Durham v. Uvalde Rock Asphalt Co.

• Decision Date: 14 May 1980
• Docket Number: No. 16283,16283
• Citation: 599 S.W.2d 866
• Parties: D. W. DURHAM and Rose Durham, Appellants, v. UVALDE ROCK ASPHALT COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 866

599 S.W.2d 866

D. W. DURHAM and Rose Durham, Appellants, v. UVALDE ROCK ASPHALT COMPANY, Appellee.

No. 16283.

Court of Civil Appeals of Texas, San Antonio.

May 14, 1980.

Rehearing Denied June 11, 1980.

Allan K. Dubois, Lang, Cross, Ladon, Boldrick & Green, San Antonio, for appellants.

William P. Dobbins, Dobbins, Harris & Gonzalez, Stephen P. Allison, Jess M. Irwin, III, Sawtelle, Goode, Davidson & Troilo, San Antonio, for appellee.

OPINION

KLINGEMAN, Justice.

This is a suit by Uvalde Rock Asphalt Company (Uvalde Rock) against D. W. Durham and Rose Durham (Durhams) on a guaranty agreement. ¹ Trial was to a jury who, in answer to the only special issue submitted, found: (1) the sum of $38,335.61 is owed by the Durhams to Uvalde Rock under the guaranty agreement; (2) reasonable attorney's fees for services performed for Uvalde Rock is $4,000. The trial court entered judgment for Uvalde Rock against the Durhams in the principal amount of $38,335.61, plus attorney's fees in the amount of $3,000. The Durhams appeal from this judgment.

A chronological summary of the events leading up to this suit is as follows:

Jan. 31, 1975 Bill Durham and his wife signed a contract and agreement with appellee. Among other things, this agreement required that the debtor keep the property free from other liens, and that there would be no adverse liens on the collateral.

Jan. 31, 1975 Appellant and wife executed a guaranty agreement with appellee, guaranteeing all indebtedness incurred by Bill Durham.

Feb., 1975 Appellee began doing business with Bill Durham with $18,000 of "stocking inventory" to be paid on an open account basis.

Aug., 1976 Upon learning Bill Durham was in arrears on his account, appellants gave appellee oral notice of termination of the guaranty agreement. It is undisputed that no written notice of termination was given. At about this same time Bill Durham and appellee instituted a new payment plan calling for inventory purchases on a c.o.d. basis with an additional ten per cent which was to be applied to amounts past due. It is contested as to whether appellants knew and/or agreed to this new payment plan. In this same month appellee found a financing statement on file since 1973 on R & R's inventory in favor of State Bank of East Fort Worth. It is disputed as to whether both appellee and appellants knew of this financing statement.

May, 1977 Appellee stopped doing business with R&R. The value of the unopened saleable inventory was disputed but the shipment was refused by appellee because of the previously filed financing statement. Appellee sued both the principal obligors, Bill Durham and his wife, and the guarantors, appellants.

Oct., 1977 A summary judgment was rendered against Bill Durham and his wife for $38,335.61, and no appeal was perfected as to this judgment. During the trial on the merits of the case before us, the appellants requested a trial amendment on the defense of mutual mistake, contending that neither party to the guaranty agreement knew of this previously filed financing statement and that, if they had known of it, the guaranty agreement would not have been made. Appellee protested that there was no evidence to support such trial amendment and that it constituted a surprise and was prejudicial. The trial court refused to permit the filing of the trial amendment.

Dec., 1978 The jury found that appellants owed $38,335.61 and attorney's fees of $4,000. The judge decreased the attorney's fees to $3,000.

By nine points of error appellants assert that the trial court erred in (a) refusing to permit filing of their requested trial amendment on mutual mistake; (b) refusing to submit certain special issues submitted by them; (c) in submitting certain other special issues; (d) in refusing to grant appellants' motion for instructed verdict; (e) in rendering judgment for appellee in the principal amount of $38,335.61; and (f) in awarding attorney's fees to appellee in the amount of $3,000.

MUTUAL MISTAKE

Appellants assert that the trial court erred (1) in refusing to allow the filing of a trial amendment asserting the defense of mutual mistake, (2) in refusing to submit appellants' requested issue on mutual mistake.

It is undisputed that the pleading upon which appellants went to trial did not assert the defense of mutual mistake. Mutual mistake is an affirmative defense which must be pleaded or it is waived. Rule 94, Tex.R.Civ.P.; Petrey v. Buckner & Sons, 280 S.W.2d 641, 642 (Tex.Civ.App. Waco 1955, writ ref'd n. r. e.). Appellants contend that the testimony of both parties raised the issue of mutual mistake because the undisputed evidence demonstrated that if both parties had known of the existence of the prior financing statement given by the debtor, Bill Durham, they would not have entered into the guaranty agreement and that it was an error not to permit the trial amendment or to submit the requested special issue on mutual mistake. They further assert that the testimony raised mutual mistake of fact as a matter of law, Nelms v. Cox, 327 S.W.2d 785, 787 (Tex.Civ.App. Eastland 1959, writ ref'd n. r. e.); that a mutual mistake as to the same material fact, held by both parties, is an affirmative defense which will void one's obligations under a contract, Petrey v. Buckner & Sons, 280 S.W.2d 641, 643 (Tex.Civ.App. Waco 1955, writ ref'd n. r. e.); and that the failure to grant a trial amendment where appropriate constitutes an abuse of discretion, Vermillion v. Haynes, 147 Tex. 359, 365, 215 S.W.2d 605, 609 (1948).

Appellee asserts that there is not one shred of evidence to indicate that knowledge of the previous financing agreement given by Bill Durham would have caused Uvalde Rock not to have entered into the guaranty contract with appellant, and that the evidence is to the contrary.

The permitting or refusing to file a trial amendment is within the sound discretion of the trial court and unless it clearly appears that such discretion has been abused, its order permitting or refusing a trial amendment will not be disturbed on appeal. City of Houston v. Riggins, 568 S.W.2d 188, 194 (Tex.Civ.App. Tyler 1978, writ ref'd n. r. e.); City of Houston v. LeBlanc, 562 S.W.2d 20, 22 (Tex.Civ.App. Waco 1978, writ ref'd n. r. e.); Burnett v. File, 552 S.W.2d 955, 957 (Tex.Civ.App. Waco 1977, writ ref'd n. r. e.); State v. Beever Farms, Inc. 549 S.W.2d 223, 225 (Tex.Civ.App. San Antonio 1977, writ ref'd n. r. e.); Simon v. Watson, 539 S.W.2d 951, 958 (Tex.Civ.App. Waco 1976, writ ref'd n. r. e.); Myers v. Cliff Hyde Flying Service, Inc., 325 S.W.2d 841, 848 (Tex.Civ.App. Houston 1959, no writ).

It is not an abuse of discretion to deny leave to file a trial amendment which would change the factual basis of the lawsuit, and which would probably be prejudicial to the opposing party. Lord v. Ins. Co. of North America, 513 S.W.2d 96, 101 (Tex.Civ.App. Dallas 1974, writ ref'd n. r. e.). Moreover, a court does not err in denying permission to file a trial amendment when the record shows a lack of diligence. Coffey v. Fort Worth & Denver Railway Co., 285 S.W.2d 453, 457 (Tex.Civ.App. Eastland 1955, no writ); Westinghouse Electric Corp. v. Pierce, 153 Tex. 527, 531, 271 S.W.2d 422, 424 (1954).

It is to be remembered that there is not just one contract involved in this dispute, but two: (1) the contract between Bill Durham, the debtor, and Uvalde Rock; and (2) the guaranty agreement between D. W. Durham and wife, Rose Durham, and Uvalde Rock. In the case before us we are only concerned with the guaranty obligations. Appellants rely on the testimony of an employee of Uvalde Rock that he would not have entered into the agreement with Bill Durham had he known of the previously existing financing statement. There is testimony that such employee had no authority to bind Uvalde Rock, and that any such decision would have had to be made by the president of Uvalde Rock. The fact, that such employee would not have entered into the agreement with Bill Durham, the debtor, is not proof of the fact of mutual mistake on the instrument here involved (the guaranty agreement). There is no evidence to indicate that knowledge of the previous financing statement given by Bill Durham would have caused Uvalde Rock not to enter into the guaranty contract and logically the existence of a prior financing statement given by Bill Durham made the guaranty contract all the more crucial in Uvalde Rock's decision to advance goods to Bill Durham.

The mistake must relate to the subject matter of the contract involved and not to a matter that is collateral or incidental to that contract. To enable a party to a written contract to be relieved from liability thereunder on the ground of mutual mistake of fact, the mistake in question must deal with a material part of the contract itself. That is, the mistake must involve the subject matter of the contract and the substance thereof. It may not be related to a mere collateral matter. Brown-McKee, Inc. v. Western Beef, Inc., 538 S.W.2d 840, 845 (Tex.Civ.App. Amarillo 1976, writ ref'd n. r. e.).

In our opinion, the evidence at its best indicates unilateral mistake. Mutual mistake was not raised by the evidence.

Based upon the record, we conclude that the trial court did not abuse its discretion in refusing to allow filing of the trial amendment on mutual mistake.

In view of our holding that the trial court did not abuse its discretion in not permitting the filing of the trial amendment, we need not discuss appellants' point of error that the trial court erred in refusing to submit the special issue on mutual mistake. In any event, we do not find anything in the record to show that such special issue was ever presented to the trial court for its consideration in accordance with the provisions of Rule 279, Tex.R.Civ.P. Such rule provides in substance that failure to submit any issue shall not be deemed grounds for reversal unless its submission in substantially correct...