Cargill, Inc. v. Continental Grain Co.

• Decision Date: 12 February 1965
• Docket Number: No. 16607,16607
• Citation: 388 S.W.2d 247
• Parties: CARGILL, INC., Appellant, v. CONTINENTAL GRAIN COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 247

388 S.W.2d 247

CARGILL, INC., Appellant, v. CONTINENTAL GRAIN COMPANY, Appellee.

No. 16607.

Court of Civil Appeals of Texas, Fort Worth.

Feb. 12, 1965.

Rehearing Denied March 19, 1965.

Gayle E. Oler and Jay S. Fichtner, Dallas, for appellant.

Allison, Mann & Allison, and Earl R. Allison, Levelland, for appellee.

LANGDON, Justice.

This is an interpleader suit by Continental Grain Company against C. G. Israel, Cargill, Inc., and Ruben Leach, d/b/a Fargo Grain Company.

Leach purchased some grain from Cargill. Continental purchased the grain from Leach and in payment therefor gave Leach its draft, dated March 1, 1962, payable to Fargo Grain Co., in the sum of $4,344.63. Israel hauled the grain from the point of purchase to Houston, Texas, where Continental took title to it. Leach did not pay Cargill for the grain or Israel for hauling it.

Because of the money owed them for grain and hauling respectively, Cargill and Israel, each acting independently of the other, made intensive efforts to locate Leach. Cargill found him first on March 14, 1962, and sought to induce him to endorse the Continental draft to it in payment for the grain. Leach advised that the draft had been lost. At Cargill's suggestion Leach called and confirmed in writing a request to Continental that it stop payment on the lost draft and issue a replacement draft payable to Cargill or to him and Cargill, whichever would better suit its bookkeeping requirements. Continental agreed to do so. Israel had no notice of these oral and written instructions. Continental acknowledged the instructions to stop payment but did not immediately issue a replacement draft.

In the meantime, on March 30, 1962, before Continental issued the replacement draft, Israel finally located Leach. On this occasion Leach had the original Continental draft, on which he had stopped payment, in his possession. The draft was complete and regular on its face and unconditional. Leach endorsed the draft and tendered it to Israel in payment of the hauling debt. Having no notice of the stop payment or other instructions relating to the draft, Israel endorsed it and requested his son to cash it at his bank. Israel, upon receiving the cash, took the sum of $660.00 due him and paid the balance in cash to Leach. $The draft was later returned by the bank because its payment had been stopped. At this point Continental, which had not yet issued the second draft, and being confronted with adverse claims to the money by Israel and Cargill, impleaded all parties and paid the monies owed by it into the registry of the court. Both Leach and Continental were dismissed from the case. leaving Cargill and Israel in the controversy for the money.

The trial was to a jury. It found that the original draft was negotiated from Leach to Israel within a reasonable time considering the nature of the instrument and the usage in the trade and that Israel in taking the draft had not acted in bad faith. Based upon the verdict, judgment was entered by which Continental was awarded its attorney's fees in the sum of $350.00 and discharged. The balance of the money, amounting to $3,994.63, was awarded to Israel. Cargill took nothing. We affirm.

By ten points of error appellant contends the court erred in (1) granting Israel judgment for the total amount of the draft; (2) failing to render judgment for Cargill for all funds in excess of $660.00; (3) submitting special issue No. 2 and in failing to give a proper definition of 'bad faith' in connection therewith; (4) refusing to submit its requested issue inquiring whether Leach had instructed Continental to pay Cargill the money it owed him; (5) failing to submit requested issues in support of its contention that Israel was an accommodation endorser rather than a holder in due course; (6 and 7) failing to submit issues to the effect that cash grain drafts are ordinarily presented for payment substantially less than thirty days, and as to Israel's experience in buying and selling grain; (8) refusing to submit requested instruction on reasonable time for negotiating draft in connection with Special Issue No. 1; (9) rendering judgment on the verdict because there was no evidence, or (10) insufficient evidence to support the jury's answers to the issues submitted.

Article 5935, Sec. 52, Vernon's Ann.Civ.St., of the Negotiable Instruments Act, defines a holder in due course as one who has taken the instrument under the following conditions: (1) that it is complete and regular upon its face; (2) that he became the holder before it was overdue and without notice that it had been previously dishonored, if such was the fact; (3) that he took it in good faith and for value; (4) that at the time it was negotiated to him he had no notice of any infirmity in the instrument or defect in the title of the person negotiating it.

Under Section 56 of Art. 5935, supra, 'To constitute notice of an infirmity in the instrument or defect in the title of the person negotiating the same, the person to whom it is negotiated must have had actual knowledge of the infirmity or defect, or knowledge of such facts that his action in taking the instrument amounted to bad faith.'

It is undisputed that the draft in question was complete and regular upon its face and unconditional. It was not overdue. The jury found it was negotiated within a reasonable time. W. L. Holder, executive assistant to Continental Grain Co., testified that quite a few of the Continental drafts were delayed thirty days or more. There was nothing unusual in one coming back after thirty days. His Company had some outstanding at the time which were several months old. This was all right with his Company as long as there were no changes in the drafts on presentment. He estimated 5% or more, perhaps 10%, of their drafts would be outstanding a...