Hinckley v. Eggers

• Decision Date: 20 July 1979
• Docket Number: No. 19740,19740
• Citation: 587 S.W.2d 448
• Parties: 27 UCC Rep.Serv. 1024 Glen A. HINCKLEY, Trustee, Appellant, v. James A. EGGERS et al., Appellees.
• Court: Texas Court of Appeals

Page 448

587 S.W.2d 448

27 UCC Rep.Serv. 1024

Glen A. HINCKLEY, Trustee, Appellant, v. James A. EGGERS et al., Appellees.

No. 19740.

Court of Civil Appeals of Texas, Dallas.

July 20, 1979.

Rehearing Denied Sept. 5, 1979.

W. Mike Baggett, Winstead, McGuire, Sechrest & Trimble, Dallas, for appellant.

William D. Sims, Jr., Jenkens & Gilchrest, Dallas, for appellees.

Before GUITTARD, C. J., and STOREY and HUMPHREYS, JJ.

HUMPHREYS, Justice.

Appellant, plaintiff below, appeals from a summary judgment denying appellees' liability on a deed of trust note which does not name any appellee and which none of the appellees has signed. We reverse on the ground that parol evidence is admissible to show that appellees are liable as principals because the note is not negotiable in view of its provision that the amount payable should be credited with payments made on a prior note.

Appellant sued James A. Eggers and eighteen other investors, who had signed a joint venture agreement calling themselves The Frisco Joint Venture, to enforce the obligations contained in a deed of trust and a deed of trust note, both of the same date, and each signed "Sam Wright, Trustee." Wright's liability is not disputed and is no part of this appeal, since his case was severed and judgment entered against him. Appellant's petition alleged that the deed of trust and the deed of trust note were delivered to appellant, who at all times has been the owner and holder thereof. He alleged that even though the deed of trust and the deed of trust note fail to name any of the appellees or to bear the signature of any of them, nevertheless, Wright acted on his own behalf and on behalf of all appellees with "actual, apparent or implied authority" to bind each. He also pled ratification by appellees of his execution of the deed of trust note. The breach of obligation in the deed of trust and the deed of trust note is undisputed.

Appellees' motion for summary judgment states one ground:

The specific ground upon which this Motion is based is that the Defendant Investors did not execute the Note (attached as Exhibit "A" to Plaintiff's Petition which is the subject of this suit) nor are Defendant Investors named in the Note. The Note was merely signed "Sam Wright, Trustee". Whether or not Defendant Sam Wright is liable on the Note, it is the universal rule that, as a matter of law, the Defendant Investors are not liable, and cannot be liable, on the Note because they neither signed the Note, nor do their names appear on the Note, nor does the signature of Sam Wright state that he executed the Note on behalf of any or all the Defendant Investors. Furthermore, parol evidence, as a matter of law, is inadmissible to vary the signature appearing on the Note.

This was the only ground for the summary judgment, and the only issue argued in the briefs in support of the summary judgment, and in the briefs on this appeal. Consequently, the sole issue is whether parol evidence is admissible to show the principal's liability, if any, when the note is signed by an agent who does not name a principal but does show representative capacity. Appellant contends the court erred in granting summary judgment because as a matter of law, the note is non-negotiable and consequently parol evidence is admissible to show that appellees are individually liable under the terms of the note and deed of trust.

The test of negotiability is prescribed by Tex.Bus. & Comm.Code Ann. § 3.104(a) (2) (Tex. UCC) (Vernon 1968) which provides that the instrument must "contain an unconditional promise or order to pay a sum certain in money." Appellant argues that the note in question is not negotiable because it is not an unconditional promise in that it is to be paid only out of a particular fund. In this connection, appellant cites section 3.105(b)(2), which provides that a promise is not unconditional if it "states that it is to be paid out of a particular fund or source," with certain exceptions not applicable here.

We agree that the note does not contain an unconditional promise to pay the principal sum. It provides:

Except as stated herein and in the Deed of Trust, There shall be no personal or corporate Liability hereunder or under the Deed of Trust And nothing contained herein or in the Deed of Trust Shall obligate Maker, or its successors or assigns, or the grantor of the Deed of Trust, or its successors or assigns, Further than to bind its right, title and interest in the property Covered by the Deed of Trust, and in the event of a default hereunder or under the Deed of Trust, The sole remedy of the legal holder hereof or Payee and of the Trustee or the beneficiary under the Deed of Trust, Shall be foreclosure of the property covered by the Deed of Trust, and neither Payee nor the legal holder hereof and neither the beneficiary nor the Trustee of the Deed of Trust Shall be entitled to a personal or deficiency judgment, and none shall be sought or entered; provided, however, in the event Maker fails to perform any of the terms and conditions hereof or of the Deed of Trust and Payee or any subsequent holder hereof has the right to accelerate the indebtedness represented hereby or to foreclose the lien of the Deed of Trust, nothing herein shall be deemed to relive (sic) Maker from Maker's Personal liability and responsibility to Pay to Payee or the subsequent holder hereof on demand that dollar amount equal to all taxes which are or...