Ennis State Bank v. Hubacek
| Decision Date | 05 December 1957 |
| Docket Number | No. 3518,3518 |
| Citation | 308 S.W.2d 60 |
| Parties | ENNIS STATE BANK, Appellant, v. Frank HUBACEK, Appellee. |
| Court | Texas Court of Appeals |
Geo. P. Hines, Ennis, Ralph Hartman, Waxahachie, for appellant.
Griffith & Lumpkins, Waxahachie, for appellee.
Appellant will be referred to as the bank, and appellee, a used car dealer, will be referred to as the dealer. The bank brought this action against the dealer to recover the amount of principal, interest and attorney's fees alleged to be due on five promissory notes which the dealer had sold and endorsed to the bank, and to foreclose chattel mortgage liens securing payment of the notes. The dealer admitted the validity of the bank's claim, but alleged that he had entered into a prior parol agreement with the bank, whereby the latter was to hold in reserve for the dealer an amount equal to two percent of the principal of all notes to be sold and endorsed by the dealer to the bank, such reserve to be used by the dealer and the bank to pay loss on any of the notes to be sold and endorsed by the dealer to the bank, and the excess of the reserve over the losses, if any, to be paid over to the dealer at the termination of the transaction. The dealer asserted that he was entitled to a credit on the notes sued upon by reason of the reserve fund provided for by the parol agreement.
The case was tried before a jury. Upon the conclusion of the evidence the bank moved the court to peremptorily instruct the jury to return a verdict in its favor for the amount of principal, interest and attorney's fees for which it sued. The motion was overruled and the case was submitted to the jury on two special issues. The jury found (1) the existence of the parol agreement alleged by the dealer and (2) that the amount created for the reserve fund under the parol agreement was $912.43. The record shows that the total aggregate amount of principal, interest and attorney's fees due and owing to the bank on the five notes sued upon was $1,562.84. The court deducted the amount created for the reserve fund from the amount otherwise due on the notes sued upon and rendered judgment in favor of the bank for the different between the two amounts in the resulting sum of $650.41.
The bank contends that the court below erred in allowing the dealer a credit on the noted sued upon, because the necessary effect thereof was to vary the terms of the notes by parol evidence, contrary to law. After due consideration of the record before us, we have concluded that the contention of the bank in this regard must be sustained.
It appears to us that this case turns upon the fact that the asserted defense of the dealer relates to and is based primarily upon the notes which the dealer admits he endorsed to the bank, and not upon any parol agreement that is separate from, collateral to, or independent of the notes endorsed to the bank. If the endorsed notes had not been placed in evidence, there would have been no way by which to arrive at the amount of rebate or credit to which the dealer might be entitled. Furthermore, the necessary effect of the parol agreement was to provide that the dealer, as endorser of the notes, would not be ultimately liable to the bank for the payment of two percent of the amount promised by the notes, but that such two per cent would be paid to the bank merely as a trustee, to be held is reserve for the benefit of the dealer. Not only was the verbal agreement thus in violation of the parol evidence rule, but it was also in conflict with the Uniform Negotiable Instruments Act, whereby the dealer, as endorser of the notes, warranted that they would be paid according to their written terms, and not by any credit, offset, or counter-claim against the endorsee.
In the case of Robert & St. John Motor Co. v. Bumpass, Tex.Civ.App., 65 S.W.2d 399, 402, er. dis., the court said:
'The parol evidence rule forbids the proof of any oral agreement varying the terms of payment, or reducing, or increasing the amount stipulated in the written contract to be paid, as for example (of the latter) an agreement that a less sum is to be paid upon a certain contingency or providing for a remission or rebate of a portion of the principal and interest, or providing that payment is to be made in something besides money.'
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Hubacek v. Ennis State Bank
...Appeals and judgment rendered in favor of the bank for $1,562.84, the full amount sued for, with foreclosure of the chattel mortgages. 308 S.W.2d 60. Whether the trial court's judgment or that of the Court of Civil Appeals is correct turns on a proper application of the parol evidence rule ......
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Ennis State Bank v. Hubacek
...appeal from the judgment of that court, the cause was reversed and judgment was rendered in favor of the Bank. See Ennis State Bank v. Hubacek, Tex.Civ.App., 308 S.W.2d 60. The Supreme Court granted a writ of error and rendered judgment reversing the judgment heretofore rendered by this cou......
- Hubacek v. Ennis State Bank