Barton v. Farmers' State Bank of Bertram

• Decision Date: 07 May 1924
• Docket Number: (No. 6743.)
• Citation: 263 S.W. 1093
• Parties: BARTON v. FARMERS' STATE BANK OF BERTRAM et al.
• Court: Texas Court of Appeals

263 S.W. 1093

BARTON v. FARMERS' STATE BANK OF BERTRAM et al.

(No. 6743.)

Court of Civil Appeals of Texas. Austin.

May 7, 1924.

Rehearing Denied June 11, 1924.

Appeal from District Court, Burnet County; J. H. McLean, Judge.

Action by the Farmers' State Bank of Bertram against Lee R. Barton and another. Judgment for plaintiff against defendant named, and he appeals. Affirmed.

White, Wilcox, Graves & Taylor, of Austin, for appellant.

Hammond, Christian & Hammond, of Burnet, for appellee Farmers' State Bank.

W. H. Nunn, of Georgetown, for appellee Hutto.

BLAIR, J.

This suit was instituted by appellee bank, seeking to recover on a note for the sum of $5,000, executed by appellant, dated November 29, 1921, and made payable to appellee Farmers' State Bank of Bertram, Tex., on demand. Appellant, Barton, filed an original answer and a cross-action, making appellee Hutto a party defendant, and later filed his second amended original answer and cross-action, on which he went to trial. Appellee Hutto specially excepted to appellant Barton's cross-action, on the ground of misjoinder of parties and causes of action. Appellee bank also specially excepted to appellant Barton's answer and cross-action, on the ground of misjoinder of parties and causes of action, and that defendant's cross-action "shows on its face that, should said Hutto be made a party defendant herein, other parties defendant will necessarily have to be made in this cause, whereby the trial of said cause will be delayed to the injury of, and without fault on the part of, plaintiff herein; the said J. T. Hutto not being a necessary party thereto." The court sustained the special exceptions of both appellee bank and Hutto, to which appellant excepted. It thereupon instructed the jury to return a verdict for appellee bank on the note, and accordingly rendered judgment, to which appellant excepted.

The cause having been decided on the exceptions to appellant's pleading, and the appeal being predicated thereon, we will set forth, in substance, the allegations of the answer and cross-action.

This pleading alleges, in substance, that the note sued on is the joint and several obligation of J. T. Hutto, R. A. McCann, and appellant; that prior to its execution these three were interested and directors in a joint-stock company organized to prospect for oil; that they agreed to finance this enterprise; that pursuant to such agreement they borrowed money from various named banks, including appellee bank; that the notes evidencing these loans were signed by these three parties, except in the case of notes evidencing money borrowed from appellee bank, which, in each instance, were signed alone by appellant, Barton, because the said Hutto and McCann were during such times directors of and the managing officers of appellee bank and were its president and cashier, respectively, and deemed it "unadvisable" to sign the notes to appellee bank; that it was agreed between them that Barton alone would sign the notes, but that Hutto and McCann should and would be jointly and severally liable on the said notes, including the one sued on, with Barton; all of which facts were alleged to have been known by the appellee bank, and that the appellee bank was a party to all of said agreements and transactions; that Hutto and McCann became jointly and severally liable with appellant on said notes herein sued on; that appellee bank was entitled to recover judgment against Hutto and appellant jointly on said note, McCann being insolvent. It was pleaded, in the alternative, that appellant, Barton, was entitled to recover against Hutto for any excess of over one-half of the amount of the note in suit which appellant might be compelled to pay by reason of this suit, and appellant was entitled to a judgment therefor against Hutto. It was further alleged, in the alternative, that, if Hutto and McCann did not become obligated to pay the note in suit, then it is alleged that the money was borrowed from appellee bank for the joint use and benefit of said Hutto, McCann, and appellant and in pursuance of said agreement, and that the proceeds were used to promote their joint oil enterprise, at the instance and request of Hutto and McCann, who agreed to become jointly and severally liable with appellant for such indebtedness, and Hutto, because of the insolvency of McCann, was liable to Barton for any sum the latter might pay on said indebtedness in excess of one-half the note in suit, and for which amount Barton asked judgment against Hutto in the event judgment should be rendered, against him (Barton) in favor of appellee bank on the note in suit.

We are indebted to counsel for the able briefs filed and for the research they have made of apparently all the authorities pertinent to the issues here raised.

We have concluded that the trial court correctly sustained the special exceptions complained of by appellant to his answer and cross-action.

The following propositions of law seem to govern this appeal:

A person who does not sign a note, in any manner, cannot be held liable in a suit on the note. Negotiable Instruments Act, art. 6001—18, Supp. 1922, Vernon's Civil Stat.; Tex. L. & C. Co. v. Carroll, 63 Tex. 48; Shuey v. Adair, 18 Wash. 188, 51 Pac. 388, 39 L. R. A. 473, 63 Am. St. Rep. 879; Mineral B. Bank v. Elking L. Co., 173 Mo. App. 634, 158 S. W. 1066; 8 C. J. § 82, pp 61, 62; Adams v. Bank (Tex. Civ. App.) 178 S. W. 993. The reason for this rule is that each party who takes the note makes his contract with the party who appears on the face of the note to be bound for its payment, and no parol evidence is admissible to charge any person on a note unless his name is in some way disclosed upon the note itself. Daniels on Negotiable Instruments, § 303; T. L. & C. Co. v. Carroll, 63 Tex. 51; Sanger v. Warren, 91 Tex. 472, 44 S. W. 477, 66 Am. St. Rep. 913.

It is not violative of the policy of the law and procedure of this state, to avoid a multiplicity of suits, for a trial court to refuse to try all issues raised, where the pleadings do not show on their face that such issues grew out of and were a part of the same transaction upon which the suit is based.

A suit on a note against the maker is not the same transaction as a suit against the maker of the note and others, not signers, upon a collateral agreement that each should and would be bound jointly and severally for the payment of the note. The first suit is founded on the note, while the latter is founded on a breach of contract to pay. A plea by the parties not signing the note of the agreement in reference to its payment would be good in bar of a recovery on the note.

It was held by this court, in the case of Adams v. Bank, supra, that —

"While an undisclosed principal cannot be held as a party to a bill or note, he may nevertheless be held liable for the debt." Citing authorities.

A maker of a note who is sued thereon cannot, over the objection of the plaintiff, implead as a cross-defendant an undisclosed principal, or a co-obligor upon a collateral agreement, unless the plaintiff to the suit has a cause of action against said undisclosed principal or co-obligor to which the maker of the note in suit is entitled to be subrogated. In Adams v. Bank, supra, the court used the following language on this point:

"We think it is well settled in this state that one who, as between himself and a defendant in any suit, is the principal obligor may be impleaded by such defendant, and that such defendant may have judgment over against such primary obligor. Kings v. Parks, 26 Tex. Civ. App. 95, 63 S. W. 900; Haberzettle v. Dearing (Civ. App.) 80 S. W. 539; Key v. Fouts, 44 Tex. Civ. App. 424, 99 S. W. 448; Hume v. Perry (Civ. App.) 136 S. W. 595; Courchesne v. Fuel Co. (Civ. App.) 155 S. W. 684; Love v. Keowne, 58 Tex. 200; Underwriters v. Railway Co., 31 Tex. Civ. App. 104, 71 S. W. 419; Ins. Co. v. Houston (Civ. App.) 110 S. W. 973. In such case it is immaterial that the obligation of indemnity arises upon a collateral contract or by force of law. As we have seen in Ft. Worth v. Allen, supra, it is the policy of our law to permit such joinder, even in cases of tort, where one party is, as between the defendants, primarily liable. We are in full accord with the statement of the court in that case, wherein it is said: `It has always seemed to us just and right that the one who is ultimately liable should be made a party to the suit in which the amount of his liability is to be fixed.'"

A maker of a note who is sued thereon cannot, over the objection of the plaintiff, for the purpose of seeking contribution, implead by cross-action others who by a collateral agreement have become jointly and severally bound with him to pay the note, unless he shows he has paid the joint obligation, or more than his part thereof. A suit where one party seeks to recover against another a proportionate part of a joint indebtedness is one for contribution.

"Contribution has been defined to be the payment made by each or any of several holding a common interest of liability of his share in the loss suffered, or the money necessarily paid by one of the parties in behalf of the others." 13 C. J. 821.

"The doctrine of contribution rests on the principle that when the parties stand in æquali jure the law requires equality, and that one shall not be required to bear a common burden in case of the rest." 13 C. J. 821.

"The right of contribution is inchoate from the date of the creation of the relation between the...