Liddell, Johnson & Garmany v. Crain , 53 Tex. 549 ( 1880 )

Bonner, Associate Justice.

In this case a jury was waived and cause submitted to the court.

Plaintiffs’ propositions, under their first assigned error, and which present the questions of law arising thereunder, are that:

“1. J. C. Schenck was chargeable with notice of the failure of consideration of the note sought to be cancelled, because he was a party to the deeds of trust executed on the same property for which it was given, through which the consideration failed.

“2. Notice to one member of a firm of the fraud or failure of consideration of a note given for property belonging to the firm is notice to all the partners.”

The questions presented for our revision are not whether the court erred in not deciding as a question of fact that Schenck had knowledge of the failure of consideration of the note for $787.50 given by plaintiffs to Jasper and Silas Crain, if, indeed, under the evidence, we could revise this question of fact, but whether, as a question of law, Schenck was chargeable with notice of this failure of consideration by reason of having been a party to the trust deeds which created the incumbrance, and by reason of having been a member of the firm of J. Crain & Co., composed of himself, Jasper Crain and one Nowell.

Having joined in the trust deeds, the law would charge him with notice of their existence and contents, and he would also be chargeable with notice of the transactions of the firm within the scope of the partnership business.

Although the existence of the trust deeds was the cause of the failure of consideration of the note, yet, as they were upon the public records, the gravamen of plaintiffs’ cause of action was the alleged fraudulent representations of Jasper Crain that the property was unincumbered.

It is not contended that Schenck participated in this fraud.

Crain had the right to sell his individual interest in the property subject to the incumbrances, and it is not believed that because the law would impute to Schenck notice of the existence of this incumbrance, it would also impute to him knowledge of the fraud of Crain in making such sale.

This sale by Crain was not a partnership transaction of J. Crain & Co., but of Crain’s individual interest only, and hence the law would not in this transaction also impute to Schenck notice of the facts, as it would had the sale been within the scope of. the partnership.

The second assigned error is, that the court erred in rendering judgment for the amount of said $500 note, when, as the record shows, the same was given for an antecedent and pre-existing debt, and would not therefore be sufficient consideration to make defendant Schenck an innocent holder of the note for $787.50.

It is now the settled law of this court that the transfer of a negotiable promissory note as collateral security, is a transfer in due course of trade and for a valuable consideration. Greneaux v. Wheeler, 6 Tex., 515; Blum v. Loggins, ante, 121; Swift v. Tyson, 16 Pet., 1.

The sixth assigned error is, that the court erred in not rendering judgment over against the defendants Jasper and Silas Crain, in favor of plaintiffs, under their prayer for general relief, for the amount of the judgment in favor of Schenck against them.

The object of plaintiffs’ suit was the cancellation of their note to Jasper and Silas Crain, and for this they specially prayed.

Although it was very appropriate that in this suit plaintiffs should have had judgment over against Jasper and Silas Crain for the amount of the judgment against them in favor of Schenck, yet this was not made an issue in the case, and the attention of the court seems not to have been called to it in the motion for a new trial or otherwise. Under the case as presented, the failure to give such relief is not sufficient to reverse the judgment.

The seventh assigned error is, that the court erred in not rendering judgment against Jasper Crain in favor of Schenck, upon the $500 note set out in his cross bill, before giving judgment against plaintiffs for the amount thereof.

This was only a subordinate issue in the case, and seems also not to have been called to the attention of the court.

The production, however, of the note for $500 given by Jasper Crain to Schenck, in connection with the other testimony, was sufficient to make such prima facie case in favor of Schenck against Crain, as authorized the court, the same not having been rebutted, to render the judgment for the amount of this note and interest in favor of Schenck against plaintiffs.

The eighth assigned error is, that the court erred in overruling plaintiffs’ motion for a new trial.

Under the motion as made, the plaintiffs could not demand as a legal right that they should have a new trial; and though all the circumstances of the case would seem strongly to have appealed to the discretion of the court in favor of the motion, yet there is not such an apparent abuse of this discretion as would authorize a reversal of the judgment.

It is also assigned as error that the judgment failed to properly apportion the costs.

We think this assignment well taken.

Schenck, Wright and McDonald should have recovered of the plaintiffs all costs by them expended, and plaintiffs should have recovered of Jasper and Silas Crain all the remaining costs, and to this extent the judgment is reformed, but in all other respects affirmed.

As there was no motion made in the court below to reform this part of the judgment, or the attention of the court otherwise called to it, the costs in and about this appeal will be adjudged against plaintiffs in error.

Reformed and affirmed.

[Opinion delivered June 4, 1880.]