Friedman-Shelby Shoe Co. v. Davidson

• Decision Date: 15 November 1916
• Docket Number: (No. 1015.)
• Citation: 189 S.W. 1029
• Parties: FRIEDMAN-SHELBY SHOE CO. v. DAVIDSON.
• Court: Texas Court of Appeals

189 S.W. 1029

FRIEDMAN-SHELBY SHOE CO. v. DAVIDSON.

(No. 1015.)

Court of Civil Appeals of Texas. Amarillo.

November 15, 1916.

Rehearing Denied December 6, 1916.

Appeal from District Court, Potter County; Hugh L. Umphres, Judge.

Action by the Friedman-Shelby Shoe Company against Alex Davidson. Judgment for defendant, and plaintiff appeals. Affirmed.

W. E. Gee and Jas. N. Browning, both of Amarillo, for appellant. Kimbrough, Underwood & Jackson, of Amarillo, for appellee.

HUFF, C. J.

This was an action, brought by the appellant, through its representative, against the appellee, Davidson, on the following guaranty contract:

"Friedman-Shelby Shoe Company, St. Louis, Mo. — Gentlemen: In compliance with your request for a guaranty of the tenor following to establish with you credit for E. E. Peoples Co., Memphis, Texas and Clovis, N. M., and in consideration of one dollar to us in hand paid by you, the receipt of which is hereby acknowledged, I hereby unconditionally guarantee payment of whatever amount said party shall at any time be owing you, whether heretofore or hereafter contracted, including interest at the rate of ______ per cent. on any balance or balance of account or note; this guaranty is to take effect without notice of its acceptance (which is hereby waived); and it is to be an open guaranty and continue in full force and effect, notwithstanding any renewals or extensions granted by you without obtaining my previous consent thereto, and until expressly revoked by notice to that effect in writing from me to you, and said revocation is in no wise to affect my responsibility in the premises for any liability contracted. Notification of purchase and maturity of bills and of any default is hereby waived but my liability hereunder is not to exceed the sum of three thousand dollars at any one time.

"It is mutually understood that this guaranty is to bind the party (or parties) who sign it, whether the same be signed by any other party (or parties) or not.

"Dated this the 7th day of March, A. D., 1911, at St. Louis, state of Missouri.

                                   "[Signed] Alex Davidson
                

"Witness: A. Friedman."

The appellant was a corporation, and under the laws of Missouri was dissolved, and its president, as trustee, brought the suit, alleging substantially the transfer of all the properties, assets, and obligations to the International Shoe Company. The allegations are to the effect that the E. E. Peoples Company was engaged in business, and gave the contract of guaranty to the amount of $3,000, and that upon the faith of this guaranty the appellant company sold to the Peoples Company goods to the amount of about $3,000, on the faith of the guaranty contract. The appellee alleged substantially among other things, that at the time the contract of guaranty was executed and guaranteed, E. E. Peoples was doing business as E. E. Peoples Company, at Memphis, Tex., and Clovis, N. M., that about a year thereafter Peoples opened stores at Electra and Amarillo, Tex., and that it was not intended by either appellant or appellees that such contract of guaranty would extend to the purchase made on behalf of any other stores than those then in operation at Memphis and Clovis, and that by the terms of the guaranty contract no obligations of the said Peoples were guaranteed other than such as were contracted in connection with the operation of the two stores at Memphis, Tex., and Clovis, N. M., then owned by him.

The facts in this case show that at the time the guaranty contract was executed by the appellee the E. E. Peoples Company was engaged in business and running stores in the towns of Memphis, Tex., and Clovis, N. M.; that about a year after that time E. E. Peoples Company opened up a store at Amarillo and Electra, Tex., and abandoned their business at the two former places; that all the goods or accounts for the Memphis store were paid in full, and there remained due by the Clovis store about $250, which amount was transferred to the Amarillo account, and carried on that account. The facts also show that there was a considerable sum paid on this account before Peoples went into bankruptcy. The facts also show that E. E. Peoples was operating under the trade-name of E. E. Peoples Company, and that he alone composed the company; that at the time of executing the contract of guaranty, only the two stores, at Memphis and Clovis, were in operation. On May 7, 1912, the appellant, through its president, wrote to Davidson that:

"Inasmuch as E. E. Peoples Company are now located in Amarillo and Electra, in addition to their old towns, I kindly ask that you sign the inclosed blank. The Peoples Company now owes us about $3,500.00 or more and I suggest that you make the amount to be guaranteed for $4,000.00. Peoples has been a little slow but with weather conditions being settled I am confident his business will show such results as will enable him to catch up with his payments."

The contract inclosed with the letter for Davidson to sign was in part:

"Gentlemen: In compliance with your request for the guaranty of the tenor following to establish with you credit for E. E. Peoples Company of Amarillo, Memphis, Electra, all of Texas, Clovis, N. M. and any other store they may open and in consideration of the sum of one dollar to us in hand paid by you," etc.

— following the terms of the former contract except that the amount is left blank. Mr. Davidson refused to sign this contract of indemnity and on June 6, 1912, they wrote again as follows:

"Some time ago Mr. Abe Friedman wrote you and sent another guaranty for you to sign for Peoples but he has not heard from you regarding same. Since he wrote you Mr. Peoples paid $400.00 on May 9th, and $350.00 on June 6th. Now, Alex, why don't you sign that guaranty and return it to Abe," etc.

Davidson did not respond to this letter, and still declined to sign the new contract. On the 15th of May, 1912, Davidson wrote:

"I have your letter of May 7th and note what you say referring to Mr. Peoples' scattering show business. I have had a letter from F. M. Hoyt Shoe Company and inclose you their letter and my copy. Although I admit I have given a pretty strong letter on Mr. Peoples, but this is my opinion at this present writing. I will not guarantee any bills for him or any one else. The guaranty I gave Friedman-Shelby Shoe Company is on account of the good friendship I have for Mr. Longley and Mr. Friedman."

He further says in his letter:

"I have to-day written Mr. Peoples and told him he ought and should not buy any shoes outside of the Friedman-Shelby Shoe Company and I believe he will follow my instructions."

He also notified them that later he asked Peoples to advise him how he stood with Friedman-Shelby before signing another guaranty:

"I wish to have all data before me. Mr. Peoples will abandon the Clovis store and I am after him to confine all of it in one store, and the amount he owes you people is entirely too much. He must by all means arrange to reduce it and I have so advised him to-day. Just as soon as I have a letter from him I will let you hear from me again," etc.

Appellant assigns error to the action of the court in refusing to sustain exception to that portion of the answer set out above, and also assigns error to the action of the court in giving a peremptory instruction for the appellee, Davidson. The liability of a guarantor —

"cannot be extended by implication, or otherwise, beyond the actual terms of his engagement. It does not matter that a proposed alteration would even be for his benefit; for he has a right to stand upon the very terms of his agreement. The case must be brought strictly within the terms of the guaranty, when reasonably interpreted, or the guarantor will not be liable." Smith v. Montgomery, 3 Tex. 199.

It is said in that case there was no firm in existence of the description of that designated by the address to which the benefit of the guaranty could inure.

If the appellant wished to furnish goods to E. E. Peoples & Co. at Amarillo, and E. E. Peoples & Co. at Electra, it should first have applied to the appellee to renew his undertaking to guarantee the sales at those places. Appellant evidently so understood, for it did apply for a new guaranty covering those places, but the appellee, Davidson, refused to sign the guaranty for those places. The facts really will warrant the inference that the parties to the obligation interpreted the contract as only covering goods sold to the company at Memphis and Clovis. We may say in this case there was no E. E. Peoples Company at Amarillo or Electra when the guaranty contract was entered into. We do not believe the language of the contract susceptible of the interpretation that appellant was secured by the contract wherever and whenever the company should transfer its business. Memphis, Tex., and Clovis, N. M., are limitations upon the credit authorized to Peoples Company. As used in the contract, they are not words descriptive, but the words limit the liability to pay. It is the business enterprise at those two places whose credit is guaranteed, and not E. E. Peoples personally whose credit is guaranteed at any and all places. Certainly he did not reside at both places at the same time. In fact, the evidence shows that he was then a resident citizen of Amarillo. He carried on business at both Clovis and Memphis, and it was the indebtedness of the business which was guaranteed; that is:

"To establish with you credit for E. E. Peoples Company, Memphis, Texas and Clovis, N. M. * * * I hereby unconditionally guarantee payment of whatever amount said party shall at any time be owing you."

The term "said party" does not refer to Peoples personally, but to Peoples Company, Memphis and Clovis. The...