Appellant Amarillo National Bank (Bank) appeals from an order of the trial court denying its motion for summary judgment and granting summary judgment in favor of appellee Delia Dilday, a/k/a D.E. Wren (Wren). In the judgment, Wren was awarded the sum of $30,772.70 in damages for wrongful pаyment by the Bank of a *40 certificate of deposit. We affirm the judgment of the trial court.
Wren instituted this suit against the Bank based upon the Bank’s payment to Wren’s son, Tony Dewey, of the proceeds from a certificate of deposit issued by the Bank and numbered 49042. The record establishes that the certificate in question was purchased with funds belonging to Wren. It was in the face amount of $22,-000, was dated September 29, 1981, and provided for interest at the rate of 15.95% per annum. It provided that it was “PAYABLE TO THE ORDER OF D.E. Wren or Tony Dewey AFTER 30 mos. ON THE RETURN OF THIS CERTIFICATE PROPERLY ENDORSED.” In two places it recited that it was non-negotiable and also had a stamped notation that it was nontransferable.
The undisputed facts are that on February 3, 1982 and July 15, 1982, Dewey executed two promissory notes to the Bank in the principal sums of $2,405.04 and $1,998.90, respectively. In conjunction with the $2,405.04 note, Dewey pledged certificate of deposit 49929 in the amount of $2,000 which was payable to D.E. Wren or Tony Dewey in the same manner as certificate 49042.
On December 20, 1982, Dewey appeared at the Bank and told the installment loan teller that he wanted to pay his loans with the proceeds of the two certificates of deposit. The Bank had possession of the $2,000 certificate under the pledge agreement. Dewey did not have possession of the $22,000 certificate. The Bank permitted him to sign an unsworn statement and indemnity agreement which recited that the $22,000 certificate had “been lost or mislaid and cannot be found.” Both certificates of deposit were cashed and a cashier’s check in the amount of $24,670.87 payable to Wren or Dewey was issued by the Bank. The check was endorsed by Dewey, cashed by the Bank and $2,633.79 deducted to pay the balance due on Dewey’s notes. The remainder of $22,037.08 was paid to Dewey in cash. Later that day, Wren contacted the Bank and, upon learning that the $22,-000 certificate had been cashed, notified the Bank that the certificate was and had been in her possession and Dewey’s statement was incorrect. The instant suit then ensued.
In attacking the judgment, the Bank raises two points of error, in both of which it asserts that it was entitled as a matter of law to pay the proceeds to Dewey. Since both points involve the same question, the Bank briefs and argues them together and we will likewise consider them together.
Initially, we note that Wren has filed a motion to strike the Bank’s brief and response to Wren’s motion for summary judgment. However, upon oral argument at submission of this cause, Wren agreed tо the overruling of the motion. Accordingly, we do so and proceed to consider the merits of the appeal.
The threshold question to be determined is whether the certificate in question was a negotiable instrument. If an instrument is negotiable аnd payable to alternative payees, Tex.Bus. & Com.Code Ann. § 3.116 (Vernon 1968) * makes possession of the instrument a prerequisite for it to be negotiated, discharged or enforced. The alternative to such possession is a proceeding to obtain a court order pursuant to § 3.804. Obviously, in cashing the certificate, the Bank did not fulfill the requirements of either section.
In contending that the certificate is a negotiable instrument, Wren points out that it is payable to “order” as required by § 3.104(a)(4) and meets all' other requirements of § 3.104. Wren argues that the notations that the certificate was non-negotiable and non-transferrable did not destroy its nature as a negotiable instrument. In support of that position, she relies upon the footnote statement in
First Nat’l Bank in Grand Prairie v. Lone Star Life Ins. Co.,
*41 Whether a certificate of deposit is negotiable or non-negotiable is not determined by labeling the writing “non-negotiable” but by its terms. To be negotiable it must be payable to “order” or “bearer;” otherwise, it is non-negоtiable. § 3.104(a).
However, in that case the question before the Court was whether the certificate of deposit there considered was an “instrument” within the purview of § 9.105 (which deals with security transactions) rather than its negotiability. Thus, the statement was dicta. Moreover, it was made without citation of authority.
There is a paucity of direct authority on the question presented. However, we note § 1.102(c) which provides:
The effect of provisions of this title may be varied by agreement, except as otherwise provided in this title ... but the parties may by agreement dеtermine the standards by which the performance of such obligations is to be measured if such standards are not manifestly unreasonable.
We find nothing in the Code which would forbid an agreement between the parties as to the non-negotiability of an instrument, nor do we find that such an agreement, if clearly and distinctly shown on the instrument itself, would be manifestly unreasonable. We also find persuasive the language contained in Tex.Bus. & Com.Code Ann. § 3.119 comment 5 (Tex.UCC) (Vernon 1968) which supports the proposition that certain language can destroy the negotiability of an otherwise negotiable instrument.
In support of its proposition that the certificate was not negotiable, the Bank cites the pre-Code decision of
Burke v. Ward,
We find all of these authorities persuasive. We also note the well-established principle in Texas that the rules of construсtion governing contracts are applicable to bills and notes, and a bill or note must be construed as a whole so as to give effect, if possible, to every part of such instrument.
Greiner v. Rogers,
We conclude that an agreement between the parties that a сertificate of deposit be non-negotiable, when clearly and unambiguously shown on the instrument, is valid and effective. The certificate of deposit here in question is clearly marked in two places as non-negotiable. We hold this sufficient tо make the certificate, by its terms, non-negotiable. Therefore, neither the Code provisions nor the footnote statement from
First Nat’l Bank in Grand Prairie v. Lone Star Life Ins. Co.,
*42 The Bank argues that by specific provision of Tex.Rev.Civ.Stat.Ann. art. 342-706 (Vernon 1973) it was entitled to pay either Wren or Dewey. The statute provides:
A bank may pay a present or future deposit, payable to or on the order of ... any one of two or more persons ... to any one of such joint depositors (before or after the death of the other joint depositor or depositors).... [Emphasis added.]
Although the term “joint depositors” is not separately expressly defined in the article, the Bank ingeniously reasons that the use of the word “such” as a modifier to the phrase “joint depositors” expresses the conсept that the term “joint depositor” has, by implication, been earlier defined in the article. It argues that, of necessity, the reference must be to “any one of two or more persons” to which a “present or future deposit” may be рaid. Therefore, it continues, since the certificate was payable to Wren or Dewey, they were joint depositors and the Bank would be protected by paying either one. We disagree with the Bank’s conclusion.
Initially, even assuming, arguendo, that the Bank’s interpretation of the statute is correct, this record does not support the conclusion that Wren and Dewey were “joint depositors.” On its face, the certificate states that Wren or Dewey deposited the funds with the Bank. This disjunctive reference to the depositors contradicts their classification as joint depositors. The undisputed summary judgment evidence establishes that the deposit was in fact made by Wren. That being the case, the Bank’s argument is fatally flawed in its inсeption and the statute would not per se authorize the payment to Dewey. Furthermore, this certificate expressly recites that it is payable “upon the return of this certificate properly endorsed.” This additional agreement as to possession and endorsement would, under the facts here existent, make article 342-706 inapplicable to this case.
The Bank asserts that the provision for return and endorsement was for its protection and could be unilaterally waived by it. In support of this proposition, it cites a statement in
First Nat’l Bank in Grand Prairie v. Lone Star Life Ins. Co.,
As additional authority, the Bank cites
Benavides v. Laredo National Bank,
The provision for presenting the passbook on depositing or withdrawing money was one, we think, which the bank could waive, at least in the absence of any statute giving it a contrary effect, being evidently a provision for its benefit. Even that made “the possession of the pass book the test of ownership.” The father had possession of the passbook when he drew out the money. [Emphasis added.]
Id. at 374. Since the individual actually had possession оf the passbook in question, any holding or implication that a possesso-ry requirement was for the unilateral benefit of the bank and could be waived by it was clearly dicta and unnecessary to the resolution of the case, and would not cоnstitute reliable authority supporting the Bank’s proposition here advanced. We also note with interest the Court’s statement that such a phrase made the actual *43 possession of the passbook “the test of ownership.”
Applying the rules of construction set out in Greiner v. Rogers and Weaver v. Weaver, we think a much more reasonable construction of the instrument is that the rеquirement of possession and endorsement of the certificate was a reasonable one, for the protection of both parties, and one upon which both parties could rely. Indeed, adherence to its provisions would have prevented this lawsuit from arising. This construction gives effect to a provision of the instrument, and we think it effectuates the intent of the parties. To hold otherwise would lead to an inequitable result.
By retaining possession, Wren had done all that could rеasonably be expected of her. The Bank, on the other hand, could easily have protected itself by insisting upon delivery of possession or a waiver and release by both Wren and Dewey. When it chose to release the proceeds upon an indemnity agreement executed by Dewey alone, it did so at its peril.
In summary, the Bank’s points of error are overruled and the judgment of the trial court affirmed.
Notes
All references to section numbers are to Tex. Bus. & Com.Code Ann. (Vernon 1968).