174 S.W. 682 | Tex. App. | 1914
Lead Opinion
Appellant, Jones, answered by general and special demurrers, general and special denial, pleas of estoppel, and by cross-action, seeking judgment upon the $1,532.10, and praying for foreclosure of the deed of trust given by appellee to the railroad company, alleging that said note was indorsed and transferred to him prior to its maturity; that he took the same in good faith without any notice or any defense which plaintiff had or may have had thereto, paying a valuable consideration therefor in due course of trade, and praying for judgment for his debt and foreclosure.
The jury returned a verdict in favor of the plaintiff and against the appellant, Jones, as to the cancellation of the note and deed of trust, and against the defendant, Jones, on his cross-action. Judgment was rendered accordingly.
Appellant requested a peremptory instruction and several special charges, but, by reason of the view we take of the case, it will not be necessary for us to consider the assignments in detail.
The note for $1,532.10 upon which appellant sought to recover by his cross-action was held by him as collateral security to the above-mentioned note for $28,000, which is as follows:
"$28,000. Dalhart, Texas, Sept. 1, 1910.
"One year after date Enid, Ochiltree Western Railway Company promises to pay to the order of F. R. Dennis, at the First National Bank of Dalhart, Texas, twenty-eight thousand dollars, for value received, with interest at the rate of 10 per cent. per annum from date. Having deposited with said F. R. Dennis as collateral security for the payments hereof the following notes: [Here follows a list of notes for various amounts, signed by the subscribers to stock, among them appears the $1,532.10 note in controversy] — which said company hereby gives said F. R. Dennis or the legal holder of said notes, authority to collect any or all of said notes, as they mature, holding the money for the said notes collected until the maturity of this note, and also to sell all or any part thereof on the maturity of this note or any time thereafter or before in the event of said securities depreciating in value, at public or private sale, at their discretion, without advertising the same, or giving said company any notice, and to apply so much of the proceeds thereof to the payment of this note as may be necessary to pay the same, with all interest due thereon, and also to the payment of all expenses attending the sale of said collateral security, and in case the proceeds of the sale of the said notes shall not cover the principal, interest, and expenses, said company promises to pay the deficiency forthwith after such sale.
"Enid, Ochiltree Western Railroad Co.
"By A. E. Weist, Jr., Vice President.
The note bears the following indorsement: "Without recourse. F. R. Dennis."
There is shown in the record the following stipulation signed by the attorneys, omitting the formal parts:
"In the above cause it is agreed * * * that said railroad company was a Texas corporation, and that said railroad company did not procure the consent of the Railroad Commission of the state of Texas to the execution and issuance by said railroad company of note for $28,000, dated September 1, 1910, due one year after its date payable to F. R. Dennis, signed by said railroad company; neither did said railroad company procure the consent of said Railroad Commission to the execution or issuance by said railroad company of security or liens upon its property to secure the payment of said note."
*684Vernon's Sayles' Civil Statutes, art.
6717 , provides:
"Among other things, the power and authority of issuing or executing bonds, or other evidences of debt, and all kinds of stock and shares thereof, and the execution of all liens and mortgages by railroad corporations in this state are special privileges and franchises, the right of supervision, regulation, restriction, and control of which has always been, is now, and shall continue to be vested in the state government, to be exercised according to the provisions of this and other laws."
Article 6727, Id., is:
"Every certificate * * * and every bond and other evidence of debt operating as a lien upon the property of such railroad company, which shall be made, issued or sold without a compliance with this chapter, shall be void."
Articles 6724 and 6725 prescribe the formalities under which evidences of debt by railroad companies shall be issued, requiring that they shall be presented to the Railroad Commission with a sworn statement in writing, signed by the president, showing the amount of stock, outstanding bonds, etc.; providing that no evidence of indebtedness shall issue without the approval of the Railroad Commission and their registration by the secretary of state.
It is clear that the note copied above, by its provisions (and by reason of the fact that appellee's note, together with other collateral paper, was delivered to appellant, together with the $28,000 note), creates in favor of the holder a pledgee's lien upon all of said collateral. The $28,000 note, not having been issued in compliance with the requirements of the above-cited statutes, is, by the express provisions of article 6727, void ab initio.
The doctrine that a negotiable instrument, issued in contravention of a statute, expressly declaring it to be void, is subject to all defenses in the hands of one who otherwise would be a bona fide holder for value, is sustained by the great weight of authority. Gilder v. Hearne,
The original note being absolutely void, appellant, as the holder of the collateral notes, was not entitled to recover against the several makers thereof. Colebrook on Collateral Securities, pp. 172-174, 177.
The invalidity of the principal debt destroys the claim of the lender upon the collateral securities held for its payment. Albert v. Savings Bank of Baltimore,
We conclude, therefore, that appellant was not entitled to recover. That portion of the judgment appealed from which decreed the cancellation of the note for $1,532.10, and the deed of trust, must be set aside because of a want of necessary parties. We express no opinion upon the questions of fraud and failure of consideration.
The judgment is in all other respects affirmed.
Reformed and affirmed.
HENDRICKS, J., not sitting.
Addendum
HENDRICKS, J., not sitting.
Addendum
Under the provisions of rule 62A (149 S.W. x) for the Courts of Civil Appeals, we therefore affirm the judgment of the trial, court in so far as it denies appellant the right to recover upon the note, and the judgment is in all things else reversed and remanded. Life Association of America v. Goode,
Affirmed in part and reversed and remanded in part.
HENDRICKS, J., not sitting.