Hill Mercantile Co. v. Rotan Grocery Co.

• Decision Date: 23 March 1910
• Parties: HILL MERCANTILE CO. et al. v. ROTAN GROCERY CO.
• Court: Texas Court of Appeals

127 S.W. 1080

HILL MERCANTILE CO. et al. v. ROTAN GROCERY CO.

Court of Civil Appeals of Texas.

March 23, 1910.

Rehearing Denied May 4, 1910.

Appeal from District Court, McLennan County; Marshall Surratt, Judge.

Action by the Rotan Grocery Company against the Hill Mercantile Company and others. From the judgment, certain of defendants appeal. Reformed and affirmed.

Odell & Johnson, W. Poindexter, and S. C. Padelford, for appellants. Prendergast & Williamson, for appellee.

KEY, C. J.

The Rotan Grocery Company instituted this suit against the Hill Mercantile Company on certain notes and an account, amounting in the aggregate to $10,850.12. R. N. Hill, J. N. Smith, and J. A. Hill were also made parties defendant, the plaintiff seeking to recover against them on a guaranty for the sum of $7,000, with interest and attorney's fees thereon. The defendants filed a general denial, and the defendant J. A. Hill filed a special plea, alleging, in substance, that the written guaranty sued on was not binding upon him, for the reason that he signed it upon an agreement to the effect that the signature of one Jake Nelson was to be procured in order to render it binding on him J. A. Hill. After hearing all the evidence, the trial court instructed a verdict for the plaintiff against the Hill Mercantile Company for $10,850.12, and against the other defendants as guarantors for the sum of $8,683.88. A verdict was returned as instructed, and judgment rendered in accordance therewith, and the defendants J. A. Hill and R. N. Hill have appealed.

Under several assignments of error, properly presented in appellants' brief, it is contended that the court below committed error in directing and compelling the jury to return a verdict for the plaintiff upon the guaranty for the following reasons: First, because the proof shows that J. A. Hill signed the guaranty upon condition that Jake Nelson should also sign it, of which appellee had notice, and that as Jake Nelson did not sign it, he, J. A. Hill, is not bound thereby; second, that J. A. Hill was not notified of the acceptance of the guaranty by appellee, hence is not bound thereby; third, that the guaranty is not a continuing one, and, as the debts which were owing at the time the guaranty was made have been paid, the guarantors are released; fourth, that because appellee took collateral security, other than the guaranty, it thereby waived any right to enforce the guaranty, and, if such right was not waived, the judgment should be arrested because it does not dispose of the collaterals; and, fifth, that by the terms of the contract of guaranty the liability of the guarantors is limited to $7,000, and error was committed in holding them liable in excess of that sum.

The undisputed testimony shows that on the 22d of March, 1906, the Hill Mercantile Company was a private corporation, and was indebted to the Rotan Grocery Company, another private corporation, about $6,200, the most of which was represented by notes executed by the Hill Mercantile Company alone, and that on that day the Rotan Grocery Company sent the following letter to the Hill Mercantile Company: "Waco, Texas, 3/22/06. The Hill Mercantile Co. Grandview, Texas— Gentlemen: We sincerely hope that you will be able to make us some payments along during the spring, as you doubtless appreciate that the account as it now stands is rather larger than it should be, and that it should not be allowed to increase, as we are going to be called on rather heavily from many sources, and what we can do for each is in a measure restricted. Inasmuch as there are several members of your firm, and we have not the individual indorsements, to simplify matters, we send herewith a guarantee, to be signed by R. N. Hill, J. A. Hill, J. N. Smith, and Jake Nelson, members of the firm. This will avoid getting the individual signatures on the notes. This guarantee is the form that is generally used by the banks and will cover this. Trusting this will be satisfactory, we are, Yours truly, The Rotan Grocery Company, H. H. Shear, Pt."

Attached to that letter and accompanying the same was a printed form of guaranty, and the letter and the unsigned guaranty were received by R. N. Hill who signed his name and the name of J. N. Smith thereto. He also carried it to J. A. Hill and he signed it, and R. N. Hill then returned it to the Rotan Grocery Company, together with a letter reading as follows: "Grandview, Texas, 3/22/1906. The Rotan Grocery Co., Waco, Texas—Gentlemen: Inclosed find the guarantee requested except Jake Nelson, it not being convenient, and he is a young man, and owns only one share of stock. Trusting this to be entirely satisfactory, we remain, Yours very truly, Hill Mercantile Co., by R. N. Hill, Pres."

The guaranty reads as follows: "Guarantee. In consideration of the sale of merchandise by the Rotan Grocery Company, to the Hill Mercantile Company of Grandview, Texas, I, we or either of us guarantee unconditionally the payment to the Rotan Grocery Company, at Waco, Texas, any indebtedness of said The Hill Mercantile Company to it, made prior to March 22nd, 1906, and thereafter until further notice in writing, not to exceed the sum of seven thousand and 00/100 ($7,000.00) dollars. And I, we or either of us consent to any extension of payment made between said parties, and that the form of such indebtedness may be changed from account to note, bill or other commercial paper, waive protest, notice and suit. And I, we or either of us agree to pay the rate of interest said parties agree upon, and 10 per cent. attorney's fee if said debt is sued upon, or placed in an attorney's hands...