Guthrie v. National Homes Corp.

• Decision Date: 29 January 1965
• Docket Number: No. 16603,16603
• Parties: N. E. GUTHRIE, Jr., Appellant, v. NATIONAL HOMES CORPORATION, Appellee.
• Court: Texas Court of Appeals

Page 158

387 S.W.2d 158

N. E. GUTHRIE, Jr., Appellant, v. NATIONAL HOMES CORPORATION, Appellee.

No. 16603.

Court of Civil Appeals of Texas, Fort Worth.

Jan. 29, 1965.

Rehearing Denied Feb. 26, 1965.

Short & Smith, and Ray Gene Smith, Wichita Falls, for appellant.

Fillmore, Schaeffer & Fillmore, and Roy Schaeffer, Wichita Falls, for appellee.

MASSEY, Chief Justice.

As originally filed the plaintiff was National Homes Corporation and the defendants were N. E. Guthrie, Jr. and John D. Crow. Plaintiff obtained judgment against both defendants, jointly and severally. Crow did not appeal, but Guthrie did. Our relation of the controversy will, therefore, primarily bear upon the same as it existed between the plaintiff and Guthrie.

Recovery under the judgment was upon allegations as in suit on a promissory note. Indisputably, there was a balance owing on the note. The suit was between the original parties to the transaction and note, the same having been executed by Crow, allegedly as agent of Guthrie of the purpose. Guthrie's signature did not appear on the instrument. Indeed, Crow signed the note as 'Crow' and the name 'Guthrie' nowhere appeared.

As between the original parties a promissory note is a simple contract until it takes on peculiar features through negotiation by the payee or as may be expressly declared by statute. Certainly, as between the original parties, such an instrument is in Texas a simple contract governed by the fundamental rules applicable to contract law. 11 Am.Jur.2d 29, 'Bills and Notes', Sec. 1 'Contracts and bills and notes compared'; 9 Tex.Jur.2d 12, 'Bills and Notes', Sec. 1, 'In General'; 11 Am.Jur.2d 716, 'Bills and Notes', Sec. 653, '(Effect of holder in due course status)--Absence of such status.'

With such recognized as the law applicable to the instant case we have little difficulty resolving one question posed. Guthrie contends that he may not be held liable as a principal obligor on the note because his signature does not appear thereon. There is no statement of facts. Under the jury findings (which are a part of the record presented to us) it was established that though the note was executed for his sole benefit Guthrie had not theretofore authorized the execution. Under further findings of the jury it was found that he did thereafter ratify its execution. Guthrie assumed the obligation to and did make payments upon the note. In the judgment credit was given for the payments so made.

Under principles of the doctrine of agency, particularly those applicable to ratification by that disclosed principal for whom an agent purported to act though not thereunto authorized at the time, and in respect to assuming payment of a note bearing only the signature of the one whose obligation is ratified (as though its execution was originally directed by the principal), we hold that Guthrie became a party primarily obligated upon the note. See sections under Chapter 4, Topics 1 to 4, inclusive, Restatement of the Law on Agency. We may assume that the evidence of Crow and plaintiff showed that Crow professedly executed the note on Guthrie's account, in the belief that he was thereunto authorized. Although not binding on Guthrie at the time it could have been had the execution been directed by him. That being true he could later ratify, as the jury found he did.

Under one point another material question for determination relates to the matter of what sum should be treated as the original principal amount owing. As prepared, the note's principal sum was expressed in words as 'Five Thousand Eighty and 00/100 Dollars'. The sum payable, as expressed in figures (sometimes referred to as marginal figures in the corner of the note), was the amount $5,780.00.

Texas adopted the Uniform Negotiable Instruments Act in 1919. It appears as Article 5932 et seq. in Vernon's Annotated Texas Statutes. Section 17 thereof, under subsection 1, provides that where...