Case No. 1389 | Tex. | Mar 30, 1883
Lead Opinion
The court ruled correctly in holding that, under the averments in the pleadings,' the appellees could jointly sue for the recovery of the amount due to them, and for the foreclosure of the lien on the real estate described in the petition.
At common law such a transfer of a part only of the note to two distinct persons, and a reservation of the balance of the instrument to the original payee, could not be recognized, and no action at law could' be maintained on such a title by any of the parties to it. Hawkins v. Cardy, 1 Ld. Raym., 360; Heilbut v. Nevil, 4 L. R., C. P., 358; Conover v. Earl, 26 Iowa, 169; Groves v. Ruby, 24 Ind., 418" court="Ind." date_filed="1865-05-15" href="https://app.midpage.ai/document/groves-v-ruby-7036898?utm_source=webapp" opinion_id="7036898">24 Ind., 418; Chalmers’ Dig. of the Law of Bills, Notes and Checks, art. 115, and cases there cited; Field v. The Mayor of N. Y., 2 Seld., 179; Hughes v. Keddell, 2 Bay, 324; Miller v. Bledsoe, 1 Scam., 530; Wait’s Actions and Defenses, vol. 1, 574.
With us there is, however, no distinction between legal and equitable rights as to the manner of their assertion, and under the operation of the very liberal rules as to the joinder of parties plaintiffs and of causes of action heretofore laid down by the court, the ruling of the district court on this point can be sustained, as justified by the previous practice of the court. Stachely v. Pierce, 28 Tex., 328" court="Tex." date_filed="1866-12-15" href="https://app.midpage.ai/document/stachely-v-peirce-4890259?utm_source=webapp" opinion_id="4890259">28 Tex., 328; Moore v. Minerva, 17 Tex., 20" court="Tex." date_filed="1856-07-01" href="https://app.midpage.ai/document/moore-v-minerva-4888587?utm_source=webapp" opinion_id="4888587">17 Tex., 20; Faulk v. Faulk, 23 Tex., 653" court="Tex." date_filed="1859-07-01" href="https://app.midpage.ai/document/faulk-v-faulk-4889541?utm_source=webapp" opinion_id="4889541">23 Tex., 653; Lane v. Squyres,.45 Tex., 383.
The action of the court, under all the facts of the case, in holding that on account of the death of the maker, and for other reasons, the plaintiffs were not required to give the six months’ notice
Let us now consider the nature and character of this partial transfer by Owens to the appellees of the note in question. What effect did it have upon the character of the instrument? Did it take away its negotiable qualities? The record discloses the fact that though the note and the deed of trust to secure it have a different date from that of the partial transfer from Owens to appellee, yet as a matter of fact they are of the same date, or at least constitute one transaction.
The record shows that the execution of the note, the agreement on the back of it, the deed of trust, and the articles of partnership between Barden, Owens and Shelton, and the execution of his notes by Owens to appellees, were all in fact contemporaneous. They are in law but one transaction, and all relate in part to the same matter, and must be considered as executed practically at the same time.
The partial transfer by Owens on the back of the note had the effect of making it (or a part of it) collateral security for his own notes of that date, which notes were given for an antecedent indebtedness of his to the appellees.
He at the same time became a guarantor for the prompt payment of the entire amount of the note, and also in the same instrument waived protest and notice.
The instrument on its face gave notice that it was secured by a deed of trust on land, in which deed it was provided that the land should not be sold even after the maturity of the note without six months’ notice of the intention to foreclose being given to the maker. The character of notice was also carefully provided for.
This partial transfer was prepared and written on the back of the note by the appellees either before or at the time of its execution. The evidence leads to the conclusion that it was, under their direction, written on the note before the signature of the maker, and it may have been, and likely was, signed by Owens before Barden himself signed the instrument. Be that as it may, before its final delivery it Avas all arranged and understood between Barden, Owens and the appellees what the body of the instrument should contain, and Avhat should be written on the reverse side of it over the signature of Owens; and one of the appellees was in advance agreed upon as trustee, before the note and deed of trust were signed.
There was an averment in the pleadings of appellees that Owens owned no part of the instrument after his partial transfer of it to the appellees. But the evidence failed to sustain the allegation.
The effect of this partial transfer was to split the title of the note into three separate and unequal parts. Two parts of it belonged separately to the appellees, the unpaid balance belonged to Owens. All this plainly appears from the contemporaneous stipulation of the parties on the face and the reverse of the note in question.
The title to the note ivas thus in the three, and Owens, according to the testimony of one at least of the appellees, and no doubt in accordance with the agreement and understanding of all of them, Avas to surrender the possession of the note and leave it in the hands of the appellees, they holding, in addition to their own interest, his interest also, as collateral security for the payment of his antecedent indebtedness to them, still unpaid and represented by his own promissory notes of equal date.
The result of this arrangement all agreed upon and understood by the parties, before the execution and delivery of the note, and evidenced by it; was, in our opinion, under the facts of the case as disclosed by the note and the collateral agreement of the parties on the back of the note, taken both together, to effectually strip the instrument of its negotiable characteristics. The relation, too, in Avhich the parties then stood to each other, the unusual provision of the deed of trust, which Avas a part of the same transaction, and drawn under the direction of appellees, that no foreclosure should be had without six months’ notice to the maker, given in a particular way, and necessary even after the maturity of the paper; the fact that the note was delivered by Givens, to be used and held as collateral security for his antecedent debts; the fact that the property in it was before its execution parceled out between Owens and the íavo firms, Avho were his creditors; that the remaining balance Owens ivas also to allow them to hold as additional collateral security for his debt due to them, and that he was to waive protest and notice and guaranty the entire note, would strongly indicate that it Avas not transferred in the due course of trade, and was in fact out of the usual and ordinary course of business of parties dealing with commercial paper, even if that fact did not appear, as it does, from the face and back of the instrument. The reason of this is well stated by Hr. Edwards in the third and last edition of his valuable Avork on Bills and Notes, vol. 1, section 396, marg. p. 279. After stating that the right of property in a note (e. g., Owens’ right of property in the note of Barden) necessarily implies the right to sell
“ The reason is,” says Mr. Edwards, “ that no one can recover on a note unless he shows a title to the instrument, and he cannot deduce his title through an indorsement which is not made in compliance with the established custom of merchants, and this custom of merchants does not allow the contract to be apportioned so as to subject the parties liable thereon to separate and distinct actions.” ■“ That custom directs that the indorsement should be made in writing on the note or bill appointing the contents to be paid to some third person, but does not recognize a partial indorsement. The language of the books is that an indorsement transfers the property of the note or bill to the indorsee. What does less than that is not strictly an indorsement, and hence, says Mr. Justice Bayley, an indorsement cannot be made for the transfer of less than the full sum that appears to be due upon the bill or note.” Story on Prom. Notes, secs. 23, 24; Roberts v. Hall, 7 Conn., 212; Wait’s Actions and Defenses, vol. 1, pp. 612, 613; also pp. 585, 586, 590, 591; Parsons on Notes and Bills, vol. 2, ch. 6, sec. 3, pp. 146-149.
In Douglas v. Wilkeson, 6 Wend., 640, Chief Justice Savage, Judge Marcy and others composing the court, a similar question was presented. In that case the note was for $2,500, and the holder (the payee) indorsed the same to the plaintiffs for $750, a part only of the contents of the note. The question was, whether that was a transfer in the due and ordinary course of business. After discussing the question fully and ably, the court, speaking with reference to the contract created by this character of partial indorsement, say: “ When, therefore, the contract between the payee of a negotiable note and a third person is of such a character as to give the latter no rights, as against the maker, that contract is not an indorsement of the note within the custom of merchants.”
Chancellor Kent, 3 Com., p. 59, says: “ The bill cannot be indorsed for a part only of its contents, unless the residue has been extinguished.” In this case we have seen the appellees refused to credit the balance as paid. The law then applicable to non-negotiable instruments furnishes the rule for determining the respective rights of the parties in this transaction.
If the appellees knew, or by the use of ordinary diligence and inquiry of the proper sources from which it was reasonably certain or
This subject of notice was entirely a matter of fact to be ascertained from the evidence. The whole question on this subject was one for the jury to pass upon, after considering all the facts and circumstances surrounding the transaction.
The charge of the learned judge who tried the case was not entirely and in every respect satisfactory on this subject, and did not fully submit all these matters to the jury with a sufficient explanation of the law governing the case. It, however, in some respects, was not objectionable. Addison on Con., vol. 1, pp. 448-450. The articles of partnership between Owens, Barden and Shelton bearing the same date in fact as 'the other papers, should have been allowed to go to the jury, not only in relation to the appellants’ claim against Owens, but also as throwing light on the issues raised by the pleadings between appellants and appellees.
It was calculated to show how, and under what conditions, and for what consideration, Barden had executed the instrument in question.
Taken in connection with the fact that the appellees knew that Barden was to be a partner of Owens in his mercantile relations, and if they had commercial dealings with him in the future, they would deal with him in all likelihood in that capacity, these articles might to some extent at least assist the jury in arriving at the real truth of the matter. x
For the same reason we are of the opinion that the court erred in excluding from the consideration of the jury the papers mentioned in the appellants’ bills of exception as exhibits “ A,” “ B ” and “ 0.”
They were calculated, to some extent at least, to explain the circumstances surrounding all the parties when the note in question was made, and might be useful in enabling the jury to determine whether the appellees did not understand, or could not have learned, that the note in question was intended as a basis for future credit, and not to pay the old debts of Owens to appellees, long past due, and in which Barden had no interest, and in reference to which he was under no obligation, moral or legal, and of the existence of which, as may be inferred from Shelton’s evidence, he was kept in ignorance.
In cases of this character, where the maker of the instrument is dead, and his widow and administrator are ignorant of the true history of the transaction, resort must be had to the best legal testimony that the nature of the case will admit of, in the absence of positive proof. If direct and positive evidence cannot be obtained, circumstantial evidence, if it exist and is lawful testimony, can be resorted to.
In Wells v. Fairbanks, 5 Tex., 584, Judge Wheeler observes: “ Great latitude is justly allowed by the law to the reception of indirect and circumstantial evidence, the aid of which is constantly required to remedy the want of direct evidence. In the absence of direct evidence, that which conduces in any degree to establish a material fact alleged is in general admissible.”
Any fact may be submitted to a jury, provided it can be established by competent means, which affords any fair presumption or inference as to the question in dispute. 1 Starkie Ev., 57, 58. See also Chandler v. Meckling, 22 Tex., 36" court="Tex." date_filed="1858-07-01" href="https://app.midpage.ai/document/chandler-v-meckling-4889295?utm_source=webapp" opinion_id="4889295">22 Tex., 36; Cooper v. The State, 19 Tex., 457, 458.
What was said and done by the parties while the business was being arranged, and while the transaction was then depending et dum fervet opus, is admissible in evidence as part of the res gestae, and is considered as well calculated, in the absence of direct evidence, to shed light on the real character of the transaction. 1 Greenl. Ev., 113; Ahern v. Goodspeed, 72 N.Y., 108" court="NY" date_filed="1878-01-15" href="https://app.midpage.ai/document/ahern-v--goodspeed-3623099?utm_source=webapp" opinion_id="3623099">72 N. Y., 108.
The judgment is reversed and the cause remanded.
Reversed and remanded,
There was a motion for rehearing filed. In disposing of it the court delivered the following opinion:
Rehearing
On Rehearing.
There is only one ground taken in the motion for rehearing that will require any notice. To that attention will be very briefly called. 6
Before doing so, however, we will take advantage of this occasion to make an observation or two having no reference to the present motion, in addition to what has been said in the original opinion, in-relation to some points that are there considered.
Lest it might be supposed that the cases of Lindsay v. Price, 33 Tex., 282, and Frank v. Kaigler, 36 Tex., 305" court="Tex." date_filed="1872-07-01" href="https://app.midpage.ai/document/frank-v-kaigler-4891450?utm_source=webapp" opinion_id="4891450">36 Tex., 305, are overruled by
In the brief of appellants our attention was more than once called to these two cases, and it was urged that as the transfer of the instrument ivas in this case clearly partial, and out of the usual course of business, and contrary to mercantile usage, that the appellees failed to show such title as would be sufficient for- them to maintain their action upon the instrument in question.
We arrived at the conclusion, however, that there was a marked difference between the case at bar and the two cases above referred to, and, without intending to overrule these cases, held that the appellees could, under the facts of this case, undoubtedly maintain this suit in the form and manner in which it was brought. In arriving at this result, though the subject was considered, we did not attach any great importance to the use of the word “ assign ” in the second section of the act of 25th January, 1840 (Hart. Dig., art. 2521), for the reason that in Knight v. Holloman, 6 Tex., 162, this court had decided, after full and able arguments, in a carefully prepared opinion delivered by Justice Wheeler, that this word, as there used, was simply employed to denote the transfer of negotiable paper. Ho further scope or significance was given to it.
As our courts, however, constantly exercise in the same cause both legal and equitable powers, we held that this suit could be maintained, inasmuch as it had been held by high authority that such a qualified and partial transfer as the one in question, even of paper clearly negotiable, was not absolutely void, but gave the transferee a claim upon the note in the nature of a- lien. Byles on Bills, 6th ed., top page 233, marg. pages 171, 172. This, too, was really a suit to establish a rejected claim against the estate of a deceased person, and was also in effect a bill in equity for the foreclosure of a lien on real estate secured by a deed of trust, which deed, by reason of the death of the maker, and the refusal of the administrator to act, could only be enforced through the instrumentality of the district court; for all these reasons, as well as many others that could be given, we held that under the facts of this case the appellees had the right to maintain the suit. Smith v. Clopton, 4 Tex., 113; Ogden v. Slade, 1 Tex., 13" court="Tex." date_filed="1846-12-15" href="https://app.midpage.ai/document/ogden-v-slade-4886833?utm_source=webapp" opinion_id="4886833">1 Tex., 13; Spann v. Sterns, 18 Tex., 556" court="Tex." date_filed="1857-07-01" href="https://app.midpage.ai/document/spann-v-sterns-4888788?utm_source=webapp" opinion_id="4888788">18 Tex., 556; Payne v. Benham, 16 Tex., 314" court="Tex." date_filed="1856-07-01" href="https://app.midpage.ai/document/smith-v-strahan-4888528?utm_source=webapp" opinion_id="4888528">16 Tex., 314; Gibson v. Moore, 22 Tex., 611" court="Tex." date_filed="1858-07-01" href="https://app.midpage.ai/document/gibson-v-moore-4889402?utm_source=webapp" opinion_id="4889402">22 Tex., 611.
The authorities are full and satisfactory to the effect, that though the agreement or written instrument may have to some extent the form of a promissory note, and may use in its body the conventional
It is also well settled that any memorandum or agreement of the parties, written across the face or on the back of the instrument contemporaneously with its execution, and intended and understood by them to constitute a part of the contract, is a substantive part of such note, and limits and qualifies it in the same manner as if inserted in the body of the instrument itself, and, with it, constitutes a single contract. 1 Daniel Neg. Inst., 59, 60, 79, 149; Carlin v. Knealey, 12 M. & W., 139; Warrington v. Early, 2 Ellis & Bl., 763; Hartley v. Wilkinson, 4 M. & S., 25; Benedict v. Cowden, 49 N. Y., 402; Leeds v. Lancashire, 2 Camp., 205; Springfield Bank v. Merrick, 14 Hass., 322; Barnard v. Cushing, 4 Met., 230; Shaw v. Meth. Epis. Society, 8 Met., 223; Fletcher v. Blodgett, 16 Vt., 26" court="Vt." date_filed="1844-01-15" href="https://app.midpage.ai/document/fletcher-v-blodgett-6572808?utm_source=webapp" opinion_id="6572808">16 Vt., 26; Jones v. Fales, 4 Hass., 245; Johnson v. Heagan, 23 Me., 329; Briggs v. Lapham, 12 Met., 475; Smith v. Nightengale, 2 Stark., 375; Leading Cases on Bills and Notes (Redfield & Bigelow), pp. 8, 9, 194 et seq.; 2 Parsons on Notes and Bills, 539.
The effect of such a disposition of the contents of the note under consideration, as was provided for by the sti pulations on its face and on its back, all made at the same time and constituting one transaction, was to rob it of the character of negotiability Its contents were from the first apportioned and set apart by the maker and payee and transferees. It was divided into three distinct and unequal parts among three different owners. If this act did not destroy the commercial qualities of the instrument, might not the three owners of it again split it and parcel it out still further, and subdivide it into still smaller parts ?
Such an instrument, to borrow the forcible lariguage of Lord Denman, “ carries its death-wound apparent on it.” Goodman v. Harvey, 4 Adol. & Ellis, 870.
The only ground of the present motion to which it has been necessary to give attention, is that in which it is contended that the coupt was in error as to the facts contained in the transcript. The record has- been again examined, and the opinion is found to state the facts in accordance with the record.
Beyond this matter of a supposed mistake, or a misapprehension
Mo new authorities have been called to our notice, and we find nothing in it except the statement as to the supposed mistakes of the court as to the matters of fact that requires consideration.
The motion is refused.
Motion refused.
Judge Statton did not sit in this case.