Court Opinion

ID: 3902293
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:32:16.658219+00
Date Added: 2024-06-11T07:42:22.468781
License: Public Domain

This suit was originally submitted to the writer for decision, and on my investigation the opinion which follows was prepared. The majority of the court declined to approve my views, and have prepared the controlling opinion in the case, hence the opinion as originally prepared by me will be hereinafter submitted as a dissenting opinion to that of the majority.
This suit was brought by Triplett Bros., a partnership, against C. D. Collins, W. L. Bailey, E. L. Walker, and the Citizens' National Bank of Lubbock, Tex., to recover upon an alleged bill of exchange. Pending the trial the plaintiffs dismissed their suits as to Collins, and trial was had between the other named parties before the court without a jury, and the court rendered judgment in favor of the plaintiffs against Bailey and Walker, jointly and severally, and also rendered judgment that the plaintiffs take nothing by their suit against the bank. From this judgment the defendant Bailey has appealed to this court.
Omitting the formal parts of the plaintiffs' petition, the plaintiffs' cause of action is stated as follows:
"That heretofore, to wit, on the 1st day of January, 1925, defendant E. L. Walker was buying cotton in the town of Farwell for one W. L. Bailey, all of which cotton was being bought by said Walker and Bailey for account of defendant Citizens' National Bank of Lubbock, and in buying said cotton the said B. L. Walker made and put in circulation the following instrument of writing:
"Bank No. _____.
"Lubbock, Texas. 1 — 1 — 1925.
"Buyer's No. _____.
"Pay to order of Citizens' National Bank of Lubbock $415.00 four hundred fifteen dollars, account _____ bales cotton, tickets attached, this day sold to _____, which cotton he holds for account Citizens' National Bank of Lubbock, and subject to their order. Description below. Value received and charge to account of C. D. Collins, seller. To W. L. Bailey, Lubbock, Texas.
Yard No.    Weight.    Price.       Amount.
   758         493
   768         472      19 1/4
   760         427                Ticket held."
   744         345
   750         424

— with indorsement on the end of the same in front, "Accepted 1 — 1, 1925, E. L. Walker, Buyer. `Bill of exchange,'" which instrument of writing is similar to many like checks of bills of exchange that said persons had issued and had been issued and circulated in the town of Texico, N.M., which is a town just over in the state of New Mexico from the town of Farwell, in Parmer county, Tex., the two towns virtually being one town, and that many others of said cotton checks on the same parties and signed by the same parties, except a difference in the sellers, have been circulated in said town of Texico, N.M., and Farwell, Tex., and all of said checks have been paid, and by so circulating said bills and paying same the defendants have caused the plaintiff to believe that all of said checks would be paid.
2. The plaintiff further says that it is a merchant; that it bought said check or bill for a good and valuable consideration in due course of his business, with no knowledge whatever of any defense to the same, and for the same he paid a good and valuable consideration, to wit, $415.49; that he had at the time he bought the same no knowledge of any defense to the same, and at this time has no knowledge of a defense to the same, and further says that the defendants, by the issuance of said bill or check, and putting the same in circulation, became bound in law to pay the face value of the same to the holder thereof in due course of business, with interest from the date of presentation.
Plaintiffs pray for judgment for their debt, interest, and costs of court, and for such other *Page 918 
relief as the court may find it entitled to receive, and for which it may pray.
Defendants Bailey, Walker, and the bank answered by general demurrer, general denial, and sworn plea of failure of consideration, setting out the facts which were alleged to show want of consideration for the issuance of same to Collins, and also pleaded that the bill of exchange was never accepted by Walker in writing, and was never indorsed by the bank, the payee named in it.
There being no statement of facts, the following statement of the findings of fact as made by the court is here given:
"(1) During the months of December, 1924, and January, 1925, and for some time prior thereto, the plaintiffs were in the mercantile business at Texico, N.M., which adjoins Farwell, Tex., so that both constitute practically one town, and that during the time mentioned, there was no bank at either place, but the banking facilities were at Clovis, N.M., some ten miles away, and the plaintiffs had, for a long time, habitually received wheat, grain, cotton and other checks, obtained the money on them from the Clovis bank and paid it out to the party presenting such check or checks, all of which was fairly well known in the community.
"(2) That during the time specifically mentioned defendants Bailey and Walker were purchasing cotton in such vicinity, defendant Walker being stationed at Texico, with authority to purchase cotton and issue bills of exchange in payment for such commodity, acting under an arrangement whereby he was to receive one-half of the profits, and he had authority to issue or accept such bills of exchange either in his own name or that of Bailey. That the form of said bills of exchange were furnished by the bank, and had been used by defendants in the vicinity of Farwell for about a year, and plaintiffs had cashed a number of said bills prior to this time. That the bank had paid all bills presented to it, either in person or through a clearing house up to this time. That the Citizens' National Bank of Lubbock, Tex., never indorsed any of such checks or drafts or marked same paid, but charged interest thereon to acceptor from time of payment until settlement. That such bills were made out and delivered to seller of the cotton by the buyer, and the seller usually signed his name on said draft, but the bank paid such bills whether signed by the seller or not, and Bailey raised no objection to such payments. That Bailey had made arrangements with the bank to take up and carry bills of exchange given in payment for cotton purchased by or for him on his individual and partnership accounts.
"(3) That on the 29th, 30th, and 31st days of December, 1924, Walker purchased five bales of cotton, being yard tickets Nos. 744, 750, 760, 768, and 758, and three other bales, from the following farmers, to wit, A. D. White, B. O. Smart, Carl Zock, C. L. Johnson, and David Robinson, for which he gave bills of exchange in all respects similar, except for dates and amounts, to the one in question.
"(4) That the said E. L. Walker purchased said cotton and received yard tickets therefor, and placed them in his cotton book, which he kept in his room at the hotel in the town of Farwell, and that some time about noon on January 1, 1925, the cotton tickets were taken from his cotton book without his knowledge or consent, and that one C. D. Collins then came to the said Walker with said cotton tickets, having substituted the name of C. D. Collins in lieu of the names of the five farmers mentioned above, and told Walker that he was selling part of this cotton for some one else, and that the remainder of it was his, and to make the check all in one. That the said C. D. Collins sold, or purported to sell, the five bales of cotton for which the bill in controversy was given, as evidenced by the foregoing yard numbers, to the said Walker, and the said Walker issued the bill sued on in payment therefor, believing that the said C. D. Collins was the owner and holder of said cotton and yard tickets, and had the right to sell the same, and, being ignorant of the fact that the said C. D. Collins was not the owner and holder of said cotton or tickets, which he would not have bought or paid for in the manner stated, if he had known the truth, and when Walker found said tickets were gone, he notified all the banks at Lubbock, Clovis, and Muleshoe.
"(5) (The court in this section finds the bill of exchange as set out above.)
"(6) That all the blanks in the bill of exchange were filled out and signed in E. L. Walker's own handwriting, with the exception of the signature of the said C. D. Collins, which was placed thereon when transferred to the plaintiffs. That said bill of exchange was not otherwise signed, indorsed, guaranteed, or accepted by any of the defendants hereto at any time, and that said instrument was not indorsed by the Citizens' National Bank of Lubbock, Tex., but shows indorsement of the Olovis, N.M., National Bank, dated January 2, 1925.
"(7) That very shortly after the bill was issued Collins presented same to plaintiffs, with a request for its face in money, but was told that it would have to be procured by them from Clovis, and replied that was all right, that he needed the money by Saturday, and would get it then. That Collins was unknown to the plaintiffs and to the defendants. That on the afternoon of the following day, January 3d, between 3 and 5 p. m., Collins returned, and secured the full amount of the bill from plaintiffs, who had no notice of the facts recited in paragraph 4 hereof, except the information obtained from the face of the instrument, and that the person presenting same claimed to be the owner thereof.
"(8) That on the night of January 1, 1925, Walker discovered his duplication of purchase of such cotton, and on January 3d, early in the morning, wired Bailey at Lubbock to stop payment on said bill. That thereupon Bailey notified the bank to stop payment thereon. That about the 12th day of January Walker came to see the plaintiffs, and asked if they had cashed the check, and was so informed.
"(9) That Collins was unknown to plaintiffs and defendants, and has not been seen since January 3, 1925, by any of the parties to this suit."
Upon these facts and findings, the trial court concluded that the plaintiffs were the owners of the bill in regular course of business, for a valuable consideration without notice of any defect therein, and with notice of no facts which, in law, put them on inquiry as to its consideration or legality, and, second, *Page 919 
that the act of Walker in uttering such instrument in his behalf and of Bailey was a binding obligation of both defendants; that Walker 
Bailey were partners; that it was not the intent of either of such defendants, or the bank, that such instrument must be "indorsed" by such bank, and that the same was, in fact and law, negotiable without the signature of the paying bank, and the bank was simply the agent of Walker and Bailey to pay the same; and that it was not legally necessary for the Citizens' National Bank to indorse such instrument at all.
The question presented by appellant's assignments and propositions is that the fact that the bill of exchange, made payable to the Lubbock bank, was not indorsed by that bank in writing, and was not accepted by Bailey in writing, as to such defendants, the bill was not a negotiable instrument, and hence it was subject to Bailey's defense of want of consideration.
Section 30, Negotiable Instruments Act (article 5934, Rev.Stats. 1925), provides:
"An instrument is negotiated when it is transferred from one person to another in such manner as to constitute the transferee the holder thereof. If payable to bearer it is negotiated by delivery; if payable to order it is negotiated by the indorsement of the holder completed by delivery."
Section 31 of the same article provides:
"The indorsement must be written on the instrument itself or upon a paper attached thereto. The signature of the indorser, without additional words, is a sufficient indorsement."
There is no ambiguity in the language of these two sections, and the Legislature in passing the act must be presumed to have intended what it said when it required a written indorsement before constituting the instrument a negotiable instrument.
The following cases are cited as supporting this interpretation: Karsner v. Cooper, 195 Ky. 8, 241 S.W. 346, 25 A.L.R. 159; German-American Nat. Bank v. Lewis, 9 Ala. App. 352, 63 So. 741; Ingraham v. England (Tex.Civ.App.) 258 S.W. 278; Jones v. Bell, 201 Ala. 336,77 So. 998; Sanderson v. Clark, 33 Idaho, 359, 194 P. 472; Miners' Bank v. St. Louis Co. (Mo.App.) 178 S.W. 211; Hill v. Hart, 23 N.M. 226,176 P. 710. That Bailey's defense was admissible, see, also, 8 C.J. p. 389.
No one can be charged on a negotiable instrument, unless his name appears on it or as a party to it in some relation. Shore v. Carl (Tex.Civ.App.) 284, S.W. 289, not yet [officially] published; Adams v. First Nat. Bank (Tex.Civ.App.) 178 S.W. 993; Moore v. Belt (Tex.Civ.App.)206 S.W. 225.
I, therefore, hold that, the bill of exchange not having been indorsed in writing, it did not have the attribute of negotiability as to Bailey, and, he not having indorsed it, he had the right to present his defense of fraud on the part of Collins in the procuring of same.
While plaintiffs' suit is not entirely a declaration on the bill of exchange, and there is a rule that, if this court, considering the whole case, concludes that the judgment was right, the case will not be reversed because the trial court gave an erroneous reason for his entering the judgment (Walker v. Garland [Tex.Com.App.] 235 S.W. 1078; American Nat. Bank v. Garland [Tex.Com.App.] 235 S.W. 562), this court might affirm such judgment notwithstanding the error of his holding as to the negotiability of the bill sued on, but for the fact that the pleading of the plaintiffs does not authorize the judgment. It will be seen by reference to the plaintiffs' petition that it was totally deficient in pleading estoppel by conduct on the part of Bailey and Walker.