First Nat. Bank of Hughes Springs v. Sanford

228 S.W. 650, 1920 Tex. App. LEXIS 1259

• Court: Court of Appeals of Texas
• Decided: December 24, 1920
• Docket: No. 2338.
• Status: Published

Opinions

The proposition in appellant's brief is as follows:

"A suit may be maintained and the venue is properly laid in the county of residence of either the drawer or drawee of a draft, where the drawee has accepted, or agreed to pay, either in writing or orally, said draft to a party cashing same upon the faith of said acceptance or promise to pay by drawee."

In support of the contention so presented appellant cites Henrietta National Bank v. State National Bank, 80 Tex. 648, 16 S.W. 321, 26 Am.St.Rep. 773, as holding that "a promise to accept a draft is tantamount to an acceptance"; Neumann v. Schroeder, 71 Tex. 81, 8 S.W. 632, as holding that "an oral promise to pay a draft is not within the statute of frauds"; Hull v. First Guaranty State Bank, 199 S.W. 1148, as holding that the "drawer and acceptor of a draft are jointly liable and suit thereon may be maintained in county of residence of either"; and Southern Creosoting Co. v. Chicago Alton Railroad Co., 205 S.W. 716 (a Missouri case), as holding that "the requirement of the Negotiable Instruments Act that an acceptance shall be in writing does not change the rule making an oral promise to accept valid and the acceptor jointly liable with the drawer to the payee." We do not doubt the correctness of the statement in the brief as to the holdings of the courts in the three cases first mentioned; but as we understand the opinion of the court in Southern Creosoting Co. v. Chicago Alton Railroad Co., the point appellant mentions as decided there was not before the court for decision and was not decided. The question in that case was as to whether certain letters written by the drawee of the draft in question should be construed to be an acceptance of the draft. The holding of the court was that they should be so construed.

The pertinent provisions of the Negotiable Instruments Act referred to (General Laws 1919, p. 190) are as follows:

"Sec. 132. The acceptance of a bill is a signification by the drawee of his assent to the order of the drawer. The acceptance must be in writing and signed by the drawee."

"Sec. 135. An unconditional promise in writing to accept a bill before it is drawn is deemed an actual acceptance in favor of every person who upon the faith thereof, receives the bill for value."

So far as we are advised the question as to the effect of the statute has not been directly determined by any of the appellate courts of this state, but we think the Supreme Court, in an opinion by Chief Justice Stayton in Neumann v. Schroeder, 71 Tex. 81, 8 S.W. 632, referred to above, clearly indicated how it should be decided, when, following, but criticizing the rule it regarded as established, to wit, that a verbal acceptance or promise to pay a check or bill of exchange was not within the statute of frauds, it said:

"If the Legislature be of the opinion that verbal acceptances or promises to pay bills of exchange and like instruments ought not to be sustained, a statute so declaring will doubtless be enacted; but, in the absence of such a statute, the courts are not authorized to depart from what seems to be the settled construction of the statute of frauds in order to reach what may seem to be an evil that another and * * * better construction would have reached."

But the question has been before the courts of several of the states, and in each instance has been determined to the contrary of what appellant thought the Missouri court held in the Creosoting Company's Case. Rambo v. Bank, 88 Kan. 257, 128 P. 183, by the Kansas court; Hanna v. McCrory, 19 N.M. 183, 141 P. 996, by the New Mexico court; Town Site Co. v. Drug Co., 20 N.M. 185, 147 P. 460, also by the New Mexico court; Ry. Co. v. Bank, 102 Va. 753, 47 S.E. 837, by the Virginia court: and Turnpike Co. v. Gooch, 113 Miss. 50, 73 So. 869, by the Mississippi court In disposing of the appeal in the first of the cases mentioned the court said:

"The drawee is not liable on the bill unless and until he accepts it. Section 134. Acceptance is the signification by the drawee of his assent to the order of the drawer, and acceptance must be in writing signed by the drawee. Section 139. Gen. Stat. 1909, §§ 5380, 5385. Section 134 relates to rights and duties, and not to form of remedy. It means that the drawee is not obligated to pay the holder unless and until he accepts, and the plaintiffs gain nothing by saying that they do not sue `on the bill.'

"Neither do they gain anything by saying that they ground their action upon equitable considerations, since equity must follow the law in all cases in which the Legislature has intervened and prescribed rules of law which govern the rights of the parties.

"`The established rule, although not of universal application, is that equity follows the law, or, as stated in Magniac v. Thompson, 15 How. 281, 299 (14 L.Ed. 696), "that, wherever the rights or the situation of parties are clearly defined and established by law, equity has no power to change or unsettle those rights or that situation, but in all such instances the maxim equitas sequitur legem is strictly applicable." * * * Courts of equity can no more disregard statutory and constitutional requirements and provisions than can courts of law. They are bound by positive provisions of a statute equally with courts of law, and, where the transaction or the contract is declared void because not in compliance with express statutory or constitutional provision, a court of equity cannot interpose to give validity to such transaction or contract, or any part thereof.' Hedges v. Dixon County, 150 U.S. 182,192, 14 Sup.Ct. 71, 37 L.Ed. 1044.

"The Negotiable Instruments Act entailed no hardship upon the plaintiffs, for they might have asked for a certified check, or might easily have obtained a lawful acceptance, and to permit them to recover on the theory proposed would loose again upon the business world the evils which the statute was designed to repress."

It is obvious, if the ruling made in the cases cited is correct, and we think it is, that appellant could not maintain its suit against appellee on the latter's verbal promise to accept or pay the drafts sued upon, that appellee therefore was not a proper party to the suit on the drafts, and hence that the trial court did not err when he sustained appellee's plea.

The judgment is affirmed.