## Facts

- Carl V. Nichols executed a promissory note payable to Henry L. Seale.
- The printed form of the note began with the words “I, we or either of us.”
- The signature area showed the business name “THE FASHION BEAUTY SALON,” with “Carl V. Nichols” typed underneath, followed by Nichols’s handwritten signature “Carl V. Nichols.”
- The note did not state that Nichols signed as an agent or officer, and it did not name any corporation on its face.
- Seale sued Nichols personally on the note and moved for summary judgment.
- Nichols filed a sworn answer denying he signed in his individual capacity and alleging he signed on behalf of Mr. Carls Fashion, Inc., a Texas corporation doing business as The Fashion Beauty Salon.
- In response to the summary-judgment motion, Nichols filed an affidavit stating he was president of Mr. Carls Fashion, Inc., that the corporation did business as The Fashion Beauty Salon, and that he signed the note as an officer on behalf of the corporation, not personally.
- The trial court granted summary judgment for Seale against Nichols individually.
- On appeal (in an opinion issued on rehearing), the appellate court granted rehearing, withdrew its prior opinion, and considered whether Nichols’s evidence created a fact issue barring summary judgment.

## Issues

1. In a suit on a promissory note between the original parties, may extrinsic evidence be used to show the signer acted for a corporation, even though the note does not show representative capacity and contains only an assumed business name?
2. Is the signer’s affidavit stating that he signed as a corporate officer and not personally competent summary-judgment evidence, or merely an inadmissible conclusion?

## Decision

- The court granted the motion for rehearing, withdrew its former opinion, reversed the summary judgment, and remanded the case for further proceedings.
- The court held that, as between the original parties, extrinsic evidence is admissible to show that the signer acted for a corporation rather than personally when the instrument’s form leaves the signer’s capacity unclear.
- The court held Nichols’s affidavit was competent summary-judgment proof and, together with the circumstances, raised a genuine issue of material fact on whether Nichols was personally liable on the note.

## Legal Principles

- When litigation is between the original parties to a negotiable instrument and the signer’s capacity is not clear from the instrument, extrinsic evidence may be admitted to determine whether the parties intended to bind the signer individually or a principal.
- Texas Business & Commerce Code § 3.403(b) sets a default rule that a representative who signs only his own name may be personally obligated if the instrument neither names the represented person nor shows representative capacity, but that default does not prevent a fact issue from being raised by admissible evidence in a dispute between the original parties.
- An affidavit is competent summary-judgment evidence when it states facts within the affiant’s personal knowledge—such as corporate status, the affiant’s corporate office, the corporation’s assumed name, and the capacity in which the note was signed—and it can raise a material fact issue on personal liability.
- Summary judgment is improper when the nonmovant’s evidence creates a genuine dispute about a material fact, including the parties’ intent as to who would be obligated on the instrument.

## Conclusion

Because the note’s signature format left uncertainty about whether Nichols signed personally or for a corporation doing business under an assumed name, and because Nichols’s affidavit and related extrinsic evidence were admissible and sufficient to create a material fact dispute on that question, the appellate court reversed the summary judgment imposing personal liability and remanded for trial.


Nichols v. Seale, 493 S.W.2d 589 (1973)