First State Bank v. Cooper

• Decision Date: 26 June 1915
• Docket Number: (No. 817.)
• Citation: 179 S.W. 295
• Parties: FIRST STATE BANK OF AMARILLO v. COOPER et al.
• Court: Texas Court of Appeals

Page 295

179 S.W. 295

FIRST STATE BANK OF AMARILLO v. COOPER et al.

(No. 817.)

Court of Civil Appeals of Texas. Amarillo.

June 26, 1915.

Rehearing Denied October 9, 1915.

Appeal from District Court, Potter County; Jas. N. Browning, Judge.

Action by the First State Bank of Amarillo, Tex., against W. P. Cooper and others. Judgment for defendants, and plaintiff appeals. Reversed, and cause remanded.

Turner & Rollins, of Amarillo, for appellant. Jones & Miller, of Amarillo, for appellees.

HALL, J.

The original petition filed by appellant bank was to recover the amount due on a promissory note of $2,500, dated April 1, 1913, bearing interest at 10 per cent. from date and providing for 10 per cent. attorney's fees, signed by W. P. Cooper, R. R. Wheatley, and Frank Morris, Jr. The note contained the usual provision waiving presentment for payment, notice of nonpayment, protest, etc. The following credits were admitted in the petition: $587.50, paid August 26, 1913; a number of small credits from $1 up to $10, aggregating $116.33, being dated from June 6, 1913, at various times, to November 8, 1913.

Defendants' original answer alleged in substance that the note sued upon was given in lieu of a prior note for the same amount, and that collateral to the value of $2,500 had been put up with said previous note to protect the signers of the note in suit, and that the defendants signed the note sued upon solely as sureties for an indebtedness due by Lankford Furniture Company; that at the time of the execution of the note in question, in suit, the president of plaintiff bank claimed to have collateral security, consisting of certain furniture notes due the Lankford Furniture Company, amounting to about $1,700; that other such notes, worth about $800, were in process of collection at Panhandle and other neighboring towns, and that something more than $280 of said $800 in notes had been collected; and that the bank would at once look up the exact amount and credit same on the back of the note in suit; that the remainder of the $800 worth of collateral would remain as security to the note sued upon. It was further alleged that plaintiff bank, without defendants' consent, thereafter took away half, or about half, of the collateral notes, and applied them to the payment of another note due plaintiff bank, upon which defendants were liable; that plaintiff had been negligent in failing to collect the collaterals, by reason of which defendants had sustained a loss; that Frank Morris, Jr., took a number of the collateral notes for collection, some of which he collected, turning the proceeds over to the bank, amounting to $264.65, which should be credited on the note sued on, together with about $126.50 worth of furniture, which was sold by the bank and the proceeds of which should be applied as a credit. Defendants also claimed a further credit of $280, being the amount which plaintiff admitted was in its possession at the time of the execution of the note in suit; that, if plaintiff did not have in its possession said $800 worth of collateral notes, it perpetrated a fraud on defendants in making such representations; that, at the time the note in suit was executed, defendants signed it upon condition that the Lankford Furniture Company and H. C. Lankford individually would also sign it, and that this was never done, thereby releasing them.

Plaintiff filed several supplemental petitions, alleging, among other things, that the defendants were stockholders and directors in the Lankford Furniture Company, a corporation, which had become bankrupt prior to the execution and delivery of said note; that the indebtedness evidenced by the note had existed in varying amounts for several years, and that there was therefore no necessity for any new consideration in order to render defendants liable thereon; that the benefit received by them was the extension of time on the indebtedness already due. It is further alleged that, at the time the note described in the original petition was executed and delivered, plaintiff had certain collateral notes, which were attached to another note made by said Lankford Furniture Company, in the principal sum of $1,175; that, at the request of defendants, plaintiff's president agreed with them that in the future in would divide said collaterals in half whenever money should be collected thereon, crediting one half on the last-named notes and the other half on the note in suit; that this was done, and the credits made simply as a favor to defendants without any consideration or legal duty resting upon plaintiff to do so; that all sums of money paid by defendants through Frank Morris, Jr., to plaintiff, have been credited in accordance with said agreement, with the full knowledge and consent of all defendants.

By first supplemental answer, defendants, among other things, alleged that the note in suit was given in lieu of a note dated November 1, 1912, executed by the Lankford Furniture Company, H. C. Lankford, Frank Morris, Jr., R. R. Wheatley, and W. P. Cooper, in the sum of $2,500, due and payable April 1, 1913; that it was executed in such manner as entitles the defendants to all of the defenses urged to the note originally sued upon and that they set up all of said defenses to said note of April 1, 1913, and further pleaded that said note was delivered with collateral notes worth $2,500, which last-named notes were secured by contracts and written liens on furniture sold by the Lankford Furniture Company; that large sums were collected on said collateral notes and the proceeds not applied to either of said notes; that the collaterals were changed several times by plaintiff or its agents, substituting for the original collateral others of a later date; that the note sued upon and set out in the original petition was procured through fraud and fraudulent representations on the part of the plaintiff, to the effect that the signature of the Lankford Furniture Company and H. C. Lankford would be secured thereto, and that the bank would immediately ascertain the amount collected upon collaterals and credit thereon, and that all collateral notes would remain with the note last executed, and but for such fraudulent representations the note first sued upon would not have been executed.

In its last supplemental petition, plaintiff prayed in the alternative that, if it should be held that it was not entitled to recover upon the note described in the original petition, then that it be allowed to recover upon the note for which it was substituted, dated November 1, 1912. There was a trial before a jury, resulting in a general verdict for the plaintiff in the sum of $100.98, and from a judgment entered accordingly this appeal is prosecuted. There is nothing in the record to indicate upon which note the jury based the verdict.

The first assignment is based upon the action of the court in overruling plaintiff's special exception to all that part of the answer alleging that the president of bank told defendants that $800 worth of collateral was in process of collection and that something more than $280 of said amount had been collected, and that the exact amount would be looked up at once and credited on the back of the note. Appellant insists that the effect of this allegation is to vary the terms of the written note signed by defendants by oral evidence, and that the effect of the evidence was to prove an amount really different from that stated in the face of the obligation. Fraud in the execution of the note described in the original answer was not alleged therein; but in the first supplemental answer (which repeats many of the facts set up in the original answer, and by reference to the original answer urges the defenses there set up to the note originally sued upon also in defense of the note dated November 1, 1912), it is alleged that the statements made by plaintiff's president, to the effect that the amount collected upon the collateral would be looked up and credited on the renewal note, were fraudulently made. The error of the court, if any, in overruling this exception, is harmless. The issue of fraud being squarely presented by subsequent pleadings, and the case having been tried with reference to the issues contained in such supplemental pleadings, no injury has resulted by the court's ruling. In Ablowich v. Bank, 22 Tex. Civ. App. 272, 54 S. W. 794, it is said:

"No fraud, accident, or mistake in execution was alleged and we must indulge the legal presumption that all prior agreements, so far as assented to, had been merged in the written instruments executed, and that they contained the exact terms upon which the minds of both parties thereto met. The instrument sued upon evidenced an absolute promise to pay $450 within a specified time, without condition, and we do not think it was competent to show by parol that the agreement in effect contained a condition upon which a less sum was to be paid."

We must imply from the language quoted that, in accordance with the general rule, if fraud, accident, or mistake had been alleged, parol evidence of the agreement would have been admissible. This assignment is overruled.

In effect the same contention is made under the fourth and seventh assignments. It seems clear to us that, if the appellees signed the last note for an amount greater than was actually due, but upon the assurance that the proper credits would be made thereon, thereby reducing it to the correct amount, and their pleadings alleged fraud on the part of the bank president in making such promise, it is a matter of inducement which they are entitled to prove. These assignments present as error the action of the court in not sustaining a specific exception to one paragraph in the original answer, setting up the execution of the note and the statement by the president that the proper credit would be made, but in which no allegation of fraud is found. Technically, this paragraph of the...