Goodwin v. Abilene State Bank

294 S.W. 883, 1927 Tex. App. LEXIS 305

• Court: Court of Appeals of Texas
• Decided: April 8, 1927
• Docket: No. 42.
• Status: Published

Opinions

HICKMAN, J.

The views entertained by the majority of this court, as now constituted, on the different questions presented by this appeal, are such as to require that we write upon it as upon an original hearing. Suit was upon a promissory note executed by D. B. Cozart and W. C. Goodwin to the Abilene State Bank for the principal sum of $7,000. The note declared upon was the eighth renewal of an original note executed to the Guaranty State Bank. Goodwin alone has appealed from the judgment of the trial court. As a defense to the note, appellant, Goodwin, pleaded his suretyship and fraud on the part of the bank in procuring his signature as 'surety to the note. The pleading will not be set out here, because we shall find it necessary to detail a summary of the testimony offered by him, and there is no question raised as to the sufficiency of the pleading to support the proof. Upon the conclusion of the testimony, the court instructed the jury peremptorily to return a verdict against the defendants, and upon this vei’dict a judgment was entered against the appellant and Cozart, jointly and severally, for the amount of the note, including interest, attorney’s fees and costs of suit. The question presented for our decision is whether or not the facts proved raised questions of fact which should have been submitted to the jury for determination. We are not called upon to determine any other question.

In determining whether the issues of fact raised by the testimony should have been submitted to the jury, we shall consider only the evidence favorable to appellant’s eonteixtion.

As stated in the case of Stewart v. Miller (Tex. Civ. App.) 271 S. W. 311, no question of preponderance of evidence is involved. If the evidence of the appellant bearing upon the issues, taken in its most favor-able light, was sufficient to raise a question of fact for the determination of the jury, then it was error for the court to withdraw the case from the jury and determine the facts himself. Progressive Lumber Co. v. Ry. Co., 106 Tex. 12, 155 S. W. 175; Charles v. El Paso Electric Ry. Co. (Tex. Com. App.) 254 S. W. 1094.

Applying this i-ule to the issues in this case, it becomes necessary for us to examine the statement of facts, and determine what pertinent testimony is disclosed therein favoivable to the contention of appellant.

F. V. Matthews was engaged in the business of buying and selling at wholesale and retail, flour, meal, molasses, and other products in the city of Abilene, Tex. D. E. Cozart entered into negotiations with him with reference to becoming a partner with him in the business. Appellant, Goodwin, is the fathei'-in-Iaw of Cozart. Cozart had not sufficient credit rating with the bank upon which to procure capital for the opei-ation of the business, and spoke to his father-in-law, appellant, with reference to his becoming surety for him at the bank, in order to borrow the necessary money for operating capital. Cozart' also talked at different times with A. E. Poole, president of the then Guaranty State Bank, and was infoi*med by Poole that Goodwin would be acceptable to the bank as a surety for a loan. While Goodwin was in the bank after his son-in-law had talked to him regarding this matter, Poole approached him and stated to him, in substance, that Cozart had told him he was thinking of going in business with Matthews. Goodwin replied that he had been informed of the same facts, and inquired of Poole what he thought about Matthews’ business. Poole told Goodwin that he thought it was one of the best businesses in Abilene, and lie would like to Lave it himself; that Goodwin could not go wrong by helping his son-in-law in this business. Goodwin informed Poole that he was a “straight cowpuncher” and had been all of his life; that he knew nothing about books and figures, but wanted to help Cozart, if it was a good business that he was buying into. Poole told him that he himself had formerly been in that kind of business, that it was a good business, and that Matthews’ business, if properly run, would be a paying business. Goodwin hesitated about signing the note, and had two or three different conversations with Poole about the matter before he finally agreed to sign. At and prior to the time of the execution of the note by Goodwin, the matter of the use to which the proceeds of the note were to be applied was discussed between Poole and Goodwin, and it was Goodwin’s understanding that all of the proceeds were to constitute an operating capital from that day in the business of Matthews & Cozart. Prior to that time, according to Poole’s testimony, he had told Cozart that $7,000 would not run the business, but that it would take more money if he did the business that Matthews had been doing, because Matthews had used as high as $16,000 or $17,-000. Cozart’s reply to Poole was that he did not want to “hit Mr. Goodwin up too hard,” but that “we will take care of that as it comes.” 'When the amount of the loan was discussed between Poole and Goodwin, Poole at first told Goqdwin that $6,000 would be sufficient, but later suggested that perhaps the amount had better be made $7,000. Poole did not tell Goodwin that he thought more than $7,000 would be required to operate his business.

The original note was executed for the principal sum - of $7,000. At the time Goodwin executed the note, Matthews was insolvent, and was indebted to the Guaranty State Bank on a bill of exchange account in the amount of $5,999.64. When Goodwin executed the note, the account of Matthews & Cozart was credited with $7,000, and, within 15 minutes after Goodwin left the bank, Poole charged this account with $5,999.64 to cover the pre-existing debt of Matthews to the bank. Goodwin never knew that this sum had been applied to the payment -of •Matthews’ debt until after he executed the last renewal note sued upon, and, as so'on as he learned thereof, he went at once to the bank and demanded' of Poole that he replace the amount of this debit to the funds for ' which it was borrowed. This Poole refused to do, and this suit followed.

Appellee seeks to sustain its judgment and justify the action of the trial court in peremptorily instructing the jury to find in its favor, upon three main grounds, as follows:

First. That, since the evidence shows that the money for which the note was executed was placed to the credit of Matthews & Cozart, the persons for whom it was borrowed, if any conversion of this fund was made by the bank after it was placed to the credit of said firm, then the cause of action, if any, for such conversion, was in the firm, but such conversion would not have the effect of tainting the original note.

Second. The evidence disclosing that the original note • was given to the Guaranty State Bank of Abilene, and that the note sued upon was executed to the Abilene State Bank, and that the Abilene State Bank had nothing to do with the original transaction, but such transaction was with the other bank, the appellee bank would not be liable for such fraud, if any, and proof of fraud on the part of the Guaranty State Bank would not correspond to the pleading alleging fraud on the part of the Abilene State Bank.

Third. That the evidence showing that Cozart was the son-in-law of Goodwin, and that the application of the proceeds of the loan was known to Cozart shortly after it was made, and could have been known to the appellant by the slightest degree of diligence, and, the note having been renewed from time to time for several times, and the appellant having applied for and procured additional credit for Cozart in the meantime, in which application he acknowledged the existence of the indebtedness upon which this suit was based, such facts, circumstances, surroundings and conditions show, as a matter of law, that the appellant was in pos-' session of such facts as that he was required to make inquiry regarding the disposition of this fund, which inquiry, it is claimed, woqlcl have led him to discover the .real facts prior to the last renewal.

These grounds will be discussed in their order.

In considering whether.or not the alleged fraud of the appellee tainted the original note, it is necessary to inquire as to the relationship created between a creditor and a prospective surety,- where such prospective surety applies to the creditor for information concerning the risk and concerning the ■ business which is the basis of the credit. The contention of appellee in this regal’d is that it is no concern of the surety as to the disposition made of the funds loaned on the faith of his credit, and that no fraud could be predicated upon the failure of the creditor to disclose all the facts within his knowledge concerning the matter about which inquiry is made.

Bet us examine the authorities and determine whether or not they support this contention. In the case of Gano v. Farmers’ Bank, 103 Ky. 508, 45 S. W. 519, 82 Am. St. Rep. 596, the appellant and nine others executed to the bank an obligation for $10,-000, that one P. T. tullen might obtain that sum with which to run a milling business. The bank, on the strength of the obligation, fürnisked $5,000 with which to pay off a debt then owing to it by Pullen, and $5,000 which was used in the business. In a suit by the bank against Gano upon the contract of suretyship, it was held that he was discharged by the facts. In discussing the reason for the holding, the opinion quotes with approval the rule as thus stated by Mr. Story in his Equity Jurisprudence.

“The contract of suretyship imports entire good faith and confidence between the parties in regard to the whole transaction. Any concealment of material facts or any express or implied misrepresentation of facts, or any undue advantage taken of the surety by his creditor, either by surprise or by withholding proper information, will undoubtedly permit sufficient grounds to invalidate the contract. Section 324. And further, ‘Thus if a party taking a guaranty from a surety conceals from him facts which increase his risk and suffers him to enter into the contract under false impressions as to the real state of facts, such concealment will amount to a fraud, because the party is bound to make the disclosure, and the omission to make it under such circumstances is equivalent to an affirmation that the facts do not exist.’ ”

In the case of Jungk v. Holbrook, 15 Utah, 198, 49 P. 305, 62 Am. St. Rep. 921, if is held that the fraud upon the sureties consists in the situation in which they were placed by the conduct of the _ other party, and in discussing this question the following language is used:

“If a material fact connected with the contract of suretyship, and directly affecting the sureties’ liability, which might influence the sureties in entering into the contract, is concealed from the sureties, or, if knowing the fact, such information is purposely concealed from the sureties, in the interest of the creditor, such concealment, though no inquiry is made by the sureties, amounts to a fraud upon the sureties, and would discharge them from liability.”

In the case of Bryant v. Crosby, 36 Me. 562, 58 Am. Dec. 767, it is held:

“A concealment, which entirely discharges' a surety, is one of facts known to the other party and not known to him, and known to be of a character to materially increase the risk beyond that assumed in the usual course of business of that kind, having a suitable opportunity to make them known to the surety.”

In Fassnacht v. Emsing Gagen Co., 18 Ind. App. 80, 46 N. E. 45, 47 N. E. 480, 63 Am. St. Rep. 322, suit was brought upon a promissory note executed by a woman as surety for her son. As a defense she pleaded that she was an old German woman, unable to read the English language, and unversed in the ways of business; that she signed the note, not knowing the exact amount, but believing it was for the purchase price of certain goods; that the payee knew this to be her belief, but also knew that the amount included a pre-existing debt. It was held in that case that the failure of the creditor to inform the surety of the fact that the note included a pre-existing debt of her principal was in law a fraud that would release the surety from the entire contract. The authorities on the question-are fully discussed in, this able opinion. The conclusion is drawn that, if any material fact connected with the contract of surety-ship which might influence the surety in entering into the contract is fraudulently concealed with a view to benefit the creditor, such concealment of facts, from one motive or another, would vitiate the contract of’ suretyship and relieve the surety.

In the case of Haworth v. Crosby et al., by the Supreme Court of Iowa, 120 Iowa, 612, 94 N. W. 1098, a clear reason for the' rule is expressed in this language:

“A person may be willing to become surety-for another in the purchase of property representing value equal to or exceeding the obligation thus assumed, and yet very reasonably refuse to become the same man’s surety for money with which to pay an antecedent debt. In the one case the surety is to some extent protected from ultimate loss by the fact that his principal becomes the owner of additional property which may be applied to the payment of tile obligation, while in the'other no such benefit or advantage results, and the surety is to. that extent prejudiced.”

In 32 Cyc. p. 59, the rule is stated in this language:

“Very little said which ought not to have been said, and very little omitted which ought to have been said, and except for which • the relation might not have been entered into, was sufficient to avoid the contract.”

The rule is summarized in 21 R. C. L. p. 989, § 381, as follows:

“If a surety, before entering into the contract of suretyship, applies to the creditor for information touching any material matter, he-is bound, if he assumes to answer the inquiry at all, to give full information as to every fact within his knowledge, and he can do nothing to deceive or mislead the surety without vitiating the agreement. Whether he is bound before' accepting the undertaking of the surety voluntarily to inform him of facts within his knowledge which increase the risk of the undertaking depends on the circumstances of the case. The rule seems to be that, if he know's or has good grounds for believing that the surety is being, deceived or misled, or that he was induced to enter into the contract in ignorance of facts' materially increasing the risks, of which helms knowledge and he has an opportunity before accepting his undertaking, to inform him of such facts, good faith and fair dealing demand that he should make such disclosures to-him; and, if he accepts the contract without, doing so, the surety may afterward avoid it, though the failure to disclose such facts was not wilful or intentional.”

In Williston on Contracts, vol. 2, § 1249, p. 2272, it is stated, in substance, that, if' the creditor knows or has good grounds for believing that the surety is being deceived or misled, or that he is being induced to enter into the contract in ignorance of facts materially increasing the risks, of which the creditor had knowledge, and he has an opportunity to inform the surety of such facts before the execution of the suretyship, good faith and fair dealing demand that he should make such disclosures to him; and, if the creditor accepts the contract of suretyship without doing so, the surety may afterward avoid it.

In Black on Rescission & Cancellation, vol. 2, p. S73, § 342, this language is used:

“But when the surety inquires of the creditor respecting the principal for information which the" creditor may properly give, and the creditor withholds the same without sufficient cause, or misleads the surety, it is the creditor who should suffer the loss occasioned thereby.”

That the rules above announced have been recognized by the courts of this state is indicated in the cases of Trammell v. Swan, 25 Tex. 473, and Southwestern Surety Insurance Co. v. Hico Oil Mill (Tex. Civ. App.) 203 S. W. 137. From these authorities and many others cited in them, it seems to us to be the well-established rule that, while there may be no duty resting upon a creditor to give information to a prospective surety about which no inquiry is made and concerning which the surety may be presumed to have as much knowledge as the creditor, yet, where such prospective surety makes inquiry of the creditor concerning the nature of the subject-matter of the suretyship, which might in anywise affect the risk which he is to assume, and such creditor undertakes at all to make reply to the inquiry, he is required to make a full and free disclosure of all material facts known to him and unknown to the surety, which might in any manner affect the risk to be assumed, or influence him in becoming a surety. Applying these principles announced to the testimony of the appellant in this case, considered in the light in which the law requires us to view it, the conclusion seems to us to be inevitable that, when appellant applied to the president of the bank for information as to the business in which Oozart contemplated entering, disclosing to such creditor his own lack of information regarding the business, and requesting information. of the creditor, such inquiry itself created a trust relation between Goodwin and the bank, imposing upon the bank the duty to inform Goodwin of each and every material fact which might affect his liability. Certainly it was material to the risk to be assumed that approximately $6,000 of the money loaned on the note was to be applied to a pre-existing debt, whether that debt was the debt of Matthews individually or, as contended by appellee, the joint debt of Matthews and Cozart. Appellant might have been willing to assume the risk of his son-in-law’s integrity and ability to conduct a successful business with proper operating capital, and at the same time be entirely unwilling to procure money with which to discharge a pre-existing debt of such son-in-law or his partner. The probability of Cozart’s being able to discharge this obligation in the future was materially lessened by the wiping out in advance of practically all of his operating capital.

Under the facts in this record, the jury should have been permitted under proper instructions to have determined the issue as to whether or not there was fraud in this transaction. In our opinion it became the duty of the president of the bank, upon being approached by appellant for information. concerning the business of Matthews, when said president assumed to furnish -information to appellant upon that subject, to disclose to appellant the fact of Matthews’ indebtedness to the bank; his purpose, if in fact he had at that time formed the purpose, of applying a portion of the loan to this pre-existing indebtedness; and the further fact, if he believed it to be a fact as he had theretofore - told 'Cozart,- that a much larger operating capital was required to conduct the business than that represented by the loan. The surety had a right to this information, and, however unintentional might have been the withholding thereof on the part of the creditor, if loss was thereby sustained, it should be borne by the creditor rather than the surety.

Nor would the rule be altered if the purpose to apply a portion of this money to the pre-existing indebtedness -Was formed during the 15-minute period between the execution of the note and the application of most of its proceeds. The surety is interested in the disposition of the proceeds of a loan and in the character of .the property in which same are invested. He has a right to impose any restriction or condition upon his suretyship, whether same appears material or immaterial; but, when such condition or restriction is placed there by him, it thereby becomes material, and the creditor is required to take notice thereof at his peril. By this we do not mean to be understood as stating that a creditor is charged with the duty of seeing what disposition is made of the proceeds of a loan by the principal debtor; but we do mean to state that, if the creditor himself disposes thereof contrary to the known purposes and intentions and restrictions of the surety, such surety is thereby discharged.

We have concluded that the pleadings of appellant, with the testimony offered in support thereof, fairly raised issues of fraud 'and misapplication of the proceeds of the loan to be determined alone by the jury, and that the learned trial judge erred'in with drawing these issues from the jury and determining them against the appellant. In arriving at this conclusion, we believe that we are following the principles above announced, which should be applied irrespective of any consideration of the preponderance of the testimony, and irrespective of any intentional wrong by the president of the bank.

The second ground relied upon by the appellee to sustain the judgment of the trial court, based upon the elementary rule of evidence that the allegata and probata must correspond, is not tenable under the facts of this case, as we view them. The facts in this record are very meager with reference to the question of just how the Guaranty State Bank of Abilene passed into and became the Abilene State Bank. About the substance of the proof is that during the year 1922; the Abilene State Bank, having a separate charter from the Guaranty State Bank, took over the Guaranty State Bank; that the accounts which had been carried in the Guaranty State Bank were continued in the Abilene State Bank; that the officers and directors of the two banks were the same; that, the stockholders were practically the same, there being but a slight difference; and that, as testified to by the former cashier of the Guaranty State Bank, “it was the same institution, you might say.” About the only difference in the two institutions disclosed by the record was the difference in name, and the fact that the Abilene State Bank had a separate charter. The record does not disclose when the charter of the Abilene State Bank was procured, or whether it was an existing bank prior to the time it took over the Guaranty State Bank. Neither does it disclose whether or not the Guaranty State Bank forfeited its charter, or whether the appellee Abilene State Bank was created solely for the purpose ''of taking over the Guaranty State Bank. What, if anything, the Abilene State Bank paid for the assets of the Guaranty State Bank is not disclosed. Whether stock in the Abilene State Bank was issued to the stockholders of the Guaranty State Bank in lieu of their stock in such bank does not appear. There is no showing that the Abilene State Bank purchased the assets and assumed the liabilities of the Guaranty State Bank. From these meager facts it is our opinion that it does not affirmatively and conclusively appear that there was such a difference between these two institutions as to constitute them distinct, separate entities and authorize a peremptory instruction based upon the application of the rule invoked that the allegata and probata do not correspond. Practically the only evidence that the two corporations differed in identity is contained in the testimony that the appellee bank had a separate charter. That fact does not necessarily establish separate identity. If the transaction constituted a consolidation of two • existing corporations, which idea is not excluded by the evidence, then there has been but an amalgamation; each corporation retaining its existence in the amalgam. In that case the consolidated corporation could be sued in its new name for the debts of its constituents. H. & T. C. Ry. Co. v. Shirley, 54 Tex. 125; Mo. Pac. Ry. Co. v. Owens, 1 White & W. Civ. Gas. Ct. App. § 386.

If, as appears more probable from the meager facts in this record, the appellee bank was but a reorganization of the Guaranty State Bank, and its charter was procured to continue its business, then the question of whether or not a different entity came into existence is largely a question of intention. In the case of Ericson v. Supreme Ruling, Fraternal Mystic Circle, 105 Tex. 170, 146 S. W. 160, the Supreme Court, speaking through Ohief Justice Brown,-stated the rule in this language:

“When a corporation is consolidated with another or becomes merged therein, whethér a new corporation is thereby created or the old corporation is continued will depend much upon the intention of the parties. Marshall on Corp. 467; 2 Clark & Marshall on Corp. pp. 974-975; Austin v. Bank, 59 Am. St. [Rep.] 547; note; Miller v. English, 21 N. J. Law, 317; First Society, etc., v. Brownell, 5 Hun [N. Y.] 464.”

The case of Miller v. English, 21 N. J. Law, 317, supra, cited by Justice Brown with approval, was a case in which the charter of a religious society was lost and the same persons who constituted the board of trustees in the former corporation procured a charter for another corporation to take its place, and it was held that no new identity came into existence by the granting of the new charter. The old English authorities are reviewed, and the conclusion is drawn that the intention is determinative of the question. After discussing and citing the eases from the English courts, this language is used:

“These are, it is true, cases of royal charters of incorporation, but the same principles apply, whether the creation or removal is by the Legislature, or by a general act of incorporation. Angell & Ames on Corp. 513. The question of identity—that is, whether the new act creates a new body politic or corporate, or merely revives an old one—is one of intention. ‘To ascertain whether a charter creates a new corporation, or merely continues the existence of an old one, we must,’ says Story, J., ‘look to it's terms, and give them a construction consistent with the legislative intent, and the intent of the corporators.’ Bellows v. Hallowell & Augusta Bank, 2 Mason, 43 [Fed. Cas. No. 1279].”

Applying this rule to the case under consideration, it is our opinion that the facts of this ease do not, within themselves, disclose any intention to create a corporation of different identity. In order to uphold the action of the trial court in withdrawing this case from the jury, it would be necessary to hold that no other effect could be given to the transaction than that a separate entity was created, and was intended to-be created when appellee bank succeeded the Guaranty State Bank. We do not wish to be understood as holding that the facts of this case disclose a consolidation of two existing banks, or a reorganization of the former bank without loss of identity; but we do state that neither of these conclusions is excluded by the testimony, and it was therefore error for the court to determine the issues against appellant without submitting them' to the jury. The modern tendency of courts, and we think a tendency in the interest of justice, is to disregard the corporate fiction when same is invoked as a means of protection against fraud. To regard the corporate fiction in this case as controlling and thereby deny the appellant the right to have his issues of fact determined by a jury would, in our opinion, be resting the separate identity of a corporation, not upon a legal fiction, but upon a conclusive presumption, which the law does not recognize.

The case of Cooper Grocery Co., v. Eppler (Tex. Civ. App.) 204 S. W. 338, while not involving the exact question under discussion here, is nevertheless indicative of the view of our courts with regard to the identity of corporations having different charters. In that case a letter of guaranty was executed by two of the stockholders of Eppler Mercantile Company, a corporation, to Cooper Grocery Company, guaranteeing indebtedness then existing and thereafter to accrue until notice of the revocation of the guaranty was brought home to the grocery company. The charter of the Eppler Mercantile Company expired, and a new corporation was chartered. The old company was authorized to transact business in two cities, but limited that business to a retail business. The new corporation’s charter authorized it to transact business in only one city, but empowered it to conduct both a wholesale and retail business. The new corporation became indebted to the wholesale house, and suit was filed thereon against the guarantors, who defended on the ground that they did not guarantee the payment of indebtedness of this new corporation. Notwithstanding the strictness with which contracts of guaranty are enforced in favor of the guarantors, the Austin Court of Civil Appeals held that the guarantors were bound for the debts of such new corporation, which came into existence after the guaranty was executed. It seems to us that, if the two corporations in that case were sufficiently identical to warrant a judgment against a surety for the debts of the one which came into existence as a successor to the other, upon a contract of guaranty covering the debts of the former, then clearly the facts in this case do not justify the conclusion that the two corporations in this case were so separate and distinct as that appellant’s rights to show fraud in the execution of the note sued upon should be determined by the general rule that he must prove the case alleged. We do not believe that the rule has any application to this case. Appellant alleged fraud in the original transaction, and showed that the appel-lee bank was claiming the benefit of the alleged fraud; he also showed that the officers of the two banks regarded them as the same institution.

It is the established rule in our state that, for a variance to be fatal, it must be material. To be material, it must be such as to mislead or surprise the adverse party. McClelland v. Smith, 3 Tex. 210; Hays v. Samuels, 55 Tex. 560; Wiebusch v. Taylor, 64 Tex. 53; Brown v. Sullivan, 71 Tex. 470, 10 S. W. 288; McDonald v. Cabiness, 100 Tex. 615, 102 S. W. 721; Cullers et al. v. May et al., 81 Tex. 110, 16 S. W. 813; Jones v. S. G. Davis Motor Car Co. (Tex. Civ. App.) 224 S. W. 701.

It cannot be contended that the appellee was either misled or surprised in this case. It had its witnesses present’ and met the issues by testimony. The ease was tried as if the issue were an issue of fact regarding fraud. No objection was made to the admissibility of any evidence on account of its variance, and it would not be consonant with our ideas of justice to permit it to reap the benefits of the alleged fraud; if, in fact, such fraud was perpetrated, on the bare ground that appellant’s answer alleged that the fraud was committed by it instead of its alter ego.

Besides this, the testimony, in. our opinion, takes out of the case any question of variance. A. E. Poole, president of appellee bank and former president of the Guaranty State Bank, testified, “When this bank was organized, it was known as the Guaranty State Bank;” and, further, “I was representing this bank in making the loan.” With this testimony in the record given by the president of the appellee bank, we can see no ground for the claim that appellant proved a different defense to that alleged. We .therefore conclude that the judgment of the trial court cannot be sustained upon the second ground relied upon by appellee.

We do not believe that from the record in this case we would be justified in holding, as a matter of law, that the appellant was put upon notice of such facts as would have, by the exercise of ordinary diligence, led him to discover, prior to the execution of the note sued on, that the money had been applied to a pre-existing indebtedness of Matthews. The question of actual notice and of diligence in making inquiry in this ease was, in our opinion, purely a question of fact to be determined by the jury. At most, there could be no more than a presumption. Presumptions must yield to positive testimony of facts. Appellant testified positively that he had no knowledge of the appli cation made of the proceeds of the original note until after the execution of the note sued upon, and A. E. Poole, president of the plaintiff bank, testified that he gave him no information of such facts prior to that time, and that, so far as he knew, appellant knew nothing of it until after the last renewal. The fact that Oozart was the son-in-law of Goodwin raises no presumption that he informed appellant of the facts within his knowledge. The record does not lend any strength to such presumption, because it is disclosed by the testimony of A. E. Poole that, before the note was executed, he informed Oozart that it would require $17,000 as operating capital, and was informed by Oozart that he did not want “to hit Mr. Goodwin .up too hard.” We do not think it is within the province of this court to resolve this issue of fact against the appellant, but that the jury alone should have passed upon same under appropriate instructions. The question of actual notice is one of 'fact for the jury. 29 Oyc. 1129, § (c), and authorities there cited.

Chief Justice Wheeler of our - Supreme Court, in the early history of our jurisprudence, wrote upon this question in his opinion in the case of Briscoe v. Bronaugh, 1 Tex. 326, 46 Am. Dec. 108, and the distinction there drawn between the province of the court and that of the jury should be carefully recognized and applied. We quote from that able opinion as follows:

“Of the weight of evidence they are the judges. The law, it has been said, has no scales wherein to weigh the different degrees of probability; still less to ascertain what weight of evidence shall ..amount to proof of any disputed fact. Its business is to define, to distinguish, and to apply legal consequences to ascertained facts; but, whether a-fact be probable or improbable, true or false, admits of no legal definition. The law therefore refers the weight of evidence, and of the different degrees of probability to the jury, who are to be guided in their decision by their conscientious judgment and belief under all the circumstances of the case.”

We believe that the foregoing quotation is applieáble, not only to the question of notice and ratification, but to every other issue in this case, all of which were withdrawn by the court from the consideration of the jury, and, so believing, it is our opinion that the judgment of the trial court should be set aside, and that this case should be remanded for further proceedings not inconsistent with this opinion, and it is so ordered.

Reversed and remanded.