Metropolitan Nat. Bank v. Vanderpool

• Citation: 192 S.W. 589
• Decision Date: 31 January 1917
• Docket Number: (No. 1107.)
• Parties: METROPOLITAN NAT. BANK v. VANDERPOOL.
• Court: Texas Court of Appeals

192 S.W. 589

METROPOLITAN NAT. BANK v. VANDERPOOL.

(No. 1107.)

Court of Civil Appeals of Texas. Amarillo.

January 31, 1917.

Rehearing Denied March 7, 1917.

Appeal from Hale County Court; W. B. Lewis, Judge.

Action by the Metropolitan National Bank against F. W. Vanderpool. From a judgment for defendant, plaintiff appeals. Affirmed.

Y. W. Holmes and W. W. Kirk, both of Plainview, for appellant. H. C. Randolph and P. B. Randolph, both of Plainview, for appellee.

HUFF, C. J.

The appellant bank brought this suit against appellee, Vanderpool, upon the following note and indorsement:

"$768.00. Minneapolis, Minn., June 29, 1914.

"One year after date I promise to pay to the order of the O. W. Kerr Company seven hundred sixty-eight and no/100 dollars at the office of the O. W. Kerr Company, Minneapolis, Minn., with interest after date at the rate of six per cent. per annum until fully paid, value received. Interest payable annually. Deferred payments of interest to draw same rate as principal sum.

                "____ Payment on Contract No. L _____
                                    "F. W. Vanderpool
                  "Plainview, Texas
                                    "The O. W. Kerr Co
                           "Per P. W. Endsley, Atty. in Fact
                

"For value received I hereby waive protest, demand, and notice of protest on within obligation, and guarantee payment thereof at maturity or any time thereafter.

                            "The O. W. Kerr Co.,
                    "Per P. W. Endsley, Attorney in Fact."
                

The appellee answered and alleged material alteration of the note after its delivery and execution to the O. W. Kerr Company. The alteration consisted in erasing the contract number, which was part of the note at the time of its execution, and referred to a certain contract made between the appellee and the O. W. Kerr Company, and that the alteration was made without the knowledge or consent of appellee. The original number of the note when executed was "Contract No. L 854," and that since that time the No. 854 had been erased, without the knowledge, consent, or authority of appellee. It is further alleged that the O. W. Kerr Company sold to appellee a certain 320 acres of land situated in Alberta, Canada, by a contract in writing, in which the company agreed to convey good title in consideration of $5,440, $500 thereof was paid in cash; the balance of the consideration was evidenced by six promissory notes executed by appellee, and that the note sued on was a renewal of the last of the notes, all the others having been paid off and discharged. It is alleged that the O. W. Kerr Company could not and would not deliver title to the appellee for the land, all of which appellant knew and had notice, and that the note had been altered as above set out, and for the purpose of destroying the appellee's right to plead failure of consideration, or such other defense as he might justly be entitled to, and in order that the holder of the note might claim that he was such without notice of the contract to which it referred.

The appellee introduced in evidence a duplicate of the agreement between himself and O. W. Kerr Company, dated June 29, 1909, with the number thereon at the top and left-hand corner of the contract as follows: "No. L 854," which is then followed by the agreement of the parties. It is recited therein, in consideration of a full performance of the conditions and stipulations and the payments made as thereinafter specified, that "the performance of each and every of the said conditions and stipulations, as well as said payments being hereby expressly declared a condition precedent and of the essence of this agreement." The company agreed to sell and convey, or would cause to be conveyed, to appellee the one-half section of land described as situated in the Province of Alberta, Dominion of Canada, for the sum of $5,440, with six per cent. interest per annum. The contract shows there are six payments provided for, five for the sum of $768, due, respectively, June 29, 1910, 1911, 1912, 1913, and 1914. The first payment being due August 1, 1909, for $1,100, which is shown by the contract not to have borne interest to that date. The interest on the other notes being shown by the contract on the due date of the other notes. After the stipulation with reference to improvements, taxes, etc., providing for the punctual payment of the several amounts, with interest, it is stipulated the purchaser, appellee, would be entitled to a deed, transfer, or patent, conveying the land in fee simple free of all incumbrances. The agreement had indorsed on it:

"Duplicate agreement, No. L 854. The parties to this appeal have agreed in the statement of facts in the record, as follows: The evidence introduced shows a failure of consideration for the note in that the O. W. Kerr Company never delivered the land because same is insolvent. The evidence introduced shows that the note was altered after execution and delivery, without the consent of the defendant, as plead by him, and as found by the jury."

The trial court submitted one issue to the jury:

"Was this note altered by erasure of the figures 854 since its execution and delivery, without defendant's authority?"

The jury answered:

"We, the jury, find for the defendant, believing the figures 854 were erased from note after execution without consent of the defendant."

The trial court rendered judgment for the defendant under this verdict, and recites in the judgment entry that he found that the erasure was a material alteration, and also that there was a total failure of consideration for the note.

The appellant presents in this court three assignments of error: (1) To the action of the court in overruling exceptions 1, 2, and 3. Because the alteration is not shown by the answer to be material; (2) in submitting the issue of alteration because if there was an alteration the evidence shows it was not material; (3) In rendering judgment because the alteration was not material and because the appellant was a purchaser in due course of business for value without notice, and before maturity. Under these assignments appellant presents two propositions: (1) The negotiability of the note is not affected by mere reference to a contract which is the consideration for the note, where it is not thereby burdened with the conditions of the contract, and therefore the erasure of such reference cannot constitute a material alteration; (2) if the reference was sufficient to give notice to the contents of the contract and its execution, there is no evidence that it was breached before the note was indorsed, and that the appellant had knowledge of the breach, and that it was therefore entitled to recover as an innocent purchaser.

The mere fact that the note states the consideration, "if the note be genuine," does not put the holder upon inquiry...