Hamilton Gin & Mill Co. v. Sinker, Davis & Co. , 74 Tex. 51 ( 1889 )

Gaines, Associate Justice.

This suit was instituted March 22,1886, by defendant in error, as a corporation, to recover of plaintiff in error, also as a corporation, an indebtedness evidenced by four promissory notes, and to forclose a mortgage upon real estate given to secure the indebtedness. 'There was a judgment by default.

The plaintiff in error assigns as error, first, that the citation is insufficient to support the judgment; but the citation is not copied into the record and the assignment can not therefore be considered. The judgment recites that the defendant was duly cited. If the assignment itself had not shown that a citation had been issued and served, it would have been our duty upon the record before us to reverse the judgment for the want of service. It is, however, evident from the whole record that there has been citation and service, and we will presume that they were lawful, the contrary not having been shown. .

The notes sued on were dated on the 15th day of August, 1884, and were payable respectively January 15, 1885, May 15, 1885, November 15, 1885, and May 15, 1886. In the original petition there was a prayer for judgment on the notes and for a sale of the mortgaged property for a sufficient amount in cash to pay the notes then due and on a credit for the balance, which was prayed to be appropriated to the satisfaction of the note not due. The potes stipulated for a payment of attorney fees, for which a recovery was also prayed. On the 18th of May, 1886, an amended petition was filed, in which it was alleged that all the notes were' due and in which a judgment was prayed for the amount of all the ñores, including interest and attorney fees, and for a foreclosure of the mortgage and the sale of the property to pay the judgment so rendered. On the day the amended petition was filed a judgment was rendered in accordance with its ¡orayer, treating all the notes as then due. The decree, as is proper in cases where the whole indebtedness is due, ordered that in the event the property did not sell for enough to satisfy the judgment that-the plaintiff should have execution for the balance remaining unpaid. In this there was error. The last note was expressly payable May 15, 1886, and was entitled to three days of grace. It is true that the notes, described in the petition show that attorney fees were recoverable in the-event they were not paid at maturity, and they do not show whether or not they were payable either to bearer or to the order of the payee.

As to the effect of a stipulation for the payment of attorney fees in a. promissory note there have been various rulings in the courts of last resort in this country. That the stipulation does not affect the validity of the note is settled in this court (Miner v. Bank, 53 Texas, 559; Roberts v. Palmer, 41 Texas, 617); but whether it destroys its negotiability or not seems not to have been determined with us. The courts of several of the States have held that it does not, and this appears to us the better opinion. The agreement to pay the expense of collection in the event the note is not paid at maturity does not change the fact that the sum to be paid when due is fixed and unconditional. Costs are always recoverable when suit has to be brought, and this is a contingent liability. The stipulation for attorney fees is no more. That this is the better doctrine is the opinion of a recent text writer of accepted authority. 1 Dan. on Neg. Ins., secs. 62 and 62a, and notes, where the authorities are collated. A promissory note which is not payable to the bearer or to the order of the payee is not in strict legal language negotiable; but it is said by Judge' Story that “a note not negotiable enjoys by our law all the privileges of a note which is negotiable so far as the maker and payee are concerned.” Story’s Prom. Notes, sec. 41. And in England at an early day it was expressly held that a note payable to the payee only is entitled to the three days of grace. Smith v. Kendall, 6 Term Reports, 124; see also The Dutchess, etc., v. Davis, 14 John., 238; The Goshen, etc., Road v. Horton, 9 John., 217; Denning v. Bochanstors, 2 Carnes, 137.

We think this should be accepted as to the common law doctrine. The decision in Brown v. Chancellor, 61 Texas, 437, is to the effect that the object of the Act of 1862 (Rev. Stats., art. 276) was merely to restore the law merchant as to days of grace upon bills of exchange and promissory notes.

The note in this case, made payable on May 15, 1886, being entitled to three days of grace, did not fall due until the 18th of that month—the day on which the judgment was rendered. It is held in Moore v. Hollaman, 25 Texas Supplement, 81, that the payee of a note has all of the day of its maturity in which to pay it, and that he can not be sued upon it until the next day. The same principle is decided in Watkins v. Willis, 58 Texas, 521. It follows that the judgment in this case was prematurely rendered upon the last note. In so far as it awarded a recovery for the .amount of that note and execution for any part of that amount it is erroneous. It is erroneous also in so far as it included the attorney fees on that note, because the condition upon which that liability was to accrue had not happened when the judgment was rendered..

We have discussed the notes upon which the judgment was rendered as shown by the allegations in the petition. There are copies of notes found in the record which are not made a part of a statement of facts or of any bill of exceptions. They show clearly that the notes were negotiable, but we have not felt at liberty to look to them.

The judgment is reversed and the cause remanded.

Reversed and remanded.

Delivered May 17, 1889.