Eikel v. Bristow Corp.

• Decision Date: 16 October 1975
• Docket Number: No. 16522,16522
• Citation: 529 S.W.2d 795,18 UCCRep.Serv. 165
• Parties: 18 UCC Rep.Serv. 165 Robert EIKEL, Testamentary Executor of the Succession of John P. Bristow, Deceased, Appellant, v. BRISTOW CORPORATION et al., Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 795

529 S.W.2d 795

18 UCC Rep.Serv. 165

Robert EIKEL, Testamentary Executor of the Succession of John P. Bristow, Deceased, Appellant, v. BRISTOW CORPORATION et al., Appellees.

No. 16522.

Court of Civil Appeals of Texas Houston (1st Dist.).

Oct. 16, 1975.

Eikel & Davey, Robert Eikel, Houston, for appellant.

Kenneth M. Morris, Houston, Vinson, Elkins, Searls, Connally & Smith, Houston, of counsel, for appellees Robert B. Taylor, allied Industrial Group, Inc., Albert A. Norris and Gray-Norris Co.

Fouts, Moore, Caldwell, Coleman & Royall, Houston, Donald R. Royall, Houston, of counsel, for appellee Harry E. Jacobsen.

Van E. McFarland, Houston, for appellee William G. King.

COLEMAN, Chief Justice.

This is a suit to recover the balance due on certain promissory notes instituted by the Houston National Bank and prosecuted by appellant against Bristow Corporation, the maker of said notes, and certain endorsers and guarantors. At the conclusion of the plaintiff's evidence some of the endorsers and guarantors moved for judgment without having presented their defenses. The court granted said motions and entered judgment on the notes only against the Bristow Corporation. Robert Eikel, the testamentary executor, has appealed.

The Houston National Bank instituted this suit on three promissory notes. The note dated March 15, 1967 in the original principal amount of $78,000.00 was executed by the Bristow Corporation and endorsed by J. P. Bristow. The note dated November 24, 1967 in the original principal sum of $35,000.00 was executed by the Bristow Corporation and endorsed in order by J. P. Bristow, Kenneth L. Burton, Robert B. Taylor, Lindon M. Williams, William G. King and H. E. Jacobsen. The third note was dated February 13, 1967 in the original principal sum of $55,000.00 and was executed by the Bristow Corporation and endorsed in order by Kenneth L. Burton, J. P. Bristow, William G. King, H. E. Jacobsen, R. B. Taylor and Lindon Williams. The bank sued Bristow Corporation, the maker, and also each of the endorsers. In addition the bank sued Paul E. Wolfinger, J. P. Bristow, J. A. Williamson, and Harry E. Jacobsen on a guaranty agreement dated July 2, 1965 by which the parties above named jointly and severally guaranteed the payment to said bank, its successors and assigns, of all loans, discounts, overdrafts or bills of exchange that said bank may or might have made to the Bristow Corporation and of any and all indebtedness, claim or demand, whether past, present or future, that said Bristow Corporation may be due and owing to said bank in any amount not to exceed $100,000.00 plus interest and attorney's fees. The bank also sued Robert B. Taylor, Lindon M. Williams, Kenneth L. Burton, and William G. King on a guaranty agreement in the same terms dated September 18, 1967, limited to an amount not to exceed $140,500.00.

While this action was pending J. P. Bristow died and Robert Eikel qualified as testamentary executor of the succession of J. P. Bristow in the 27th Judicial District Court of Louisiana. Thereafter the executor paid to the Houston National Bank the sum of $25,000.00 and received assignment of the cause of action, the underlying notes and guaranty agreements. In November, 1973 a suggestion of death was filed and thereafter Robert Eikel as executor filed an answer for J. P. Bristow. After the assignment of the cause of action to the executor, the trial court on March 1, 1974, permitted him to be substituted as plaintiff. The executor was permitted to proceed to trial as plaintiff on the pleadings filed by the bank. See International Shelters, Inc. v. Pinehurst Inv. Corp., 474 S.W.2d 497 (Tex.Civ.App.--Corpus Christi, 1971, writ dism'd); Duncan v. Ponton, 102 S.W.2d 517 (Tex.Civ.App.--Fort Worth, 1937, no writ hist.); Dickinson v. Dysart, 237 S.W. 615 (Tex.Civ.App.--San Antonio 1922, no writ hist.); Paxton v. First State Bank of Tatum, 42 S.W.2d 837 (Tex.Civ.App.--Texarkana, 1931, no writ hist.); Crowe v. Union Auto Ins. Co., 79 S.W.2d 168 (Tex.Civ.App.--El Paso, 1935, error dism'd).

Despite the fact that the trial court rendered judgment at the conclusion of the plaintiff's evidence, and before the defendants had presented their evidence or had rested, by sustaining the defendants' motion for judgment, he, on request, filed findings of fact and conclusions of law. Findings of fact under such circumstances are inappropriate, since the propriety of the action in sustaining the motion for judgment must be considered under the rules of law authorizing instructed verdicts in jury cases. Pine v. Gibraltar Savings Association, 519 S.W.2d 238 (Tex.Civ.App.--Houston (1st), 1975, writ ref'd n.r.e.); Shirley Nesmith Allen v. Robert E. Nesmith, 525 S.W.2d 943 (Tex.Civ.App.--Houston (1st), 1975, no writ hist.).

On February 22, 1974, the Houston National Bank assigned to 'Robert Eikel, Independent Testamentary Executor of the Succession of John P. Bristow, Deceased,' the three promissory notes and the two continuing guaranty agreements dated July 2, 1965 and September 18, 1967, respectively, and 'assignor's cause of action in the above described suit entitled Houston National Bank v. Bristow Corporation et al, pending on the docket of District Court of Harris County, Texas, 157th Judicial District, under Docket Number 782,032.' The assignment was made without recourse or warranties. Each of the three promissory notes was endorsed 'Pay to the order of Robert Eikel, Independent Testamentary Executor of the Succession of John P. Bristow, Deceased, without recourse express or implied' and signed 'Houston National Bank, Houston, Texas by O. W. Harigel, Senior Vice President. The written assignment agreement recites that it was executed at Houston, Texas. The evidence reflects that Robert Eikel paid to the bank the sum of $25,000.00 by check drawn on Robert Eikel, Trustee Account. The judgment entered by the district court contains this recital:

'BE IT REMEMBERED that the above entitled and numbered cause came on for trial on the 10th day of December, 1974, at a regular setting thereof, and came the plaintiff Robert Eikel, Testamentary Executor of the Succession of John P. Bristow, Deceased, substituted as plaintiff for the Houston National Bank of Houston, Texas, by virtue of assignment of the said bank's causes of action herein under order of this Court dated March 1, 1974, . . .'

The trial court entered a judgment sustaining a motion for nonsuit as to the claim against J. A. Williamson and rendering judgment on the notes against Bristow Corporation. It granted the motion that plaintiff take nothing as to J. P. Bristow, Kenneth L. Burton, William G. King, Harry E. Jacobsen, Robert B. Taylor, and Lindon M. Williams. The cross-actions and third party actions of J. P. Bristow, Harry E. Jacobsen, and Robert B. Taylor were denied.

The appellant Robert Eikel presents by his point of error number one the proposition that the trial court erred in its conclusion of law:

'The reacquisition of a promissory note by a prior endorser or co-obligor discharges liability on the note itself.'

The trial court erred in holding that the notes in question were descharged by their acquisition by Mr. Eikel. The extent of the discharge of any party from liability on an instrument is governed by Section 3.601 of the Uniform Commercial Code. Under this section the liability of all parties is discharged when any party who has himself no right of action or recourse on the instrument reacquires the instrument in his own right. Here Mr. Eikel has a cause of action against the corporate maker of the three notes and against Mr. Burton on one of the notes. Section 3.603, Uniform Commercial Code, provides in Section (b): sus 'Payment or satisfaction may be made with the consent of the holder by any person including a stranger to the instrument. Surrender of the instrument to such a person gives him the rights of a transferee (Section 3.201).'

Appellees principally rely upon the provisions of Section 3.208 of the Uniform Commercial Code to sustain the judgment of the trial court. This section provides:

'Where an instrument is returned to or reacquired by a prior party he may cancel any indorsement which is not necessary to his title and reissue or further negotiate the instrument, but any intervening party is discharged as against the reacquiring party and subsequent holders not in due course and if his indorsement has been cancelled is discharged as against subsequent holders in due course as well.'

A comment under this section of the Uniform Commercial Code provides 'The reacquirer may keep the instrument himself or he may further negotiate it. On further negotiation he may or may not cancel intervening indorsements. In any case intervening indorsers are discharged as to the reacquirer, since if he attempted to enforce it against them they would have an action back against him. . . .'

Section 3.118(5), Uniform Commercial Code, provides:

'Unless the instrument otherwise specifies two or more persons who sign as maker, acceptor or drawer or indorser and as a part of the same transaction are jointly and severally liable even though the instrument contains such words as 'I promise to pay'.'

The Uniform Commercial Code comment found under this section states that it applies only where such parties sign as a part of the same transaction; successive endorsers are, of course, liable severally but not jointly.'

Section 3.414 of the Uniform Commercial Code in paragraph (b) thereof provides:

'Unless they otherwise agree indorsers are liable to one another in the order in which they indorse, which is presumed to be the order in which their signatures appear on the instrument.'

The liability of the endorsers, as contrasted to the guarantors, is dependent, therefore, on whether or not there has been a reacquisition of the instrument by a previous endorser. There is some evidence that all the endorsers signed as a part of the same...