Womack v. First National Bank of San Augustine

613 S.W.2d 548, 31 U.C.C. Rep. Serv. (West) 1029, 1981 Tex. App. LEXIS 3382
CourtCourt of Appeals of Texas
DecidedMarch 12, 1981
Docket1287
StatusPublished
Cited by8 cases

This text of 613 S.W.2d 548 (Womack v. First National Bank of San Augustine) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Womack v. First National Bank of San Augustine, 613 S.W.2d 548, 31 U.C.C. Rep. Serv. (West) 1029, 1981 Tex. App. LEXIS 3382 (Tex. Ct. App. 1981).

Opinion

SUMMERS, Chief Justice.

The First National Bank of San Augustine, Texas, appellee, sued Charles C. McClanahan and his brother, Dr. H. Lane McClanahan to recover upon five promissory notes. The bank alleged that the notes represented individual obligations of each of the brothers or, alternatively, were partnership obligations executed by Charles C. McClanahan on behalf of a partnership composed of the two brothers named “McClanahan Brothers.” Charles C. McCla-nahan answered, admitting liability and claiming that the notes were partnership notes. H. Lane McClanahan filed a general denial and by verified plea alleged non est factum. Prior to trial, Dr. McClanahan died, and upon suggestion of death, his estate, by and through its Temporary Administrator, was substituted as a party defendant. The case was tried before a jury which, in response to special issues submitted, found that the notes were partnership obligations; judgment was rendered for appellee from which Dr. McClanahan’s estate appeals.

We affirm.

It appears from the record in this case that for a number of years the McClanahan brothers had a continuing banking relationship with appellee bank. The inception of this relationship appears to have been in April 1971 when Dr. Lane McClanahan wrote an officer of the bank a letter which stated:

Dear Mr. Howard,
I am sending you a financial statement. My brother, Charles McClanahan wants to do business with you for some of the farming operations.
Sincerely yours,
/s/ H. Lane McClanahan, M.D.

Enclosed with this letter was Dr. McClana-han’s personal financial statement.

Thereafter, on August 4,1972, the McCla-nahan brothers executed a partnership agreement for the express purpose of engaging in the operation of a hog farm. By this agreement, which consisted of only four provisions and covered only a half page, the brothers agreed that Charles was to devote his time to the business and in return, receive 75% of the profits and share 50% of the losses while Lane would receive 25% of the profits and share 50% of the losses. Additionally, the agreement provided that the partnership funds would be kept in a joint account and Charles agreed “... to keep a complete record of the business, and shall be subject to inspection by Lane at any time.” The agreement does not contain any provision relative to the partners’ authority, nothing limiting their authority nor defining it. No partnership name is indicated in the agreement and there is testimony that the partnership operated under the names “McClanahan Farms,” “C. C. McClanahan Farms,” “McClanahan Brothers” and “Sugar Bush Farms” interchangeably. There is also testimony in the record that this agreement, as well as Dr. McClanahan’s letter and accom *551 panying financial statement were contained in the bank’s files for the entire period that the bank dealt with the partnership.

Following formation of the partnership, Lane and Charles McClanahan began executing a series of notes with appellee bank as payee. The first of these, for the sum of $10,000, was executed on September 15, 1972. Over an eight-month period the brothers signed four notes with appellee bank for a total of $30,000. In a deposition taken before his death, which was admitted into evidence at trial, Dr. McClanahan admitted executing these four notes. Both he and his brother testified that the money which was loaned under these notes was used to finance the hog farm and to carry on its business. All four original notes reflect on their face that they were executed in contemplation of investment in the partnership business, each containing notations that they are secured by either livestock, feeding equipment or hogs. These four notes are signed “Charles McClanahan” or “C. C. McClanahan” and “H. Lane McClana-han, M.D.” At the top of the notes is printed the word “NAME” followed by a blank on which is typed-in the name “McClanahan Brothers” on two of the notes and “Charles McClanahan and H. Lane McClanahan” on the other two. All but one of these notes was paid and the remaining note (No. 4088) was renewed by note number 7554 on October 18,1974. Note number 4088 has the name “McClanahan Brothers” typed at the top. The renewal note, which both brothers admitted executing, is signed “McClanahan Farms By: C. C. McClanahan By: H. Lane McClanahan, M. D.” and the name “McClanahan Brothers” is typed at the top. When this note matured, it too was renewed by note number 10828 which has the name “McClanahan Farms” typed at the top and is signed “C. C. McClanahan” underneath which appears the signature “H. Lane McClanahan.” Charles McClana-han admitted signing his brother’s name to this as well as the four other notes (described hereinafter) which form the basis of the bank’s suit (notes numbers 11,364; 11,365; 11,551; 11,550).

The notes upon which the bank sued are all renewal notes. These notes as well as their predecessors reflect a continuing lending relationship between the bank and the partnership over a period from April 28, 1973, to May 1,1975. They, as well as their precursors were executed by Charles McClanahan who also signed his brother’s name to the notes. The earlier notes all have one of the names under which the partnership operated noted in the top margin. Additionally, each of the predecessor notes contains language on its face indicating that the notes were executed for the purpose of carrying on the partnership business; notations such as “339 Feeder Pigs,” “breeding sows and boars,” “feeding equipment,” etc., were made on each of these notes in the lower left-hand corner. Some of the predecessor notes were executed as follows:

McClanahan Farms (typewritten)
By: C. C. McClanahan
or
McClanahan Farms (typewritten)
C. C. McClanahan
or
McClanahan Bros, (handwritten)
C. C. McClanahan

Likewise, each of the notes upon which the bank sued reflect on their face similar notations. 1

Charles McClanahan testified that he considered himself in charge of the farm pursuant to the partnership agreement. In his deposition, Dr. McClanahan testified as follows:

*552 Q: What was Charles supposed to do in the business venture?
A: It was more or less his operation that he was going to build the hog farm and raise the hogs and do all the raising of the hogs.

Charles McClanahan testified that he devoted his time to the operation of the farm, buying and raising hogs, feeding them, selling them, using the money of appellee bank in the operation of the business. As he would sell hogs, he would make payments to the bank and to his brother and borrow additional funds executing notes therefor, thus maintaining a running account with the bank for the benefit of the partnership. Ray Neal McEachern, one of appellee bank’s officers, testified:

Q: How did Charles make payments on those notes?

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Gray v. Federal Deposit Insurance Corp.
841 S.W.2d 72 (Court of Appeals of Texas, 1992)
Tuttle v. Simpson
735 S.W.2d 539 (Court of Appeals of Texas, 1987)
Lassiter v. Rotogravure Committee, Inc.
727 S.W.2d 8 (Court of Appeals of Texas, 1987)
Gomez v. State
709 S.W.2d 351 (Court of Appeals of Texas, 1986)
Gulf & Basco Co. v. Buchanan
707 S.W.2d 655 (Court of Appeals of Texas, 1986)
Boyer v. First National Bank of Kokomo
476 N.E.2d 895 (Indiana Court of Appeals, 1985)
Bufkin v. Texas Farm Bureau Mutual Insurance Co.
658 S.W.2d 317 (Court of Appeals of Texas, 1983)

Cite This Page — Counsel Stack

Bluebook (online)
613 S.W.2d 548, 31 U.C.C. Rep. Serv. (West) 1029, 1981 Tex. App. LEXIS 3382, Counsel Stack Legal Research, https://law.counselstack.com/opinion/womack-v-first-national-bank-of-san-augustine-texapp-1981.