Court Opinion

ID: 3937525
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:01:54.077538+00
Date Added: 2024-06-11T14:16:54.392031
License: Public Domain

On Motion for Rehearing.
Appellees insist that appellant bank is not a holder in due course of the notes sued upon because of the provisions of the Negotiable Instruments Act, article 5934, R.C.S., which provides that the "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 order it is negotiated by the indorsement of the holder completed by delivery." Section 30.
"The indorsement must be written on the instrument itself or upon a paper attached thereto." Article 5934, § 31.
Appellee says the provisions of the statute were not complied with, and contends, further, that the trial court found that the note in controversy was not indorsed by the payee, and that there was no indorsement on any paper attached to the note, and found that, therefore, the appellant is not a holder in due course for value.
There is no statement of facts before us. The case was tried to a jury, and the jury did not return a verdict finding any such facts as are contended for. The trial court made no such finding in the judgment before us, and, of course, was not called upon to make any findings of fact, or conclusions of law, this being a case tried to a jury.
Looking into the transcript, where we are directed by appellees (pp. 69 to 71), we find what is called a "bill of exceptions," and it recites that "there was also offered and admitted into evidence (a) contract between the City National Bank of Bowie, Texas (original payee) and the First National Bank of Bowie, Texas, dated October 6, 1930, whereby all the assets of the said City National Bank were transferred to plaintiff herein, said First National Bank; the note set out above was not endorsed by the City National Bank of Bowie, Texas, nor was there any endorsement on any paper attached to said note, and therefore the Court holds that the plaintiff is not a holder in due course for value. Etc."
The foregoing is treated by all parties as a bill of exceptions, and is signed by all parties and approved by the trial court. This is the part of the record from which appellees take their said findings by the trial court. Nowhere else are there any such findings by the trial court.
We do not believe that the so-called bill of exceptions is a statement of facts.
If it is a bill of exceptions, it cannot take the place of a statement of facts. This is fundamental.
If it is a statement of facts, then it shows upon its face that on October 6, 1930, the original payee made a written contract with the appellant whereby it transferred all of its assets (which would, of necessity, include the note in question) to appellant, and such an instrument in writing would be, as a matter of law, a substantial compliance with the terms of the Negotiable Instruments Act requiring that the payee's "indorsement must be written on the instrument itself or upon *Page 123 
a paper attached thereto." Such would be in contemplation of the statute, "a paper attached thereto," and the finding of the trial court that there was no indorsement on any paper attached to the note is made in the face of undisputed facts, and would not be permitted to stand.
The court submitted without objection upon the part of any party to the suit Issue No. 11, as follows: "Special Issue No. 11. On October 6, 1930, when the directors of the City National Bank executed the instrument to the First National Bank under which plaintiff now claims as assignee of the notes, did the plaintiff, First National Bank, have knowledge that it had been agreed between G. B. Bell, J. H. Bell and the City National Bank that the deed and the ten vendor's lien notes, dated August 16, 1924, should be of no force and effect unless such land should be sold to one Richardson (if such an agreement was made between G. B. Bell, J. H. Bell and the City National Bank)? Answer yes or no. Answer: No."
This issue assumes, without objection of any party, that on October 6, 1930, the proper officers of the original payee executed an instrument in writing assigning the note in question to the First National Bank, and requires the jury to find whether or not the assignee of the note had knowledge of an oral agreement had between the Bells and the original payee to the effect that the note would not have any force or effect unless certain lands were thereafter sold to one Richardson. The jury answered that the assignee had no such knowledge.
This issue admits that a written assignment of the note was made by the original payee to the appellant.
The note necessarily accompanied the written assignment, and this would be a compliance with the provisions of the Negotiable Instruments Act.
The motion for a rehearing is overruled.
                      On Second Motion for Rehearing.
Appellees strenuously contend that appellant bank is not a holder in due course of the note in controversy, and that therefore the note is subject to any defense that could be raised while in the hands of the original payee. If we admit, for the sake of argument, that this proposition is true, we are, nevertheless, still confronted with the question: Has a defense to the note been established? We do not think so. J. H. Bell undertakes to be released from the note on the theory that the payee bank obligated itself to procure G. B. Bell's signature to the note as a maker, but that this was not done, and he is, by reason of such breach of contract, released from all liability as a surety; he having pleaded that it was understood that he would only sign as a surety. But the pleadings and undisputed record show that J. H. Bell is entitled to no such defense. J. H. Bell pleads, under oath, that the obligation is solely that of G. B. Bell; that he was requested to sign the note as a surety; that he delivered the note to the payee bank with the understanding and agreement that G. B. Bell would sign as a maker; that the note was in renewal of a former note owing by G. B. Bell. G. B. Bell expressly adopted, under oath, the pleadings of J. H. Bell and alleged, under oath, that the allegations in J. H. Bell's petition "are true and correct in substance and in fact."
It is undisputed that J. H. Bell signed the note and that G. B. Bell signed it but qualified his indorsement as that of a surety. J. H. Bell swears that the obligation is G. B. Bell's, and G. B. Bell swears that these allegations are true and correct. When G. B. Bell pleads, under oath, that he is the principal obligor, and in effect alleges that he should have signed the note as maker and should not have attempted to qualify his indorsement, wherein has J. H. Bell been injured?
J. H. Bell's sworn complaint is that he is only a surety and G. B. Bell should have been the maker. But G. B. Bell admits that he is the maker and the principal primarily obligated. This is not a case where a person who should have signed did not do so, and could not be held. This is a case where a person whose signature was to be obtained actually signed the note, but in so doing attempted to qualify his indorsement. But when suit is brought on the note he promptly answers, under oath, and acknowledges that he either erroneously or fraudulently qualified his indorsement. In good conscience, G. B. Bell cannot thus take advantage of his own wrong, which he admits under oath. Having admitted his liability under oath, J. H. Bell can make no complaint because G. B. Bell thus acknowledges that the debt is his.
Appellees cite Beard v. Austin (Tex. Civ. App.) 297 S.W. 786; Williams v. Jones, 122 Tex. 61, 52 S.W.2d 256; and Fowler v. Hays (Tex. Civ. App.)1 S.W.2d 1097. *Page 124 
But these cases are easily distinguished from the case before us, because in each of these cases the promised signature was never procured and the persons whose signatures were to be procured were not in court pleading, under oath, that they did sign the notes, but that they qualified their indorsements when they should not have done so.
This cause presents a situation unlike any case that has been furnished us by either appealing party and unlike any that we have found by private investigation. The question before us is: Under the sworn pleadings of the parties, who executed the note in question, and, under the admitted facts, can G. B. Bell take advantage of his own wrong? If he cannot, then can J. H. Bell, who cannot show that he has been injured by reason of G. B. Bell's admissions, complain that he, as an indorser, should be released? We do not believe that either Bell can deny liability under such circumstances.
The second motion for rehearing is overruled.