Mauricio v. Mendez, 04-85-00480-CV

• Decision Date: 14 January 1987
• Docket Number: No. 04-85-00480-CV,04-85-00480-CV
• Parties: 4 UCC Rep.Serv.2d 1106 Paul MAURICIO, Appellant, v. Jose MENDEZ, Appellee.
• Court: Texas Court of Appeals

Page 296

723 S.W.2d 296

4 UCC Rep.Serv.2d 1106

Paul MAURICIO, Appellant, v. Jose MENDEZ, Appellee.

No. 04-85-00480-CV.

Court of Appeals of Texas,

San Antonio.

Jan. 14, 1987.

Judith Grantham, San Antonio, for appellant.

Ruben Sandoval, San Antonio, for appellee.

Before CADENA, C.J., and ESQUIVEL and DIAL, JJ.

OPINION

CADENA, Chief Justice.

Plaintiff, Paul Mauricio, appeals from a judgment in a case tried to the court, denying him recovery in his suit to collect from defendant, Jose Mendez, on a lease agreement and what plaintiff described in his pleadings as a "note." The trial court rendered judgment at the conclusion of plaintiff's evidence, holding that plaintiff had failed to prove a cause of action against defendant. We reverse and remand.

Plaintiff, who operated a bar and restaurant on premises owned by him in San Antonio, by written agreement sold the restaurant and bar equipment, furniture and supplies to defendant and his wife on October 9, 1984, for $9,373.00, with defendant making a down payment of $1,000.00. As part of this transaction, defendant, who planned to operate the bar and restaurant on the premises owned by plaintiff, orally agreed to pay $600.00 per month as rent for the premises and to reimburse plaintiff for utility charges incurred by defendant in the operation of the bar and restaurant.

The written agreement relating to the sale of the bar and restaurant equipment read as follows:

10-9-84

To Whom it may Concern

                Equipment sold to Jose Mendez or Carolina S. Mendez From Paul Mauricio
                Amount         9373.00
                down payment   1000.00
                               -------
                Balance due--  8373.00
                

There will be no intrest [sic] charged until 10-9-85. Interest will be at the rate of 12% per year

Mr. & Mrs. Mendez will pay as much as possible per month

Minimum amount will be $500.00 per. month

Seller /s/ Paul Mauricio

buyer /s/ Jose Mendez S.

After defendant made payments of $500.00 each on November 10 and December 10, 1984, there was a fire on the premises and defendant made no further payments. Plaintiff then brought this suit to recover the $7,373.00 due on the written agreement which was alleged to be a note. Plaintiff also sought to recover $1,103.78 as reimbursement for the amounts paid by him for utilities used by defendant in the operation of the bar and restaurant.

Plaintiff first argues that the October 9, 1984, written agreement is a promissory note as alleged in his petition. Defendant contends that the instrument is not a promissory note, relying, as does plaintiff, on § 3.104 of the Texas Uniform Commercial Code (UCC). ¹

Subsection (a) of § 3.104 provides that, to be a negotiable instrument, a writing must (1) be signed by the maker; (2) contain an unconditional promise to pay a sum certain in money; (3) be payable on demand or at a definite time; and (4) be payable to order or to bearer.

According to § 3.104(b), a writing which complies with the requirements of § 3.104(a) is a "note" if it is a promise other than a certificate of deposit. "Promise" is defined by § 3.102(a)(3) as an undertaking to pay which must be more than the acknowledgment of an obligation.

The written agreement is not a negotiable instrument since it is not payable to bearer or order. See Texas State Investors v. Kent Electric Co., 620 S.W.2d 841, 843 (Tex.Civ.App.--Houston [14th Dist.] 1981, no writ); Nelson v. Powell, 434 S.W.2d 165, 166 (Tex.Civ.App.--Beaumont 1968, no writ).

But this does not mean that the writing is not a promissory note. It is possible to have a non-negotiable note. See § 3.104(c). Whether the instrument is negotiable or not is irrelevant, since the suit here is between the original parties to the instrument. The written agreement contains an unconditional promise to pay plaintiff at least a certain sum of money each month. It is, therefore, in the form of a note. See Wexel v. Cameron Grier & Co., 31 Tex. 617 (1869); 11 Am.Jur.2d, "Bills and Notes", § 21 (1963).

Defendant's liability on the instrument is not governed by the law of negotiable instruments, but by the law of contracts. The evidence established the existence of the agreement, performance by plaintiff, defendant's breach and plaintiff's right to recover for the breach of the agreement. Landrum v. Davenport, 616 S.W.2d 359, 361 (Tex.Civ.App.--Texarkana 1981, no writ).

The trial court erred...