Antrim v. McMurrey

• Decision Date: 06 April 1977
• Docket Number: No. 12520,12520
• Citation: 549 S.W.2d 463
• Parties: 21 UCC Rep.Serv. 1091 Richard ANTRIM, Appellant, v. Milton R. McMURREY et ux., Appellees.
• Court: Texas Court of Appeals

Page 463

549 S.W.2d 463

21 UCC Rep.Serv. 1091

Richard ANTRIM, Appellant, v. Milton R. McMURREY et ux., Appellees.

No. 12520.

Court of Civil Appeals of Texas, Austin.

April 6, 1977.

John T. Anderson, Graves, Dougherty, Hearon, Moody & Garwood, Austin, for appellant.

Gretchen E. Raatz, Sneed, Vine, Wilkerson, Selman & Perry, Austin, for appellees.

SHANNON, Justice.

Richard Antrim, appellant, filed suit on a promissory note in the sum of $11,654.56 signed by appellees, Milton R. McMurrey and wife, Katherine M. McMurrey. After trial to the court, the district court of Travis County entered judgment that Antrim take nothing. We will reverse that judgment.

Antrim's trial petition averred that appellees, for a valuable consideration, executed a promissory note in the sum of $11,654.56, and that appellees refused to pay the note. By way of defense, appellees alleged that although they signed the note, the instrument was incomplete at the time of signature. Appellees pleaded that the note ". . . was never intended to become an instrument and was incomplete in all necessary respects and no person was granted the authority to fill in any blanks or attempt to effect completion of such paper." Appellees alleged further that Antrim's ". . . filling in of the blanks in an attempt to make the paper into a promissory note constitutes an alteration which is both fraudulent and material and discharges this Defendant (appellees) from any purported obligations." Appellees also pleaded that, "No consideration was given by Plaintiff for the signature of Defendant upon such incomplete paper."

The execution of the promissory note arose from a construction contract by the terms of which Construction 2000, Inc., agreed to build a house for Antrim. Appellee Milton R. McMurrey was president of and majority stockholder in Construction 2000, Inc. The contract price for the construction project was $122,134. Antrim's testimony was that near the time of the completion of the house McMurrey told Antrim that the corporation was failing financially and that both the corporation and Antrim probably would suffer losses. At that time appellees' bank refused to extend any more credit to the corporation and, in addition, a number of subcontractors on the job had not been paid by the corporation. McMurrey estimated the cost of completion of the house would be about $11,654.56 over the contract price. Antrim testified that McMurrey proposed that a promissory note be executed for that sum payable to Antrim. Milton R. McMurrey signed the note as president of the corporation, and McMurrey and his wife also signed the note individually as co-makers.

The parties used a printed note form, and the note was signed without advice of counsel. At the time appellees signed the note the blanks for the date, the amount of interest, and duration of the note, were not completed. Later, Antrim filled in the blank spaces and showed the note, as altered, to appellees. Appellees refused to initial the changes which had been made in the note.

Antrim took over the construction project and completed the job. Antrim settled with the subcontractors for about forty percent of the sums which they claimed due.

Upon request the court filed findings of fact and conclusions of law. The court found, among other things, that Antrim did not have authority to complete the note. The court found further that Antrim induced appellees to sign the note by representing to them that he would pay all subcontractors in full, and that appellees would not have signed the note but for Antrim's representation that all subcontractors would be paid in full. The court concluded that the consideration for the execution of the note failed; that the note was an incomplete instrument pursuant to Tex. Bus. & Comm. Code Ann. § 3.115; that the rules with respect to material alterations were applicable pursuant to Tex. Bus. & Comm. Code Ann. § 3.407; and that the alterations made by Antrim were fraudulent and material and that appellees were discharged from liability pursuant to Tex. Bus. & Comm. Code Ann. § 3.407 (1968).

Antrim argues that the court erred in concluding that the consideration for the execution of the promissory note failed because there was no pleading to support such conclusion. It is true that appellees pleaded there was no consideration for the note, and not that there was a failure of consideration. Nevertheless, Antrim, without objection, permitted the introduction of evidence bearing upon failure of consideration. The issue of failure of consideration, then, was tried by consent. Tex.R.Civ.P. 67.

Antrim claims, and we agree, that the court erred in concluding that the consideration for the execution of the promissory note failed because there is no evidence to support that conclusion.

Appellees maintain that the consideration for their execution of the promissory note was Antrim's representation that he would pay all of the subcontractors in full. The district court found, as a fact, that Antrim made such a representation.

The evidence pertaining to the supposed representation is as follows. On direct examination McMurrey was asked if it were agreed that the sum of $11,654.56 would be used by Antrim to pay the subcontractors. His response was that he did not recall ". . . an agreement one way or another." In describing his purpose in meeting with Antrim, McMurrey testified ". . . I was there for the purpose of signing something to get, you know, everybody kind of off of my back, to get the subcontractors paid off and to get Mr....