Wilson Supply Co. v. West Artesia Transmission Co.

511 S.W.2d 261 (1974)

WILSON SUPPLY COMPANY, Petitioner, v. WEST ARTESIA TRANSMISSION COMPANY, Respondent.

No. B-4517.

Supreme Court of Texas.

June 19, 1974.

Rehearing Denied July 17, 1974.

*262 Lloyd, Lloyd, Ellzey & Lloyd, Parker Ellzey, Alice, for petitioner.

Martin & Shannon, Fred Shannon, San Antonio, for respondent.

PER CURIAM.

This is a suit on a check given by West Artesia Transmission Company, respondent, to Gernandt Drilling Company and endorsed by the latter to Wilson Supply Company, petitioner, to apply on a preexisting indebtedness owing by Gernandt to Wilson Supply. The case was tried before the court, and judgment rendered denying Wilson Supply a recovery against West Artesia on the check. West Artesia established its defense of failure of consideration, and the only question is whether Wilson Supply is a holder in due course. As pointed out by the Court of Civil Appeals, there is evidence to support an implied finding by the trial court that Wilson Supply did not accept the check unconditionally in payment of its preexisting claim but simply agreed that the proceeds, when collected, would be applied to the account of Gernandt Drilling. The Court of Civil Appeals held, with one justice dissenting, that one who thus accepts a check conditionally in satisfaction of part or all of a preexisting claim is not a holder in due course within the meaning of § 3.303 of the Uniform Commercial Code, V.T.C.A. 505 S.W.2d 312. We agree with this holding, and the application for writ of error is refused, no reversible error.