Goldstein v. Union Nat. Bank

• Court: Texas Supreme Court
• Writing for the Court: Hawkins
• Citation: Goldstein v. Union Nat. Bank, 213 S.W. 584, 109 Tex. 555 (Tex. 1919)
• Decision Date: 11 June 1919
• Docket Number: (No. 2525.)
• Parties: GOLDSTEIN v. UNION NAT. BANK et al.

Page 584

213 S.W. 584

GOLDSTEIN v. UNION NAT. BANK et al.

(No. 2525.)

Supreme Court of Texas.

June 11, 1919.

Certified Questions from Court of Civil Appeals of Fifth Supreme Judicial District.

Suit by the Union National Bank against A. Goldstein and another, in which the Commonwealth National Bank of Dallas intervened. Judgment for intervener, and named defendant appealed to Court of Civil Appeals, which submitted certified question to Supreme Court. Questions answered.

Victor H. Hexter and Etheridge & McCormick, all of Dallas, for appellant.

D. E. Upthegrove, of St. Louis, Mo., and T. L. Camp, Walter Nold, and J. E. Gilbert, all of Dallas, for appellees.

HAWKINS, J.

From our Court of Civil Appeals for the Fifth Supreme Judicial District come the following statement and certified question:

"The Union National Bank of Dallas instituted this suit against appellant and I. B. Walker on a promissory note for the sum of $5,000, dated August 30, 1909, payable to said bank or order on demand, and bearing interest at the rate of 8 per cent. per annum from maturity. On May 20, 1911, the appellee Commonwealth National Bank of Dallas intervened in the suit, setting up that it had purchased the note; that it was the legal and equitable owner and holder thereof and entitled to the relief and judgment prayed for herein by the Union National Bank. The case was tried before the court without a jury, and the trial resulted in a judgment in favor of the intervener against appellant and I. B. Walker for the amount sued for, and the defendant Goldstein alone appealed. After demurrers and a general denial, the defendant Goldstein pleaded in the fourth paragraph of his answer as follows: `And for special answer herein to all the pleadings against him herein, this defendant comes by attorneys and says that heretofore, to wit, on or about August 30, 1909, and for some time prior thereto, L. Wenar Millinery Company, a corporation engaged in business in the city of Dallas, was largely indebted to the Union National Bank of Dallas in a sum approximating $20,000, which was the full loaning capacity of said Union National Bank of Dallas to any one person, firm, or association; that this indebtedness was carried in said bank to the extent of $15,000 in the form of notes of the said L. Wenar Millinery Company, which, when they came due from time to time, were renewed and extended by said bank, and a part of the indebtedness was carried in said bank as an overdraft; that the loaning power of said Union National Bank was not sufficient to enable said Union National Bank of Dallas, without violating the law, to furnish to the said L. Wenar Millinery Company all of the money that the said L. Wenar Millinery Company sometimes required; that prior to the 30th day of August, 1909, the said L. Wenar Millinery Company and the said Union National Bank of Dallas, acting through its vice president and general manager, I. B. Walker, and this defendant, entered into an agreement by the terms of which this defendant agreed to execute to the Union National Bank and in conjunction with this codefendant, I. B. Walker, and for the accommodation of the said L. Wenar Millinery Company, to a limited extent and as occasion should arise, notes to be discounted by said Union National Bank, and the proceeds to be used by said L. Wenar Millinery Company in transacting its business in some way other than paying any part of its indebtedness to said Union National Bank, which was within the loaning power of said bank to lend the said millinery company, and in consideration of this defendant executing paper as aforesaid for the accommodation of said L. Wenar Millinery Company the said L. Wenar Millinery Company agreed with this defendant to make deposits in the Union National Bank of Dallas from time to time in the usual course of business, and that said deposits when so made should be applied at once to the extinguishing pro tanto of any note made by this defendant under the said agreement until the same was fully liquidated and extinguished, and that no part of said deposits should be applied to the liquidation or extinguishment of any debt or demand existing in favor of the Union National Bank of Dallas against said L. Wenar Millinery Company or be checked out for any other purposes of the said L. Wenar Millinery Company, and the said Union National Bank of Dallas agreed to discount said paper as it might be made by this defendant and to receive the deposits of the said L. Wenar Millinery Company as they were made from time to time, and to apply the same exclusively to the liquidation and discharge of the notes which should be made by this defendant under said agreement until the same at any time outstanding should be fully paid off and discharged. This defendant further represents that the note sued on by the plaintiff herein and now claimed by the intervener herein was executed by himself and his codefendant, I. B. Walker, under the agreement and understanding aforesaid, as another note theretofore made by them had been also executed under said agreement, which other note for, to wit, $2,500 had been also paid off in accordance with said agreement prior to the execution of the note herein sued on; that this defendant received no consideration whatever for said note, the sole consideration therefor moving to the said L. Wenar Millinery Company, which received the total proceeds of the discount of said note by the plaintiff bank; that after the discount of the note herein sued on, which was on, to wit, the 7th day of November, 1911, the said L. Wenar Millinery Company deposited sums of money in the said Union National Bank of Dallas daily or frequently and to the approximate extent of $4,000 per month during the months of November, December, January, February, and March next ensuing after execution of said note, which said deposits amounted to largely more than the principal, interest, and attorney's fees of the note herein sued on, and which deposits, so far as necessary to fully pay off and discharge the note herein sued on, belonged in equity to this defendant as a fund set aside by the said L Wenar Millinery Company under an agreement with this defendant and with said Union National Bank of Dallas for the discharge and retirement of the note herein sued on, and if this defendant was not in equity the owner of said fund, then the said fund constituted an equitable security to this defendant to indemnify him against liability because of the execution by him of the note herein sued on, and this defendant became entitled to have the said deposits applied as they were made immediately to the liquidation pro tanto and to the ultimate entire liquidation of the note herein sued on, and it became the duty of said Union National Bank of Dallas to so apply said deposits, but the Union National Bank of Dallas failed so to apply them, and, on the contrary, in violation of its agreement, applied said deposits in part to the extinguishment of indebtedness due by the said L. Wenar Millinery Company to it and in part the said Union National Bank of Dallas permitted said L. Wenar Millinery Company to check out said deposits without leaving them a sufficient amount to pay off and discharge the obligation herein sued on; that the agreement hereinbefore mentioned was made by and with the full knowledge of said Union National Bank of Dallas, and only by virtue of said agreement and because of the making thereof did the said Union National Bank secure from this defendant the note sued on herein, which was afterwards taken over by the Commonwealth National Bank of Dallas after maturity, and it was charged with the full knowledge of this defendant's defense thereto. And of all this defendant puts itself upon the country.'

"By supplemental petition the intervener, Commonwealth National Bank, demurred generally and specially to the foregoing paragraph of appellant's answer, the third special exception thereto being as follows:

"`This intervener specially excepts to that part of defendant Goldstein's said answer, beginning with the words "that prior to the 30th day of August, 1909," and ending with the words "should be fully paid off and discharged," as contained on pages 2 and 3 of said defendant's amended original answer, for the following reasons, to wit:

"`(a) Because said agreement, if any such was entered into, was made long prior to the execution and delivery of the notes herein sued upon, and, if said agreement did exist, it was merged into the written contract herein sued upon, and cannot now be urged as a defense.

"`(b) Because it is not alleged whether said agreement was oral or in writing, and, if said agreement is in writing, the terms and conditions are not fully and specifically set out so as to enable this intervener to know the terms and conditions thereof; and, if oral, it is an attempt to vary and contradict the express terms of the written contract herein sued upon. * * *

"`(d) If it may be construed that such an agreement was made with I. B. Walker, and that he was an officer of the Union National Bank, then it appears that I. B. Walker was adversely interested to [the] bank of which he was an officer, and such contract, if made by the said I. B. Walker, would not be binding upon the bank unless notice was brought to the bank through some other and proper source and unless said contract was ratified by said bank.

"`(e) Because it is not alleged that the Union National Bank had any power or authority to force the L. Wenar Millinery Company to apply such deposits as it might make to the payment of the note herein sued upon. It is alleged that such deposits as L. Wenar Millinery Company would make were placed in the Union National Bank for the payment of said note, and it is not shown by any proper pleading that the Union National Bank had any control whatever over the deposits of the L. Wenar Millinery Company after the execution of the note herein...