Russell v. People's Nat. Bank

• Citation: 2 S.W.2d 961
• Decision Date: 18 January 1928
• Docket Number: (No. 7161.)
• Parties: RUSSELL v. PEOPLE'S NAT. BANK OF BELTON et al.
• Court: Court of Appeals of Texas

2 S.W.2d 961

RUSSELL v. PEOPLE'S NAT. BANK OF BELTON et al.

(No. 7161.)

Court of Civil Appeals of Texas. Austin.

January 18, 1928.

Rehearing Denied February 28, 1928.

Appeal from District Court, Bell County; Lewis N. Jones, Judge.

Consolidated suits by the People's National Bank of Belton against B. V. Russell, in one of which one Yarrell intervened. From a judgment upon a directed verdict in favor of intervener, defendant appeals. Affirmed.

A. L. Curtis, of Belton, and Jno. W. Brady of Austin, for appellant.

Jas. B. Hubbard, of Belton, for appellees.

McCLENDON, C. J.

Appellee bank brought two suits against appellant, Russell, each upon a negotiable promissory note and trust deed upon real estate securing it. In the first suit the note was for $12,500, dated August 9, 1920, due August 9, 1921; in the second for $20,000, dated November 20, 1920, due November 20, 1921. The suits were brought in 1925 before either note was barred by limitation. September 5, 1925, appellee Yarrell intervened in the first suit, asserting ownership of the $12,500 note. The cases were consolidated by agreement, and thereafter the bank filed an amended petition containing two counts. In the first it set up the two notes and trust deeds, alleging that Yarrell was the real owner of both notes, and asking that judgment thereon be rendered in his favor. In the second, in the alternative, it was alleged that the notes were given as collateral security for a cotton account which Russell owed the bank, the unpaid balance of which was stated; and the prayer was for judgment on the account, in case it were held that recovery could not be had on the notes. The facts, in brief, were that prior to and during 1920 Russell was buying cotton and the bank was advancing the money for his purchases, holding as security therefor cotton tickets until the cotton was sold. The cotton market declined and the two notes and trust deeds were executed upon their respective dates as security for the account. The latter was closed some time in 1921, and thereafter various credits representing the proceeds of other collateral were applied to it. Some time prior to the maturity of the notes Yarrell gave his checks to the bank for the amounts then owing on the account and secured, respectively, by the two notes and trust deeds. The notes were not indorsed, but were placed in the separate file of Yarrell in the bank. At various times after closing the account and up to 1925, the bank sent statements to Russell, showing the balance due on the account and demanding its payment. Prior to filing the suits no credits were entered on the notes so as to conform the amounts owing thereon to the amount of the cotton account balances. There was no formal assignment of the cotton account to Yarrell.

The case was tried to a jury, and judgment upon a directed verdict was rendered in favor of Yarrell upon each note for the amount still due on the cotton account which the note was given to secure, and foreclosing the trust deeds. Russell has appealed.

Appellant's brief contains eight assignments of error followed by thirteen propositions. The latter, however, may be reduced to the following three contentions:

(1) Yarrell's right to recover upon the $12,500 and trust deed securing it was barred by limitation because his intervention was filed more than four years after the due date of the note.

(2) Yarrell never became the owner of either note and judgment could not be rendered thereon in his favor because the notes were merely collateral security for the cotton account which was not assigned to Yarrell.

(3) Being merely personal obligations of the main debtor, the collateral notes could not be sued upon as independent obligations, and therefore, the account being barred when the suit was filed, the notes and trust deeds securing them were likewise barred.

We hold the first contention unsound for two reasons.

In the first place, where suit is brought upon a negotiable instrument in the name of the payee or indorsee thereof, the statute is tolled in favor of the true owner although the latter does not intervene or become a party to the record until after the bar would, but for the filing of the suit, have attached. The holding is that the intervention does not constitute a new cause of action. Field v. Gantier, 8 Tex. 74; Foote v. O'Roork, 59 Tex. 215; Hanna v. Drennan, 2 Posey, Unrep. Cas. 536; Triplett v. Morris, 18 Tex. Civ. App. 50, 44 S. W. 684; Howard v. Stahl (Tex. Civ. App.) 211 S. W. 826. See, also, 37 C. J. pp. 1064, 1065, and note 64.

In the second place, one holding the legal title to a negotiable note either as payee or indorsee may maintain an action thereon in his own name though the equitable or beneficial ownership thereof be in another. There is an unbroken line of decisions in this state to this effect, only three of which we cite. Thompson v. Cartwright, 1 Tex. 87, 46 Am. Dec. 95; Allison v. Phoenix Ins. Co., 87 Tex. 593, 30 S. W. 547; Nickels v. Gilmore (Tex. Civ. App.) 293 S. W. 884. We cite the Nickels Case because it appears to be the last published adjudication on the holding in this state.

In the Cartwright Case (opinion by Associate Justice Lipscomb) it was held that:

"The person who appears to be the legal holder of a promissory note may maintain an action upon it in his own name, although the actual ownership is in another."

In the Allison Case (Associate Justice Brown writing), a suit upon a fire insurance policy, the holding is thus expressed:

"It is a general rule, applicable to all written contracts,...