Lloyd v. Lawrence, 72-2398. Summary Calendar.
Decision Date | 18 January 1973 |
Docket Number | No. 72-2398. Summary Calendar.,72-2398. Summary Calendar. |
Citation | 472 F.2d 313 |
Parties | W. R. LLOYD, Jr., and Margene West Lloyd, Plaintiffs-Appellees, v. Charles H. LAWRENCE, Jr., Defendant-Appellant. |
Court | U.S. Court of Appeals — Fifth Circuit |
Robert J. King, Jess Hall, Houston, Tex., for defendant-appellant.
Tom Alexander, Donald B. McFall, Houston, Tex., for plaintiffs-appellees.
Before THORNBERRY, COLEMAN and INGRAHAM, Circuit Judges.
This is a diversity case under Article 3 of the Uniform Commercial Code as adopted in Texas, V.T.C.A., Bus. & C. Code Ch. 3. The facts in this suit on two series of notes are undisputed. Pursuant to a plan of arrangement defendant executed the two series of notes payable respectively to the order of Mr. and Mrs. Lloyd. The notes recited that defendant waived presentation, demand, notice and protest and agreed that if any one note of the series had not been satisfied within fifteen days after its maturity, the holder could advance the maturity of the remaining notes of the series. Defendant had failed to satisfy certain notes of each series and plaintiffs brought this action under the acceleration provisions to collect with interest and attorney's fees the balance due on the series of notes.
Plaintiffs' complaint, with photocopies of both series of notes attached, recited in part as follows:
Plaintiffs, however, failed to allege that they were the present holders of these admittedly negotiable instruments. Moreover, they did not verify the photocopies or introduce proof of possession of the instruments.
Defendant failed to capitalize on these omissions and answered by entry of a denial. In answer to plaintiffs' request for admission pursuant to Rule 36, F.R. Civ.P., defendant acknowledged the genuineness of his signature on the notes in question and that certain of the notes had not been paid as they became due.
In the face of defendant's answer to the request for admissions, plaintiffs moved for summary judgment pursuant to Rule 56, F.R.C.P. The district court denied the summary judgment when defendant opposed the motion by ambiguously asserting his entitlement to an equitable set-off of the claim.
Discovery continued with the taking of defendant's deposition, whereupon the plaintiffs renewed their motion for summary judgment. Defendant again asserted a vague claim for set-off, but without filing controverting affidavits. The district court, granting the motion, held:
Substituting counsel on appeal, defendant for the first time contested the propriety of summary judgment on three grounds: (1) Insufficiency of the pleadings pertaining to plaintiffs' entitlement to sue on the notes—i. e., their lack of pleading that the plaintiffs were the present holders of the instruments; (2) the insufficiency of summary proof under Texas law asserted to be applicable to the case; and (3) that the defendant had indeed made a triable issue of fact out of the contention that a set-off was applicable.
Defendant's latter two contentions are of little merit. The district court correctly concluded that no genuine issue of fact as to defendant's entitlement to a set-off had been made. Defendant's claims under Texas summary judgment practice are likewise ineffectual as the sufficiency of a complaint or the adequacy of proof for summary judgment under Rules 8 and 56, F.R.C. P., respectively, are determined by recourse to federal law. Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). But whether the notice pleadings have stated a cause of action actionable under state law is to be determined under Erie.
Defendant is correct, however, in noting that review of summary judgment requires our engaging in a twofold analysis—first, whether the parties have raised a genuine issue of fact requiring trial and, second, whether the prevailing party was entitled to judgment as a matter of law. Rule 56(c) F. R.C.P. so states:
". . . The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law."
Poller v. Columbia Broadcasting System, Inc., 368 U.S. 464, 82 S.Ct. 486, 7 L.Ed. 2d 458 (1962); Moore's Federal Practice, ¶ 56.27(1).
Suits to enforce negotiable instruments are among the most suitable classes of cases for summary judgment. North Denver Bank v. Freeby, 285 F. Supp. 74 (N.D.Tex., 1967), affirmed 394 F.2d 149 (5th Cir., 1968); Moore's Federal Practice ¶ 56.15. Under the UCC as adopted in Texas, the elements of proof necessary to recover on a negotiable instrument are straightforward. 9 Tex.Jur.2d, Rev., Bills and Notes §§ 326-365. All these elements are found in plaintiffs' complaint and the record on summary judgment, except for proof that plaintiffs, as holders of the instruments, were entitled to bring this action. Such proof is essential under §§ 3.301, 3.307(b) and 3.603 of the Code.1 Its absence is fatal to plaintiffs' claim for summary judgment. Cf. United States v. Mullins, 344 F.2d 128 (4th Cir., 1965). In this respect the case at bar is substantially similar to Talcott v. Allahabad Bank, Inc., 444 F.2d 451 (5th Cir., 1971), where in holding a factual issue on possession had been presented we said:
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