Court Opinion

ID: 9646547
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:02:32.106703+00
Date Added: 2024-06-11T18:11:39.227105
License: Public Domain

On Second Motion for Rehearing

Appellee has filed second motion for rehearing, contending that § 3.105(a)(8) is the exception which prevents this note from being unconditional because the instrument “is limited to payment out of the entire assets of a partnership, unincorporated association, trust or estate by or on behalf of which the instrument is issued.” He argues the property securing payment of this note is the entire asset of the trust property, and therefore, the terms of the note are unconditional.
We disagree. We read Section 3.105(a)(8) to mean that a note may be negotiable even though payment is limited to the assets of a particular partnership or trust estate if the entire assets of the partnership or trust estate, both presently owned and subsequently acquired, are subject to execution for its payment. This view is supported by the authorities cited by appellee. Kitzer v. Kitzer, 20 Ill.App.3d 54, 312 N.E.2d 699 (1974); Charles Nelson Co. v. Morton, 106 Cal.App. 144, 288 P. 845, 850-851 (1930).
Under this interpretation, the note in question does not qualify for several reasons. First, even if the evidence should establish that the property described in the deed of trust is now the only asset of the venture, or was at the time the note was signed, no property subsequently acquired by the venture, whether by sale of this property or otherwise, could be subjected to payment of the debt, according to the terms of the note. The joint venturers are entirely free to amend their agreement and acquire other property without subjecting it to execution, whether or not the property described is sufficient to satisfy the debt.
Second, the note does not show on its face that the property described in the deed of trust is the only property owned by the venture. That fact could only be established by extrinsic proof, which would not affect negotiability, since the unconditional character of the obligation must be determined from the terms of the note itself. See Tex.Bus. & Comm.Code Ann. § 3.105 *452(Tex. UCC), Purposes of Changes, (Vernon 1968). See generally Continental National Bank of Fort Worth v. Conner, 147 Tex. 218, 214 S.W.2d 928, 931 (1948).
Appellee’s second motion for rehearing is overruled.