National Cattle Loan Co. v. Armstrong

• Decision Date: 09 June 1928
• Docket Number: (No. 11973.)
• Citation: 8 S.W.2d 767
• Parties: NATIONAL CATTLE LOAN CO. v. ARMSTRONG et al.
• Court: Texas Court of Appeals

8 S.W.2d 767

NATIONAL CATTLE LOAN CO. v. ARMSTRONG et al.

(No. 11973.)

Court of Civil Appeals of Texas. Fort Worth.

June 9, 1928.

Rehearing Denied but Judgment Reformed July 14, 1928.

Appeal from District Court, Tarrant County; Bruce Young, Judge.

Suit by the National Cattle Loan Company against George W. Armstrong and others. From the judgment, plaintiff appeals. Affirmed.

Bryan, Stone, Wade & Agerton, of Fort Worth, for appellant.

Cantey, Hanger & McMahon, of Fort Worth, and Bailey & Bailey, of Dallas, for appellees.

DUNKLIN, J.

The National Cattle Loan Company, a private corporation chartered under the laws of the state of Delaware, having its domicile and principal place of business at National Stockyards, St. Clair county, state of Illinois, and also having a permit to do business in the state of Texas, instituted this suit against George W. Armstrong and the copartnership firm of George W. Armstrong & Sons, composed of George W. Armstrong, Allen J. Armstrong, and George W. Armstrong, Jr., and against the individual members thereof, and also, against John H. Kirby, to recover judgment on seventeen promissory notes, dated June 23, 1922, payable January 9, 1923, the aggregate sums of which amounted to $137,152, with interest thereon from maturity at the rate of 10 per cent. per annum, and 10 per cent. of the principal and interest as attorneys' fees.

All of the notes were made payable to the order of the National Stockyards National Bank, National Stockyards, Ill. They were executed by the partnership firm of "George W. Armstrong & Sons" as makers, and, at the time of such execution and before delivery, they were indorsed on the back thereof by defendants George W. Armstrong and John H. Kirby. The notes also bear the indorsement of the National Stockyards National Bank without recourse.

Plaintiff alleged in its petition that the bank for a valuable consideration indorsed, transferred, and delivered the notes to it, and that defendants had become jointly and severally liable to it for the principal, interest, and attorneys' fees sued for. Usury was one of the defenses pleaded by defendant George W. Armstrong; that plea being based upon allegations that the notes were made payable in the state of Illinois to a bank organized and existing under the National Banking Act, and having its domicile and doing business at National Stockyards, Ill., and that the notes, which were renewals of former notes, included interest in excess of 7 per cent. per annum, aggregating the gross sum of $108,000, and therefore were usurious.

Defendant George W. Armstrong further pleaded, and the evidence showed, his discharge in bankruptcy. No answer was filed by the partnership firm of George W. Armstrong & Sons.

Defendant John H. Kirby filed an answer, in which he alleged, and the evidence showed, that he was an accommodation indorser only. His answer contained these further allegations:

"This defendant denies that the said notes herein sued upon were delivered, assigned, and indorsed for a valuable consideration by the National Stockyards National Bank to the plaintiff herein; but alleges, on the contrary, that, while said notes were made payable to the National Stockyards National Bank, of National Stockyards, Ill. (and this defendant accepted and believed that bank to be the true payee), the notes were intended to be and were actually delivered to an entirely different payee, viz. the National Cattle Loan Company; that the delivery to the National Stockyards National Bank was in form only and without consideration, but that the money, if any such was advanced on said notes, was advanced by the National Cattle Loan Company; that the National Stockyards National Bank never received and held said notes for themselves, and never received any consideration for their indorsement or transfer thereof, but, on the contrary, said notes, while made payable to the order of the National Stockyards National Bank, were intended to be and were actually delivered to and held by a different payee, which is plaintiff in this case."

The case was tried before a jury and the following are the special issues submitted to them, together with their findings thereon:

"Question 1. What notes, if any, included in the amount of $137,152 in evidence before you, were received by the National Stockyards National Bank, acting as agent for and in behalf of the National Cattle Loan Company? Ans. All.

"Question 2. What notes, if any, included in the amount of $137,152 in evidence before you were received and paid for by the National Stockyards National Bank for and in behalf of itself? Ans. None."

Judgment was rendered denying plaintiff any recovery against either George W. Armstrong, individually, or the defendant John H. Kirby; the finding in favor of Armstrong being upon the defense filed that he had been discharged in bankruptcy. Judgment was rendered in favor of the plaintiff against the partnership firm of George W. Armstrong & Sons, composed of George W. Armstrong, Allen G. Armstrong, and George W. Armstrong, Jr., but not against the individual members thereof, for the sum of $70,274.24, which the court found was the balance due upon the notes sued on, after eliminating therefrom the amount held to be usurious interest under the laws of the state of Illinois; the judgment in favor of the individual members of the firm of George W. Armstrong & Sons being by reason of the finding by the trial court that each and all of them were notoriously insolvent.

This appeal has been prosecuted by the plaintiff, but no complaint is made of the judgment in favor of defendant George W. Armstrong, nor that of the individual members of the partnership firm of George W. Armstrong & Sons. And while there is an assignment of error for failure to render judgment against the partnership firm for the full amount claimed, the same cannot be considered because it is not presented as a proposition within itself, nor has any proposition been submitted based thereon.

The judgment recites that, by reason of the findings made by the jury, which are set out above, the defendant John H. Kirby did not become liable on the notes by reason of his indorsement thereon. The evidence offered by the defendants to sustain those findings by the jury consisted chiefly of a pleading that had heretofore been filed by the National Cattle Loan Company, appellant here, in the chancery court of Adams county, Miss., in a suit then pending in that court, styled "George W. Armstrong, Complainant, v. National Stockyards National Bank et al., Defendants." The pleading begins as follows:

"Now comes the National Cattle Loan Company, a corporation, which has been made defendant in this cause by the amended bill herein filed by B. K. Isaacs, trustee in bankruptcy of George W. Armstrong, the original complainant, and publication for said defendant as a nonresident of Mississippi, and which now enters its appearance in this suit by its attorneys and answers the original and amended bills herein filed, and for answer to so much and such parts of said bills as it is advised that it is material or proper for it to answer, says."

Then follow allegations to the effect that the notes sued on in that case, which are the same as the ones sued on in this case, were renewals of former notes, the renewals being from time to time, beginning in the year 1917; that the loans represented by those notes were made by the National Cattle Loan Company, through Wirt Wright, its president, at its principal office at National Stockyards, Ill., which was likewise the domicile and place of business of the National Stockyards National Bank; that Wirt Wright was the president of both of those corporations; that the National Cattle Loan Company was engaged in rediscounting and selling notes taken by it to purchasers throughout the country, and that the bank named would sometimes purchase notes taken by the same loan company upon the indorsement of the latter company. It was further alleged in that pleading that Wright, the president, without legal advice, made the notes sued on as well as those which were merged into them by way of renewal, payable to said bank instead of in the name of the National Cattle Loan Company, who, in fact, advanced the money for which the notes were given and was the owner of those notes; in other words, that, in taking the notes payable to that bank rather than the National Cattle Loan Company, the bank was acting as the agent of the latter company. That pleading contained this further allegation:

"Defendant further says that there is now on file in this cause, in reply to interrogatories of said George W. Armstrong, a full and complete statement with reference to the original loans to said Armstrong, with all renewals thereof showing character of notes, rates of interest, interest charged and all other matters pertaining to said transaction, and defendant now specially refers to said statement, which was made and sworn to by Wirt Wright, president of said bank, June 15, 1923, and which, with its several exhibits, was filed herein on the 30th day of July, 1923, and avers that it is a complete statement of said transactions."

To the introduction of that pleading, the plaintiff objected on the following grounds: That it was immaterial to any issue made in this case; that the pleading was in a court in a foreign state; that neither George W. Armstrong nor John H. Kirby was a party to that suit; and on the further ground that the pleading was not verified, did not bear the signature of the plaintiff or of any of the officers, but merely purported to be the product of some of its attorneys, and because the particular notes sued on are not described in that pleading. The pleading referred to above was offered in evidence as an admission by the plaintiff against its interest, and we believe that it was admissible upon that theory; and we believe further that it is immaterial that it was filed...