First Nat. Bank of Bowie v. Chandler

DUNKLIN, Justice. The First National Bank of Bowie instituted this suit to recover on a promissory note executed by I. L. Chandler, Paul Donald, and F. O. Green, payable to the First State Bank of Bowie and assigned to the plaintiff. From a judgment denying a recovery, the plaintiff has prosecuted this appeal. The defendants pleaded a failure of consideration by allegations that the First State Bank of Bowie, who was then the owner of a note in the sum of $4,600, executed by one Edward Stewart, was in financial straits, and was unable to collect the Stewart note, and the state banking examiner demanded that the Stewart note be charged off, and, in order to relieve that situation and to avoid a closing of the bank by reason of its financial embarrassment, and in order to satisfy the bank examiner, the defendants who were stockholders in the First State Bank executed the note in suit without any consideration passing to them therefor, and with the further agreement that the Stewart note would still be held by the First State Bank and) collected, if possible, and the proceeds applied to the payment of the note in suit. In answer to a special issue, the jury returned a finding sustaining that defense, and that finding had ample support in the evidence. [1057] In the case of Central National Bank of Waco v. Lawson, 27 S.W.(2d) 125, by the Commission of Appeals, the defense of failure of consideration of a note executed under substantially the same facts and circumstances as in this case was sustained for lack of consideration, and that decision is of controlling effect here. And that defense was available as against the plaintiff who acquired the note after its due date and for the purpose of liquidating the assets of the First State Bank of Bowie, which had become insolvent. Commercial State Bank v. Ellington (Tex. Com. App.) 24 S.W.(2d) 359. Accordingly, the judgment of the trial court is affirmed without the necessity of discussing other assignments of error which become immaterial in view of the foregoing conclusions.