Arnett v. Simpson

• Decision Date: 30 November 1921
• Docket Number: (No. 1857.)
• Citation: 235 S.W. 982
• Parties: ARNETT et al. v. SIMPSON et al.
• Court: Texas Court of Appeals

235 S.W. 982

ARNETT et al. v. SIMPSON et al.

(No. 1857.)

Court of Civil Appeals of Texas. Amarillo.

November 30, 1921.

Rehearing Denied January 4, 1922.

Appeal from District Court, Lubbock County; W. R. Spencer, Judge.

Action by Mary E. Simpson and another against R. H. Arnett and others. Judgment for plaintiffs, and defendants Arnett appeal. Reversed and remanded.

Bean & Klett, of Lubbock, for appellants.

Percy Spencer, of Lubbock, for appellees.

HUFF, C. J.

This action was brought by appellee Mary E. Simpson as executrix of the will of her deceased husband, C. P. Simpson, joined by J. W. Bounds, against Geo. W. Goss and appellants, R. H. and W. D. Arnett. The action is based on a lease contract to a certain building in the town of Lubbock, dated April 23, 1918, between C. P. Simpson and J. W. Bounds, lessors, on the one part, and Geo. W. Goss, lessee, on the other part, for a period of two years, to be occupied as a garage and paint shop, for an annual rental of $500, payable monthly in advance on the 1st day of each month. Clause 7 of the contract reads:

"That in case of default in any of the above covenants and agreements the lessors may enforce the performance thereof in any of the modes provided by law, and may declare the lease forfeited at their discretion, and they or their agents shall have the right without further notice or demand to re-enter and remove all persons therefrom, without being deemed guilty of any manner of trespass, and without prejudice to any remedies for the unpaid rent or breach of contract, or they may assume possession of the premises and relet the same for the remainder of the term at the best rent they may obtain for account of lessee, who shall make good any deficiency, and the lessors shall have liens as security for the rent aforesaid, upon all goods, wares, tools, chattels, implements, fixtures, and machinery, and other personal property which may be put in said building for lessee."

Clause 8 reads:

"That said lessors have this day loaned the lessee the sum of $800, which is to be paid back to said lessors, with 10 per cent. per annum interest thereon, in monthly installments of $18.33 1/3 payable on the 1st day of each month, except the last payment, which is to be paid on the 1st day of the last month of this lease, and is to be for the full amount of the balance due and interest on the whole amount, and the failure to pay any installment when due, shall, at the option of the lessors, mature the whole and terminate this lease, and the payment of said $800 and interest as the same matures is made one of the covenants of this lease."

After the signatures of the lessors and the lessee, the following guaranty is indorsed on the instrument:

"The above-described lease having been made at our request, in consideration of said letting, we hereby guarantee the performance of all the covenants and conditions of said lease and contract by the lessee, and agree to assume the obligations of the lessee in the event of default." Signed by the appellants Arnett.

It is alleged that on the 1st day of February, 1919, defendants vacated the building, since which time plaintiffs have used and occupied the same as a storage room, the reasonable value thereof being $15 per month, for which defendants are entitled to a credit for the value of such use; that Geo. W. Goss is insolvent; that plaintiffs have been damaged in the sum of $2,300, less the amount of the credit above pleaded, and they pray for a judgment accordingly.

The defendants R. H. and W. D. Arnett replied that the plaintiffs had not shown statutory diligence in securing and fixing liability of defendants Arnett; that suit had not been filed at the first term of court after the cause of action accrued; that there had been no protest or notice of protest by a notary public and no excuse alleged; that said defendants had no notice of default and had not waived diligence. They also alleged that on about September 1, 1918, they were released and discharged from liability on said rental contract and loan agreement, in that the landlords and lessee mutually agreed to rescind and alter said contract — an agreement in such way as to allow the plaintiff the use of said building as a storage room without the knowledge or consent of the sureties, although the rental contract guaranteed by the appellants restricted the use of said building to that of a garage and paint shop, and none other, thereby releasing appellants from all liability.

The case was submitted to the jury on special issues, which with the findings of the jury are as follows:

"(1) Was Geo. W. Goss notoriously insolvent at the time this suit was originally filed? Answer: Yes.

"(2) Is Geo. W. Goss notoriously insolvent at this time? Answer: Yes.

"(3) Does Geo. W. Goss reside in such part of the state of Texas that he cannot be reached by ordinary process of law? Answer: Yes.

"(4) What part of their debt could plaintiff have collected out of the property belonging to Geo. W. Goss by the exercise of ordinary diligence, under the circumstances? Answer: $400.

"(5) Did the defendant Geo. W. Goss have property in his possession out of which the plaintiff could have collected any part of their debt by execution or sale? Answer: Yes.

"(6) Could plaintiffs have collected by execution or order of sale any part of their debt out of property on which they had a lien? Answer: Yes.

"(7) Did defendant Geo. W. Goss have property in his possession after plaintiff's cause of action accrued out of which they could have collected their rent by the exercise of ordinary diligence? Answer: No.

"(8) Was the defendant Geo. W. Goss insolvent on May 8, 1919? Answer: Yes.

"(9) Did the plaintiff protest or give notice of protest of nonpayment of any part of the debt sued on? Answer: Yes.

"(10) Is defendant Geo. W. Goss now insolvent? Answer: Yes.

"(11) Did the plaintiff and defendant Geo. W. Goss mutually agree, on or about February 1, 1919, to a rescission of the rental contract sued on, for the purpose of allowing plaintiff to use one-half of the 30-foot frame building described in lease contract sued on, without the knowledge or consent of defendants R. H. and W. R. Arnett? Answer: Yes.

"(12) Did plaintiff give notice to or make demand upon defendants R. H. and W. R. Arnett at or before taking possession of the rented building in controversy on or about February 1, 1919? Answer: No."

Upon calling the case for trial, and upon announcement, the plaintiff dismissed as to Geo. W. Goss, and judgment was entered that he go hence and recover his costs, and upon the findings of the jury the court entered judgment in favor of the appellees against appellants Arnett jointly and severally for the sum of $1,613.49, with interest on $999.72 of that amount at the rate of 10 per cent. per annum from the date of the judgment, and on $613.17 at the rate of 6 per cent. per annum from the date of the judgment. From this judgment the Arnetts appeal.

It is asserted by propositions that appellants are only indorsers on the obligation of the tenant and liable only in the event of default; that appellees were not entitled to judgment for the reason that there is no pleading and proof that the liability of appellants as indorsers was fixed according to statutes. The contract guaranteed was not a bill of exchange or promissory note, assignable or negotiable by law. Article 579, R. C. S., does not require notice by protest or suit on instruments of the character set out in the pleadings in order to fix the liability of a surety or guarantor. The instrument was not negotiable and there was no necessity for protest to fix the guarantor's liability.

Under articles 583 and 584 nonnegotiable instruments may be assigned, but in order to hold the assignor as surety for the payment of the obligation assigned the assignee shall use due diligence to collect the same. It has been held the diligence required under these statutes is the same as required in negotiable instruments under the law merchant. Kampmann v. Williams, 70 Tex. 568, 8 S. W. 310. The appellants in this case were not assignors of the lease, but agreed the lessee should perform his contract, and to assume the obligation in the event of default. The guarantor or surety, as distinguished from an indorser, is not entitled to demand protest notice, nor to require that suit should be brought against the maker to the first term of the court after the maturity of the obligation. Carr v Rowland, 14 Tex. 275; Brooks v. Stevens, 178 S. W. 31; Hollimon v. Karger, 30 Tex. Civ. App. 558, 71 S. W. 299; Toole v. First National Bank, 168 S. W. 423.

The relation of the parties, as established by the instrument sued on, is, we think, controlled by article 6329, R. S., reading:

"Any person bound as surety upon any contract for the payment of money or the performance of any act, when the right of action has accrued, may require, by notice in writing, the creditor or obligee forthwith to institute suit upon such contract."

There is no pretense that such notice was given and the sureties, therefore, show no discharge or right of discharge under their obligation, or guaranty, for failure to sue or give notice. Naylor v. Anderson, 178 S. W. 620.

The general rule is the creditor owes no duty of active vigilance to the surety to enforce the collection of indebtedness. 21 R. C. L. "Principal and Surety," § 162, p. 1124; Hunter v. Clark, 28 Tex. 159; Nunn v. Smith, 194 S. W. 406; Bank v. Gilvin, 152 S. W. at page 656 (8-11); Self Motor Co. v. Bank, 226 S. W. 428. The cases cited by appellants, Heidenheimer v. Blumenkron, 56 Tex. 308, and Barringer v. Wilson, 97 Tex. 583, 80 S. W. 994, hold parol testimony is not admissible to change the legal effect of an indorsement on a note. In those cases the payee indorsed the notes, and following his indorsement is that of others. It is not permissible to show such indorsers were mere sureties, not entitled to notice under...