Stetson v. First Nat. Bank of Cleveland

• Decision Date: 30 December 1931
• Docket Number: No. 2172.,2172.
• Citation: 44 S.W.2d 792
• Parties: STETSON v. FIRST NAT. BANK OF CLEVELAND.
• Court: Texas Court of Appeals

44 S.W.2d 792

STETSON v. FIRST NAT. BANK OF CLEVELAND.

No. 2172.

Court of Civil Appeals of Texas. Beaumont.

December 30, 1931.

Rehearing Denied January 6, 1932.

Appeal from District Court, Liberty County; Thos. B. Coe, Judge.

Action by the First National Bank of Cleveland against C. H. Stetson and another. From a judgment for plaintiff, defendant C. H. Stetson appeals.

Affirmed.

Stevens & Stevens, of Houston, for appellant.

P. C. Matthews, of Liberty, for appellee.

O'QUINN, J.

Appellee sued J. W. Smith and C. H. Stetson in the district court of Liberty county to recover on a promissory note in the sum of $880, together with a foreclosure of a chattel mortgage of even date with said note executed by said Smith on certain live stock. Smith answered by special plea that appellee could not maintain its suit because the due date of the note sued on had been extended and said note was not due, and further answered by general denial. Stetson answered that he executed said note only as surety for Smith, and that said Smith had executed the mortgage which appellee sought to foreclose, and specially that after the note became due the said Smith had an opportunity to sell certain of the livestock for a named price and requested permission of appellee, mortgage holder, to sell said stock and to apply the purchase price on the note, but that appellee refused its consent to such sale; that by reason of appellee's refusal to allow said sale there was lest in the security of said note the sum of $327.50, in that two head of the said stock that could have been sold for $165 had died, five other head of said stock which could have been sold for $35 each had depreciated in value one-half, and other stock under said mortgage had depreciated in value $75; that appellant, as surety on said note, was thus deprived of having the sum of $327.50 applied on the debt, and that said loss was caused by appellee's negligence and unwarranted refusal to agree to and permit the sale of said stock; and that he, appellant, had stood ready and willing to purchase said stock proposed to be sold, and his codefendant, Smith, was willing to apply the proceeds on the note.

Appellee, by supplemental petition, replied to appellant's answer by general demurrer to paragraphs 4 and 5 of said answer relative to the request for the sale of certain of the mortgaged stock and alleged loss in the value of said security by reason of its not permitting said sale, and by general denial of all of the allegations in said answer contained. The court sustained the demurrer to appellant's answer relative to the proposed sale of the mortgaged stock. Smith's plea in abatement was overruled, and, without further pleadings, the case was tried to the court and judgment rendered for appellee against Smith and Stetson, jointly and severally, for $1,105.40, being for the amount of the note, interest, and attorney's fees, and for foreclosure of the mortgage. From this judgment, Stetson has appealed.

Appellant's brief contains four assignments of error, all complaining that the court erred in sustaining appellee's demurrer to paragraphs 4 and 5 of his said answer, same being that portion of said answer relative to the refusal of appellee to permit the sale of certain stock upon which it held a mortgage to secure the payment of the note.

The assignments are all overruled. The note sued on reads:

                "$880.00
                     Cleveland, Texas, October 1st, 1928
                

"One year after date I, we, or either of us, promise to pay, for value received, to the order of The First National Bank of Cleveland, Texas, the sum of Eight Hundred Eighty and no/100 Dollars, with interest from maturity hereof at the rate of ten per cent. per annum until paid. It is further agreed that if this note is not paid at maturity, and the same is placed in the hands of an attorney for collection, or if suit is filed on same, we agree to pay ten per cent. of the principal and interest due hereon, in addition hereto, as attorney's fees for collection. Protest and notice on the above note is hereby expressly waived.

                  "No. 28138
                  "Due October 1st, 1929
                  "P. O. Hightower, Texas
                                         "J. W. Smith
                                         "N. P. Havard
                                         "C. H. Stetson."
                

Appellant's brief states that "it was contended in the court below that under the Negotiable Instrument Act, since there was nothing on the face of the note to show that Stetson was a surety, he had no right to complain."

Appellant's insistence is that an accommodation maker, or surety, can always show his relation as such against the original payee of the note, and that the Texas Negotiable Instruments Act (Rev. St. 1925, arts. 5932-5948) did not change this rule. He cites us to the case of Brinker v. First National Bank of Oklahoma (Tex. Com. App.) 37 S.W.(2d) 136, as sustaining his contention.

It is well settled in this state that an original payee of a note is not a holder in due course, and therefore a negotiable note held by the payee is subject to every defense to which it would be subject if it were nonnegotiable, and that an accommodation maker can establish a complete defense by pleading and proving such facts as would defeat a recovery against him. Section 58, art. 5935, R. S. 1925; Threshing Machine Co. v. Howth, 116 Tex. 434, 293 S. W. 800, 801. Brinker v. Bank, supra, cited by appellant, follows and is based upon the holding in Threshing Machine Co. v. Howth, supra. The note in the instant suit shows upon its face that all the signers are joint makers and principals. There is nothing to disclose that any one of the signers was a surety. Appellee, plaintiff below, specifically pleaded a primary obligation against the makers of the note, copying the note into its petition. Appellant, in his answer, did not plead general denial, but satisfied himself by merely alleging in paragraph 1 of his answer that he was a surety, and then in paragraphs 4 and 5 that as such...