Viracola v. Dallas Intern. Bank

• Decision Date: 21 March 1974
• Docket Number: No. 5315,5315
• Citation: 508 S.W.2d 472
• Parties: L. A. VIRACOLA, Appellant, v. DALLAS INTERNATIONAL BANK, Appellee.
• Court: Texas Court of Appeals

Page 472

508 S.W.2d 472

L. A. VIRACOLA, Appellant, v. DALLAS INTERNATIONAL BANK, Appellee.

No. 5315.

Court of Civil Appeals of Texas Waco.

March 21, 1974.

Rehearing Denied April 25, 1974.

Weinberg, Sandoloski & Hines (J. C. B. Aler), Dallas, for appellant.

Irion, Cain, Magee & Davis (Tedford E. Kimbell), Dallas, for appellee.

HALL, Justice.

The defendant, L. A. Viracola, appelals from a summary judgment awarding the plaintiff, Dallas International Bank, recovery against him on a past due note. American Panel Corporation and Viracola are co-makers of the note and Bank is its payee. Viracola signed the note as president of the corporation and in his individual capacity. It was executed on April 7, 1970, and was due 90 days thereafter. This suit was brought against Viracola only. We reverse and remand.

To be entitled to a summary judgment in a proceeding such as this, a plaintiff must come forward with proper pleadings and proof that there is no genuine issue as to any material fact and that he is entitled to judgment as a matter of law. Sec. (c), Rule 166--A, Vernon's Texas Rules of Civil Procedure; Harrington v. Y.M.C.A., (Tex.Sup., 1970) 452 S.W.2d 423, 425.

Viewed alone, Bank's pleadings and motion and supporting proof would entitle it to the judgment rendered. However, in opposition to Bank's motion, Viracola filed an affidavit in which he set forth the following facts: On November 4, 1966, he was president of American Panel Corporation. On that day the company borrowed $9,000 from Bank and made a note to it for that amount. The money was borrowed to support operation of the company during negotiations for its sale to a buyer in Alabama. Viracola signed the note on behalf of the corporation in his capacity as its president. Soon thereafter, Bank requested Viracola to co-sign the note individually and to pledge his American Panel Corporation stock with Bank 'only to assure the Bank that the note would be paid in full first from the proceeds of the sale before any distribution of funds was made to other creditors and stockholders.' Viracola was assured by Bank that 'if the sale was not finalized' the stock would be returned to him and his individual liability on the note would end. Viracola pledged the stock and co-signed the note. From then until January, 1969, the note was renewed several times. Each renewal was co-signed by Viracola 'with the same conditions as per the original note.' In January, 1969, the sale fell through and the Alabama buyer withdrew. Bank returned Viracola's stock to him. In March, 1969, dickering began for sale of the company to a buyer in Washington, D.C. Bank again requested that Viracola pledge his corporate stock and co-sign renewal notes on April 3, 1969, 'with same conditions as original note'. He did. The note was continued and renewed 'with the same understandings and conditions.' In December, 1969, Bank sued both makers on the note. In January, 1970, Viracola reviewed the dealings between Bank and the company with Joe Abbey, Bank's attorney. Abbey requested that Viracola renew the note 'under the same conditions' and the suit would be dismissed. On February 6, 1970, the note was renewed and co-signed by Viracola 'with the same conditions.' The suit was dismissed by Bank. On April 7, 1970, the note was again renewed 'with the same conditions and understandings.' In May, 1970, the buyer from Washington, D.C., withdrew from further negotiations. Viracola resigned from the corporation and it ceased operation. No further actions or demands were taken or made by Bank against Viracola until December, 1972, at which time Bank demanded that he pay the note. This suit was filed in January, 1973.

Viracola's affidavit places in issue the question of whether or not the note was induced by fraud. Fraud in the inducement is a good defense in a suit on a note between the original parties. Costello v. Sample, (Tex.Civ.App.,--Waco, 1971, writ ref. n.r.e.) 470 S.W.2d 446, 448; Secs. 3.408, 3.306(2) and 3.302, Vernon's Ann.Tex.Bus. & C.Code, V.T.C.A.

Bank asserts that Viracola's statements concerning the alleged fraudulent procurement of his signature is without probative value because they violate the rule which excludes parol evidence to vary the terms of a written instrument. Not so. The exception to that rule which permits the admission of extrinsic evidence to show that the execution of a simple contract was procured by fraud applies also in actions on notes. Farnsworth v. Dolch, (Tex.Civ.App.--Waco, 1972, writ ref. n.r.e.) 488 S.W.2d 531, 533; 23 Tex.Jur.2d 538, Evidence, Sec. 363; Sec. 3.306(2), Vernon's Tex.B. & C.Code; 9 Tex.Jur.2d 220, Bills & Notes, Sec. 207.

Contrary to Bank's contention, it is of no consequence that Viracola has not pleaded fraud. When the summary judgment record discloses facts which show that an amendment to the pleadings of the opposing party will render the position of the moving party untenable under the substantive law, it cannot be said that the movant has established his right to judgment as a matter of law, and summary judgment is improper. Womack v. Allstate Insurance Company, 156 Tex. 467...