American Exchange Nat. Bank of Dallas v. Keeley

VAUGHAN, J. Appellee, Thomas F. Keeley, instituted suit November 24, 1928, against appellant bank, independent executor of the estate of S. T. Morgan, deceased, to establish a claim of approximately $15,000, alleged to have been advanced about August 12, 1925, to pay off a note signed by Aztec Oil Company, a corporation, as principal, on which said Morgan was one of four sureties by indorsement. Appellee, among other things, alleged: That on June 21,1925, the Aztec Oil Company executed a note in the sum of $50,000, payable to the Houston National Bank of Houston, Tex., which was indorsed by W. H. Grey, S. T. Morgan, R. A. Welch, and L. A. Carlton; that thereafter, on October 15, 1925, appellee, on behalf of said Morgan, paid to the Houston National Bank the sum of $15,000 in discharge of Morgan’s liability on said note; that thereafter said Morgan, with knowledge of all the facts, approved, confirmed, and ratified the acts of appellee in making said pg.y [931] ment for his benefit, and promised and agreed in writing to pay appellee said sum of $15,-000 plus interest; that said Morgan wrote letters to appellee, admitting therein the justness of appellee’s claim and demand for the payment of said sum so advanced. Appellee further alleged that the sum of $4,478.49 had been paid to him and credited to the amount due him by said Morgan, but that the balance remained unpaid; that he duly and properly presented his claim to appellant, independent executor of the estate of said Morgan, which was refused. Appellant’s answer consisted of a general demurrer, general denial, and the two and four year statutes of limitation. Upon conclusion of the trial on December 19, 1929, both appellant and appellee moved for an instructed verdict. Appellee’s motion was granted, and-judgment entered December 20, 1929, in his favor for $13,151.88; said judgment and the basic proceeding leading thereto are properly before this court for review and revision. Appellee’s suit was not filed within two years after the payment of said $15,000 to the Houston National Bank, and, to remove the bar of the limitation statutes, pleaded by appellant, appellee relied upon three letters received by him from S. T. Morgan, dated, respectively, July 17, December 14, and December 28, 1927. Following are the material facts established without contradiction in the record: That on June 21, 1925, the Aztec Oil Company executed its promissory note in the sum of $50,-000, payable to the order of the Houston National Bank of Houston, Tex., with interest, thereon at the rate of 10 per cent, per an-num from maturity until paid, due 90 days after date; that said note was indorsed by W. H. Grey, S. T. Morgan, L. A. Carlton, and R. A. Welch; that on October 15, 1925, the sum of $5,000 was paid on said note; that $15,000 was paid on said note by appellee by his eheck dated October 12, 1925, payable to the order of the Houston National Bank; that on or about said date, the estate of L. A. Carlton paid $15,000 and R. A. Welch $15,000 on said note; that on the payment of said three sums of money the following indorsement was placed on said note: “Pay to the order of R. A. Welch, estate of L. A. Carlton and Thomas F. Keeley, without recourse or warranty on us. Houston National Bank, by Milton Rorff, .vice-president”; that some time after the next preceding indorsement was made, the exact date not being shown by the record, the following indorsement was made on said note: “This note is transferred to the Aztec Oil Company without recourse on us in consideration of the Aztec Oil. Company delivering to each of us its $15,000.00 secured notes as partial remuneration for these cash payments made by each of us on this note. [Signed] R. A. Welch, Estate of L. A. Carlton by Otis Meredith, Thomas F. Keeley”; that the Keeley named in said indorsements is the appellee herein; that said sum of $15,000 so paid by appellee was for the use and benefit of said Morgan, one of the indorsers on said $50,000 note in discharge of his liability thereon ; that said payment was made without the knowledge or consent of said Morgan. As to the circumstances under which appel-lee made the payment of said $15,000, Henry K. Maas, a witness for appellee, testified: “I know that Mr. Keeley gave that eheck; it was paid for Sam. T. Morgan and for his part of the indorsement on that note dated June 21, 1925; at that time, October 12, 1925, Mr. Morgan’s condition, physically and financially, was bad; he was a sick man; he stayed at home most of the time and his finances had gotten in very bad shape; he had lost lot of money, and at that time he did not have the cash to pay his portion of that note and the bank was demanding payment. W. H. Grey was head of the Aztec Oil Company and left very suddenly for Europe, and he was gone. The Bank demanded payment of Mr. Morgan and I wired Mr. Keeley, knowing that he was a personal friend and business associate, and Keeley came down and they had a meeting and Keeley agreed to pay Morgan’s part of the note * * * along with Carlton and Welch.” Said Morgan was not advised of, and had no notice in reference to, any of the proceedings testified to by said witness, until long after said sum of $15,000 had been paid by appellee to the Houston National Bank to be applied as a credit on said $50,000' note for his use and benefit. Three letters written by Morgan to appellee were introduced in evidence, and from same we extract the following as being all that, in any respect, relates to the payment of said sum of $15,000 by said appellee, viz.: From letter of date July-17,1927, we quote: “In my hurried reply to your letter I overlooked expressing my deep appreciation of your kindness in payment for my account $15,000 on the Aztec Oil Company note to the Houston Bank for $50,000 *■ * ⅜. I am in hopes that the Ratton Furniture Company will arrange by a larger loan to take up the second mortgage note and preferred stock and that at an early date in which evident' I can with what the Aztec bonds may pay, 25 to 30 per cent., pay you and the bank.” From letter of date December 14, 1927, we quote: “I enclose statement, etc. and write you this somewhat lengthy letter for the purpose of suggesting or asking that after careful inquiry and investigation of the value and future of the 15th Avenue property that you consider taking it over in settlement or part settlement plus what may be finally realized, if anything, from the prorata of the Aztec Oil Company bond turned over by the Houston [932] Exchange National Bank at the time the note was paid. I have no data of date paid and amount of payment of this note except that I know that through -kindness and your friendship for me, you voluntarily protected my liability on the note when payment of the note was demanded by the bank at the time I was sick; and I feel that had you not done so and kept the transaction from reaching me until I had somewhat -recovered my health that this additional financial loss and trouble would have been sufficient to push me over the divide. Therefore, I am very desirous of getting this matter adjusted to the limit of my ability and especially to your entire satisfaction.” From letter of date December 28, 1927, we quote: “I ha-ve no word from Gray as to the affairs of the Aztec Oil Company. I did not expect any lengthy or very reliable report from him but I was in hopes of hearing from him to the extent of his estimate as to amount we would realize from the bonds, say, 20 to 30 cents on the dollar. At 20 cents we would get out of the bonds about $17,000 taken over from the Houston Bank $3400; this amount added to my equity in the Seattle property $19,294, mentioned in my letter of the 14th instant, would make total of $22,694, and would enable me to make a further reduction in the price of the property and leave balance sufficient to pay you the amount in full that you paid the bank — plus interest.” We further find .that Morgan never did repay said sum of $15,000 to the Houston National Bank, or to appellee; that he died January 30, 1928; that, for the transfer by ap-pellee of said $50,000 note to the Aztec Oil Company, he received from said company a note for the sum of $15,000, and $17,000 worth of its bonds as security therefor, part of the bonds that had been held as collateral by the Houston National Bank for the payment of the $50,000 note. While it is doubtful that appellee’s petition contains allegations sufficient to show that his cause of action was based upon a subsequent promise to pay the debt created by implication on account of the payment of said $15,000, and barred by the two-year statute of limitation at the time this suit was filed, nevertheless we will, for the purpose of disposing of this appeal, treat his petition as having alleged a new promise created by the three letters above set out as the foundation of his action, and that his allegations setting out his original cause of action were only made for the purpose of showing a consideration for the subsequent promise alleged by him to have been made. Coles v. Kelsey, 2 Tex. 542, 47 Am. Dec. 661; Howard & Hume, Adm’rs v. Windom, 86 Tex. 560, 26 S. W. 483; Leigh v. Linthecum, 30 Tex. 101. It is to be affirmatively gathered from the contents of said three letters, supra, that said Morgan acknowledged a debt of $15,000 had been created against him in favor of appellee by the payment of that sum on the $50,000 note to the Houston National Bank, and expressed a willingness to pay appellee such debt. Coles v. Kelsey, supra; Smith v. Fly, 24 Tex. 345, 355, 76 Am. Dec. 109; Gathright v. Wheat, 70 Tex. 740, 9 S. W. 76. Nevertheless, if' the acknowledgment of the debt was accompanied with a promise to pay conditionally, the fact that the new promise contained the expression of a willingness to pay the bar of the statute of limitation would not be removed against the original cause of action forming the basis for the making of the new alleged promise. We have diligently searched the contents of the letters and have not been able to gather therefrom more than a meager conditional promise to pay appellee the indebtedness that was barred •by the two-year statute of limitation at the time the suit was filed, and which constitutes the consideration for the making of the new alleged promise to pay. Mitchell v. Clay, 8 Tex. 443. In that case the court held: “(I) It is perfectly well settled that the acknowledgment of a debt, if accompanied- with a promise to pay conditionally, is of no avail, unless the condition be complied with, or the event happen, upon which the promise depends. “(2) An offer to pay a debt which is barred by the Statute of Limitations, in specific articles, is a conditional promise, and will not avail the creditor as an acknowledgment of the justice of the claim, unless the offer be accepted within a reasonable time.” Appellee signally failed to establish that any one of the conditions upon which S. T. Morgan promised to pay said indebtedness was complied with, or that any one of the events to be found in said letters had happened upon which said promise to pay depended. McDonald v. Grey, 29 Tex. 80. From its syllabi we quote: “(1) It is free from all doubt that an acknowledgment which, by its immediate effect, will take a debt out of the bar of the statute of limitation must be clear and unequivocal, and neither qualified by conditions nor limitations. (Paschal’s Dig., Art. 4617a, Note 1027a.) — [Smith v. Fly], 24 Tex. 353. ‘‘•(2) If the new promise be upon condition, the plaintiff must prove a compliance with, or the happening of, the condition. [Mitchell V. Clay], 8 Tex. 443. . “(3) If the condition be the offer of a compromise, the plaintiff must prove that he accepted the teims.” In Webber v. Cochrane, 4 Tex. 31, it is held: “The bar interposed 'by the statute, it is held now, can be repelled only by-an express promise, which must be proved in a clear and ex933 plieit manner and be, in its terms, tineqnivocal and determinate. And if there be no express promise, bnt one is to be .raised by implication of law, from tbe acknowledgment of the party, such acknowledgment should contain an unqualified and direct admission of a previous subsisting debt which the party is liable and willing to pay; or the acknowledgment must be coupled with such circumstances as irresistibly imply a promise to pay, and unaccompanied by any ‘expression declarative, or qualification indicative, of a contrary intention.’ ([Bell v. Morrison], 1 Pet. 362 [7 L. Ed. 174]; [Young v. Monpoly], 2 Bailey [S. C.] 280; [Bell v. Rowland’s Adm’rs], 1 Hard. [Ky.] 301 [3 Am. Dec. 729]). “These rules of construction were generally recognized before the enactment in England, Texas, New York, -and perhaps other States, of a further security against the defeat of tlie statute, by requiring authentic written evidence of the alleged promise or acknowledgment.” Salinas v. Wright, 11 Tex. 572, from which we quote: “Where the defendant had acknowledged in writing, that he was indebted to the plaintiff in a certain amount, which he promised to pay as soon as circumstances would permit,- it was held that the plaintiff could not recover, on that instrument alone, without proof of the ability of the defendant to pay. “Where the petition alleged a promissory note, and the plaintiff, instead thereof, proved a promise to pay as soon as circumstances would permit, and did not prove the defendant’s ability to pay, it was held that the foundation of the action so manifestly failed, that the objection could be taken, although it was not assigned as error.” Also see Krueger v. Krueger, 76 Tex. 178, 180, 12 S. W. 1004, 7 L. R. A. 72; York v. Hughes (Tex. Com. App.) 286 S. W. 165; Smith v. Fly, supra; Rowlett v. Lane, 43 Tex. 274, 276. Appellee’s cause of action was upon the implied promise created by the payment of the $15,000 by him on the $50,000 note for the use and benefit of S. T. Morgan, and not upon that note or the note for $15,000 executed by the Aztec Oil Company to appellee, and said original cause of action, under the facts of this case, was barred by the statute of limitation 'of two years at the time this suit was instituted. Faires v. Cockerell, S8 Tex. 428, 31 S. W. 190, 639, 28 L. R. A. 528; Boyd v. Beville, 91 Tex. 439, 44 S. W. 287. In view of the fact that a determination of the propositions not herein discussed is not necessary to a disposition of this appeal, same is pretermitted. We are of opinion that the judgment of the trial court'should be reversed, and judgment here rendered for appellant, that appellee take nothing by'his suit, and it is so ordered. Reversed and rendered.