
    KIRBY v. ARKANSAS BANK & TRUST CO.
    (No. 2271.)
    (Court of Civil Appeals of Texas. Texarkana.
    May 27, 1920.)
    1. Bills and notes <&wkey;493(3), 497(2) — Maker has burden of proving failure of consideration and assignee’s notice.
    Maker of note sued by assignee, conceding execution and delivery and assignment before •maturity, has burden of proof on defense that consideration failed and that assignee had no-ticfe thereof.
    2. Bills and notes <&wkey;5l8(l) — Failure of consideration not shown.
    Failure of consideration of note given to corporation, which was to acquire land and issue stock to maker, is not shown; there being no evidence that the land will not be acquired and the stock issued.
    Appeal from District Court, Harris County; J. D. Harvey, Judge.
    Action by the Arkansas Bank & Trust Company against John H. Kirby and others. Judgment for plaintiff, and the named defendant appeals.
    Affirmed.
    Andrews, Streetman, Logue & Mobley, of Houston, for appellant.
    J. W. Lewis, of Houston, for appellee.
   HODGES, J.

On June 22, 1917, J. H. Kirby, the appellant, executed and delivered to the Marion Coal & Lumber Company his promissory note for the sum of ¥5,000, due four months after date. A few days thereafter the note was indorsed in blank by Earl D. Sweetwood, treasurer of the Marion Coal & Lumber Company, and delivered to A. N. Walker, the president of that corporation. Some time before its maturity, Walker pledged the note to the Arkansas Bank & Trust Company, the appellee, as collateral to secure his personal obligation amounting to something over $4,000. Walker having failed to pay his indebtedness at maturity, demand was made upon the appellant for the payment of this note. He refused, and this suit was instituted by the appellee against the appellant, the Marion Coal & Lumber Company, and A. N. Walker. Appellant was the only defendant who answered in the court below. He pleaded a failure of consideration, and alleged, in substance, the following facts: That a short time prior to the execution of the note the appellant was approached by A. N. Walker and Earl D. Sweetwood, who represented themselves to be the president and treasurer, respectively, of the corporation known as the Marion Coal & Lumber Company; that Walker also represented that he expected to acquire for that company a large body of timber and coal land situated in Tennessee, with which the appellant was then familiar. Walker further represented that he needed approximately $10,000 to consummate the purchase of that property, which amount; if secured from the appellant, would be used for the purpose. He further represented that the papers to be delivered in consummation of the purchase were then in the possession of a certain bank in Tennessee, and that, if appellant would advance the amount of $10,-000, he (Walker) would immediately proceed to make the purchase of the property. It was thereupon agreed between Walker as the 'president of the Marion Coal & Lumber Company, and Sweetwood' as its treasurer, and the appellant Kirby, that the latter would execute and deliver to the Marion Coal & Lumber Company two notes for the sum of $5,000 each, which should be immediately used by Walker in part payment for the property above referred to; that'Walker would proceed to Tennessee and complete the purchase, using the two notes in part payment-therefor. In pursuance of that understanding, the appellant executed his notes and delivered them to Walker with the express understanding that they were to be used only in the acquisition of that property. It was further alleged that the representations of Walker were false and fraudulent and were made for the purpose of obtaining the appellant’s note for Walker’s individual use and benefit, and that the notes were so used for that purpose by Walker. After hearing the evidence, the court gave a peremptory instruction in favor of the plaintiff in the suit.

In this appeal it is contended that the evidence presented issues of fact which should have been submitted to the Jury. It is claimed that the testimony was such as to support a finding by the Jury that the consideration for which .the note was given had failed, and that the appellee was not a purchaser for value and without notice.

The execution and delivery of the note and its assignment before maturity being conceded, the appellant had the burden of proving that the consideration had failed and that the appellee had notice of that fact. In testifying for himself the appellant admitted'the execution of the note. He stated that at the time the note was given Walker represented that he (Walker) had decided to make the purchase of the coal lands but lacked part of the money; he wanted appellant to take a part of the investment, which the latter agreed to do and executed this note and another of like amount and delivered them to Walker and Sweetwood. Walker represented that the papers covering the purchase were then in a bank in Chattanooga, Tenn., and that with this $10,000 the purchase could be consummated; that after the purchase was consummated he (Walker) would issue to appellant an agreed amount of the stock of the Marion Coal & Lumber Company as .a consideration therefor. On cross-examination he said:

“I first learned that the plaintiff in this case held one of these notes at the maturity of the note, whatever date that was. These properties that I speak of had not been acquired by the Marion Coal & Dumber Company then. I learned from both Mr. Walker and Mr. Sweet-wood prior to the maturity of this note, I should say about September 1917, that the consummation of the deal was held up because one of the selling parties had died and it was necessary to have some court proceeding to bind his heirs, and that the deal was halted pending that court action.”

The legitimate inference from the above is that the real consideration for the note sued on was stock in 'the Marion Coal & Dumber Company to be issued in the future. No defense, however, is predicated upon that fact. The evidence relied on by the appellant was not sufficient to justify a finding that the consideration of the note had failed. There was no evidence that the land had not or would not thereafter be acquired, or that the stock in the corporation would not thereafter be issued. The appellee offered testimony, which was not disputed, that the lands were subsequently acquired and were owned at the time of the trial by the Marion Coal & Dumber Company. It is true the evidence shows that this note was pledged by Walker for the purpose of securing his individual indebtedness to the appellee; but, assuming that the consideration had failed in whole or in part, the evidence was not sufficient to show that the appellee had notice of such failure.

It could serve no useful purpose to quote at length from the evidence. We have carefully considered all of the material facts, and have concluded that the judgment should be affirmed. 
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