Citizens' Cotton Oil Co. v. Elliott
| Decision Date | 09 April 1927 |
| Docket Number | (No. 9944.) |
| Citation | 294 S.W. 654 |
| Parties | CITIZENS' COTTON OIL CO. v. ELLIOTT et al. |
| Court | Texas Court of Appeals |
Suit by J. T. Elliott and others against the Citizens' Cotton Oil Company. Judgment for plaintiffs, and defendant brings error, and plaintiffs file cross-assignment of error. Reversed and remanded.
K. R. Craig, of Dallas, for plaintiff in error.
Muse & Muse, of Dallas, for defendants in error.
This suit is on a promissory note brought by J. T. Elliott Lumber Company, a partnership, against Citizens' Cotton Oil Company, a corporation of Lancaster, Dallas county, Tex.
Defendant, in a sworn plea, admitted the execution of the note, but alleged that at the time of its execution there was written on the back, and a part thereof, a memorandum showing the note was entitled to a credit of $273.45, which had been materially altered by plaintiffs' agent without the knowledge or consent of the defendant, rendering the note unenforceable.
In an amended petition, plaintiffs alleged the facts in regard to the origin of their indebtedness against defendant and the circumstances under which and by whom the credit of $273.45 was placed on the note, and further alleged that they were not in any way obligated to pay defendant the Neilon account, that constituted the credit; that the same was placed on the note without their knowledge or consent; that they never knew the memorandum had been indorsed upon the note, or that defendant claimed the note was entitled to such credit, until just before the institution of the suit. They alleged further that Neilon, who was their local manager at Lancaster, was not authorized to allow as a credit on the note his personal indebtedness to defendant, and that by reason of the fraudulent conduct of defendant and Neilon the account of plaintiffs against defendant was improperly shown to have been settled, notwithstanding there remained a balance due thereon of $273.45, the amount of the unauthorized credit. In harmony with this view, plaintiffs prayed judgment for the balance due on the note after deducting all credits, including $273.45, the Neilon account, and sought judgment, as upon open account, for $273.45, the unpaid balance of their account against defendant, and for general relief.
Defendant answered to the effect that, with full knowledge of the act of their agent, plaintiffs ratified the same by instituting suit on the note in its altered form, and that after thus making the act of the agent their own, they could not restore the note to its original form and maintain the suit; that the note was rendered void by the alteration and was altogether unenforceable. Defendant further pleaded the statute of limitation of two years to the claim of plaintiffs on open account, being the amount alleged to have been illegally and improperly settled by the unauthorized credit.
At the conclusion of the evidence the court instructed a verdict for plaintiff for the amount due upon the note, less the credit of the Neilon account, and judgment was entered accordingly, from which defendant appeals. Plaintiffs have also filed a cross-assignment of error.
The facts are these: Plaintiffs were engaged in the retail lumber business at several places. J. T. Elliott was general manager and J. W. Neilon was local manager at Lancaster. The defendant cotton oil company had its plant at Lancaster, and W. G. McCurdy was president and manager. On March 1, 1922, defendant was indebted to the plaintiff on open account in the sum of $1,000.45, and Neilon, plaintiffs' local manager, was personally indebted to the defendant on open account in the sum of $273.45. In this situation, Mr. McCurdy, for defendant, executed and delivered to Neilon, plaintiffs' local agent, the note in suit, for the amount due plaintiffs, but before delivery indorsed on the back of the note the following memorandum:
McCurdy having failed to place revenue stamps on the note, Neilon stamped the same and pasted the stamps so as to obscure the credit memorandum above mentioned. Plaintiffs were in no way liable for the payment of the account held by defendant against Neilon, nor did they know or consent to the entry of the credit on the note. Neither Elliott nor McCurdy knew that Neilon had effaced the credit until about April 20, 1923. Elliott ascertained a short time prior to April 20th that defendant was claiming a credit on the note for the amount of the Neilon account. On that date, he, in company with his new manager at Lancaster, Mr. Buxton, visited the office of Mr. McCurdy in regard to the matter. Mr. McCurdy insisted that the credit had been placed on the note and should be shown, but as it was not apparent, Neilon was called into the conference and admitted that the credit was on the note, but that he had obscured the same by pasting over the memorandum revenue stamps, which on examination was found to be true. Neilon's excuse was that he was not able to take care of the account and this was his method of killing the credit. Plaintiffs immediately placed the note in the hands of attorneys for collection, and this suit ensued.
Defendant contends as grounds for reversal that the court erred in refusing to direct a verdict in its favor because the note was altered in a material respect, that plaintiffs, with full knowledge of the unauthorized act of their agent, ratified the same by filing suit on the note as altered, and that the note could not thereafter be restored to its original form and recovery obtained thereon.
We find no fault with the doctrine insisted upon by appellant; that is, that a material alteration will vitiate a written instrument and that the rule applies with equal force to the alteration of a memorandum intended to form a part of the instrument. This case, however, is not in our opinion within the rule for the reason that the credit memorandum alleged to have been altered never became a part of the instrument.
Plaintiffs were not liable for the Neilon account, were not consulted in regard to the matter, did not agree to the credit...
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