Barton v. Farmers' State Bank

• Decision Date: 14 October 1925
• Docket Number: (No. 695-4251.)
• Parties: BARTON v. FARMERS' STATE BANK et al.
• Court: Texas Supreme Court

Page 177

276 S.W. 177

BARTON v. FARMERS' STATE BANK et al.

(No. 695-4251.)

Commission of Appeals of Texas, Section A.

October 14, 1925.

Error to Court of Civil Appeals of Third Supreme Judicial District.

Action by the Farmers' State Bank against Lee R. Barton, who filed cross-action against and impleaded J. T. Hutto. Judgment against defendant Barton, affirmed by Court of Civil Appeals (263 S. W. 1093), and he brings error. Reversed and remanded.

White, Wilcox, Graves & Taylor, of Austin, for plaintiff in error.

Christian, Hammond & Christian, of Burnet, and W. H. Nunn, of Georgetown, for defendants in error.

NICKELS, J.

The bank sued Barton, declaring upon a negotiable demand note of date November 29, 1921, for the principal sum of $5,000, interest, and attorneys' fees. The petition was filed September 6, 1922. Barton promptly answered, setting up a general demurrer, a general denial, and facts, which, if true, would show that the note in question was but manually delivered for a restricted purpose, and that whatever rights the bank had grew out of a debt for which the bank's officers, J. T. Hutto and one McCann (with Barton), were jointly liable; it being shown that McCann was insolvent. Those facts were presented defensively, and, as the basis of a cross-action against Hutto, coupled with a prayer for the impleading of Hutto, etc., and for relief against him in the event the bank should have judgment against Barton. Hutto was duly cited, and appeared and answered the cross-action, etc., on appearance day of the January term, 1923. The opinion of the Court of Civil Appeals and subsequent portions of this opinion sufficiently disclose the nature of the pleadings.

At the next succeeding term of the court (and on May 29, 1923) the so-called special exceptions interposed by Hutto and by the bank (presenting alleged misjoinder of parties and actions) were sustained, and thereupon judgment was rendered against Barton alone for the full amount sued for; the court excluding all evidence offered by Barton to support his averments and denials. The action of the trial court was rightly presented by appropriate assignments of error in the Court of Civil Appeals, where the judgment was affirmed, and the same questions have been brought to the Supreme Court.

Because the case was determined on exceptions, we assume (as we must) the truth of Barton's allegations.

1. Barton's motion to strike was properly overruled, because it was directed at the first supplemental petition as a whole, and that petition included a general demurrer. But for this, the motion should have been sustained for reasons disclosed in the next connection.

2. No actual delay was encountered by reason of Barton's "cross-action" and the impleading of Hutto. The case made by the bank's pleading was first triable at the January term, 1923; and Hutto was vouched in prior to the beginning of that term; he answered on its appearance day, and thereafter remained a party defendant. Both Hutto and the bank had ample opportunity, on January 2d, and throughout the January term, to press any objection of misjoinder of causes or parties. Hutto did not insist upon disposition of the questions at that term, and the bank did not even suggest them, but, on the contrary, they consented (on the third day of the term) to a continuance of the case to the May term, 1923. Prior to the continuance, Hutto had filed his contemplated impleader of the oil companies; and to this pleading and prayer the bank did not, at the January term or subsequently, respond or object in any way, although it had the chance as early as January 2d. If Hutto had diligently embraced the opportunity to have the court determine whether the oil companies were necessary parties, and it had been found they were such, they would have been duly cited and served and compelled to answer to the May term, presumably ready for trial. Like means of preventing delay were open to, but ignored by, the bank. In view of the fact that the rule sometimes forbidding misjoinder of causes or parties is one of convenience, which ought not to be permitted to defeat the general policy of avoiding multiplicity of suits (Great Southern Life Ins. Co. v. Dolan [Tex. Civ. App.] 239 S. W. 242; Lawrence v. Cooper Co. [Tex. Civ. App.] 237 S. W. 961), the objection should be pleaded in limine (Kemendo v. Fruit Dispatch Co., 61 Tex. Civ. App. 631, 131 S. W. 73, 76), or at the first reasonable opportunity in any event. If the objection be not seasonably made, the right to make it is waived; and we believe it was waived here (Adams v. First National Bank [Tex. Civ. App.] 178 S. W. 993), and, therefore, the court erred in sustaining the demurrers. It is proper, here, to correct the statement of the Court of Civil Appeals to the effect that Hutto was dismissed from the case January 3d, and the bank, therefore, had nothing to which objection could be made. Until May 29th Hutto remained a party, and the bank's opportunity and duty were that already shown.

3. A paradox would be committed if it were held that Hutto could object to the alleged misjoinder of parties on the score of delay in trial, even if he had not waived in the manner shown last above. He became a party as early as January 2d, and the proposal to bring in still others was his, not Barton's; and it was not pressed until May 29th. If he has a cause of action against the oil companies, or if he should have one as a result of present litigation between himself and Barton, he can declare upon it in another suit, if he objects to delayed trial in the present case. This is said upon the assumption that on the showing made the oil companies are not necessary parties to Barton's cross-action, and the reasons for this assumption will appear in paragraph 6 below. If the companies are merely proper parties, Hutto can easily preclude delay, and yet have means of protection, by waiving his request for their bringing in; and, if he does not care to waive, the trial court can properly exert discretion to keep them out.

4. One basis of the demurrer, and one reason which moved the trial court and the Court of Civil Appeals to sustain it, is that delay will result to the prejudice, and without the fault of the bank. Reasons why the bank is not "without fault" have been stated already in paragraph 2. But in another important sense, whatever delay, actual or potential, has or may be encountered is attributable to the bank and to its managing officer, Hutto. According to Barton's pleading (which must be taken as true) both the bank and Hutto had actual knowledge, from the beginning, of all the facts disclosed, and knew (long before the suit was filed) that the note was signed by Barton solely because of (and upon) the terms and conditions agreed to, which measurably restricted the purpose for which the paper was made. With this knowledge, they should have expected, and, if they were reasonably prudent men, they did expect, the exact form and nature of Barton's defense and effort at recoupment. With the agreements and conditions averred by Barton in existence, both Hutto and the bank knew that the true situation was not disclosed in the bank's petition, and that by giving the petition its form they were breaching the contract with Barton, violating the conditions of the delivery of the note, and thereby practicing a species of bad faith toward Barton (Waukee Savings Bank v. Jones, 179 Iowa, 261, 159 N. W. 691) and the court. They must therefore be charged with anticipating that the facts would be disclosed by Barton, and that he would do what he has done for his own protection. Again, assuming Barton's allegations to be true, the bank was offered the opportunity at first to bring an effective suit against Hutto and Barton (and McCann if he was believed to be solvent) upon the joint obligation (Adams v. First National Bank, supra), and to hold them, and each of them, liable, merely by presenting the facts. Thus it could have foreclosed possibility of delay incident to impleaders; and, in doing so, it would have kept faith with Barton. But it chose to ignore the opportunity and to declare upon an incomplete and incorrect state of facts, and thereby to invite the exact condition to which it now objects. For present purposes, the naked legal right to give its suit the form selected may be conceded; but the existence of that right does not imply the further privilege of excluding the truth, even though development of the facts might require postponement of trial.

For these additional reasons we do not believe the trial court's action can have support in, or be justified by, the idea that the supposed prejudice to the bank is without its fault.

5. The only additional ground of the demurrers, and the only additional reason which impelled the trial court, and one of the reasons which moved the Court of Civil Appeals, is that there is no identity in, or connection between, the causes of action as between the bank and Barton on the one hand and as between Hutto and Barton on the other. In passing upon the question, the Court of Civil Appeals said:

"A suit on a note against the maker is not the same transaction as a suit against the maker of the note and others, not signers, upon a collateral agreement" etc.

True enough, in a sense; but the suits themselves are not the "transactions" embraced in the test of multifariousness. The subject-matter of the suits may well relate to, or be different parts of, the same "transaction," or the subject-matter of one suit (e. g., Barton's "cross-action") may include, as a part of it, the whole of the subject-matter of the other. The note itself relates back to, and obviously is a product of, the course of dealing which began (as between Hutto, McCann, Barton, and the bank) in 1920. Its present nominal amount includes a portion of the original loan made to the three individuals in June, 1920, as, also, the unpaid portions of the additional loans made...