Albritton Development Co. v. Glendon Investments, Inc.

• Decision Date: 03 October 1985
• Docket Number: No. 01-85-266-CV,01-85-266-CV
• Citation: 700 S.W.2d 244
• Parties: ALBRITTON DEVELOPMENT CO., Appellant, v. GLENDON INVESTMENTS, INC., et al, Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 244

700 S.W.2d 244

ALBRITTON DEVELOPMENT CO., Appellant, v. GLENDON INVESTMENTS, INC., et al, Appellees.

No. 01-85-266-CV.

Court of Appeals of Texas Houston (1st Dist.).

Oct. 3, 1985.

Rehearing Denied Oct. 31, 1985.

Eric R. Cromartie, Hughes & Luce, Dallas, for appellant.

Patricia Hair, Crain, Caton, James & Womble, Houston, for appellees.

Before JACK SMITH, DUGGAN and HOYT, JJ.

OPINION

HOYT, Justice.

This appeal arises from a summary judgment award of $38,153 arising out of a promissory note. In four points of error, appellant, Albritton Development Co., (ADC) challenges the trial court's refusal to consider parol evidence in a promissory note case when the contentions allege fraud in the inducement, failure of consideration, estoppel, and breach of contract. We affirm the judgment.

Contemporaneous with the purchase of a 42 1/2 acre tract of land, ADC signed a note in the amount of $317,914.68 payable to Glendon Investments, Inc. and Bubco Investments, appellees. The note was given to evidence payment of a real estate commission owed Glendon and Bubco by ADC on the 42 1/2 acre tract of land. The terms of the note provided for two interest installments payable on October 1, 1983, and October 1, 1984. The principal was to be paid in two equal installments on October 1, 1985, and October 1, 1986, with any accrued interest. After ADC failed to make the October 1, 1983, interest payment, Glendon and Bubco commenced suit for that installment.

ADC contends that the note was signed because Glendon was to provide potential purchasers and because no payment would be due until Glendon provided ADC with them. It further contends that these representations are admissible as an exception to the parol evidence rule and, once admitted, a fact question is raised which bars summary judgment for the appellees.

It is well established that written instruments, including promissory notes, cannot be changed by evidence of a prior or contemporaneous oral agreement that contravenes the terms of the written instrument. McPherson v. Johnson, 436 S.W.2d 930, 932 (Tex.Civ.App.--Amarillo 1968, writ ref'd n.r.e.). An exception to this rule exists where a holder in due course sues the maker. However, where there is only a showing of a representation to the maker, without a fraudulent scheme or trickery, a negotiable instrument which is clear and express in its terms cannot be varied by parol representations of a payee that a maker will not be liable. Town North Nat. Bank v. Broaddus, 569 S.W.2d 489, 491 (Tex.1978).

In the instant case, ADC's affidavit contains only an allegation that the payee represented that no payment would be due until a buyer was provided. The affidavit provides no details of a fraudulent scheme or trickery that accompanied the representation. Thus, ADC's response to the summary judgment evidence is insufficient to be an exception to the parol evidence rule. We overrule ADC's contention that there was fraud in the inducement.

ADC correctly sets forth the elements of equitable estoppel as adopted by the Supreme Court in Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929, 932 (1952). It contends that evidence of false promises forming the basis for estoppel is not barred by the parol evidence rule. To support this contention, ADC cites cases in which promises made subsequent to the signing of the agreement were held admissible. See Chicago Fire & Marine Ins. Co. v. Herring, 54 S.W.2d 236 (Tex.Civ.App.--Amarillo 1932, writ ref'd n.r.e.).

In this case, however, ADC's evidence shows that the promise was made prior to the signing of the note, and the note was legally sufficient. Parol evidence is not admissible when the promise is made prior to the signing of a note that is otherwise valid. See Prince v. Miller Brewing Co., 434 S.W.2d 232, 240 (Tex.Civ.App.--Houston [1st Dist.] 1968, writ ref'd n.r.e.); Joseph v. Mahoney Corporation, 367 S.W.2d 213, 215 (Tex.Civ.App.--Austin 1963, writ ref'd n.r.e.). ADC's equitable estoppel theory is overruled.

ADC next contends that there was a breach of contract, because the promise to provide a resale of the property was the consideration for the note and ADC is therefore permitted to introduce evidence to establish the consideration underlying the note. The promissory note stated in pertinent part: "This Note constitutes payment for brokerage services in connection...