Court Opinion

ID: 3914785
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:42:50.294888+00
Date Added: 2024-06-11T13:52:16.450370
License: Public Domain

This much of the able brief filed here by counsel for defendant in error is adopted as my dissenting opinion:
"If the only amount due on the notes at the time suit was filed was the first installment of interest due July 1, 1929, of $210.00, then clearly the amount in dispute was less than the jurisdictional amount of the district court, and the learned trial judge was correct in sustaining the defendant's demurrer. If plaintiff had the right to mature the whole indebtedness upon default of the first payment of interest, then the court erred, so that the sole and only question before this court is, `Did plaintiff have the right to mature the whole or his portion of the indebtedness upon defendant's failure to pay the first installment of interest?'
"Plaintiff can only have the right to mature the entire series by virtue of the acceleration clause in the notes, which must be construed and enforced as any other provision in a contract. Notes and other instruments sometime provide for maturity of the whole indebtedness upon failure to pay principal or interest when due, and the failure to pay such principal or interest when due ipso facto matures the whole indebtedness. Notes and other instruments frequently provide for the maturity of the whole indebtedness at the option of the holders, or either of them. This clause permits one of several holders to elect to mature the whole indebtedness upon default by the maker, but in no case, so far as defendant has been able to determine, has the acceleration clause used in the notes under consideration allowed one of two payees to mature the whole indebtedness without the consent, election, and acquiescence of the other payee.
"The Supreme Court of Texas in the case of Bomar v. West, 87 Tex. 299,28 S.W. 519, 520, had occasion to construe the clause used in the notes in the instant suit, and, in the opinion of that court, there is no such right in one of several payees of a note providing for acceleration at the option of the holder. In the reported case, plaintiff sued in trespass to try title, claiming title through a sale made under a deed of trust given to secure the payment of five notes payable to D. T. Bomar. The deed of trust provided: `In default of the payment of said notes, or either of them, then a foreclosure of said deed of trust should be had at the instance of said D. T. Bomar, or the legal holder of said notes.' The first note of the series was transferred to the West Publishing Company, and the others to one Callahan. Upon default in the payment of the first note, the trustee, at the request of the publishing company, sold the land. The court held that the trustee did not pass title by his sale. In other words, since the publishing company was not the holder of all the notes, or the holders of the other notes did not join in the request, there was no right in the trustee, or the publishing company, to mature the whole indebtedness by virtue of the clause in the deed of trust. Judge Gaines, speaking for the Supreme Court, said in part:
"`We are of opinion that the sale by the trustee did not pass title to the land. The limitation upon the power of the trustee to *Page 366 
sell upon default in the payment of either of the notes at maturity is that he shall act upon the request of "the holder of the notes." The literal meaning of this language is that any person who was the lawful holder of all the notes at the time default was made in the payment of either of them should have the right to demand of the trustee that he make the sale. It may be that it should be construed to mean that the joint demand of all the holders of the notes would be sufficient to authorize the trustee to execute the trust upon default in the payment of either. But we are of opinion that it does not mean that, in case of a transfer of the several notes to different holders, any one of them has the right to demand a sale without the consent of the others. * * * The deed in trust not having provided that a holder of any one of the notes should have the right to demand a sale, we conclude that the trustee acted without authority, and that his sale passed no title.'
"Plaintiff attempts to distinguish the above case, because it was a sale under a deed of trust in which strict compliance with all the terms and provisions is necessary. Nevertheless the words used in the deed of trust are of the same import as those used in the notes under consideration, and their construction and meaning should be the same whether used in notes, or a deed of trust.
"Further answering plaintiff's attempt to distinguish the above case, Judge Fly, speaking for the court of Civil Appeals at San Antonio, in the case of Parker v. Mazur, 13 S.W.2d 174, said: `A court of equity must scan very closely the enforcement' of an acceleration clause in a note. The construction contended for by plaintiff would be making a new contract for the parties by adding after the words `at the option of the holder,' the words `or either of them,' which latter provision is frequently found in notes.
"Plaintiff also pleaded that the notes were given for partnership property and that Perez had authorized him to act in all matters in handling the assets undisposed of, referring to the dissolution agreement attached to the petition.
"Paragraph X of the agreement gave each one the right to use the other's name in collecting accounts, or disposing of other assets as per the agreement, but the notes in question had already been disposed of in Paragraph VI of the agreement, whereby, as pleaded by defendant, plaintiff was given a 60% interest in the notes and Perez a 40% interest therein. If either partner had the right to mature the whole indebtedness prior to the dissolution not only without the consent of the other but against his wishes, such right was lost when the partnership was dissolved, and particularly by Paragraph VI of the agreement whereby their rights in the notes were determined and they became thenceforth mere joint holders thereof as individuals in the separate proportions so fixed.
"It appears, then, that the honorable district court was correct in sustaining defendant's general demurrer, thereby holding that plaintiff had no right to mature the whole indebtedness; nor do the cases cited by plaintiff lead to any different conclusion."
I think the judgment should have been affirmed.