Full opinion text
MOURSUND, J. This is a suit by W. L. Moody & Co. against Hudspeth, Alexander & Co., a firm composed of A. D. Hudspeth and G. Alexander, and against the members of said firm individually, the City National Bank of Bowie, Tex., hereinafter called “Bank,” the Wichita Falls Compress Company, hereinafter called “Compress Company,” the Missouri, Kansas & Texas Railway Company, hereinafter called “Railway Company.” The petition on which the case went to trial contained the following allegations: That on or about March 7, 1910, Hudspeth, Alexander & Co., with intent to defraud plaintiffs out of .large sums of money, proposed by telegraphic communications sent from Bowie, Tex., to plaintiffs at Galveston, Tex., to ship plaintiffs 800 bales of early cotton of average weight and grade, none below strict middling, to be sold by plaintiffs, as cotton factors and commission merchants, prior to May 1, 1910, on regular factors’ terms, and to draw upon plaintiffs against said shipment of cotton, with bills of lading attached to drafts, the sum of $55 per bale, which proposition plaintiffs accepted. That, before accepting the proposition, plaintiffs, being informed that said G. Alexander was a customer of defendant Bank, communicated with said Bank by telephone, notifying it of the offer so made, and asked if its relations with Alexander had been satisfactory and if plaintiffs could safely rely upon his representations with reference to said cotton, to which the Bank replied that Alexander was its customer, and falsely and fraudulently replied that its relations with him had been satisfactory and that plaintiffs could rely upon his representations with regard to said cotton, afid, but for said information thus given, plaintiffs would not have accepted said proposition. Further, that said Bank knew of the said Hudspeth, Alexander & Oo.’s intention of defrauding plaintiffs, and gave said information to assist them in carrying out such intention, and conspired with them to accomplish such purpose. That the relations between Alexander and the Bank were not satisfactory, that the firm of which he was a member was heavily indebted to the Bank, and said Bank knew said firm was insolvent, and that plaintiffs could not safely rely upon Alexander’s representations with reference to said cotton. That said firm owed the Bank a large overdraft which was the occasion of dissension in said Bank and for criticism of its active officers, by reason of which constant requests were made upon said firm to pay tfie Bank, but that none of said facts were communicated to plaintiffs. That, by all dealing in and handling cotton, “early cotton” means, and at all times alleged in the petition meant, cotton ginned and prepared for market early in the season, free from boll, leaf, and trash; and “average weight” means, and meant, that the average weight of a given number of bales of cotton shall be approximately 500 pounds per bale, and “bales” of cotton means and meant, packages or bales of’ the average weight of approximately 500 pounds, and plaintiffs and all the defendants at all thé times mentioned in the petition well knew said meaning of said words. That at said time Hudspeth, Alexander & Co. had or procured 400 bales of cotton, gathered late in the season and of Inferior grade, and delivered said cotton to the Compress Company and procured it to split said bales of cotton each into two bales and to prepare same so as to make each half bale appear to be a full compressed bale, and to assist it in shipping same as full bales, and to procure bills of lading as for full bales, to the end that it would be made to appear that they had bills of lading for 800 instead of 400 bales of cotton. That said Compress Company delivered said cotton to Railway Company as full bales, certifying to it that same were bales of cotton. That, in order to procure the assistance of the Compress Company in this matter, they agreed to pay a compensation beyond that company’s ordinary charges for compression. That said company knew of the fraudulent designs of said Hudspeth, Alexander & Co. to swindle plaintiffs or others and the purchasers of all bills of lading which might be issued in pursuance of such design. That the Compress Company failed to compress said cotton to the density required by custom between railroad and compress companies and by the regulations of the Railroad Commission. That, if Compress Company did not in fact know of the fraudulent intention and design of Hudspeth, Alexander & Co., the requests made to them were so unusual and extraordinary that they were put upon notice of the fraudulent purposes of Hudspeth, Alexander & Co. and negligently participated therein so as to make themselves liable. That 485 bales of said cotton were loaded by the Compress Company for the Railroad Company in pursuance of prearrangement, custom, and course of dealing between it and Railroad Company, and Compress Company issued a certificate that 485 bales of cotton of given marks and brands had been received from G. Alexander for shipment, via Missouri, Kansas & Texas Railway Company of Texas to Galveston, and said parties applied to Railway Company for bill of lading for full bales of cotton, and Railway Company assented to such request, accepted said certificate, waived its rules, which provide that, in case of shippers permanently located at said stations, it should be furnished an affidavit once each week covering shippers’ weights to be inserted in bills of lading, and contrary to its rules and custom, and the general rule and custom of the trade, accepted said packages as bales of cotton and issued bill of lading for 485 bales of cotton, by which it recited and represented that it had received that number of bales consigned to shipper’s order, notify W. L. Moody & Co., Galveston, Tex., and by which it bound itself to deliver 485 bales of cotton at Galveston, Tex. That thereby it contracted with said other parties to the suit, or some of them, that it had received and was transporting said number of bales of cotton, but failed to put the dealers in said bill of lading on notice that it had received only half bales. That all the defendants knew it was the custom among shippers of cotton to attach the bills of lading to drafts drawn against banks, purchasers, or other consignees of cotton, in favor of themselves, bearers, or other payees, or order, and would place same in the bank where the bills of lading would be accepted as importing that the Railway Company had received the merchandise and was transporting same as set forth in such bills of lading. That Railway Company knew, or by the exercise of reasonable diligence could have known, that said packages of cotton were not bales of cotton, but half bales, but recklessly and negligently, in pursuance of the plans proposed by the other defendants and adopted by it, accepted said packages as being bales of cotton and issued its bill of lading, knowing it would be used to obtain funds from some person upon the strength of their belief in the recitation therein contained that said packages were bales of cotton, and also with notice and knowledge that the other defendants intended to use said bill of lading in some business transaction with W. L. Moody & Co. That under the regulations imposed by the Railroad Commission the Railway Company was required to take charge of and receipt for said cotton on the platform of the Compress Company in the same manner as if tendered at its depot. That at or about the time of the issuance of said bill of lading Compress Company, or another, made inquiry of said Railway Company, its agents or employes, whether it would issue and deliver bill of lading for said cotton without stating in same the weights of the cotton, by which it was further put upon notice of the fraudulent designs of the shippers and those acting in collusion with them. Further, that Railway Company issued said bills of lading without stating therein the weights of the cotton, but wrote in the column provided for weights the abbreviation “est.,” meaning thereby estimated, but in fact no estimate was made, although said Railway Company knew that when the weight was stated in the manner aforesaid it was understood hy all in the business of operating railroads and compresses, and in the business of banking and the business of cotton buyers and factors and commission merchants, to mean that such cotton had not been weighed, but that the weights had been carefully, fairly, and honestly estimated by the carrier issuing such bill of lading, and that it was estimated to weigh an average of approximately 500 to 560 pounds per bale. That said Compress Company marked said packages of cotton with marks necessary to represent full bales, and issued and delivered to said Railway Company a written, or partly written and partly printed, receipt or certificate, by which it certified that it had received from said G. Alexander 485 bales of cotton, to be shipped to Galveston by Railway Company, when in fact tha cotton described in. such receipt was in packages containing half bales, and that it in like manner issued receipt for the other 815 bales. That if said Railway Company used any diligence to ascertain whether said cotton was bales of cotton of average weight, it was by having same examined, inspected, and checked by one or more of its agents or servants by which it discovered, or by the use of ordinary care could have discovered, that it was in fact only half bales. That about March 16, 1910, Hudspeth, Alexander & Co. caused G. Alexander to indorse his name in blank on the said bill of lading for 485 bales of cotton, and to make draft upon W. L. Moody & Co. payable to the order of City National Bank of Bowie, Tex., for $26,675, said draft reciting and being conditioned that bill of lading for 485 bales of cotton was attached thereto, and caused said draft to be signed by said Alexander and indorsed by. him in blank, and to attach said bill of lading to same, and deliver draft and bill of lading to said Bank, requesting said Bank to collect same from W. L. Moody & Co., and deliver bill of lading upon payment of said draft. That said Bank, knowing the participation of the other defendants in the conspiracy to defraud plaintiffs, received said draft and caused same to be collected from W. L. Moody & Co., which payment by W. L. Moody was made solely upon the faith of representations contained in said bill of lading, and the conditions in said draft, that said bill of lading did import 485 bales of cotton,, and not upon any reliance upon the credit of G. Alexander and A. D. Hudspeth, nor of Hudspeth, Alexander & Co., nor on account of any funds any of said parties had with W. L. Moody & Co. That plaintiffs relied upon and were deceived by all of said representations made to secure the bill of lading, those contained in the bill of lading and the draft, and the statement that said cotton had been estimated, and that same comprised bales, and not half bales, and paid said draft before said cotton had arrived at Galveston. That said Hudspeth, Alexander & Co. were indebted to said Bank to the extent of more than $31,000, which indebtedness was unsecured, and said firm and its members were insolvent, as said Bank well knew, and before receiving the proceeds of such draft fraudulently and wrongfully applied all or some of the forthcoming proceeds of the payment of plaintiffs upon said draft to the indebtedness due said Bank by said firm, with full knowledge of all the facts. That thereafter said Bank received and still retains plaintiffs’ money as aforesaid.' That the payment of said draft was made upon a mistake of fact and because of the fraud perpetrated upon it hy the other defendants herein, and by reason thereof it is entitled to trace same into the possession of said Bank and recover same, and also because of the breach of the conditions contained in the draft and bill of lading. That, if plaintiffs are mistaken in alleging that said Bank had no security for its said debt, then that such security was only as to part of the debt and consisted of a pledge to it • of part of said cotton, or cotton tickets or warehouse receipts therefor, which cotton plaintiffs tendered back to defendants, which tender all defendants refused, and they are allowed credit for the full value of said cotton in this petition. That said money having come into the hands of the Bank by means of such fraud, it received same in trust for plaintiffs and is liable to plaintiffs for the same less the value of the cotton upon which it held such lien. That thereafter said cotton was delivered to plaintiffs and weighed approximately 115,203 pounds, being an average of about 237 pounds per half bale of cotton, and was all of low and inferior grade. That said cotton was of the value of about $13,448.49, after deducting the cost of conditioning, caring for, storing, putting in bales of merchantable weight, and marketing same, and had it been of the weight and as represented would have been worth not less than the amount of said draft. That defendants having refused the tender of said cotton upon condition of reimbursing plaintiffs for the amount paid out, plaintiffs sold said cotton, realizing net the sum of $13,-448.59. That by reason of the matters and things set out, plaintiffs were damaged in the sum of $13,226.61, with interest and costs, for all of which they prayed judgment against all of the defendants and each of them. Plaintiffs filed trial amendment identifying certain paragraphs of rules of Railroad Commission attached to answer of Railway Company as the rules mentioned in their petition, and stating the gross amount received for the cotton as $15,161.34, also stating the various items of expense incurred with reference to the cotton. The Compress Company filed plea of privilege to be sued in Wichita county, Tex., alleging that the Railroad Company was fraudulently joined for the purpose of giving jurisdiction in Dallas county. It answered by general denial and a plea in reply to both plaintiffs and the Railway Company alleging that it never issued, approved, or authorized the issuance of any such bills of lading alleged by plaintiff; that the bills of lading approved by it were open bills reading from Alexandre as consignor to Alex-andre as consignee, and were not negotiable; that it made no representations as- to the weight of the cotton; that the Railway Company had full knowledge and notice of all facts with reference to said cotton and knew that the original bales had been divided. It further alleged that plaintiffs had collected §2,975 from G. Alexander, which is pleaded as an offset against any judgment in favor of plaintiffs. The Missouri, Kansas & Texas Railway Company of Texas answered by general denial, and special answer setting up the rules and regulations of the Railroad Commission of Texas in regard to handling cotton, certified copies of which were attached to the answer, and further alleged that it accepted said cotton while on the platform of said compress in accordance with the requirements of said rules and regulations; that it had no knowledge of the actual condition of the cotton at the time it issued the bills of lading, and same were executed,' under the universal rule and custom of all railway companies in the state of Texas, upon the certificate and receipt of the Compress Company, which receipts and certificates were set out in full; that in executing the bills of lading it acted entirely upon the faith of the recitations contained in said receipts and certificates. Further, that in the absence of the sworn weights furnished by the shipper it was not allowed to insert in the bills of lading any weights of the cotton, and the term “estimated,” used in said bills, was known to plaintiffs to mean that the cotton had not been weighed, and that the bills as issued contained no misrepresentations; that its agent who issued the bills of lading had no notice of the split condition of the cotton and no opportunity to acquire such notice, and had no notice of the design of Hudspeth, Alexander & Co. to swindle plaintiffs; that the identical cotton received by it was delivered to plaintiffs; that plaintiffs were familiar with the rules, regulations, and customs of handling cotton over the railroads in the state of Texas, and fully knew from the use of the term “estimated” that said cotton had not been weighed, and no representation was made by it in said bills as to the weight of said cotton; that, under the circumstances, plaintiffs were guilty of negligence in paying the draft of an entire stranger on his representations as to weight and grade of the cotton; that in issuing the bills of lading it acted wholly upon the representations or recitals contained in the certificates issued by Compress Company, and* if the same contained any misrepresentations-as to the amount of cotton received, it was induced to execute the same by reason of the certificates so issued by said Compress Company, and said company knew at the time of its issuance thereof that this defendant would execute a bill of lading on the faith thereof, and prayed that, if any judgment was rendered against it, it have, judgment over against said Compress Company for a like amount. Further, that if said Compress Company was its agent in loading the cotton, as alleged by plaintiff, and that by reason thereof it was chargeable with the knowledge of said Compress Company, and if by reason • of such imputed knowledge it should be held liable to plaintiffs, then that it recover over against the Compress Company. Further, that if said City National Bank of Bowie participated in the proceeds of the scheme by which plaintiffs were defrauded, with notice of such fraudulent scheme, as alleged by plaintiff, that as between "it and said Bank, it was entitled to recover over against said Bank if it should be held liable to plaintiffs, and it so prayed. Defendant Bank filed' plea of privilege to be sued in the county of Montague, and answering filed demurrer, various special exceptions, a general denial, and a special answer containing in substance the following allegations: That in the spring of 1909 the firm of Hudspeth, Alexander & Co. opened an account with said Bank, drawing drafts on it and pledging cotton tickets with it as security, and upon sale of the cotton would procure the tickets from this defendant, and with same procure bills of lading, which would be attached to drafts collected by and through this defendant, and the money derived from such sales would be immediately placed to the liquidation of such balance. That at the end of the cotton season of 1909' said firm owed the Bank nothing. That during the season of 1909 and 1910, which began late in the summer of 1909, said firm again began business with the Bank, and same was conducted in the same manner as-during the former season, and about the 16th or 17th of March, 1910, said firm owed the Bank betwéen §25,000 and $26,000, and the Bank had as security 529 bales of cotton, stored at the Wichita Falls Compress, the tickets for which were in possession of the Bank as security for said indebtedness. That said cotton was worth about $70 per bale, and the amount was amply secured. That said G. Alexander informed the Bank that he wished to ship the said cotton on consignment to W. L. Moody & Co., and to enable him to do so it delivered to him the tickets so that he could procure bills of lading as he had been doing during the season. That he took the tickets and brought back two-bills of lading, one for 485 bales of cotton- and the other for 38 bales of cotton, each marked, “Shipped to- order of G. Alexander-at Galveston, notify W. L. Moody & Company”; the bills reciting that the weights were estimated, which meant that the cotton had not been weighed-at its point of origin. That said Alexandre drew drafts on Moody & Co. through this Bank, one for $2,090 with bill of lading attached for 38 bales, and the other for $26,675 with bill of lading attached for 485 bales of cotton, but before accepting same, and before forwarding them for collection, the Bank, as was its custom, stamped on each of them the following notice, “Notice — This Bank hereby notifies all parties concerned that it is neither responsible for the quality, quantity nor delivery of the goods covered by the bill of lading, or otherwise,” signed, City National Bank of Bowie, Tex. That, notwithstanding said notice and the fact that the bills of lading advised that the cotton had not been weighed, Moody & Co. paid said drafts on presentation, and the proceeds thereof came into the hands of this Bank. That after being advised of the collection of said drafts this defendant credited Hudspeth, Alexander & Co. with same, applying the credit thereof to the liquidation of their indebtedness, and they checked out the balance of said account, and the $4,000 collected through the First National Bank of Bowie was deposited with it the same day and cheeked out by Hudspeth, Alexander & Co. Further, this defendant specially denied that it entered into any conspiracy with anybody to defraud Moody & Co. and that it had any notice, knowledge, or information of any irregularity or anything unusual in the shipment of said cotton. It alleged further that plaintiffs had recovered from G. Alexander $2,975, and had an opportunity to recover $1,000 more, in that it enjoined payment of drafts to that amount in the possession of Hudspeth and had voluntarily dismissed the suit; that plaintiffs were negligent in not collecting said amount as well as in paying said drafts, and in any event this defendant should have credit for said $2,-975; that this defendant had no notice of any fraudulent act or conduct of Hudspeth, Alexander & Co. until long after the money had been collected on the drafts and applied as aforesaid; that it had given up its security, which was ample, at the request of plaintiffs, wherefore plaintiffs were estopped to claim any damages. The ease was dismissed as to G. Alexander, individually. The jury returned a verdict in favor of the plaintiffs against all the defendants for $13,226.51, with interest at 6 per cent, from March 17, 1910, and in favor of the Railway Company over against the Compress Company and the Bank, and found against the prayers of the Compress Company and the Bank for judgment over against other codefendants. Judgment was rendered overruling all pleas of privilege, and upon the merits in accordance with the verdict of the jury, from which judgment appeals have been perfected by the Railway Company, the Compress Company, and the Bank. The following facts are undisputed, and give a general outline of the case: A. D. Hudspeth and G. Alexandre composed the firm of Hudspeth, Alexander & Co., and were engaged in the cotton business, with headquarters at Biowie, Tex. This firm was largely indebted to the City National Bank of Bowie, also the First National Bank of Bowie, both of which held as collateral security for such indebtedness cotton tickets, •issued principally by the Wichita Falls Compress Company. In March, 1910, said Alex-andre arranged with Moody & Co., who were engaged in the cotton business at Galveston, by letters and telegrams, to ship them 800 bales of cotton of average weight and grade, with the right to draw on them with bill of lading attached to draft for $55 per bale, which amount Moody & Co. agreed to advance, as well as further amounts after the cotton arrived at Galveston, provided the weight and grade of the cotton justified such additional advances. After the agreement was made, Hudspeth, Alexander & Co., for the purpose of shipping the cotton to Moody & Co., secured from said banks the cotton tickets held by them as collateral, and procured the Wichita Falls Compress Company to divide or split 400 bales of cotton and recondition it so as to give it the outward appearance of 800 bales of cotton. The superintendent of said Compress Company, acting for the same, issued to Alexandre three receipts (or O. K.’s), one for 38 bales of cotton, weight 31,320 pounds, one for 485 bales of cotton, weight estimated, and the other for 315 bales of cotton, weight estimated, all of which tickets showed shipment via Missouri, Kansas & Texas, destination Galveston. These receipts were attached to bills of lading for their respective amounts of cotton,.upon blanks of said Missouri, Kansas & Texas Railway Company of Texas. Bills of lading, with said receipts attached, showing that the cotton was received from G. Alexandre and consigned to his own order, Galveston, Tex., notify W. L. Moody & Company, were presented to the employé of said Railway Company in charge of its local freight office at Wichita Falls, who executed the same in the name of the local freight agent. On March 16, 1910, G. Alexandre drew a draft through the City National iBank of Bowie for $26.675 on Moody & Co., to which the bill of lading for 485 bales was attached. This draft was paid and the proceeds applied by the Bank to the account of Hudspeth, Alexander & Co., which left said firm a balance after paying their indebtedness to the Bank, and said balance was regularly checked out in a few days. The bill of lading for 315 bales was attached to a draft on Moody & Co. for $17,-325, drawn through the First National Bant of Bowie, and, being paid, the proceeds were applied to the payment of said firm’s indebtedness to that Bank. When the cotton arrived at Galveston and was delivered at the Moody press, the light condition of the 800 bales was discovered. The same were weighed and stored by Bloody & Co. and sold in June of the same year. Bloody & Co. deducted from the proceeds the storage insurance, •commission for selling, cost of reconditioning, and expense of handling said cotton, ■and credited the two drafts with the net amount so obtained from the proceeds of ■said cotton. They then brought two suits in- the district court of Dallas county, one being this suit, which is for the loss sustained on the draft attached to' bill of lading for 485 bales of cotton, and the other suit being for the loss sustained on the draft attached to bill of lading for 315 bales of cotton, which suit is against all the parties who were made ■defendants in this case, as well as against the First National Bank of Bowie. Other facts relating to the liability of the respective defendants will be stated in passing on the assignments questioning such liability. We will first take up the brief of the Compress Company. The first assignment is based upon the admission of the letters and telegrams between Bloody & Co. and G. Alexandre with reference to the consignment of cotton by Alexandre to Bloody, over the objections that it does not appear the Compress Company had any knowledge of said correspondence, ■and the same was not admissible against said company, though admissible against Alexandre. Appellees contend that the defendants against whom same was not admissible should have requested instructions -to the effect that same could not be considered against them. In general this is the correct rule. However, in this case it is shown that at the time of the admission of the evidence it was expressly stated by counsel-for appellees that they would later prove a conspiracy between all the defendants. Having failed to redeem such promise, and in fact prepared a general charge for the court which did not mention the issue of conspiracy, it was incumbent on appellees to request an instruction limiting said testimony, and not upon this appellant. Root v. Kansas City R. S. Co., 195 Bio. 348, 92 S. W. 621, 6 L. R. A. (N. S.) 223; Smith v. Sedalla, 182 Mo., 1, 81 S. W. 167. The second assignment complains of the admission of the testimony of W. O. Layton to the effect that, several months prior to the transaction involved in this suit, ■defendant Hudspeth asked witness, who Was running a compress at Bowie, Tex., to tear up some cotton for him; that some of the bales were too large, and he wanted to divide .them up; that he (witness) replied he did not care to do it. The objection made was as follows: “Because the transaction testified about occurred long before the conspiracy claimed by the plaintiff could have been formed and was an independent transaction, no part of the res gestas of the transaction involved in this suit, and it was not shown that this defendant had any knowledge of it and it was immaterial, but calculated to affect the verdict.” The evidence should not have been admitted against this defendant, and the assignment is sustained. The third assignment is also based upon the admission of certain other testimony given by the witness Layton and is sustained. The fourth assignment is overruled. While evidence that it had not been customary to divide or split cotton at compresses and repack same so as to make two bales is no evidence of fraud, yet it was admissible to show the unusual nature of the request made of this defendant by Alexandre, and the request, being unusual, can legitimately be considered as a circumstance tending to put this defendant on notice that a fraud was intended to be perpetrated by means of its assistance. Assignments 5 and 6 complain of the refusal of peremptory instructions in favor of this defendant. We overrule these assignments, and will state briefly the facts upon which we base the liability of this defendant, in so far as said facts have not heretofore been stated by us. Trueblood, superintendent of the Compress Company, testified that Hudspeth asked him to call up the railroad office and ask if they would ship out the 38 bales on estimated weights; that up to that time they had not shipped out any cotton on estimated weights; that Hudspeth told him the cotton he wanted split was some that Alexandre had sold and agreed to deliver in California in small bales; that they split the cotton and repacked it so as to resemble ordinary bales; that he 'refused to O. K. the bills of lading until the cotton was made into 800 bales, as a usual thing, though he O. K.’d a man’s bill of lading when he presented it to him with instructions, that is, if the cotton was there; that he was aware of the provisions of the Railroad Commission rules requiring railroads to accept cotton on the platform of the Compress Company, provided the Compress Company carried insurance to cover it, which this appellant did; that with one exception, in 12 years’ experience, it had always been usual and customary for the Railroad Company to sign bills of lading on the faith of his O. K., and th,ey never weighed or counted the cotton or had anything to do with it prior to the time the bills of lading were issued that he knew of; that Hudspeth had procured him to split two 75-bale lots of cotton oerore tnat and make 100-bale lots out of same, stating he had sold some cotton, and the cotton had gone up on him, and he wanted to fill .his contract with as little cotton as he could; that he never had split any big lot of cotton before this transaction and made twice as many bales out of it; that he required extra compensation for splitting said cotton in addition to the regular charge for compressing, and required Hudspeth to furnish the bagging, and also exacted an indemnity agreement for any claim that might arise because said cotton was not of the proper density; that he took said agreement, which, according to his information, would have applied if the cotton was going export, although he relied entirely on Hudspeth’s statement that the cotton was going to Galveston and from there to Oakland, Cal.; that Hudspeth, Alexander & Go. at that time owed them a bill for patching and handling cotton, which they paid; that they charged the Railroad Company the full 10 cents per hundred pounds on 560 pounds for compressing charges which was paid, but refunded after being furnished weights of the cotton at Galveston, as they did in all cases. The sheriff of Montague county and Graham, adjuster for appellees, both testified that Trueblood, about March 24, 1910, stated that he handled this Hudspeth, Alexandre transaction, and that he suspected and thought a fraud was intended at the time, or words to that effect; that he suspected the transaction was not correct, and stated that he took the indemnity; and that Hud-speth had told him many lies. Graham’s testimony was, further, that Trueblood stated his suspicions were aroused to such an extent that he took a release from Hudspeth of liability in the matter and showed him the release. The false receipt and representations were issued by the Compress Company covering the 485 bales of cotton, and attached to the bill of lading described in plaintiff’s petition. Trueblood testified that the bill of lading presented to him by Hud-speth was not the one actually issued, but one by G. Alexander to G. Alexandre. It was the custom for the shipper to make out a bill of lading, then procure receipt from the Compress Company and attach same, and then have bill of lading signed by the agent of the Railroad Company. Trueblood testified he would not have O. K.’d the bill of lading described in plaintiff’s petition had it been presented to him; that is, if the cotton had been shipped without its being weighed. On the same day as the issuance of the receipt mentioned, the Compress Company issued 17 loading slips, 16 for 50 bales each and 1 for 38 bales, certifying that 838 bales of cotton of the weight of 28,000 pounds per 50-bale lots, such weight stated, under the words, “Weight sworn estimated,” neither of which was struck out, had been shipped from Wichita Falls over the Missouri, Kansas & Texas Railroad, destination Galveston, on that date in certain car number and initials, said certificate being signed W D. Trueblood, compress superintendent, F. E. McKay, railroad agent. The Compress Company says it should not be held liable for doing a legal act, viz., spirt-ing the bales of cotton. If this was all it had done, certainly it would not be liable; but, under the facts as set out, which by repeating all the testimony would be made even stronger, it is apparent that said company had ample knowledge of facts putting them upon notice that Hudspeth, Alexandre & Co. were going to try to perpetrate a fraud upon somebody. Trueblood’s statement to the sheriff and Graham, as detailed by them, while denied by him, must be taken as true in passing on this assignment. Having such suspicions and knowledge, he certainly acted in bad faith with the Railroad Company, and in reckless disregard of the rights of others, in not insisting that the cotton be shipped on sworn weights. His knowledge of the falsity of his certificate is conclusively shown by his refusal to issue same until he had made 800 bales out of the 400; he sought to delude his conscience by first creating the semblance of things admitted by him as not existing in fact. Nor should said company be heard to say that, while issuing a false certificate, it was not guilty of participation in the fraud because, if the bill of lading shown Trueblood had been used, the fraud might not have occurred. Having assisted in the fraud by issuing a false certificate, it should not be permitted to avoid liability by saying it was negligent in not seeing that such certificate was not detached from such bill of lading and attached to another. However, the evidence of the railway clerk at Galveston shows that even such a bill as Trueblood described could have been used as the bills in evidence were used, though not with equal facility, and in support of the verdict we must find that this fact was found by the jury under the charge of the court. Had Trueblood been as innocent in*the matter as the Compress Company would have us believe, and had really believed that Hudspeth did not intend to commit a fraud, he would have proposed to issue receipt for 800 half bales, instead of stating that he would issue receipt for 800 bales as soon as he could accomplish the task of making the same out of 400 bales. The issuing of a false certificate constituted a fraudulent act under the circumstances of this case, and it was intended that upon the faith of it a bill of lading should be issued, and that said bill of lading would represent that 800 bales of cotton, within the ordinary and usual meaning of the term bales of cotton, had been received and transported. This appellant should not be heard to say that it did not intend the natural consequences arising from its fraudulent acts, and we hold the evidence sufficient to sustain a verdict against it. Chubbuck v. Cleveland, 37 Minn. 466, 35 N. W. 362, 5 Am. St. Rep. 864; Wilson v. Green, 25 Vt. 450, 60 Am. Dee. 281; Stoney Creek Oo. v. Smalley, 111 Mich. 321, 69 N. W. 722; Wells v. Western Union Tel. Oo., 144 Iowa, 605, 123 N. W. 371, 24 L. R. A. (N. S.) 1045, 138 Am. St. Rep. 317. The eighth assignment is overruled. Misjoinder of causes of action would not authorize a verdict against plaintiff on the merits. If presented by plea in abatement, and same was sustained, the plaintiff would be required to dismiss to-the extent necessary to cure the objection, and, if presented in connection with a plea of privilege, the sustaining thereof would only require a transfer of the case to the court of the county in which the venue should have been laid. The ninth and tenth assignments complain of the giving of special charges at the request of the Railroad Company, in regard to the Railway Company’s plea for recovery over against Compress Company. One was a peremptory charge directing that, if the jury found against the Railroad Company, then to find for Railway Company over against Compress Company for same amount. The other was more liberal to Compress Company. The eleventh assignment complains of- the eighth paragraph of the main charge, also on Railway Company’s ple’a for recovery over against the Compress Company which allowed such recovery upon finding certain facts. If the court erred in giving the peremptory charge, this case will have to be reversed as between the parties, as the other charges could not cure such error. If it did not err in giving the peremptory instruction, then the other charges are harmless as against the Compress Company. We are of the opinion that the peremptory instruction was authorized. The evidence is conflicting as to whether Leech, an agent of Railway Company, had knowledge of the split condition of the cotton at the time he checked same, after it was loaded. In passing on the correctness of a peremptory instruction, we must take as true the evidence most favorable to the party against whom such instruction is given, and therefore must consider this question upon the theory that Leech had such knowledge. In pursuance of his duties, after counting the bales in the cars, he made a “blind check” of the number of bales in each car and took same to the office of the Compress Company, and compared same with the loading slips furnished by said company, and, finding such slips correct, he signed the name of E. E. McKay, agent for the Railway Company, to same, then gave the originals back to the Compress Company and delivered the duplicates at the freight office of the Railway Company. These slips were issued after the cotton was loaded, and are dated March 16, 1910. Such slips were referred to in making out the waybills, which were dated March 17, 1910; but the bills of lading, while dated March 14, 1910, were in fact signed March 16, 1910, upon the faith of receipts issued by the Compress Company to the effect that it had received the stipulated number of bales from G. Alexander, which receipts were attached to said bills of lading at the time same were presented to the agent of the Railway Company for signature. The loading slips had not been brought to the railway’s office at the time the bills of lading were issued, and the employe who signed McKay’s name to the bills of lading testified positively that at the time he signed the bills of lading he had nothing except the said bills of lading and the compress O. K.’s. However, if Leech had knowledge that half bales were being shipped and had disclosed such knowledge by marking the loading slips to that effect, the Railway Company would have had a chance to have avoided damage by notifying Moody & Co. of that fact. While this is true, we fail to see how the negligent or willful failure of an employé to communicate to his employer knowledge of a fraud being perpetuated by an agent of such employer (if Compress Company be considered as the agent of the Railway Company), or by a contractor (if Compress Company be considered, as between it and Railway Company, to be merely a contractor), should excuse such agent or contractor from liability for such fraud. Having set the fraudulent agencies in motion, it cannot excuse itself from the consequences by saying that an employé was negligent or guilty of fraud in not apprising his employer of the fraud being perpetrated. We overrule the assignment. The twelfth and thirteenth assignments are overruled. The fourteenth assignment is overruled. We see no error in the definition of notice, and when notice becomes knowledge. The fifteenth and sixteenth assignments complain of paragraphs of the charge wherein, if they find for plaintiffs, they are told what to take into consideration in arriving at the amount. The charges state the correct rule as we understand it. The omission to require a credit of $2,975 would not be affirmative error, and such question properly arises under other assignments, and will be disposed of under the same. The seventeenth assignment complains. of the verdict of the jury as being in disregard of a special charge given at the request of the Compress Company to allow a credit for $2,975 collected from Alexandre, if it found against the Compress Company and also should not allow plaintiffs any commission for selling the cotton. We think their commission was a legitimate item of expense. They were entitled to what their services were reasonably worth in a necessary and reasonable effort to minimize the damages. As to the item of $2,975: It appears from the agreement contained in the record that said amount was saved hy the efforts of plaintiffs and the First National Bank out of funds' received by said bank in payment of the draft for the other 315 bales of cotton, and that in a case involving the loss suffered by plaintiffs on account of said draft which was attached to bill of lading for the other 315 bales of cotton, out of the 800 split by this appellant, and in which suit all parties to this suit are parties, besides said First National Bank of Bowie, the plaintiffs concede said amount, less the expense of collecting it, as a credit to be given the defendants in said suit. We do not think appellant was entitled to have said amount credited upon plaintiffs’ claim in this suit, nor did the jury allow such credit. Under the general charge of the court these credits of $2,975 and $485 were not required to be allowed, but under the special charge the jury was told to allow same. The special charge being offered by this appellant,- and being erroneous, it cannot be heard to say that the verdict is wrongful because the jury did not follow such erroneous charge and decided the issues in accordance with the general charge of the court. The assignment is therefore overruled. I. & G. N. Ry. Co. v. Parish, 18 Tex. Civ. App. 130, 43 S. W. 1066; Gooch v. Addison, 13 Tex. Civ. App. 76, 35 S. W. 83. The nineteenth and twentieth assignments complain of the refusal of special charges offered by this defendant. Charge No. 9 placed too great a burden upon plaintiffs, while the latter part of No. 10 is misleading and too restrictive in requiring knowledge on the part of Trueblood when either knowledge or notice would be sufficient. The assignments are overruled. The twenty-first assignment complains of the refusal to give the following special charge: “You are instructed that the evidence fails to show any conspiracy or agreement between the City National Bank of Bowie, Tex., or any of its officers or agents, with the defendant Compress Company, or any of its officers or agents, and you are therefore instructed that you must not consider for any purpose, as against the defendant Compress Company, any testimony introduced which you may believe shows, or tends to show, any liability on the part of said Bank, but such testimony, if any, will be considered only between the plaintiff and said Bank.” The court did not err in this matter because this special charge was too general. There was evidence in the case, for instance the bills of lading, which could legitimately be considered against both parties. By this charge the jury was called upon to pass its judgment on the admissibility of the evidence as against the two parties mentioned in this charge. The twenty-fourth assignment is overruled for the reasons given in passing on the fifth assignment. The twenty-fifth and twenty-sixth assignments are overruled for the reasons given in discussing assignment No. 17. Assignment 27 complains of certain communications between the court and jury, in writing, after the retirement of the jury, and while it was in a jury room, opening out from the courtroom where the court was trying another ease; the door of the jury room being in view of the court. The jury sent the following communication to the court: “Does paragraph 10 of your charge mean absolutely that if we find against all defendants we are obliged to find for the Railway Company against the Compress and the Bank? F. W. Yensen, Foreman.” The judge wrote on the slip of paper: “Yes. E. B. Muse, Judge. Keep this.” And the slip of paper was returned by the deputy sheriff to the jury. Afterwards, the foreman sent another slip of paper to the court containing the following: “If w'e allow interest, do we have to compute the interest? F. W. Yensen, Foreman.” The judge wrote on it: “Not necessarily. E. B. Muse, Judge. Keep this.” These slips were returned with the verdict and charges, but not filed until motion for rehearing was heard. Having held that the Railroad Company was entitled to a peremptory instruction against the Compress Company in case the jury found against all defendants, we fail to see how the Compress Company was prejudiced by the first question, nor could any injury have resulted from the second question and answer. However, under the authority of Railroad Co. v. Byrd, 102 Tex. 263, 115 S. W. 1163, 20 L. R. A. (N. S.) 429, 20 Ann. Cas. 137, the question is whether these acts of the court and jury violated the statute with respect to communications between the court and jury.- While not approving the practice, yet we feel constrained to hold that the statute was substantially complied with, and overrule the assignment. The seventh, eighteenth, twenty-second, and twenty-third assignments all are based upon the failure to sustain this appellant’s plea of privilege, and upon the action of the court in rendering judgment overruling same, upon a verdict not disposing of the issue. We are of the opinion that all of. these assignments should be overruled. It is a very doubtful question whether the Compress Company was ever in a position to urge its plea of privilege after filing its first pleading, which it styled “Original Answer,” and which reads that for answer it says: (1) “The defendant excepts to the plaintiffs’ petition and says the same is insufficient in law and shows upon its face no right of plaintiff to sue this defendant in Dallas county,” etc. But even if the first part of this “answer” was not a demurrer, but a part of an .exception asserting privilege, which is followed in the second.count by a plea of privilege, yet we think there was no evidence sufficient to raise an issue on the question whether the Railway Company was fraudulently joined in the suit for the purpose of procuring jurisdiction. As said Railway Company was properly sued in Dallas county and the cause of action against this appellant grew out of the same transaction, it was a proper party to the suit. Even though it were held that liability did not exist on the part of the Railway Company, such conclusion would not prove that it was fraudulently joined in the suit to procure jurisdiction. Railway v. Williams, 38 Tex. Civ. App. 405, 86 S. W. 38; Toland v. Sutherlin, 49 Tex. Civ. App. 538, 110 S. W. 487. The causes of action asserted against the Railway Company and the Compress Company are connected with each other so as to make it both desirable and proper that the same should be settled in the same suit. We are of the opinion that the court committed no error in overruling the plea of privilege without submitting any issue with respect to same to the jury. We pass to the consideration of the questions presented in the brief of appellant Missouri, Kansas & Texas Railway Company of Texas. The first assignment is as follows: “The verdict of the jury is contrary to the law and the evidence, in that the evidence shows beyond dispute that this defendant delivered to the plaintiffs all of the cotton actually received by it under the terms of the bill of lading, and that, if said bill of lading showed the receipt of’ more cotton than was actually delivered to plaintiffs, then this defendant never received the same, and the act of its agent in executing the bill of lading therefor was not binding on this defendant, and it is not estopped under the law to deny the recitations in said bill of lading, and for this reason the trial court erred in refusing this defendant a new trial, all of which appears in section 7 of its said motion.” Three propositions are submitted: (1) That the bill of lading was not an instrument negotiable by the law merchant, and appellees, as assignees of same, were bound to allow all discounts and defenses that were good against their assignor, prior to the time appellant had notice of the assignment. (2) In so far as a bill of lading is a' receipt for goods, it may be explained or varied by parol testimony. (3) A local freight agent of a railway company has no authority to issue a bill of lading for any goods except those actually delivered to him for shipment, and, even though the recitation in the bill of lading as to the amount of cotton received for shipment was substantially false and known to the said local freight agent to be false, yet the appellant had the right to show what was actually received by it under said bill of lading and that it delivered the goods actually received.. These propositions are submitted upon the theory that, even though the agent issuing the bill of lading had actual knowledge of the condition of the cotton, yet the Railway Company would not be liable. So far as we have been informed and have ascertained, this question has never been decided in Texas, and it is probable that it will not arise in any other cases than this and its companion case, as the legislature, by the act approved September 13, 1910, relating to bills of lading, has provided that, when issued by the authorized agent, the bill of lading shall be deemed the act of the carrier, and the principal shall be liable thereon in accordance with its terms; also, that when available, authenticated, or certified in accordance with the rules therein provided for and those prescribed by the Railroad Commission in accordance with the provisions of said act, same shall, if in the hands of an innoceent holder for value, be incontestible as to the matters and things therein set forth. The weight of authority in the United States is to the effect that, where no goods are in fact received by the carrier, a bill of lading reciting receipt of such goods is void even as to innocent purchasers for value; the reason given for the rule being that the agent has no authority to execute bill of lad'ing until the goods are actually received, and therefore as between the parties to such instrument the same is a nullity, and, being nonnegotiable the assignee can' obtain no greater right than the assignor had. See Hutchinson on Carriers, § 161. But, as is stated in the treatise just cited, “this rule has not been uniformly followed, and is opposed by courts of eminence and by reason of great cogency”; the doctrine announced by said courts, briefly stated, being, that under such circumstances the statement as to the. receipt of the goods amounts to a representation by the carrier of a fact which was, or in the ordinary course of business ought to have been, within the knowledge of the agent, and that as to an innocent and bona fide holder of the bill of lading the carrier will be estopped from claiming that he did not receive the goods. Hutchinson on Carriers, § 161. The rule just stated appeals to us as the correct rule to apply in this case. In the first place, the Railway Company has not sought by its pleading to deny the authority of its agent to issue the bill of lading in question, but is defending upon the theory that it was authorized to issue the bill of lading for 485 bales on estimated weights, because it was permitted to transport cotton without weighing same, and that it was guilty of no wrong or negligence in issuing the bills of lading. Plaintiffs’ cause of action as against this appellant is based in part upon the bill of lading, and it would therefore appear that under our statute want of authority on the part of its agent to execute same should be pleaded under oath. Even though the question of authority was in this case, yet it would present a very strong case for the application of the doctrine of estoppel. The bill of lading contained the following provision: “This bill of lading is not negotiable unless the freight covered by it is consigned to shipper’s order and is properly indorsed and surrendered upon delivery of the cotton herein receipted for.” It also recited: “Consigned to shipper’s order, notify W. L. Moody & Company; destination Galveston, Texas; number of bales 485.” The evidence shows that the bill of lading was duly indorsed 'by G. Alexandre and by W. L. Moody & Co.; that upon the faith of its representations Moody & Co., paid the draft before the arrival of the cotton in Galveston, as was the usual custom in the cotton business with respect to drafts attached to bills of lading to shipper’s order. It was shown that the term “bale of cotton” has a definite meaning in the cotton business; that it means a merchantable bale weighing approximately 500 pounds; that the term “estimated” as used in describing cotton in bills of lading means that the cotton is considered as weighing 560 pounds; that Moody & Co. so understood and interpreted said recitals. It was also shown that the general custom and practice as to handling the cotton business, financing the crop, and moving it to market, was for the owner to deliver his cotton to the carrier and secure shipper’s order bill of lading therefor, and make draft on purchaser at destination ; that banks and others will generally advance to the shipper the cash called for in the draft, and thus Such draft with bill of lading attached will make its way through the exchange centers to destination. Instead of delivering 485 bales of cotton called for by this bill of lading, 485 half bales were delivered. It was the necessary expectation of this appellant, in issuing such bill of lading, that a business transaction would be consummated upon the faith of same with W. L. Moody & Co., said firm being mentioned therein, and that said transaction would probably include advances made upon the faith of such bill of lading. Article 822, Revised Statutes, required carriers to state in a bill of lading the quantity, character, order, and condition of the goods. We are of the opinion that, under the facts of this ease, this applicant is estopped to deny that it received the 485 bales of cotton as said term was used and understood among those dealing in and handling cotton, viz., of the approximate weight of 500 pounds. Nor do we believe that this holding is at all inconsistent with that of our Supreme Court in the ease of Stamford Compress Co. v. Bank, 148 S. W. 1142. In that ease it is held that where a nonnegotiable receipt is issued, it is the duty of the purchaser thereof to notify the party issuing such receipt of such purchase, otherwise said party will not be liable for delivering the goods to the person to whom the receipt was issued upon a reasonable explanation for not presenting such receipt. The receipt in that case was expressly by its terms made nonnegotiable and did not even contain an implied promise that the goods would be held for the bearer of the receipt. We think the opinion in that case has no bearing on the question of the effect of a false representation in a nonnegotiable receipt, when acted upon by a bona fide purchaser for value. The assignment is overruled. The second, third, fourth, and fifth assignments are considered together, being based upon the contention that there was no evidence to sustain a finding that there was a material difference between the recitation in the bill of lading and the cotton actually received. The evidence was ample to. show that the term “bale of cotton” has a well-defined meaning; in fact, so much, so that this appellant’s agent admitted that he would not knowingly issue bills of lading for bales of cotton when only half bales had been delivered to the Railroad Company. Said assignments are all overruled. The sixth assignment attacks the evidence as insufficient on the ground that appellant’s agent at the time he executed the bill of lading had no knowledge or notice that the recitation in the bill of lading was untrue. The Compress Company, which split the bales of cotton and issued a false receipt to the shipper and executed false loading slips to the appellant, was under contract with this appellant to load cotton received by the railroad at the platform of the Compress Company. It was paid for this service, and none of the employés of the Railroad Company had anything to do with the loading. The Compress Company loaded this particular cotton. None of this appellant’s em-ployés, whose duty it was to sign bills of lading, had any actual knowledge or notice of the fact that said cotton was half bales, at the time said bills of lading were issued. There is evidence that Leech, an employé of this appellant, whose duty it was to check the cotton after bills of lading were issued, and see that the loading slips were correct as prepared by Compress Company, had knowledge of the condition of the cotton when he checked same, and also that he had knowledge on the day previous to the issuance of the bill of lading that this cotton was being split. We are of the opinion that the evidence sustains a finding that the Compress Company was the agent of the Railroad Company in receiving and loading the cotton. Arthur v. Railway Co., 204 U. S. 505, 27 Sup. Ct. 338, 51 L. Ed. 590; Railway v. Edwards, 56 Tex. Civ. App. 643, 121 S. W. 570. Through said agent this appellant had knowledge that it had received and loaded half bales of cotton instead of bales. The assignments are overruled. The seventh assignment complains that the verdict is contrary to the undisputed evidence in that same shows that plaintiffs' agent, Barden, when he paid the draft, acted on the faith of the notice of the shipment from Alexander as to weights and grades, and did not depend upon the recitation in the bill of lading on the question of weight. The eighth assignment charges plaintiffs with being guilty of contributory negligence in paying the draft. The evidence was sufficient to sustain a finding against appellant on these issues. We overrule these assignments. The ninth assignment complains of the refusal to give a peremptory instruction for this appellant. The assi