McGregor v. Hudson

• Decision Date: 27 March 1895
• Citation: 30 S.W. 489
• Parties: McGREGOR v. HUDSON.
• Court: Texas Court of Appeals

Page 489

30 S.W. 489

McGREGOR v. HUDSON.

Court of Civil Appeals of Texas.

March 27, 1895.

Appeal from Haskell county court; D. P. Sanders, Judge.

Action by W. T. Hudson against G. C. McGregor. There was a judgment for plaintiff, and defendant appeals. Reversed.

Baldwin & Lomax, for appellant. H. G. McConnell, for appellee.

Conclusions.

HEAD, J.

On May 21, 1892, F. L. McGregor and appellee executed to the First National Bank of Haskell, Tex., their negotiable note for the sum of $204. Appellee was in fact surety for McGregor, and, as sometimes happens in such cases, was compelled to pay the debt. He subsequently instituted this suit to recover upon said note against McGregor's father (appellant), upon two grounds: (1) That F. L. McGregor was in fact the agent of his father, and the amount for which the note was given was used for the benefit of the latter. (2) If such agency did not in fact exist, appellant, by holding his son out as authorized to represent him, and by repeatedly paying debts so contracted, was estopped to deny that authority had in fact been given.

That an undisclosed principal can be held liable upon contracts not negotiable by the law-merchant, made for his benefit by his agent, in the latter's name, is well settled in this state. Cattle Co. v. Carroll, 63 Tex. 52. In that case, however, it is said: "The general rule is that an agent should execute a contract in the name of his principal; and, in reference to negotiable instruments, it is well settled that no one can be charged thereon unless his name appears as a party to the paper in some relation. Daniel, Neg. Inst. 303. This rule, however, in reference to negotiable paper, arises from the nature of such paper and the uses for which it is intended. Such paper is expected and intended, if it be necessary or convenient for the holder to do so, to be transferred, and to pass into the hands of various persons; and, for the security of all who deal with it, it is necessary that it should show upon its face the liability of every person who is bound for its payment, for it is upon what appears from the paper to be the true relation of persons to it that successive holders contract." The section from Mr. Daniels cited fully sustains this conclusion. It must be admitted, however, that this distinction has not always been observed in this state. In the following cases it seems to have been taken for granted that the right to charge an undisclosed principal applies as well to negotiable paper as to other simple contracts: Raymond v. Mann, 45 Tex. 301; Sessums v. Henry, 38 Tex. 37; Edwards v. Ezell, 2 Willson, Civ. Cas. Ct. App. 276. In Heffron v. Pollard, 73 Tex. 100, 11 S. W. 165, the distinction seems to have been in the mind of the judge who wrote the opinion, and we are aware of no case since the one cited from 63 Tex. which ignores it. Were it necessary to decide the question, we, therefore, might feel constrained to hold that parol evidence is not admissible to charge an undisclosed principal for the payment of a negotiable promissory note executed by his agent in his own name, especially where, at the time he receives the note, the payee is informed of the liability of the principal. Chandler v. Coe, 54 N. H. 561; Mechem, Ag. § 699. This last authority, in the section quoted, says: "But where the creditor, with knowledge of the principal's liability, sees fit to take the individual note of the agent, without taking at the time of the transaction any steps indicative of an intent to hold the principal, this is equivalent to a discharge of the principal, as a matter of law." But do the principles announced in the authorities above quoted have application to this case? We are of opinion they do not. If the note was in fact made for the benefit of the...