Case Name: MERCHANTS & FARMERS BANK & TRUST, Plaintiff-Appellee, v. Guy Roger SMITH, et al., Defendants-Appellants
Court: Louisiana Court of Appeal
Jurisdiction: Louisiana
Decision Date: 1990-03-15
Citations: 559 So. 2d 845
Docket Number: No. 88-1212
Parties: MERCHANTS & FARMERS BANK & TRUST, Plaintiff-Appellee, v. Guy Roger SMITH, et al., Defendants-Appellants.
Judges: Before FORET, YELVERTON and KING, JJ.
Reporter: Southern Reporter, Second Series
Volume: 559
Pages: 845–849

Head Matter:
MERCHANTS & FARMERS BANK & TRUST, Plaintiff-Appellee, v. Guy Roger SMITH, et al., Defendants-Appellants.
No. 88-1212.
Court of Appeal of Louisiana, Third Circuit.
March 15, 1990.
Writ Denied April 27, 1990.
Edwin Cabra, Leesville, for plaintiff-ap-pellee.
Larry W. Rivers, Alexandria, for Rivers.
Wm. Yarno, Alexandria, for Smith.
Before FORET, YELVERTON and KING, JJ.

Opinion:
YELVERTON, Judge.
The question presented by this appeal is whether this defendant, who cosigned a promissory note and executed a collateral mortgage on his immovable property as security, and simultaneously endorsed a handnote for the security of which the collateral note was pledged, became liable personally on the underlying obligation, or liable only to the extent of the mortgaged property. The trial judge held that despite the defense that the defendant did not intend personal liability, he was personally liable, and judgment was rendered against him in a suit by the holder of the collateral mortgage note. We affirm.
The appeal presents two issues, one legal and one factual. The legal issue is whether one who executes a collateral note and mortgage on his property to secure the debt of another becomes personally liable, or liable only to the extent of the property mortgaged. The factual issue is whether in this particular ease it was the intent of the parties that the defendant's liability be restricted to the mortgaged property.
The facts are simple. On April 12, 1983, the defendant, Rivers, an attorney, wanting to help a friend, Smith, cosigned with Smith a collateral promissory note to any holder for $15,000. Rivers also cosigned a collateral mortgage on property belonging to him in Vernon Parish to secure future advances. Money was advanced to Smith on the same day that the collateral note and mortgage were signed, the advance being represented by a handnote, signed by Smith and endorsed by Rivers, for $13,500. On the face of the handnote it was shown that the collateral note was pledged as security. This was done pursuant to language in the collateral mortgage which specifically authorized either mortgagor to pledge the ne varietur note as security for advances.
The maker of the handnote, Smith, who borrowed the money, did not repay it, and the bank called on Rivers. Hence this suit. The bank sued Rivers on the collateral mortgage note for the indebtedness due under the handnote, and asked for recognition of its mortgage on the immovable property. Rivers denied liability beyond the value of the property.
LEGAL ISSUE
Is the maker of a collateral mortgage note, pledged to secure a handnote issued pursuant to the authority of the collateral mortgage agreement, personally liable on the pledged note for the obligation created by the handnote? Or is his liability limited to the mortgaged property?
This circuit on two occasions has held that the maker of a collateral mortgage note is personally liable for the indebtedness sued upon, up to the full amount of the collateral mortgage note. Bank of Lafayette v. Bailey, 531 So.2d 294 (La.App. 3rd Cir.1988), writ granted in part, 533 So.2d 5 (La.1988); Concordia Bank & Trust Co. v. Lowry, 533 So.2d 170 (La.App. 3rd Cir.1988), writ granted in part, reversed in part, 539 So.2d 46 (La.1989). Believing that our previous decisions on the subject were correct, we hold that there is personal liability.
FACTUAL ISSUE
Rivers admitted at the trial that he signed the ne varietur collateral note and the collateral mortgage as a maker, and that he endorsed the handnote in the same transaction, but he testified that it was neither his intention nor the bank's that he was to be personally liable. He testified that the intention of all parties (the notes were never negotiated) was that his liability would be limited to the property mortgaged. We recognize that such an agreement, if proved, would be the contract between the parties.
This testimony was not rebutted by other testimony at the trial. Although a bank vice-president appeared as a witness in order to identify the collateral mortgage package when the instruments were introduced in evidence, this officer had no personal knowledge of the transaction. The bank officer who did have personal knowledge of the transaction was not called to testify. Nor was the other party in the transaction, Smith.
The trial court held that the bank had proved its case, and that Rivers was personally liable on the collateral mortgage note. We are asked to find error.
In this case Rivers signed documents that said what they said. The documents were received in evidence as part of the plaintiff's case. At the trial Rivers testified that the parties' intent was different from that stated in the documents. It is true that evidence of witnesses which stands uncontradicted must be accepted as true. Olds v. Ashley, 250 La. 935, 200 So.2d 1 (1967). In this case Rivers' testimony was not contradicted by other testimony. His testimony was contradicted, however, by other evidence, or proof, consisting of the documents which he signed, and which stated the intent of the parties, and which he admitted signing. In the documents Rivers said his intent was one thing; in his sworn testimony at the trial he said the intent in signing the document was another thing. Thus, the trial judge had before him two kinds of proof in the case, each proof tending to establish different facts. It was the function of the trial judge to make a determination of facts from the conflicting proofs. The trial judge did so, and we are bound to review his decision by the standard of manifest error. We find no manifest error.
The judgment of the trial court is affirmed, at appellant's costs.
AFFIRMED.
FORET, J., dissents and assigns reasons.