First Nat. Bank in Canyon v. Gamble

• Citation: 132 S.W.2d 100
• Decision Date: 18 October 1939
• Docket Number: No. 1783-7296.,1783-7296.
• Parties: FIRST NAT. BANK IN CANYON et al. v. GAMBLE.
• Court: Supreme Court of Texas

132 S.W.2d 100

FIRST NAT. BANK IN CANYON et al. v. GAMBLE.

No. 1783-7296.

Commission of Appeals of Texas, Section B.

October 18, 1939.

Error to Court of Civil Appeals of Seventh Supreme Judicial District.

Action on promissory note by J. B. Gamble, administrator of the Estate of Tom Davies, deceased, against the Canyon Loan Company and another, in which the First National Bank in Canyon intervened. Judgment for plaintiff against named defendant and intervenor was affirmed by Court of Civil Appeals, 105 S.W.2d 272, and First National Bank in Canyon brings error.

Affirmed.

H. H. Cooper, of Amarillo, for plaintiff in error.

Sanders & Scott and Howard F. Saunders, all of Amarillo, for defendant in error.

SMEDLEY, Commissioner.

The suit is by defendant in error J. B. Gamble, as administrator of the estate of Tom Davies, deceased, against Canyon Loan Company and First National Bank in Canyon, plaintiffs in error, for the recovery of the principal, interest and attorney's fees due on a promissory note in the principal sum of $10,000, executed by Canyon Loan Company, payable to Tom Davies, dated February 6, 1929, and due on or before one year after date, and for foreclosure of a deed of trust lien on a lot in Canyon City. Judgment of the district court, following instructed verdict, in favor of defendant in error against both plaintiffs in error was affirmed by the Court of Civil Appeals. Canyon Loan Co. v. Gamble, 105 S.W.2d 272.

The principal question presented as between defendant in error and plaintiff in error Canyon Loan Company is whether there has been an acknowledgment in writing sufficient, under Article 5539 of the Revised Civil Statutes of 1925, to toll the statute of limitations. The controversy between defendant in error and plaintiff in error First National Bank in Canyon is as to priority of liens, the bank taking the position that it has a deed of trust lien on the property superior to defendant in error's lien, because at the time it acquired its lien the note sued upon by defendant in error was more than four years past due and there had been no extension of the lien securing defendant in error's note in accordance with Article 5520 (as amended in 1931, Vernon's Ann.Civ.St. art. 5520) and Article 5522 of the Revised Civil Statutes of 1925.

The deed of trust securing the note for $10,000 payable to Tom Davies was never filed for record, but was kept with the note in Davies' safety deposit box in First National Bank of Canyon, which later became First National Bank in Canyon. From its beginning Canyon Loan Company had very little business and such business as it had was conducted by Oscar Hunt, its president, O. W. H. Cook, its first secretary-treasurer, and W. C. Black, who succeeded Cook as secretary-treasurer. Hunt was at the same time vice-president and director of First National Bank of Canyon and later of First National Bank in Canyon, while Cook, and thereafter Black in his place, was cashier and director of the bank during the time he was secretary-treasurer of the loan company. The loan company's business was conducted in the bank's place of business by its officers above named, who were at the same time officers and directors of the bank.

Tom Davies, although skilled in handling cattle, was illiterate, and Cook, during the time that he was cashier of the bank and secretary-treasurer of the loan company, attended to all of Davies' business transactions and prepared papers for him when he made a loan. All of Davies' papers were kept in a safety deposit box in the bank and Cook at all times had access to the box. In the same way Black, after succeeding Cook as cashier of the bank and secretary-treasurer of the loan company, assisted Davies in his business affairs and in the preparation and care of his papers, keeping Davies' key to the safety deposit box in a drawer in his (Black's) desk in the bank.

The $10,000 note owed by Canyon Loan Company to Davies and which represented money loaned to it by Davies bore interest at 7% payable semi-annually. Davies made no request for payment of the principal after it became due but came into the bank every six months and asked for payment of the interest. It was paid to him by checks of the loan company on First National Bank of Canyon and later on First National Bank in Canyon, which checks were drawn and signed by Black at the direction of Hunt. Each of the checks was for $350 and several of them bore on the face the notation "Int." or "Int. on note". The last of these checks was in the sum of $350, dated September 21, 1934, payable to the order of Tom Davies, signed Canyon Loan Company by W. C. Black, and bore the notation "Int. on note", which was made by Black at the time he wrote the check.

It is our opinion that the Court of Civil Appeals correctly held the check last above described to be a written acknowledgment of the debt owed by the loan company to Davies, sufficient under the provisions of Article 5539 to take defendant in error's suit out of the operation of the statute of limitations. The check is a written instrument signed Canyon Loan Company, the debtor, by W. C. Black, its secretary-treasurer, under directions from Oscar Hunt, its president. The check was executed in payment to Davies of the semi-annual interest due on the note by the loan company to Davies. The notation on the face of the check "Int. on note" means, according to the testimony of Oscar Hunt, president of the loan company and the testimony of Black, its secretary-treasurer, who drew the check and made the notation, that the check was drawn and delivered in payment of interest on the $10,000 note. The written statement made by the notation on the face of the check, that the payment of the interest is being made on the note, is an acknowledgment in writing of the existence of the debt evidenced by the note and from this acknowledgment, in the absence of anything to the contrary in the writing, the law implies a promise to pay. According to the uncontradicted evidence, the notation on the check refers to the note sued upon. The following authorities support the conclusion that the check, bearing the notation "Int. on note", when considered in connection with the evidence identifying the note referred to, is an acknowledgment in writing sufficient to constitute compliance with Article 5539. Stein v. Hamman, 118 Tex. 16, 6 S.W.2d 352, 9 S.W.2d 1104; Howard & Hume v. Windom, 86 Tex. 560, 566, 26 S.W. 483; Cotulla v. Urbahn, 104 Tex. 208, 216-218, 126 S.W. 1108, 135 S.W. 1159, 34 L. R.A.,N.S., 345, Ann.Cas.1914B, 217; Elsby v. Luna, Tex.Com.App., 15 S.W.2d 604; Beeler v. Harbour, Tex.Civ.App., 116 S. W.2d 927, application for writ of error refused; Cherry v. Corban, Tex.Civ.App., 119 S.W.2d 111.

In Stein v. Hamman, supra, Stein, being indebted to Davis & Company, bankers, in the sum of $46,229 due upon certain overdrafts with that company, which overdrafts as such were barred by the statutes of limitations, delivered to the company a promissory note executed by C. H. Brown payable to himself in the sum of $235, and endorsed on the Brown note, and signed such endorsement, the following: "As collateral to secure my overdrafts to J. H. P. Davis & Co.". It was held that the endorsement signed by the debtor was a recognition of his indebtedness to the bank for the overdrafts and, when considered with the parol evidence identifying the overdrafts referred to, was sufficient to meet the requirements of the statute. The opinion, written by Judge Speer, Commissioner, was adopted by the Supreme Court. The substance of the written acknowledgment held sufficient in that case was that the note was given as collateral to secure the debt arising from the overdrafts. In the instant case the substance of the written acknowledgment is that the check is given to Davies in payment of interest on the loan company's debt evidenced by a note.

The new promise evidenced by the check, which had the effect of renewing or extending the note, also, as between the parties, extended the lien securing the note, although no written agreement of extension was made in the manner prescribed by Articles 5520 (as amended in 1931) and 5522 of the Revised Civil Statutes. To quote from the opinion written by Judge Speer in Farmers' Life Insurance Company v. Wolters, Tex.Com.App., 10 S.W. 2d 698, 704: "As between the parties, the lien being an incident to the debt and the debt having been by them extended, the lien was by implication of law likewise extended". See also Jolly v. Fidelity Union Trust Company, 118 Tex. 58, 298 S.W. 530, 10 S.W.2d 539; Wilkinson v. First National Bank, 118 Tex. 202, 13 S.W.2d 346; First National Bank in Hemphill v. Arnold, Tex.Com.App., 128 S.W.2d 1151; Beeler v. Harbour, Tex.Civ.App., 116 S. W.2d 927, application for writ of error refused; Cherry v. Corban, Tex.Civ.App., 119 S.W.2d 111.

First National Bank in Canyon contends that by reason of the provisions of Articles 5520 (as amended in 1931) and 5522 the deed of trust lien securing a note in the principal sum of $5,000 given it by Canyon Loan Company is superior to the lien securing the Tom Davies note upon which defendant in error sues. First National Bank of Canyon held the...