Shaw v. Nolen

• Decision Date: 21 December 1929
• Docket Number: (No. 8289.)
• Parties: SHAW, Banking Com'r, v. NOLEN.
• Court: Texas Court of Appeals

23 S.W.2d 445

SHAW, Banking Com'r, v. NOLEN.

(No. 8289.)

Court of Civil Appeals of Texas. San Antonio.

December 21, 1929.

Rehearing Denied January 15, 1930.

Appeal from District Court, De Witt County; J. P. Pool, Judge.

Suit by James Shaw, Banking Commissioner, against W. C. Nolen. Judgment for defendant, and plaintiff appeals. Affirmed.

Spencer, Rogers & Lewis, of San Antonio, for appellant.

Fly & Ragsdale, of Victoria, for appellee.

COBBS, J.

Appellant banking commissioner sued W. C. Nolen, appellee, on a promissory note executed by appellee, dated August 1, 1927, for the sum of $1,200, payable to Yoakum State Bank six months after date, with 6 per cent. interest after date. It is alleged that the note was delivered to the Bankers' Finance Corporation of South Texas, which corporation delivered it to Yoakum State Bank and received from the bank $1,200 cash; that the charter of Yoakum State Bank had expired; that a new corporation known as the Yoakum State Bank had been organized about August 9, 1927, and all of the assets of Yoakum State Bank were transferred to the new bank.

The defense, besides exceptions, was that the note was given for stock in the Bankers' Finance Corporation of South Texas, with the understanding that the note would be held in escrow by the bank until Nolen procured a loan of $12,000 from the Bankers' Finance Corporation, at which time 10 per cent. of the proceeds of this loan would be used to pay off and discharge the note; that, in the event he did not procure the loan, he was not to pay the note; that he executed the note and delivered it in advance of receiving the stock and the loan because it was represented to him that the note was needed by the managers or promoters of the corporation as evidence that he had bought $1,200 worth of stock in the corporation. He alleged that these dealings were had with M. C. Driscoll, one of the bank's officers, and that the transactions occurred at the bank's place of business. He alleged further that the stock was never delivered to him; and that the loan was never made, so that the note never became the property of the bank, it was simply held in trust by it; that the consideration of the note failed; and that it was unenforceable because it was given for stock in a corporation in violation of the Texas Constitution.

This case was tried with a jury upon special issues submitted by the court.

The jury found that Yoakum State Bank, through its vice president, M. C. Driscoll, acquired possession of the note under the agreement with Nolen that the bank would hold the note until the Bankers' Finance Corporation delivered $1,200 worth of stock in said corporation and made him a loan of $12,000; that the new bank, at the time it took over the assets of the old one, had knowledge of this agreement; that the new bank agreed and obligated itself to carry out the agreements and contracts of the old bank; that other officers of the Yoakum State Bank, other than Driscoll, at the time the note was acquired, had knowledge of the agreements made with Nolen; that the knowledge of M. C. Driscoll was acquired in the transaction of the business of the bank; and that other officers of the new bank had knowledge of all the facts.

It was a proper pleading that the defendant was not to pay the note given for subscribed stock in the event he did not obtain the loan from the corporation in which he was subscribing for stock, and the court did not err in refusing to strike it out. The verbal testimony stating the facts and want of consideration was proper.

Defendant raised by his pleading that Yoakum State Bank was merely a trustee and not the owner of the note and had no right to recover on it. The note was delivered and held in escrow, and there was no consideration given for it. Waters v. Byers Bros. & Co. (Tex. Civ. App.) 233 S. W. 572; article 1, § 16, of Uniform Negotiable Instrument Law of this state passed by Thirty-Sixth Legislature (chapter 123); Reid v. Ragland (Tex. Civ. App.) 156 S. W. 920; Henry v. McCardell, 15 Tex. Civ. App. 497, 40 S. W. 172; Rahe v. Yett (Tex. Civ. App.) 164 S. W. 30; Central Bank & Trust Co. v. Ford (Tex. Civ. App.) 152 S. W. 700; Hansen v. Yturria (Tex. Civ. App.) 48 S. W. 795; Watson v. Rice (Tex. Civ. App.) 166 S. W. 106 (writ of error refused); Hawkins v. Johnson (Tex. Civ. App.) 181 S. W. 563,...