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P . F E D E R A L R E S E R V E B A H K

Y «%U /

OF

DALLAS.

LAW

DEPASE.IESTT

Locke,Locke,Stroud

&

Randolph

Counsel. November

5, 1926.

M r. Walter Wyatt, General Counsel

The

Federal Reserve Board

Washington,

D.C.

Dear Walter;

I acknowledge receipt of your le t ter of October 28 ,

i n

which

y o u

enclose copies

of

severa l l e t t e r s

you

have received

commenting upon

t h e

case

of the War

Finance Corporation

v .

Duff.

I

have intended writing

you

about th is cas e,

b u t

have delayed

i t

due to the f ac t t ha t we have had a case involving almost identical

facts , which

wo

l o s t

i n t h e

t r i a l cou r t

and

a l so

i n t h e

Court

of

Civil Appeals.

We now

have pending

an

app l i ca t ion

f o r

wr i t

of

er ro r f o r t h e Supreme Court of Texas.

I am

enclosing herewith

a

copy

o f t h e

opinion

of the

Court

o f

Civil Appeals

in t h e

case

i n

which

t h e

Federal Reserve Bank

i s i n t e r e s t e d , and also a copy o f t h e appl ica t ion f o r wr i t o f er ror .

I am

al so sending under separ ate cover t hi r te e n copies

o f t h e

brief

which

we

f i l e d

in t h e

Court

of

Civil Appeals.

• I

think that

th e

matters pointed

o u t i n

Paragraph Number

Two in our

app l i ca t ion

f o r

wr i t

o f

error, under Grounds

of

J u r i s d i c -

tion, fully cover anything which

I

might have

to say

with reference

to

t h e importance of th e question,

I

will keep

y o u

advised

as t o t h e

progress

of the

case

i n t h e

Supreme Court.

Sincerely,

(signed) E . B. Stroud, J r .

E. B.

STROUD,

JR.

Enclosures.

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Ho. 392 .

In thr

COURT

OF

CIVIL APPEALS

FOB THE

TENTH SUPREME JUDICIAL DISTRICT

OF

TEXAS

, AT

WACO

FEDERAL RESERVE BANK

OF

DALLAS

Appellant,

v .

T. A. KAMA BT AL, APPELLEES.

Appeal from D i s t r i c t Court,

Johnson County

This suit

w as

ins t i tu ted ,

by

ap pe ll an t, Feder al Reserve Bank

of

Dal las , against appel lees ,

T. A.

Hanna

and C. D.

Dickerson,

t o r e -

cover

on two

promissory notes

in th e sum of

$750.00 each, with inter-

e s t a n d a t t o r n e y ' s f e e s . The pa r t i e s w i l l b e designated a s i n t he t r i a l

co ur t. Said no te s were executed

by

defendant Hanna

t o

defendant Dickerson

a n d

made payable

a t t h e

First National Bank

of

Cleburne, hereafter called

t h e Cleburne Bank, on Ju ly 1 s t , 1931 a nd September 1 s t , 1 9 2 1 , respec t ive-

l y .

They were bo th dul y endorsed

by

Dickerson

and

sold

and

del ivered

by him to sai d Cleburne Bank. Defendant Hanna was af terwards duly a d -

vised o f s a id f a c t . On August 23rd, 1921, the Cleburne Bank notified

defend ant Hanna th at s ai d f i r s t note

w as

pas t

due , and

that said second

note would be due September 1 s t , a nd that both were payable a t i t s

o f f i c e . Defendant Hanna immediately wrote sa id bank ask ing th at both

notes

b e

extended

to

November

1 s t .

Said bank refused

t h e

reques t ,

and

declared

i t

would take necessary stops

t o

c o l l e c t

t h e

same

i f n o t

paid

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,'•08

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within t e n days. Defendant Hanna mai led to said bank h i s check

t h e

amount

due on

both notes. ^Baid check

was

received

b y

said bank

on

September

8 , 1921 , and was

promptly cashed

and the

proceeds appro-

p r i a t e d by i t t o i t s own u s e . Said Cleburne bank w as indebted t o t he

p l a i n t i f f

a nd ha d

long prior

t o t he

matur i ty

of

said notes endorsed

and

del ivered t h e same t o i t a s co l l a t e r a l s ecu r i t y f o r such indebtedness.

Defenda nts, among ot he r def en se s, pleade d t ha t s ai d no te s

h a d

been paid

i n

f u l l

t o t h e

Cleburne Bank

and

that said bank

was the

agent of p l a i n t i f f a t t h e time o f such payment an d author ized t o r e -

ceive

t h e

same.

The case was submitted t o a j u ry on special issue and judgment

was rendered f o r t h e defendants o n t h e verdict re turned i n response

thereto.

OPINION.

The court submitted t o t he j u ry t h e following special issue:

Was the

National Bank

of

Cleburne

t h e

Agent o f t he Federal Reserve Bank of Dallas i n t h e c o l -

l e c t i on

of the two

notes sued upon

on

September 8th,1921?"

The ju ry answered said issue "ffes". P l a i n t i f f objecte d t o t he s ub -

mission of said issue o n t h e ground that there was no evidence to

author ize

i t s

submission. P la in t if f contends that

t h e

court erred

i n

over ruli ng s&id obje ctio n,

and

such contention

i s t h e

p r i nc ipa l

*

i ssue presented

i n

this appeal.

Defendant's check

f o r t h e

amount

of

said notes

was

sent t o t h e Cleburne Bank by mail and he was not present a t t he

time i t w a s received t o require production and surrender of said

notes. While

i t

appears tha t s aid not es were probably

i n

said bank

i n

t h e

hands

o f t h e

manager

of

p la in t i f f ' s loan depar tment

f o r

co l lec t ion

a t t he

time,

i t d i d n o t

have actual possession

o f t h e

same.

The

rule

i n

such cases

i s

laid down

i n 3 r d

R.C.I, . ,

p . 1289 , s e c . 521 , a s

follows:

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"Yf.ieii payment i c made to a person n o t

having possession

o f t h e

secur i t ies proper ly endorsed,

t h e burden of showing that such person was au thor ized t o

receive payment f o r t h e credi tor res ts upon t h e pa r t y who

makes

t h e

claim

of

payment."

See also 2 C . J . , 6 24 ; Hhodos v . Belches, 59 Pa c. 117. The mere

fac t t ha t t h e person to whom payment i s made i s n o t a t t h e time of

payment

in

actual possession

of the

s e c u r i t i e s

o r

notes intended

to

be discharged i s n o t conclusive of l ack of au thor i t y , b u t i s a mere

circumstance to be duly considered in determining t h e i s sue of agency

o r

a u t h o r i t y

to

receive such payment.

2 C . J . p . 5 2 5 , s e c . 2 6 2 . I t i s

n o t , however, necessary that agency oV au thor i t y i n f a c t to receive

payment

b e

e s t ab l i shed

by

di re ct evidence. Like

any

other mater ia l

f a c t i n i s sue , i t may be proved b y circumstances. 2 C . J . , p . 9 4 4 , s ec .

708; 2 1 B. C. 1 . ,

pp.820-1,

sec . 6 ;

Daugherty

v .

Wiles,

207

S.W.900,

901-2; Stringfellow v . Brazel ton, 142 S.W. 936, 938-9; Ward V. Powell,

127 S. W. 851, 852; Wilson v . LaTour, 66 H. W. 474; B i s s e l l v .

Dowling,

76 BT. W. 1 00 .

Where evidence

i s

introduced tending

t o

show

agency o r au thor i t y t h e issue should b e submitted t o t h e j u r y . 2 C . J . ,

p . 9 6 0 , s ec . 7 3 1 ;

Brads t ree t

v .

G i l l ,

72 Tex. 11 5, 116 .

The Cleburne Bank w as indebted t o t h e p l a i n t i f f in t h e

sum of more than $600,000.00, which indebtedness was secured b y notes

owned

b y i t an d

endorsed

and

de l ivered

b y i t t o t h e

p l a i n t i f f

a s c o l -

l a t e r a l .

Mr.

Gentry,

t h e

manager

o f

p l a in t i f f ' s l oan depa r tmen t ,

was

a

wi tness

i n i t s

beha l f .

He

t e s t i f i e d

on

cross-examination that

h e

v i s i t e d th e Cleburne bank every day from t h e ear ly par t of August, 1921,

u n t i l i t f a i l e d on or about the 18 th day of October of that year , e x -

cept

on two

occasions, when someone else from

h i s

department cane

i n

h i s stead; that during a l l that time h e knew that t h e Cleburne bank

was

borrowing heavily,

w as

hard pressed

f o r

money,

and was in

what

h e termed an "extended" condition. He d i d n o t define that term b ut on

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X-4724-a

cons ide ra t i on o f h i s testimony as 'a whole we understand, that h e fclrlnir

thereby

a

condi t ion

of

probable

b u t n o t

ce r ta in inso lvency .

He f u r -

t h e r t e s t i f i e d t h a t h e kngw during a l l t ha t time tha t p l a i n t i f f d i d

n o t

care

t o

send said bank

a n y

more notes through

t h e

mai l

f o r c o l -

l e c t i on ; t ha t

h i s

d a i l y v i s i t s

to

said bank were

t o

co l l e c t s a id

c o l -

l a t e r a l n o t e s and also checks on sai d bank; th at h e brought each day

a l l notes that were d u e , a l l th at were pa st d u e a n d a l l that would

mature

i n t h e

next

t e n

days; that

h e d i d n o t

presen t sa i d not es

to the

makers b u t t ha t h e collected them b y presenting them to Mr. Norwood,

p r e s i d e n t

o f t h e

Cleburne bank; t h at

t h e

bank paid very

fe w

no t e s

i n

comparison with

t h e

not es they

had o u t . We

quote from

t h e

testimony

of said witne ss a s follows?

I

don't know

who

would notify

t h e

various

makers

o f t h e

various notes

I

would bring down here

t o

come

i n a n d p a y t h e no t e s . M r. Norwood never d id a t my instance

n o t i f y anybody th at t he ir note wa s d u e a n d f o r them t o come

i n and pa y i t . No one in th e bank d i d t h a t I know o f ; they

d i d n ' t

do

anything

at my

i n s t ance .

I

would come

i n

there with

my

no tes pas t

d u e , b u t I

brought

no

p r e s su re

on

them

a t a l l

t o go ou t and n o t i f y t h e makers o f t h e n o t e s t o come in and

pa y up . * * * As to whether or no t I j u s t s a t down there and

guarded th e no tes an d d i d n ' t a s k anybody t o make an y e f f o r t

t o c o l l ec t those no tes , I looked a f te r t h e notes. That i s

what I was supposed to do . That was my b u s i n e s s . I d idn ' t

give

any of

them away.

I

never

d id see any o f t he

makers

of

t h e

notes myself ,

go out and

tell them

to

come

in and pay

them.

I

never

d i d

w r i t e

any of

them no ti ce s.

* * *1

d idn ' t

even suggest that t o t h e National Bank of Cleburne; I assumed

t h a t he was looking a f te r t h e c o l l e c t i o n s h i m s e l f . " ( I t a l i c s

ours ) .

Th i s w i tne s s fu r the r t e s t i f i ed t ha t h e would n o t sur render a note to

t h e

employes

o f t h e

Cleburne Bank

and

permit them

t o

take

i t t o t h e

window a n d c o l l e c t i t a n d b r ing t h e money back t o h i m , b u t t ha t h e r e -

quired them to b r i n g t h e money to him be fo re h e would part with t h e

no te . This testimony

was

cont rad ic ted

b y

defendant 's wi tness Handle ,

who

t e s t i f i e d t h at

he was

employed

b y t h e

Cleburne Bank

an d

t h a t

h e

kept

t h e

loan

an d

discount ledger thereof du ring

t h e

time

i n

quest ion.

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X-4?24-a

We quote from h i s testimony a s fol lows: „ .

f )

o 3 . i < 5

I t i s a fa c t that f o r several months prior

t o t h e f a i l u r e of the national Bank of Cleburne M r. Gentry

on p ra c t i ca l ly every day came down to th e National Bank of

Cleburne and brought t h e notes that t h e National Bank of

Cleburne h a d placed a s co l l a t e ra l wi th t h e Federal Reserve

Bank with h im f o r co l l ec t i on. With refe renc e to what the

method was of c o l l e c t i n g th e notes, when customers of th e

bank would come into

t h e

bank

and

come

up to the

window

and

want

to pay a

note held

by the

Federal Reserve Bank,

Mr.

Gentry would bring

h i s

notes, together with

h i s

cash l e t t e r ,

every morning,

a nd he

would

s i t

back

i n t h e

back

end of

t h e bank, a s well a s I remember, and the notes were usually

paid a t t h e f r o n t , an d i f a, man came i n t o p a y h i s note we

would have to go back a nd ge t t he note from M r. Gentry and

come up a nd c o l l e c t t h e money and then take t h e money back

to Mr. Gentry * * * In col lect ing these notes from t h e makers

of them and paying t h e money to Mr . Gentry, i t i s a fact that

on

account

o f the

f inancia l condi t ion

o f the

National Bank

a t that time that t h e only money they were able to pa y the

notes with was from what they co ll ec te d and what money was

deposi ted i n t h e bank."

We

th ink

t h e

testimony above quoted, considered rithall

the

other testimony in the ease , ra i sed a reasonable inference that the

Cleburne bank

was

n o t i f y i n g

t h e

makers

o f th e

notes pledged

by i t to

p l a i n t i f f o f the matur i ty o f the same a s they became due , and endeavor-

ing to c o l l e c t t h e same, and that plaint i ff knew of such action and

n o t only acquiesced therein b u t taci t ly approved t h e same; that neither

t h e Cleburne bank n o r p l a i n t i f f saw f i t t o disclose that said notes

h a d oeen so pledged; that pl a i nt i f f in tended tha t t h e Cleburne bank

should continue t o c ol l ect sa id notes a s t h e ostensible owner and

holder thereof,

b u t f o r i t s

b e n e f i t ,

and

tha t

t h e

procedure adopted

by

p l a i n t i f f

was

intended merely

to

keep

i t i n

touch with such collections

a nd

prevent

a

d ivers ion

o r

misappl ica t ion

of the

preceeds .

The

notes

involved i n this case were a p a r t of s a i d c o l l a t e r a l , an d were,according

t o the testimony of t he witness Gentry, brought by him to t h e Cleburne

bank

f o r

c o l l e c t i o n

t h e

same

a s t h e

o ther no tes tes t i f ied about

by him.

We

think

t h e

testimony

was

ample

to

j u s t i f y

t h e

court

i n

submit t ing

t h e

i ssue

o f t h e

%gcncy

of t he

Cleburne Bank

i n

co l l ec t ing sa id co l l a t e ra l .

No

complaint

was

made

o f t he

manner

i n

which such issue

was

submitted.

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313

P l a i n t i f f ' s c on te nt io n t h a t t h e court eittfed i n submit t ing t h e same

i s overruled.

We have examined a l l t h e other content ions presented b y

p l a i n t i f f

a s

ground

f o r

r ever sa l

and

have concluded tha t t he y

^

should b e overruled.

The

judgment

of the

t r i a l cou r t

i s

af f i rmed.

J . N .

GALLAGHER

Chief Justice

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X-4724-b

__ ITo • • •

P

Y In th e

SUPREME COURT OF THE STATE OF TEXAS

——™oOo—

—

•


of

Dallas,

P l a i n t i f f

i n

Error

v .

T. A.

HAMA,

e t a l ,

Defendants i n Error

—-oOo——

APPLICATION FOB D9RIT OF E3R0R

——oOo

TO THE SUPREME COURT OF THE STATE OF TEXAS:

The


of

Dal las ,

a

banking corporation

organized under a n t b y v i r t ue of th e laws o f t h e United States of America,

hereby applies

f o r a

wr i t

of

e r ror

t o t h e

Court

of

Civil Appeals

f o r t h e

Tenth

Supreme Judicial Dist r ic t

of

Texas,

to

cor rec t

t h e

errors committed

by

said

Court and to render such judgment a s s ai d cou rt should have ren der ed in the

causes, th er ei n pendi ng , numbered 392 , wherein t h e said Federal Reserve Bank of

Dallas

i s

appe l l an t ,

and T. A.

Hanna

and C. D.

Dickerson

a r e

appel lees .

NATURE OF THE CASE

The

statement

o f t h e

na ture

o f t h e

case made,

b y t h e

Court

of Civil Appeals i n i t s opinion i s complete an d accurate except in t h e fol low-

i n g p a r t i c u l a r s :

1. The opinion does n o t disclose that

t h e indebtedness of $600,000 on the p a r t of the Cleburne

bank

to t h e


of

Dallas, secured

i n

p a r t by the notes in quest ion, was a loan o f $600,000

made b y t h e Federal Reserve Bank of Dal las in due course

i n pursuance of th e purposes contemplated by law of lending

money t o member banks upon t h e s ecu r i t y of commercial paper.

31.4

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X-4724-b

2. The

opinion does

n o t

mention

t h e

undisr-

puted fact that

th e

Cleburne hank

was

regularly open

f o r

business an d func t ioning a s a going concern each day u n t i l '

October 18, 1921, when i t f a i l e d .

3. The opinion mentions, b u t unimportantly,

tha t th e defendant 's check was received b y t h e Cleburne bank

on

September

8, 1921,

for ty days pr ior

t o t h e

f a i l u r e

of the

Cleburne bank.

4. The opinion does n o t mention t h e fac t

t ha t

t h e

maker

of the

notes took

no

steps during this time

to

obtain possession

of the

notes ,

and

tha t

h e

made

n o i n -

quiry concerning t h e same.

5. The

opinion mentions,

b u t

l ikewise

without emphasis, that

t h e

notes

i n

question were payable

a t t h e Cleburne bank.

GROUNDS OF JURISDICTION

This Court possesses jur isdict ion to i s sue , an d should issue

t h e

wri t

of

error appl ied

f o r

because:

1. The cause is of a civi l nature , brought to t h e Court of

Civil Appeals

b y

appeal from

t h e

final judgment

o f t h e

Dist r ic t Court

of

Johnson

County, Texas, and i s no t o f the c l a s s of cases i n which t h e j u r i s d i c t i o n of the

Court of Civil Appeals is by law made final.

2 . I n i t s

decis ion

o f t h a

case,

th e

Court

of

Civil Appeals

h a s committed errors of law of such importance to t h e jur i sprudence of the State

as to requi re cor rec t ion .

(a ) .The e f fec t of the opinion o f t h e

Court of Civil Appeals i s t o make i t impossible f o r t h e

holder

of a

number

o f

notes payable

a t t h e

same bank

to

present than there

f o r

payment

and to

rece ive

an d

accept

payment f o r a por t ion of them without co ns ti tu ti ng th e

bank a t which t h e notes a r e payable h i s agent to co l lec t

a l l o f t h e

notes which

h e

holds, where

th e

holder

has any

knowledge that

t h e

bank

a t

which

th e

notes

a r e

payable

i s

encouraging their payment; and this notwithstanding such

bank a s pledgor h a s such a l awful r ight to do t h i s V.-at the

holder could

n o t

prevent

h im

from

so

doing. Thus,

th e

opinion means that t h e only protection which a holder h as

i s t o n o t i f y th e maker o f t h e notes that they have been

t r a n s f e r r e d to h im, whereas i t i s a fundamental rule of

law

t ha t

no

such duty devolves upon

t h e

holder

of a

negot iable inst rument ,

and

whereas

i t i s

also funda-

mental that t h e maker of such commercial paper makes

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X-4?24-b

payment a t h i s p e r i l i f ho does n o t secure t h e surren-

de r o f t he

instrument

i n

exchange

f o r

payment.

( b ) . I n e f f e c t ,

t h e

opinion

o f t he

Court

o f

Civil Appeals requires that

a

holder

in due

course

of a ne go tia bl e instru ment, wherein t h e maker def ini te ly

promises

to pay a t a

specified place, must make some effort

to

co l l ec t

t h e

note from

t h e

maker ot he r than merely

t o

present

t h e

note

a t t he

s t ipula ted da te

and

p l ace

o f p a y -

ment, whereas, t h e fundamental and universal ly recognized

r u l e

o f

commercial

l a w i s

t ha t

i t i s t h e

duty

o f t h e

maker

o f t h e

note

:to be

present

or to

cause some

one to be

present

a t t h e date a n d p lace o f payment to make payment a n d t o r e -

ceive

t h e

note

i n

exchange.

(c ) .The e f fec t

o f t h e

opinion

of the

Court of Civil Appeals i s t o permit t h e es tabl ishment o f

agency from

a s e t of

circumstances each

i n

i t sel f proper

a n d

l awful ,

o r

yhol ly i r re levant ,

and

this notwithstanding

that there

i s

admittedly

no

question

o f

estoppel involved.

(d).There being no express evidence o f agency

on t he

p a r t

o f t he

Cleburne bank

t o

c o l l e c t

t h e

notes ,

an d there being on t he contrary express testimony that there

was no

such agency

f o r

co l l ec t i on ,

an d

t ha t

t h e

Federal

R e-

serve Bank of Dallas ha d i t s own c o l l e c t o r , on e Gentry, pres-

e n t a t t h e

s t ipula ted da te

a n d

p l ace

o f

payment

to

receive

payment,

and to

de l iver

t h e

notes only when

h e

received

t he

amount called f o r , t h e Court of Civil Appeals h a s held that

t h e

circumstance "that

t h e

Cleburne bank

w as

n o t i f y i n g

t he

makers o f t h e notes pledged by i t t o p l a i n t i f f o f t h e matur-

i t y o f t h e

same

a s

they became

due and

endeavoring

to

col lect

t h e same, a n d that plaint i f f knew of such action a n d n o t only

acquiesced therein

b u t

tacit ly approved

t h e

same" implied

actual agency, whereas there i s no evidence that t h e Federal

Reserve Bank knew

t h e

l e t t e r s were wr i t t e n ,

a nd i f

suph

knowledge may be i n f e r r e d , i t w as t he r i g h t and duty of the

Cleburne bank

a s

pledgor ,

and

t he r e fo re

a s t h e

owner

of the

e q u i t a b l e t i t l e t o t h e notes a nd t he res iduary in te res t in

t h e

same,

to

exer t

a l l o f i t s

e f f o r t s

t o

secure

t h e

a t t end-

ance o f t h e makers upon t h e date a nd a t t h e p lace s t ipula ted

with

t h e

money with which

t o

make payment,

and

whereap tfye

l e t t e r s w r i t t e n

by t he

Cleburne bank i?ere consistent

^±t%

this

r i g h t a n d duty, and whereas there i s no evidence whatever i n -

d ica t i ng

a n y

knowledge

on the

p a r t

o f t he


of Dallas that t h e Cleburne bank w as doing anything other than

exe r t i ng

i t s

e f f o r t s

t o

such

a n e n d , ;

There

was no

evidence

whatever that any misrepresentat ion was made b y t h e Cleburne

bank with reference

to i t s

ownership

of any

notes

o r

holding

of any notes , o r tha t t h e Federal Reserve Bank of Dal las had

an y

inf orm ati on whatever concerning

any

f raudulent

or im-

proper misr epr esen tati ons. Moreover, th is decisio n

w as

made

V

b y t h e Court of Civil Appeals notwithstanding t h e fundamental

a n d

universal ly recognized rule

jaf law

that agency

may not be

proved

by t h e

dec la ra t ions

o r

a c t s

o f t he

al leged agent

h i m-

s e l f .

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— 4 — X—47 *24—

D

. , . <1 :1 7

( G). The

d is regar

d by . the

Court

of

Civil Appeals

of

th ia fundamental ru le

o f

evidence,

i t s

implied ru li ng

tha t

t h e

holder

in due

course

of a

negotiable instrument

must give socio no t i ce th at t h e note h a s been transferred

to h im, and tha t ho must make some effort himself t o col lec t

t h e

note other than merely

to

present

i t a t t h e

s t ipula ted

time

and

p lace

of

payment,

and

tha t

he may not

allow

a n y p e r -

son who is a

pledgor

o f t h e

note

and

thus owner

o f i t s

equi ta -

b l e

t i t l e ,

to

n o t i f y

o r

urge

t h e

maker

o f t h e

note

to pay the

same a t t h e s t ipula ted da te a n d p lace o f payncr.t o r threaten

t h e maker with legal action i f i t b e n o t pa id , a r e o f t r e -

mendous consequence

t o t h e


of

Dallas

in

t h e

performance

o f i t s

publ ic funct ions ,

a nd a r e o f

tremen-

dous consequence to state banks o f this state which discount

a nd rediscount commercial paper f o r their customers, and to

t h e commercial public i n general .

The


of

Dallas

i s a n

ins t i tu t ion c rea ted

b y t h e Federal Government f o r a national purpose, and operates throughout the e n -

t i re Sta te

of

Texas

and

a d d i ti o n a l t e r r i t o r y .

I t i s a n

es tabl ished pol icy

of

both s tate an d na t iona l law that every bank should maintain i n cash o r u n re s t r i c -

t e d

c red i t

a

cer ta in por t ion

of i t s

depo sits . This

i s

commonly known

a s a

bank

1

s

reserve , and one of th e chief functions o f th e Federal Reserve Bank of Dallas

i s to hold a n d have readily available t h e reserves of a l l national banks o f this

d i s t r i c t ,

and

such state banks

a s a r e

members. That t h i s l ar ge

sum of

money

may be u t i l i z e d f o r t h e b e n e f i t o f t he agr i cu l t u ra l , l ivestock a n d commercial

i n t e r e s t s

of

t h i s d i s t r i c t ,

t h e


of

Dallas

i s

permitted

by

t h e terms o f t he Federal Reserve Act to extend loans t o i t s member banks upon

t h e

s t rength

of

their customers' notes, such

a a

those involved

i n

this case,

thus supplying credit as and when t h e legitimate demands o f a community require

more than

t h e

local banks

a r e

able

to

fu rn is h without as si st an ce . When with-

drawn

and

converted into money,

t h e

credit thus supplied

i s

l a rg e l y

i n t h e

form

of Federal Reserve Bank notes, which form approximately thirty five p e r cent of

t h e

na ti on al ci rc ul at io n. They pass from hand

to

hand,

a n d t h e

public accepts

them a s r e a d i l y a s i t does gold o r silver coin issued b y t h e p i n t s o f the United

St a tes government. These Feder al Reserve Bank no te s

a r e

made valuable because

they

a r e

secured

by a

deposit

of

s ix ty

p e r

cent

of

their value

i n

gold,

and

for ty

p e r cent of the i r va lue in notes taken by a Federal Reserve Bank t o secure t h e

7/17/2019 frsbog_mim_v25_0307.pdf


318

— — X—4*724--b

loans made

t o

member banks, similar

t o t he

notes involved

i n

t h i s l i t i g a t i o n .

Obviously, t h o member bank notes securing t h e Federal Reserve Bank notes must

b e

co l lec ted

as and

when they nature,

a nd i t i s o f t he

greatest importance that

t h e

courts

of

th i s Sta te

do no t

permit

the l aw on

such questions'

a s a r e

here

involved

to

become confused,

a nd

thus give rise

t o a

s t a t e

of law

which night

impair t h e value of a large por t ion o f ou r national currency a nd jeopardize t he

reserves

o f t he

banks located

i n

t h i s d i s t r i c t .

3, In

this case,

t h e

Court

of

Civil Appeals

i s i n

conf l i c t

with other courts

o f

Civil Appeals

of

th i s Sta te ,

in

tha t

i t

permits

t h e

es tab-

lishment

o f

actual agency upon evidence

of

much less probative force than

was

held to be i n s u f f i c i e n t i n t h e cases of Evans Snyder Buel Company v Holder,

41 S. W. 404; and

Higley

v .

Dennis,

88 S. W. 400.

4 . In this case, t h e Court of Civil Appeals h a s held d i f -

ferent ly f rom

a

pr io r decis ion

o f t he

Supreme Court

of

Texas upon

a

question

of

la w mater ia l t o t h e dec i s ion , i n t ha t i t h a s held that t h e n o t i c e s and l e t t e r s

mailed

. t o t he

maker

b y t h e

Cleburne bank were circumstances

to be

considered

in

connection with other circumstances f o r t h e purposfe of es tabl ishing agency on

t h e pa r t o f t he Cleburne bank to receive payment; whereas, i n t h e case of

Coleman

v .

Colgate,

6 S. W. 553 , th e

Supreme Court holds that

t h e

declarat ions

of t he

alleged agent, even taken

i n

connection with other circumstances,

a r e

no t t o be

considered

i n

proving agency.

%

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• - 6 — X—4724

ASSIQgETTS OF EtGOR 3.19

First Assignment of Error;

The

Court erred

in

r e f u s i n g

to

sus ta in Appel len t ' s f i r s t

assignment of e r r o r , and. i n thereby holding that t h e l e t t e r s e t o u t i n p l a i n -

t i f f ' s B i l l of Exception lTo.2 filed in t h e t r i a l cou r t was admissible i n e v i -

dence over p la in t i f f ' s ob ject ion that

th e

same

was

immateria l, i r re l eva nt ,

and

an attempt to prove agency b y t h e declara t ions of the al leged agent . The l e t t e r

i s a s fo ll ows : "Cleburne, Texas, Aug. 23, 1921.

Mr. T. A. Hanna,

Kaufman, Texas

Dear

S i r :

Your note

i n

favor

o f

this bank

f o r $750;00 was due and payable a t t h i s o f -

f i c e on Ju ly 1, 1921.

Please give your attention

to the

n a t t e r

on or

before

t h e

above date.

Yours very truly,

S.B.JTorwood, President.

We

appreciate promptness."

Proposi t ion:

Declarat ions

of an

alleged agent

a r e n o t

admissible even

as a

circumstance

to be

considered

i n

connection with other circumstances

to

prove

th e

f a c t of agency.

Statement:

This assignment

i s

iden t ica l wi th appel lan t

1

s

:f

i r s t assignment

of er ror d i rec ted t o t h e ac t ion of the Distr ict Court , an d i s presented under th e

second ground

i n

Appellant's Motion

f o r

Rehearing

in t h e

Court

of

Civil Appeals.

Further statement

i s

rendered unnecessary

b y t h e

f u l l

an d

complete statement

a p -

pearing in t h e opinion of the Court of Civil Appeals,subject to the corrections a p -

pearing

on

Pages

1 and 2 of

this instrument.

Argument

and

Authorities:

We

r e s p e c t f u l l y r e f e r

t h e

Court

f o r

argument

a n d

au tho r i t i e s

t o t h e discussion in t h e p r in t ed b r i e f f i l e d by Appellant in t h e Court of Civil

Appeals, Pages 18-24,

a n d t o i t s

Motion

f o r

Rehearing, Pages 16-19.

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— 7 — X-47 24:—"b

Second Assignment

of

3rror:

3 2 0

The

Court errod

i n

r e f u s i n g

to

sustain Appellant 's second assign-

ment

of

e r ro r ,

.and i n

thereby holding that

t h e

l e t t e r

se t ou t in

p l a i n t i f f

'.s

Bi l l

of

Exception

No,3 was

admissible

i n

evidence over p l a i n t i f f ' s ob ject i ons that

the

same

was

immater ial , i r re lev ant ,

and an

attempt

to

prove agency

by t h e

declara-

t ions o f the al leged agent . The l e t t e r i s a s follows:

"Cleburne, Texas, Aug. 23,1921.

Mr. T.A.Hanna,

Kaufman, Texas.

Dear S i r :

Your note i n favor of this bank

of $750.00 will be due and payable a t this

o f f i c e on S e p t . l , 1921.

Please give

t h e

matter your

a t -

t en t ion on or be fo re t h e above date.

Yours truly,

S . 3 . Norwood, president

We appreciate promptness."

Proposi t ion:

The same pr op os it io n urg ed under o u r f i r s t ass ignment of error

i s appl icab le t o t h e second assignment of e r ro r .

Statement:

This assignment i s ident ical with appel lant ' s second assign-

ment of er ror d i rec ted t o t h e ac t ion o f the Dis t r ic t Cour t , a nd i s presented under

t h e second ground i n Appellant 's Motion f o r Rehearing i n t h e Court o f Civ i l Ap-

pe al s. Further statement i s rendered unnecessary by the f u l l and. complete st at e-

ment appearing

i n t h e

opinion

of the

Court

o f

Civil Appeals subject

t o t h e c o r -

rect ions appearing

on

Pages

1 and 2 of

this ins*rumiE6t.

Argument

and

Author i t ies :

We


t h e

Court

f o r

argument

and

a u t h o r i t i e s

t o the

discussion

i n t h e

p r in t ed b r i e f f i l ed

b y

appel lan t

i n t h e

Court

of

Civil


a n d t o i t s

Motion

f o r

Rehearing, Pages 16-19.

Third Assignment o f Error:

The

Court erred

i n

r e f u s i n g

t o

sus ta in Appel lan t ' s th i rd

a s -

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- e -

X

' 1 M

signment

o f

e r ro r ,

and in


t h e

l e t t e r

s e t o u t i n

p l a i n t i f f ' s

B i l l

of

Exception

No.4

f i l e d

i n t h e

t r ia l cour t

was

admissible

i n

evidence over

p l a i n t i f f ' s o b j e c t i o n t h a t th e same was immater ia l , i r r e le van t , and an attempt

*

to

prove agency

b y t h e

declara t ions

of the

alleged agent.

The

l e t t e r

i s a s f o l -

lows:

THE NATIONAL BANK OF CLEBURNE

Cleburne, Texas, Aug.30,

1921 <

Mr. T. A.

Hanna,

Kemp, Texas.

Dear

S i r :

I have your letter of August 29th,

and in rep ly b e g advise i t w i l l no t be

agreeable with us to extend these notes to

November

1 s t a t a l l . We

wi l l expect payment

i n

fu l l wi th in

t h e

next

t e n

days, otherwise

we

wi l l

b e

compelled

to

take such steps

a s

necessary

to

collect same.

Yours truly,

S. B.

Norwood,

President"

PROPOSITION:

The same proposition urged under o u r f i r s t ass ignment of error

i s

appl icab le

t o t h e

third assignment

of

er ror .

STATEMENT:

This assignment

i s

identical with appellant 's third assignment

of error directed t o t h e ac t ion o f t h e Distr ict Court , a n d i s presented under th e

second ground i n Appellant's Motion f o r Rehearing i n t h e Court of Civil Appeals.

Further statement

i s


b y t h e

f u l l

and

complete statement

appearing i n t h e opinion of ftie Court of Civil Appeals subject t o t h e correct ions

appearing on Pages 1 and 2 of this instrument.

Argument an d Author i t ies :

We


t h e

Court

f o r

argument

an d

au tho r i t i e s

t o t h e discussion i n t h e p r in t ed b r i e f f i l ed by appel lant i n t h e Court of Civil


a n d t o i t s

Motion

f o r

Rehearing, pages 16-19.

7/17/2019 frsbog_mim_v25_0307.pdf


X-4724-b

Fourth Assignment of Error ; 3 ^ 3

The Court erred in r e f u s i n g to sus t a in Appe l l an t ' s f i f t h a s -

signment of e r ro r , and in thereby holding that t h e l e t t e r p r e sen t ed to t h e Court

of

Civil Appeals

i n

p l a i n t i f f ' s B i l l

of

Exception

No. 6

f i l e d

i n t h e

t r i a l cour t

was admissible in evidence over p l a i n t i f f ' s objec t ion tha t t h e same was imma-

t e r i a l , i r r e l e v a n t , and an at tempt to prove agency b y t h e dec l a r a t i ons of the

alleged agent.

The

l e t t e r

i s a s

follows:

THE NATIONAL BAM OF CLEBURNE, *

Cleburne, Texas

A.P.Wooldridge,Receiver,

September

1, 1923.

Mr. C. R. Ps nn i l l , Cashier ,

First National Bank,

Kemp, Texas.

My dear S i r :

As

rece iver

o f t h e

fai led Nat ional

Bank of Cleburne, I have two notes of one T.A.

Eanna f o r $750.00 each an d both past due since

September 1, 1921.

I

understand that

M r.

Hanna lives

a t

Kemp

and Mr.

Walter Tynes,

J r . ,

Vice Pr es i-

dent

of the

First National Bank

of

Maybaxvk,

Texas h a s suggested that I wr i t e you .

Will you p lease l e t m e know in co n -

fidence something o f t h e character , s tanding

and f i n a n c i a l r e s p o n s i b i l i t y of Mr. T. A. Han-

na and if I am

forced

to

employ

an

at torney,

who

would

be a

good lawyer

a t

Kemp

to

whom

to

i n t rus t t h i s co l l ec t i on .

I

will accept what

you

may be kind enough to wr i t e me in s t r i c t co n -

f idence.

I enclose a s e l f - addres sed and

stamped envelope

f o r

your anticipated kind

reply.

Respec t fu l ly ,

A. P. Wooldridge, Receiver'

Proposi t ion:

The

same pr op os it io n urged under

our

f i r s t ass ignment

o f

error

i s appl icable to t h e fourth assignment o f e r ror .

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- 10 - x-4724-b

Statement:

Qi (Q

This assignment

of

er ror

i s

ident ical with

t h e

appe l l an t ' s

f i f th assignment bf error directed to the act ion of the District Cotlrt , and is

presented under th e second ground in Appellant's Motion f o r .Rehearing in the Court

of

Civil Appeals. Further statement

i s


b y t h e

f u l l

and com-

plete statement appearing

i n t h e

opinion

o f the

Court

of

Civil Aopeals subject

to

th e corrections appearing on Pages 1 and 2 of this 'insiriLsent.

Argument and Authori t ies:

We r e s p e c t f u l l y r e f e r th e Court f o r argument and au tho r i t i e s

to the

discussion

in the

pr in ted br ief f i l ed

by

appel lant

in the

Court

of

Civil


a nd t o i t s

Motion

f o r

Rehearing, Pages 3,5-19.

Fifth Assignment of Error;

The

Court erred

in

r e fu s ing

t o

sustain Appel lant ' s s ixth

a s -

signment of e r ro r , and in thereby holding that t h e l e t t e r se t ou t in p l a i n t i f f ' s

S i l l

of

Exception Ho.7,. filed

i n t h e

tibial boui-t,

was

admissible

i n

evidence

over p l a in t i f f ' s ob jec t ion tha t

t h e

same

was

immaterial , i r re le va nt ,

a nd a n a t -

tempt

to

prove agency

by the

declara t ions

o f the

alleged agent.

The

l e t t e r

is as

follows:

THE NATIONAL BAH OF CLEBURNE,

A.P.Wooldridge, Receiver

'

August

29 , 1923 . .

Mr.

Walter Tynes,

J r . ,

Cashier,

First National Bank,

' Maybanks, Texas.

Dear S i r :

As

receiver

of

this bank,

I

hold

^two notes of one T. A. Hanna f o r $750.00 each.

*0ne note i s pas t due since July 1, 1921, and

th e other since September 1, 1921. I am trying

to locate M r. Hanna and f i n d o u t something

about

h i s

character

and

standing.

Do you

know this gentleman

and

does

h e

live anywhere

i n

your vicini ty ,

and may I as k you in th e

s t r ic tes t conf idence, i s h e good f o r t h e a -

mount of the two notes of which I am writing

o r e i the r o f them, and what does he do?

I inclose a stamped envelope f o r

your anticipated kind reply.

Respectful ly ,

(Signed) A.P.Wooldridge, Rece ive r".

7/17/2019 frsbog_mim_v25_0307.pdf


Proposition;

OH *

The

same proposition urged under

our

f i r s t assignment 01 error

'

s

appl icable

to t h e

f i f th assignment

of

er ror .

Statement:.

This assignment

i s

ident ical with appel lant ' s s ixth assignment

f

er ror d i rec ted

t o t h e

ac t ion

of the

Distr ict Court ,

a n d i s

presented under

t h e

i n Appellant's Motion f o r Rehearing in t h e Court of Civil Appeals.

i s rendered unnecessary b y t h e f u l l an d complete statement

i n t h e opinion of the Court of Civil Appeals subject t o t h e correct ions

on Pages 1 and 2 of this instrument

Argxu.0-.-t

and

Author i t ies ;

We


t h e

Court

f o r

argument

a n d

a u t h o r i t i e s

o th e

discussion

i n t h e

p r in t ed b r i e f f i l ed

b y

appel lan t

in t h e

Court

of

Civil

a n d t o i t a

Motion

f o r

Hehearing, Pages 16-19.

Sixth Assignment of Error;

The

Court erred

i n

r e fu s ing

to

sustain appel lant ' s seventh

assignment

of

e r r o r ,

and in


th e

Distr ict Court

d i d n o t e r r

in admit t ing in evidence, over appel lant ' s object ion that t h e same was immaterial

and i r r e l e v a n t , a s f u l l y s e t o u t i n p l a i n t i f f ' s B i l l of Exception N o . 8 , t h e t e s -

timony of George Randies, a s fbllowst

A. Mr. Gentry would bring h i s no tes , t o -

together with h i s cash l e t t e r every morning

, and he would s i t back in t h e back end of th e

bank a s well a s I remonber an d t h e notes were

usual ly paid

a t t h e

f r o n t ,

a nd i f a man

came

i n t o p a y h i s note we would have |o go back

an d g e t t h e note from him and come u p an d co l -

l e c t t h e money and take t h e money back to h im.

That

i s the way I

remember

i t .

Proposition;

The

foregoing assignment

i s

submitted

a s a

proposi t ion .

Statement;

This assignment

i s

ident ical with appel lant ' s seventh assign-

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*

1< :

-

X-4724-b

meat of error di rected t o t he . act ion of the Dist r ic t Court , a nd i s preseto^S'dPunder

t h e

f i rs t ground

j.u.

App ell an t 's Motion

f o r

Rehearing

i n t h e

Court

o f

Civil Appeals.

Further statement i s rendered unnecessary by t he f u l l and complete statement

appearing

i n t he

opinion

of the

Court

of

Civil Appeals, subject

t o t h e

correc-

tions appearing on Pages 1 and 2 of this instrument.

Argument and Authori t ies ;

We

r e spec t fu l l y r e f e r

t h e

Court

f o r

argument

an d

au thor i t i e s

to the discussion i n t h e printed "brief f i led by t he Appellant i n t h e Court of

Civil Appeals» Pages 40-52,

a nd i n i t s

Motion

f o r

Rehearing, Pages

7 - 8 .

Seventh Assignment of Error;

The Court erred i n r e fus ing t o sustain appel lant ' s e ighth

assignment

of

error based

on

p l a i n t i f f ' s m o t i o n

f o r

peremptory ins t ru ct i ons ,

and

in thereby holding that t h e testimony was ample to j u s t i f y t h e court i n submitting

t h e issue of agency.

Proposi t ion;

Inasmuch a s t he p l a i n t i f f i n e r ror was in possession of the

two notes sued upon,properly endorsed, and there was no legal evidence that the

National Bank

a t

Cleburne

was the

agent

o f t he

p l a i n t i f f

i n

e r ro r

t o

c o l l e c t

t he

same, t h e motion f o r peremptory instructions should have been granted.

Statement:

* The

foregoing assignment

of

error appears

a s

Assignment

of

Error

E o . 8

f i l e d

i n t h e

t r ia l court (Tr .43-44) ,

a nd i s

presented under

t h e

f i r s t

ground

i n

Appellant 's Motion

f o r

Rehearing

i n t he

Court

of

Ci vi l Appeals. This

assignment necessari ly involves

t h e

testimony educed upon

t h e

t r i a l

o f t he

case.

The

opinion

of th e

Court

of

Civil Appeals together with

t h e

statements

i n t h e b e -

ginning of t hi s ap pl ic at io n cover- th is testimony,

Argument

and

Authorities;.

We

r e spe c t fu l l y r e f e r

t h e

Court

f o r

argument

a n d

au thor i t i e s

t o t h e discussion i n t he p r i n t ed b r i e f f i l e d by appe l lan t i n t he C o u r t of Civil

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- 13 -

X_47&4-b


a n d t o i t s

Motion

f o r

Rehearing, Pages

3 - 1 5 ,

Eighth-Assignment of Error;

The

Court errod

i n

overr ulin g ap pe ll an t ' s t wel ft h assignment

o±

e rror d i rec ted

t o t h e

ac t ion

of the

t r i a l cour t

i s

submitt ing

t h e

i ssue

of

agency to the j u ry , on the grounds that there was no evidence, and tha t t h e e v i -

dence

was

i n s u f f i c i e n t

to

warrant

t h e

submission

of

such issue

t o t h e

j u ry ,

a s

se t out in

p l a i n t i f f

s object ions

and

exception

t o t h e

charge

o f the

court

(T r . 47)

and t-iereoy holding that t h e testimony was ample t o j u s t i f y t h e t r i a l cour t in

submitting th e i s sue of agency.

Proposit ion:

The foregoing assignment i s submitted a s a propos i t ion .

Statement;

This assignment i s identical with appellant * s twelf th ass ign-

ment of e rror d i rec ted t o t h e ac t ion o f t h e t r i a l c o u r t , a nd i s presented under

t h e

f i rs t ground

i n

Appellant*

s

Motion

f o r

Rehearing

i n t h e

Court

of

Civi l

Ap-

pea l s .

The

statement under this assignment

i s

neces sa r i ly

a

r e p e t i t i o n

of the

statement i n t h e next preceding assignment, being p l a i n t i f f

r

i n error 's seventh

assignment of e r ro r , a n d f o r a statement herein we r e s p e c t fu l l y r e f e r t h e Court to

o ur statement under o u r seventh assignment of e rror .

Argument

and

Author i t ies ;

We

r e s p e c t fu l l y r e f e r

t h e

Court

f o r

argument

an d

au thor i t i e s

t o t h e

same po r ti on s

o f the

p r in ted b r ie f f i l ed

b y

appel lant

i n t h e

Court

of

Civil

a nd to the

same po rt i on s

of

Appellant

1

s

Motion.for Rehearing

a s s e t ou t

o u r argument i n t h e next preceding assignment o f e rror .

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— 1 4 —

X - 4 7 2 4 - B

iH&Ui."5MT miDER FIRST

TO

FIFTH ASSIGNMENTS

OF

ERROR

The

p r i n c i p l e

of law

tha t declara t ions

of an

al leged agent

ore

n o t

admissible

to

e s t a b l i s h

th e

f a c t

of

agency,

a nd a r e

admissible only for , the

purpose of b inding t h e p r in c i p a l a f t e r th e f a c t of agency h a s been established,

we think i s t oo wel l se t t led to require further argument o r c i t a t i o n of au thor i -

t i e s ,

In the

present case,

i f t he

Cleburne bank

was in

f a c t

t h e

agent

of the


o f

Dal las ,

no

d ispute

as to the

payment being binding

on

t h e Federal Reserve Bank of Dallas could b e made. The above i s a statement

in which we th ink a l l will concur, a nd i t i s made merely t o show that t h e only

question i n this case was and is tha t o f t he a u t h o r i t y o f t he Cleburne bank. In

other words, this

i s no t a

case wherein

i t was

sought

to

bind

t h e

p r i n c i p a l

by

th e authorized acts o r admissions o f t he agent , but one in which t h e author i ty

was sought to be shown by t he a c t s and conduct and admissions of the aMeged

agent, and the herein complained of no t i ces and l e t t e r s ma i l ed b y t h e Cleburne

bank were, over ob je ct io ns , in trodu ced so le ly f o r t h e l a t t e r purpose , and counsel

so

concedes

i n

a p p e l l e e ' s b r i e f f i l e d

i n t he

Court

of

Civil Appeals, wherein

i t

i s

state d: "Appellees wi l l s t at e pers pec t ive ly that

t h e

purpose

of th e

i n t r o -

duction of the two l e t t e r s i n August 1921, taken i n connection with t h e other

f a c t s and circumstances i n t he case , a f f i rma t ive ly an d clearly show t o t he mind

of any reasonable man tha t t h e National Bank of Cleburne in. wr i t ing sa id le t te rs

was a c t i n g a s t he agent of appe l l an t . " The Court of Civil Appeals, while no t

pass ing di rec t ly on the assignments of e r ro r r e l a t ing t o these poi nts , d i d s e t

ou t as one of t h e

circumstances tending

t o

show agency,

to be

taken into consid-

eration with other circumstances, t h e fac t tha t t h e test imony "raised a reasonable

inference that t h e Cleburne bank w as n o t i f y i n g t h e makers o f t h e no^es pledged

by i t to

p l a i n t i f f

o f t he

matur i ty

of the

same

a s

they became

due , and

endeavor-

i ng t o co l l ec t t h e same, and tha t p la in t i f f knew of such action a n d n o t only

acquiesced therein,

b u t

taci t ly approved

t h e

same."

And

again ,

i t i s

pointed

o u t tha t on August 23, 1921, t he Cleburne bank notified defendant Hanna

27

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- 15 - X-4724-"b

0 9 0

tha t sa id f i r s t note

was

pas t

due , and

that Said second note would

b e d u e o n '

September 1» Defendant Hanna immediately wrote s ai d bank as ki ng th a t bo th no te s

be

extended

to

November

1 .

Said bank re fu se d

t h e

reques t ,

and

declared that

i t

would take necessary steps

to

c o l l e c t

t h e

same

i f n o t

paid

in t en

daysj" thus,

one

of the circumstances was the fact that these notices were sent t o t h e makers by

th e Cleburne bank.

In this connection, we quote from t h e case of Coleman v .

Colgate, reported

i n 6

5.W.553,

a s

follows:

11

The propos i t ion of the appellant , under

this assignment of e r ro r , i s t ha t t h e

1

dec l a r a t i ons of the

par ty tha t

h e i s an

agent

a r e

good

a s a

circumstance (taken

i n

connection with other circumstances)

to be

considered

in

proving agency, especially

#

when accompanied with acts

of

agency, action, and advice i n t h e i n t e r e s t and on behalf of

t h e same pr in ci pa l .

1

There was no e r ro r i n excluding t h e

evidence o f Walker. Starkweather ' s dec lar at i ons , i f he had

made them, that

he was

p l a i n t i f f ' s agent cou ld

n o t

have

e s -

t ab l i shed

t h e

agency. Agency cannot

b e

e s t ab l i shed

i n

this

way; nor can the admissions an d s ta tements of one represent ing

himself to be an agent bind t h e p r i n c i p a l u n t i l t h e agency

i s es tab l i shed ."

ARGUMENT UNDER SIXTH, SEVENTH,

M P

EIGHTH ASSIGNMENTS

OP

ERROR

The submission to a j u ry o f t h e question of agency in

this case violates fundamental and wel l es tab l i shed ru les of commercial law, in

tha t

t h e

a c t s

an d

conduct relied upon

t o

es tabl ish agency were just i f ied

by the

elemental rules per ta ining t o t h e r i g h t s and ob l i ga t i ons o f t h e holder of com-

mercial paper. The fol lowing rules a r e fundamental:

1 . There i s n o duty res t ing o n t h e holder

o f a negot iable note to n o t i f y t h e maker that t h e note h as

been t ransfer red to him an d i s i n h i s poss essio n. (Sect ions

52 and 57 of the

Uniform Negotiab le Instr ument s

Act -

Art ic le

5935, Revised Civil Statutes,

1925 ,

Sect ions

51 and 57) .

2 . Where a note o n i t s f a c e i s made payable

a t a spec i f i ed p lace , t h e only duty rest ing on the holder i s

t o

present

t h e

note

a t t h e

time

and

place where

i t i s

made

payable. (Sections

70 and 73 of the

Uniform Negot iabl e In st ru -

ments Act - Article 5937, Revised Civil Statutes, 1925 , Sec-

t i ons

70 and 73) .

3. The

pledgor

of

commercial paper retains

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- 16 - X-4724-b

329

an

i n t e r e s t

i n t h s

same which entitles

him to

advise

t h e p a r -

t ies l iable thereon o f t he time and place o f payment, and

i n t he

event

of

non-payment,

to

take such steps

a s a r e

neces-

sary

to

co l l ec t

t h e

dame. Brown

v .

Bronson,

87

N.Y.Sup.,872;

Baker

v .

Burket t ,

2 1

Southern

970 ;

Baldwin v.Jordan,

17 1 S.W.

1016*

4 . I t i s t h e

duty

o f t h e

maker

o f a

note

to

demand

t h e

surrender

o f t h e

note

a t t h e

time

of

payment. 3hodes

v . Belchee, 59 Pac ., 117 ; Smith v . Kidd, 68 li.Y.lSO; Evans

Snyder 3uel Company

v .

Holder,

4 1

S.W.404.

5 .

Where

a

negotiable instrument

i s

payable upon i t s f a c e a t a specif ied bank, t h e bank so

spec i f i ed

i s t h e

agent

of the

debtor

t o

make payment

un l e s s t h e instrument i s actual ly lodged by t he holder

with

t h e

bank. Ward

v .

Smith,

74 U. S. 447 ;

State

National Bank of St ,Louis , v . J . J . Hyatt & Co . , 86 S.W.1002.

To

permit

t h e

submission

of th e

question

of

agency upon

the

f a c t s and circumstances pointed ou t i n t he opinion of the Court of Civil Appeals

dest roys t h e protection thrown around t h e holder o f commercial paper by the

principles above enumerated.

oOo—

WHEBSFOHE, premises co ns id er ed , your p l a i n t i f f

i n

e r ro r

r e -

sp ec tf ul ly prays th is Court to grant i t a wr i t of e r ro r f o r r ev i s i on of the

judgment of th e Court o f Civil Appeals, and upon consideration t o render such

judgment

a s

sa id Court should have rendered

i n

favor

of

p l a i n t i f f

in

e r ror .

The defendant i n e r r o r , T. A. Hanna, i s represented b y

G. 0. Crisp, Kaufman, Texas; Chriaman & Chrisman, Cleburne, Texas; Ke it h and

Prestridge, Cleburne, Texas; and espec ia l ly by Gayle Prestridge o f t h e f i rm of

Keith and Prestridge, upon whom service may be had.

Tho

defendant

i n

e r ro r ,

C. D.

Dickerson,

i s a

r e s iden t

o f

Cleburne, Johnson County, Texas,

a n d i s n o t

represented

b y

counsel, never having

answered

i n

this cause.

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- 17 - X-4724-b

330

The p l a i n t i f f i n error deposits with t h e clerk herewith c a r -

uon copies of th i s expl ica t ion , an d h a s advised counsel f o r t h e defendant T. A.

Hanna, a s well as t h e defendant C. D. Dickerson, of the f i l i n g o f t h e same, and

of the

deposi t

of

said copies.

Attorneys

f o r

p l a i n t i f f

i n

error

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