Crum v. Lane Co.

• Decision Date: 25 March 1926
• Docket Number: (No. 328.)
• Parties: CRUM et al. v. LANE Co. et al.
• Court: Texas Court of Appeals

284 S.W. 980

CRUM et al. v. LANE Co. et al.

(No. 328.)

Court of Civil Appeals of Texas. Waco.

March 25, 1926.

Rehearing Denied May 27, 1926.

Appeal from District Court, McLennan County; Sam R. Scott, Judge.

Action by the Lane Company and others against Mrs. B. V. Crum and others to cancel certain trade acceptances. Judgment for plaintiffs and defendants appeal. Reversed and judgment rendered for the defendant named on her cross-action.

Spell, Naman & Penland, of Waco, for appellants.

Williamson & McDonnell, of Waco, for appellees.

BARCUS, J.

On June 24, 1924, W. E. Williams, under the name of Cascade Products Company, entered into a contract with the Lane Company, appellee, as follows:

                                                  "Aristocrat Line
                =================================================================================
                Date sold.  |                                                    |  Date billed
                6-24-24.    |       No.____. Salesman E. J. Ferguson.            |
                ------------|                                                    |
                Terms.      |       Ship to the Lane Company.                    |
                Reg.        |                                                    |
                ------------|                                                    |---------------
                Rating.     |       Town and state, Waco, Texas.                 |     Ledger
                            |                                                    |
                            |       Ship by M., K. & T.                          |
                ---------------------------------------------------------------------------------
                

"Special Agency Agreement.

"Company hereby grants the undersigned dealer the sales right for the Aristocrat Line, for the period of this agency agreement of one year from date hereof.

                ============================================================================================================================
                Quan.  |  Volts.  |   Cur.  |   Cyc.  |   Goods shipped for special campaign.  |  Retail at  |   Total Retail. |   Net amt
                ----------------------------------------------------------------------------------------------------------------------------
                10     |   110    |    AC   |    60   |  Artist dish wash mach. model A        |   125.00    |      1,250      |
                       |          |         |         |                                        |             |                 |
                2      |   110    |    AC   |    60   |  Artist dish wash mach. model B        |   185.00    |        370      |
                       |          |         |         |                                        |             |_________________|
                       |          |         |         |                                        |             |      1,620.00   |
                       |          |         |         |   Less 30% net frt. allowed            |             |        486.00   |   1,134.00
                -----------------------------------------------------------------------------------------------------------------------------
                

"Said dealer agrees to pay a commission of 10 per cent. of sales price to company's salesman on sales made directly by them, take up shipments promptly, reorder machines as needed, furnish list of names for mailing and advertising, and co-operate in promoting mutual interest.

"Company agrees, by special campaign, to sell or cause to sell goods listed above within 60 days from arrival of shipment, or take back, according to the period of this agency agreement, any of such goods remaining unsold. Also will handle acceptable lease sales contracts and remit amount due thereon by check direct to dealer and said dealer will in turn pay company according to acceptances herewith.

"Only the written conditions appearing hereon in reference to this order are binding on the company.

                            "Firm: The Lane Company,
                                         "By H. G. Lane.
                 "Cascade Products Co. of Texas."
                

On the same date and in connection therewith, the Lane Company accepted three trade acceptances drawn by the Cascade Products Company, each for $378 and due 60, 90 and 120 days after date, the first one being as follows:

                            "Trade Acceptance.
                "$378.00      Dallas, Texas, June 24, 1924.
                

"To the Lane Company, P. O., Waco, Texas: Sixty days after date pay to the order of ourselves at Dallas, Texas, the sum of three hundred seventy-eight and no/100 dollars.

"The obligation of the acceptor hereof arises out of the purchase of goods from the drawer; maturity being in conformity with original terms of purchase.

"Cascade Products Company, W. E. Williams.

"Accepted at Waco, Texas, on June 24, 1924, payable through Central Nat. Bank.

"Firm: The Lane Company, by G. H. Lane, Authorized Buyer."

Indorsed:

"Cascade Products Company, W. E. Williams.

"For collection for B. V. Crum, by Ellis P. House, Atty."

The number of washing machines called for under the above contract were received by the Lane Company some time in September, 1924. On October 29, 1924 appellee brought this suit against W. E. Williams and Mrs. B. V. Crum and husband to cancel the three trade acceptances, on the ground that the machines were not as represented, and the machines were tendered to appellants. Appellant Mrs. Crum answered by a cross-action against appellee, alleging that she was the owner of the trade acceptances for value before maturity, and prayed for judgment against appellee for the amount thereof. The cause was tried before a jury and resulted in a judgment being rendered canceling the three trade acceptances and awarding to Mrs. Crum the washing machines.

Appellee's contention is that the statement in the trade acceptances that "the obligation of the acceptor hereof arises out of the purchase of goods from the drawer, maturity being in conformity with original terms of purchase," makes same nonnegotiable. The original contract states in the heading that the terms of the sale are regular, but does not state what the regular terms are. The last part of the second paragraph of said agreement states that—

"Said dealer (being the Lane Company) will in turn pay company according to acceptances herewith."

Paragraph 2 of section 3 of article 5932 of the Revised Statutes provides that it does not make a note nonnegotiable if it contains "a statement of the transaction which gives rise to the instrument." When a note contains a statement that its payment is subject to or controlled by a named contract, said statement makes the instrument nonnegotiable (Parker v. American Exchange Bank [Tex. Civ. App.] 27 S. W. 1071; Wellington Ry. Committee v. Crawford [Tex. Com. App.] 216 S. W. 151), and to the same effect is a statement contained in a note that it is to be paid out of "current funds" (First State Bank v. Hidalgo Land Co., 114 Tex. 339, 268 S. W. 144). A statement, however, which simply states that it is given in payment for a certain named contract, or which is simply a recital of the consideration for which the note is given, does not make same nonnegotiable. 3 R. C. L. 918; Metropolitan Nat. Bank v. Vanderpool (Tex. Civ. App.) 192 S. W. 589; Buchanan v. Wren, 10 Tex. Civ. App. 560, 30 S. W. 1077; Utah Lake Irrigation Co. v. Allen, 64 Utah, 511, 231 P. 818, 37 A. L. R. 651.

The general rule seems to be that a reference in a note to an extrinsic agreement, in order to destroy its negotiability, must be such as to show that it is burdened with and...