Case Name: REPUBLIC SUPPLY CO. v. BARROW
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1931-02-28
Citations: 41 S.W.2d 475
Docket Number: No. 12414
Parties: REPUBLIC SUPPLY CO. v. BARROW.
Judges: 
Reporter: South Western Reporter Second Series
Volume: 41
Pages: 475–478

Head Matter:
REPUBLIC SUPPLY CO. v. BARROW.
No. 12414.
Court of Civil Appeals of Texas. Fort Worth.
Feb. 28, 1931.
Rehearing Denied April 18, 1931.
Fischer & Fischer, of Wichita. Falls, for appellant.
C. P. Engelking, of Electra, for appellee.

Opinion:
DUNKLIN, J.
The waiver of diligence on the part of the plaintiff to enforce collection of the note agairist the maker, embodied in the note sued on, having been overlooked on original hearing, the motion for rehearing is granted; the judgment heretofore rendered by this court is set aside, the opinion heretofore filed is withdrawn, and the opinion this day filed is filed as a substitute original opinion, and the appeal .will be disposed of in accordance with the terms of that opinion.
Opinion.
The Republic Supply Company instituted this suit against H. O. Barrow, as indorser on a promissory note for the principal sum of $1,311.69, dated July 25, 1925, due 60 days after date with interest thereon at the rate of 8 per cent, per annum, and with 10 per cent, additional as attorneys' fees, which was executed by G. D. Lewis as maker, the Republic 'Supply Company being the payee of the note. G. D. Lewis, the maker of the note, was not made a party defendant; plaintiff's excuse for not suing him consisting of an allegation that after the execution of the note Lewis had moved out of the state, to the state of Colorado, during the year 1925, and that ever since he has been a resident of that state; and further that said Lewis is now insolvent.
Defendant Barrow presented a special exception to the plaintiff's petition by way of abatement of'the suit, on the ground that it appeared therefrom that he was only secondarily liable on the note, and that Lewis, the maker of the note, was a necessary party defendant, and that the suit could not be maintained against him as the sole defendant.
In addition to a general denial, defendant also pleaded specially that he indorsed the note in Wichita county and at the time he did so Lewis then had certain oil well drilling supplies, consisting of tools and accessories which were owned by him and located in Wichita county, loaded and ready for shipment to Las Animas county, Colo., and that defendant was induced to indorse the note at the request of plaintiff's representative and Lewis, and in consideration of a parol agreement on the part of plaintiff, acting through said representative, to take a valid chattel mortgage on such supplies and duly record the same both in Wichita county, Tex., and Las Animas county, Colo.; that on the due date of the note, plaintiff would demand payment of the same from Lewis, and, in the event of his failure to pay the same, plaintiff would promptly enter suit to foreclose the chattel mortgage and have the property covered thereby sold under foreclobure proceedings, and the proceeds applied to the payment of the note; and that defendant's liability would not arise unless and until the proceeds of such sale should prove to be insufficient to satisfy the note, and that demand would be made upon the defendant for the balance only of the amount remaining unpaid; and that plaintiff further agreed that no demand would be made on the defendant for payment of the note until after such foreclosure' proceedings.'
The defendant further pleaded that a chattel mortgage was taken on such supplies which were of a value far in excess of the amount of the note, but that plaintiff failed and refused to take any legal steps to enforce payment of the note by Lewis by suing him either for personal judgment or for a foreclosure of the chattel mortgage in Colorado, where the mortgaged property had been transported. Plaintiff further pleaded that his indorsement of the note was for accommodation only, and without consideration. All the facts so pleaded were alleged as further ground for an abatement of the suit.
By supplemental petition and in reply to defendant's answer, plaintiff pleaded the insolvency of Lewis, with the further allegation that, ever since the execution of the note by Lewis, he and the personal property covered by the chattel mortgage have been in the state of Colorado and beyond tbe jurisdiction of tbe courts of Texas.
This appeal bas been prosecuted by tbe plaintiff from a judgment denying it tbe relief prayed for.
Tbe trial was before a jury, and tbe following was tbe only issue submitted, with tbe finding of tbe jury tbereon: "Do you find from a preponderance of tbe evidence that at tbe time defendant H. O. Barrow, signed bis name on tbe back of tbe note in question, it was orally agreed by plaintiff with tbe defendant that tbe plaintiff would first resort to a foreclosure of the chattel mortgage lien on tbe drilling tools of G. D. Lewis, before calling upon defendant Barrow for a payment of tbe note sued on? Answer: Yes."
Tbe proof showed that plaintiff had never taken any steps to sue Lewis either for a personal judgment or to foreclose the chattel mortgage, although tbe note sued on matured September 25, 1925, and this suit was instituted May 23, 1929. It is a rule universally recognized that in a suit 'to enforce an ordinary contract in writing, which does not involve title to land, testimony is admissible to show a contemporaneous parol agreement that tbe instrument was delivered with tbe understanding that it was not to become effective until tbe happening of a certain event. See decisions cited in Holt v. Gordon, 107 Tex. 137, 174 S. W. 1097; 10 R. C. L. pp. 1053, 1054, § 249, 250. While tbe pleadings of defendant in this case were sufficient to tender tbe issue that at tbe time he indorsed and delivered tbe note to tbe plaintiff there was a parol agreement between him and tbe plaintiff's representative that be was not to become liable until there bad been a foreclosure of tbe chattel mortgage and an application of tbe proceeds of the property under foreclosure sale to tbe payment of the note, and while tbe testimony of defendant was sufficient to sustain that allegation, yet there was no finding by tbe jury op that issue, nor was that issue presented or requested by tbe defendant, and any defense based tbereon was therefore waived. Ormsby v. Ratcliffe, 117 Tex. 242, 1 S.W.(2d) 1084, and authorities there cited.
Testimony introduced to establish tbe parol agreement found by tbe jury was objected to on tbe ground that its admission would be in violation of tbe parol evidence rule, since it would vary this provision in tbe body of tbe promissory note sued on; tbe note being indorsed in blank, without any qualification, by tbe defendant Barrow: "Tbe sureties, endorsers, and guarantors severally waive presentment for payment, protest and notice of protest and nonpayment of this note and suit to fix their liability and diligence in enforcing its payment, and agree that time of payment may be extended without notice to them and without affecting their liability."
All assignments of error based upon tbe introduction of parol testimony of tbe character noted are sustained. 6 Texas Jurisprudence, par. 151, p. 7S4, par. 154, p. 787, and the decisions cited in footnotes to sustain tbe test.
For tbe same reason, such testimony could not be given tbe effect to establish tbe defense of failure of consideration. It follows, therefore, that tbe parol agreement found by the jury constituted no defense to plaintiff's suit.
But tbe plaintiff introduced no evidence to sustain the allegations in its pleadings, to tbe effect that G. D. Lewis, the maker of tbe note, was a nonresident of the state, residing in the state of Colorado, or was insolvent.
Article 1987, Rev. Oiv. Statutes of 1925, reads: "Tbe assignor, indorser, guarantor and surety upon a contract, and tbe drawer of a bill which bas been accepted, may be sued without suing tbe maker, acceptor or other principal obligor, when tbe principal obligor resides beyond tbe limits of the State, or where be cannot be reached by the ordinary process of law, or when bis residence is unknown and cannot be ascertained by the use of reasonable diligence, or when be is dead, or actually or notoriously insolvent."
As a condition precedent to plaintiff's right to maintain the suit against tbe defendant, tbe burden was upon it to both plead and prove the facts already recited, which were alleged as a reason why tbe maker of tbe note was not made a party defendant to tbe suit. Whitaker v. Brooks (Tex. Civ. App.) 137 S. W. 921. And in tbe absence of any competent proof to sustain such allegations, tbe trial court erred in failing to abate tbe suit. Furthermore, that issue was not submitted to *he jury nor did plaintiff request its submission, and it therefore waived any right to relief based tbereon. Ormsby v. Ratcliffe, supra.
Accordingly, the judgment of tbe trial court decreeing that plaintiff was not entitled to recover on the merits of its suit, which was apparently predicated upon tbe verdict of the jury, must be set aside and vacated, and tbe judgment which tbe trial court should have rendered will be here entered, abating and dismissing the suit. All costs incurred in tbe trial court and in this court will be adjudged against appellant, plaintiff in tbe court below.
On Motion for Rehearing.
The provisions of tbe Negotiable Instruments Act, fixing tbe obligations of indorsers (Rev. St. 1925, art. 5936), which are so 'earnestly stressed by appellant, do not purport to change tbe common-law rule of practice to tbe effect that the principals who have executed such instruments are necessary parties defendants in suits to enforce their collection. Article 1987 of tbe Revised Civil Statutes of 1925 was enacted as an exception to that common-law rule. Furthermore, Article 19S6, Rev. Statutes 1925, reads: "The acceptor of a bill of exchange, or a principal obligor in a contract, may be sued either alone or jointly with any other party who may be liable thereon; but no judgment shall be rendered against a party not primarily liable on such bill or other contract, unless judgment be also rendered against such acceptor or other principal obligor, except where the plaintiff may discontinue his suit against such principal obligor as hereinafter provided."
See, also, 6 Tex. Jur., pages 89,6-899, paragraphs 234 and 235.
Accordingly, the motion for rehearing is overruled.