Smith v. Traders' Nat. Bank
| Decision Date | 18 October 1889 |
| Citation | 12 S.W. 221 |
| Court | Texas Supreme Court |
| Parties | SMITH <I>v.</I> TRADERS' NAT. BANK. |
Appeal from district court, Tarrant county; R. E. BECKHAM, Judge.
A. M. Carter, for appellant. Hoggsett & Greene, for appellee.
This suit was brought by appellee against appellant, to recover upon a promissory note executed by the latter, payable to the order of the Texas Investment Company, Limited, a private corporation, and transferred by the payee to the appellee. The defendant in the court below pleaded a general denial, and also specially answered, alleging a failure of consideration, and that the plaintiff received the transfer of the note with notice of his defense. It was averred in the special answer that at the time of the execution of the note the Texas Investment Company, Limited, was upon the verge of a failure, and that in order to maintain its credit and standing it was agreed among the stockholders that each should execute to the company his promissory note for an amount equal to the amount of stock held by him in the company, except such as held the obligations of the company, and that such stockholders should release to the corporation an amount of their credits equal to the amount of their respective shares. The agreement was alleged to be in writing, and the following was set out as a copy thereof:
It was also alleged that the note sued upon was executed in pursuance of this agreement; that some of the stockholders failed to execute their notes as promised; and that Fore, Morphy & Henderson, who were stockholders, and held the obligations of the company, refused to release such obligations to the amount of the stock held by them. It was also specially averred that it was agreed with the company that the notes executed in pursuance of the written agreement above set forth were to be used by the company in carrying out certain contracts for the delivery of cattle upon which the defendant and others were its sureties; that the note in suit was not so used, but that it was transferred to the plaintiff to secure a previously existing indebtedness to it; and that the company had made default upon the cattle contracts, and that in consequence thereof the defendant had been compelled to pay, as its surety thereon, sums of money largely in excess of the amount of the note. It was also averred in defense that the plaintiff had received the note sued upon in connection with others, as collaterals to secure the payment of a note held by it against the investment company, and that it had collected a sufficient sum of money from the other collaterals to discharge the indebtedness. The plaintiff did not reply to this answer by supplemental petition, but filed an amended original petition, in which it averred that it became the owner of the note sued upon by indorsement and delivery before maturity for a valuable consideration, and without notice of any defense thereto. The plaintiff filed demurrers to so much of the answer as alleged a failure...
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