State Nat. Bank of El Paso, Tex. v. Cantrell , 47 N.M. 389 ( 1943 )

On Motion for Rehearing The appellant, plaintiff below, has moved for rehearing setting up two grounds therefor. First, and incident to the claim that the writing involved is a Texas contract, it is contended we have not given proper effect to certain holdings of the Supreme Court of that state protecting a holder in due course of negotiable paper against the defense of failure of consideration upon breach of an executory contract furnishing the consideration for the paper. Next, it is asserted we overlooked certain testimony in the record on the issue of estoppel urged against the defendant.

We have carefully reviewed the first contention and are satisfied with our holding in the opinion filed. The plaintiff seemingly fails to appreciate that we agree to the correctness of the Texas decisions, which are in accord with our own decision in Azar v. Slack, 29 N.M. 528, 224 P. 398. The Texas and New Mexico law seem no different in this respect. Where the plaintiff loses is not because of any difference in the law of the two states on the question presented but, rather, in failing to challenge successfully the defendant's right under our then controlling statute on counterclaims (1929 Comp., § 105-417), or under the Texas statute as well as for that matter (Art. 2017, Vernon's Revised Civil Statutes 1936), to set up against the plaintiff, even though the holder of the note, his cause of action for breach of warranty under the conditional sale contract by whose covenants the plaintiff unhappily is bound as assignee and holder. Even assuming this to be a Texas contract, the lex fori determines whether a claim of defendant may be pleaded by way of setoff or counter-claim. 11 Am.Jur. 504.

Upon the second point urged in support of the motion, we confess an oversight. In our opinion, we stated that except for the defendant's letter mentioned in finding No. 8 acknowledging the complete installation of the equipment, that it was satisfactory and promising to make payments on the note as called for, there was no testimony touching plaintiff's reliance upon the letter in making the purchase. The circumstances under which this acknowledgment was secured are set out in our opinion. This statement is inaccurate. In making it, we overlooked the testimony of plaintiff's vice-president appearing in the transcript on the former appeal, before us for consideration on this appeal, stating that but for defendant's letter he would not have purchased the note and that he placed full reliance on it. However, the finding No. 8 quoted in our opinion, standing alone, fails to create an estoppel. Whether, but for defendant's letter mentioned in the court's finding, the plaintiff would have purchased the note, involves speculation on an issue rendered unimportant by the circumstance that the trial court neither so found nor was requested so to find.

Furthermore, at the least, one other essential element of an estoppel by conduct as enumerated in Dye v. Crary, 13 N.M. 439,85 P. 1038, 9 L.R.A., N.S., 1136, is absent in the case at bar. The representation relied upon as constituting the estoppel must have been made with knowledge of the facts. Not only is there a dearth of evidence that such was the case, but there is an affirmative finding that defendant did not know that part of the equipment purchased was second-hand.

It was peculiarly the province of the trial court to determine and find whether the necessary elements existed to support an estoppel. The findings made are not sufficient to warrant us in holding as a matter of law that defendant is estopped to assert his counterclaim. We apprehend that the law of Texas and of New Mexico are the same as respects proof of an estoppel but, whether so or not, and conceding but not deciding that this is a Texas contract, the lex fori determines the competency, admissibility, quality and degree of evidence, the quantum of evidence required to take a case to the jury and the right to direct a verdict for insufficiency of the evidence. 11 Am.Jur. 522.

The motion for rehearing will be denied and it is so ordered.

MABRY, BICKLEY, and BRICE, JJ., concur.

THREET, J., did not participate.