Camp v. Dallas Nat. Bank , 21 S.W.2d 104 ( 1929 )

In its motion for rehearing, Dallas National Bank contends that this court erred in affirming the judgment below as to Foster and Davisson. I am of opinion that this contention is well taken, and, as the majority adheres to the decision heretofore announced, I will state briefly the reasons for my dissent.

In holding Mr. Camp liable on the note, as maker, we proceeded on the theory that the letter written by him to the Automatic Inn Company, of date September 30, 1926, and the note signed by Foster and Davisson, without consideration moving to them, for the benefit of Mr. Camp and Louis Lipsitz, must be construed as one instrument, because executed at the same time, by the same parties at interest, as parts of the same transaction, and intended to accomplish the same general object. 3 R.C.L. 870; 8 C.J. 196; 13 C.J. 528, § 487. The instrument thus reconstructed, interpolating language used by Camp in his letter to the Automatic Inn Company, contains words indicating that the note was made for the benefit of himself and Mr. Lipsitz, the real parties at interest; hence we held that the case was controlled by section 20 of article 5932, Rev.Civ.St. 1925 (of the uniform Negotiable Instruments Act), and that Camp alone was liable as maker of the note. The reasons that actuated the court in deciding the case in favor of Foster and Davisson were stated in the original opinion by Chief Justice JONES as follows:

"To hold that section 29, above quoted, applies to this case, and that Foster and Davisson are accommodation makers within the provisions of said section 29, would be a holding that the two said sections of our Negotiable Instruments Law are in contradiction, and that section 29 destroys the functions of section 20. No such construction of different sections of the same legislative enactment can be allowed, unless such is the only construction that the enactments will permit. These two sections were intended to apply to different conditions under which negotiable instruments are signed. Section 20 clearly applies where such instrument is signed by an accommodation party, and the one for whom he signed is disclosed by the instrument, together with the facts, which show that the obligation created is not the obligation of the one so signing, but is the obligation of the real principal, whose name and responsibility the instrument discloses. We conclude that, when a negotiable instrument is signed by a party in compliance with the provisions of section 20, the instrument is thereby taken out of the provisions of section 29, and that the Legislature intended the two enactments to be so construed. We therefore hold that the court did not err in giving peremptory instructions in favor of Foster and Davisson, and overrule appellee's cross-assignments of error."

I have reached the conclusion that the case is not controlled by section 20, art. 5932, but think it should be controlled by section 29, art. 5933, of the Negotiable Instruments Act. Section 20, art. 5932, reads as follows:

"Where the instrument contains or a person adds to his signature words indicating that he signs for or on behalf of a principal, or in a representative capacity, he is not liable on the instrument if he was duly authorized; but the mere addition of words describing him as an agent, or as filling a representative character, without disclosing his principal, does not exempt him from personal liability."

This provision of the statute is only applicable, in my opinion, where a person purports to sign an instrument as agent, or in a representative capacity, for another, and in such case cannot be held personally liable, provided (a) he was duly authorized to act; (b) and the instrument contains, or he adds to his signature, words indicating that he signed in a representative capacity, or on behalf of a principal; and (c) discloses the principal for whom he acts; in other words, to escape personal liability, the act of the agent or representative must be legally sufficient to fix the liability of the principal. This statute asserts nothing new, as the principle announced is a part of the law of agency. In the early case of Sydnor v. Hurd, 8 Tex. 98, Judge Wheeler said:

"The doctrine on this subject, as applicable to agents, in general, engaged in commercial dealings, drawing, indorsing, and accepting bills, etc., is that `if, from the nature and terms of the instrument, it clearly appears, not only that the party is agent, but that he means to bind his principal, and to act for him, and not to draw, accept, or indorse the bill on his own account, that construction will be adopted, however inartificial may be the language, in furtherance of the actual intention of the instrument. But if the terms of the instrument are not thus explicit, although it may appear, that the party is an agent, he will be deemed to have contracted in his personal capacity.' Story on Agency, §§ 155, 156, 157, 158, 159. `A person contracting as agent will be personally liable, whether he is known to be an agent, or not, in all cases where he makes the contract in his own name, or voluntarily incurs a personal responsibility, express, or implied.' Id. § 269. * * * If, the agent does not give a right of action against his principal, the law holds him personally liable. * * * The agent `must see to it that his principal is legally bound by his act.'"

The liability of Mr. Camp as maker was not fixed by any act of Foster and Davisson; he fixed his own liability by the letter he wrote, when it and the note are construed as one instrument; hence the question as to their agency, or representative capacity to bind him, could not arise. I believe we correctly construed, as one instrument, the letter written by Mr. Camp to the Automatic Inn Company and the note payable to Automatic Inn Company, contemporaneously signed by Foster and Davisson (for the benefit of Camp and Lipsitz), and as thus construed, Camp was shown to be a maker of the note, just as though he had originally signed with Foster and Davisson. But to hold that he is the only one liable as maker is to completely ignore the fact and the legal significance of the unqualified execution of the note by Foster and Davisson. The execution of the note by them certainly meant something; they either fixed their own, or the liability of Camp and Lipsitz, which was it? No word is contained in the note, or added to their signatures, indicating that they signed as representatives, or on behalf of Camp and Lipsitz, nor did they disclose the name of any principal for whom they purported to act.

The fact that the contract was made for the benefit of Camp and Lipsitz appears only in the letter from Camp to the company; therefore, to attach any meaning whatever to their act in signing the note, it must be held that they signed on their own responsibility as accommodation comakers. For this reason, I believe the case should be controlled by the provisions of section 29, art. 5933, R.C.S. 1925 (of the Uniform Negotiable Instruments Act), as follows:

"An accommodation party is one who has signed the instrument as maker, drawer, acceptor, or indorser, without receiving value therefor, and for the purpose of lending his name to some other person. Such a person is liable on the instrument to a holder for value, notwithstanding such holder at the time of taking the instrument knew him to be only an accommodation party."

If under this provision of the statute Foster and Davisson are held to be comakers of the note, for the accommodation of Camp and Lipsitz, no violence will be done any provision of the contract, and full legal effect will be given the signatures of Foster and Davisson to the note; but to hold otherwise is to say that their acts in signing the note were and are meaningless and of no significance. I think the liability of Mr. Camp as a comaker of the note is apparent, when the note and the letter written by him are read as one instrument, and that the liability of Foster and Davisson was fixed by their unqualified acts in executing the note.

That an accommodation maker may be a comaker with the party accommodated, so far as a holder for value is concerned, is well settled. See First State Bank v. Hare (Tex.Civ.App.) 152 S.W. 501, 502; Edmonston v. Ascough, 43 Colo. 55, 95 P. 313; 8 C.J. 277, § 432. However, as between these accommodation makers and Camp, under the facts stated in his letter to the Automatic Inn Company, they are but sureties, and as against Camp are entitled to be protected as such. First State Bank v. Hare, supra.

But, if it can be correctly said that there exists such a diversity of parties as to preclude the reading of the note signed by Foster and Davisson, and the letter written by Mr. Camp to the Automatic Inn Company, as one instrument, and that each should be treated separately, then we have this situation; that is, the liability of Foster and Davisson to the bank on the note would stand unrelieved by any fact or circumstance, and the liability of Camp as guarantor of the note, based on his letter of guaranty, would be clear and undoubted. So it is immaterial whether these instruments are construed as one or enforced separately, for in either event, as I view the case, the bank was and is entitled to recover, not only against Camp, but against Foster and Davisson as well.

For these reasons, I am of opinion that the motion of the bank for rehearing, as to Foster and Davisson, should be granted; that the judgment of this court heretofore rendered in their favor, affirming the trial court, should be set aside; that the judgment of the trial court in this respect should be reversed, and judgment here rendered in favor of the bank.