Loe v. Murphy, 20457

• Decision Date: 21 November 1980
• Docket Number: No. 20457,20457
• Citation: 611 S.W.2d 449
• Parties: Daniel Boyd LOE, Appellant, v. James Irwin MURPHY, III, Appellee.
• Court: Texas Court of Appeals

Page 449

611 S.W.2d 449

Daniel Boyd LOE, Appellant, v. James Irwin MURPHY, III, Appellee.

No. 20457.

Court of Civil Appeals of Texas, Dallas.

Nov. 21, 1980.

Rehearing Denied Dec. 18, 1980.

Stephen C. Porter, McMullen & Porter, Dallas, for appellant.

Alan M. Glassman, Glassman & Solis, Dallas, for appellee.

Before GUITTARD, C. J., and AKIN and ROBERTSON, JJ.

ROBERTSON, Justice.

This is a suit on a note given by defendant Loe to plaintiff Murphy for the purchase of plaintiff's auto repair business. Plaintiff moved for summary judgment and defendant filed his answer to the motion, supported by an affidavit, asserting that the parties had a prior or contemporaneous oral agreement that plaintiff would not compete with defendant and that if such competition occurred, defendant's liability on the note would cease. His answer and affidavit also asserts that plaintiff has established a competing business and thus a genuine issue of material fact exists concerning failure of consideration. Additionally, defendant argues that the security agreement securing the obligation of the note, foreclosed by the trial court, is ambiguous as a matter of law. On the other hand, plaintiff argues that the parol evidence rule prohibits giving any evidentiary weight to the oral agreement and that as between the parties the security agreement is not ambiguous. The trial court granted summary judgment for plaintiff. We affirm.

To be entitled to a summary judgment, the movant has the burden of establishing that there exists no material fact issue and that he is entitled to judgment as a matter of law. Town North National Bank v. Broaddus, 569 S.W.2d 489, 494 (Tex.1978). It is not disputed before this court that by way of pleadings and proper summary judgment proof, plaintiff demonstrated as a matter of law that he was entitled to summary judgment. In opposition to this, defendant asserted the affirmative defense of failure of consideration. In order to avoid a summary judgment in favor of plaintiff, it was defendant's burden to show the existence of an issue of fact with respect to his affirmative defense. Id. To meet this requirement defendant offered his affidavit asserting the alleged oral agreement. If this affidavit does not set forth such facts as would be admissible in evidence, then defendant is in the position of having offered no summary judgment proof to meet the burden imposed upon him to show the existence of a genuine issue as to a material fact and the summary judgment for plaintiff is proper. Id.

Our determination of whether defendant's affidavit is sufficient to show the existence of a genuine issue as to a material fact begins with a statement of the parol evidence rule. Professor Corbin expresses the rule as follows:

When two parties have made a contract and have expressed it in a writing to which they have both assented as the complete and accurate integration of that contract, evidence, whether parol or otherwise, of antecedent understandings and negotiations will not be admitted for the purpose of varying or contradicting the writing. 3 Corbin on Contracts § 573, p. 357 (1960).

The Texas courts have adhered to the parol evidence rule. Our supreme court stated in Hubacek v. Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30 (1958) that "When parties have concluded a valid integrated agreement with respect to a particular subject matter, the rule precludes the enforcement of inconsistent prior or contemporaneous agreements." The mere statement of the parol evidence rule, however, does not aid us in the determination of this cause, for it can be seen from both of the above-stated expressions of the rule that the first question with which we are faced is whether the note here involved is the integrated agreement of the parties.

Negotiable instruments, such as the note in this case, must initially be presumed to be the integrated agreement of the parties. A negotiable instrument must, with certain exceptions, contain an unconditional promise or order to pay. Tex.Bus. & Com.Code § 3.104 (1968). To include in the note conditions on the promise to pay would destroy the negotiable character of the paper. "(T)he note is conclusive as to what the real contract between the parties was." Dolsen v. De Ganahl, 70 Tex. 620, 8 S.W. 321 (1888).

The Texas Supreme Court has recognized, however, that a note will normally appear integrated in order that it may be negotiable, even though there may be collateral agreements between the parties. Hubacek v. Ennis State Bank, supra, 317 S.W.2d at 34. To reconcile the policy that a negotiable instrument must be presumed integrated, with the reality that the instrument may not in fact represent the complete agreement of the parties, the courts and the legislature have recognized certain exceptions to the parol evidence rule. "The rule does not preclude enforcement of prior or contemporaneous agreements which are not inconsistent with and do not vary or contradict the express or implied terms or obligations thereof." Id. 317 S.W.2d at 32. Likewise, a condition of delivery, as opposed to a condition of payment, may be shown to exist. Kuper v. Schmidt, 161 Tex. 189, 338 S.W.2d 948 (1960). Section 3.119 of the Business and Commerce Code expressly allows consideration of a written agreement executed as part of the same transaction. Tex.Bus. & Com.Code § 3.119 (1968).

The alleged oral agreement in this case does not come within any of these exceptions; nor does defendant cite us to any other...