Liberty Oil & Sulphur Co. v. City Nat. Bank of Beaumont, 2162.

• Decision Date: 27 January 1932
• Docket Number: No. 2162.,2162.
• Citation: 45 S.W.2d 782
• Parties: LIBERTY OIL & SULPHUR CO. v. CITY NAT. BANK OF BEAUMONT.
• Court: Texas Court of Appeals

Page 782

45 S.W.2d 782

LIBERTY OIL & SULPHUR CO. v. CITY NAT. BANK OF BEAUMONT.

No. 2162.

Court of Civil Appeals of Texas. Beaumont.

January 27, 1932.

Rehearing Denied February 3, 1932.

Appeal from District Court, Jefferson County; Geo. C. O'Brien, Judge.

Action by the City National Bank of Beaumont against the Liberty Oil & Sulphur Company and others, in which defendant James V. Polk filed cross-action against his codefendant W. D. Gordon. After instructed verdict in favor of plaintiff against all defendants, jury returned verdict for cross-complainant, and from judgment for cross-complainant, W. D. Gordon and M. S. Duffie appeal.

Judgment on cross-action reversed and rendered.

E. E. Easterling and W. D. Gordon, both of Beaumont, for appellants.

Conley, Renfro & Keen and Howth, Adams & Hart, all of Beaumont, for appellee.

O'QUINN, J.

The City National Bank of Beaumont brought this suit in the district court of Jefferson county against the Liberty Oil & Sulphur Company, a corporation duly incorporated under the laws of the state of Texas, as principal, and W. D. Gordon, M. S. Duffie, and James V. Polk, as sureties, to recover judgment on a promissory note in the sum of $1,500, with interest and attorney's fees.

The defendant Liberty Oil & Sulphur Company answered by general denial.

Defendant James V. Polk answered by general demurrer, general denial, and by cross-action against defendant W. D. Gordon as follows:

"3. And this defendant James V. Polk, now becoming the actor and plaintiff in cross action over against the defendant, W. D. Gordon, for cause of action on his cross action against the said W. D. Gordon, further respectfully alleges and shows unto the court as follows:

"The said James V. Polk did not owe, nor was he legally liable for the amount of money represented by the promissory note herein sued on, said note being in the sum of $1,500.00, due ninety days after date, with interest at 8% per annum after maturity, providing for the usual additional 10% attorneys fees, but that said note represents money borrowed by the said W. D. Gordon from the plaintiff herein, The City National Bank of Beaumont, and which said money was intended to be used and was actually used by the said W. D. Gordon for his own benefit and in the execution of his own individual undertakings and enterprise relating to and growing out of the development of a certain oil, gas and mineral lease located in Liberty County, Texas, and said note represented money borrowed by said W. D. Gordon for the purpose of making further explorations and developments of the said lease after his defendant, James V. Polk, and other shareholders had contributed money for the work of the original development and exploration.

"4. After the expenditures of the monies contributed and advanced by this defendant, James V. Polk, and several other shareholders for the original development work, which was unsuccessful, this defendant and others deemed it expedient and for their best interest not to contribute any more money for the further development and thereupon said W. D. Gordon being of the opinion that the chances were good for making the lease productive by further expenditures of money to be used in deepening and cleaning out the well already drilled, obtained a release of their respective interests in the enterprise from this defendant and of the others associated in contributing money for said original development, in order that he, the said W. D. Gordon, might continue the exploration and development by the expenditure of his own money, the agreement between him and his original associates in the enterprise being that if he did spend money for further development that he, the said W. D. Gordon should be entitled to and should have the whole lease and all of its production and the interest of all of his associates.

"5. Thereupon, in pursuance of such agreement between the said W. D. Gordon and his associates, who had contributed money for the drilling and development of the said lease, he, the said W. D. Gordon, undertook further to develop said lease and for said purpose made arrangements with the City National Bank of Beaumont, plaintiff herein, to borrow the money, as evidenced by the note sued upon by plaintiff herein, and after executing the said note himself, requested this defendant, James V. Polk, to sign it, and promising this defendant to hold him harmless in so doing, and he the said W. D. Gordon, entered into an agreement with the said Polk himself to pay said note when it became due; stating as an explanation why he, the said Gordon, desired the defendant, James V. Polk, to sign the note, that he thought it would look better and it would not appear that he, the said Gordon, was attempting to take full complete charge, control, possession and ownership of the said lease except by and through the consent and agreement of all the other parties who had contributed monies for the original development; it being then fully understood and agreed between said W. D. Gordon and this defendant, James V. Polk, that he, the said James V. Polk was not claiming any further interest in the lease or in any production that might be developed by further development and expenditures thereon, such as he, the said Gordon, intended to make.

"6. On the faith of the foregoing promise, contract and agreement between said Gordon and this defendant, with respect to holding this defendant harmless either as a surety or as principal in said note, that the said W. D. Gordon would himself pay it when it became due, this defendant signed the note, and as result of the foregoing agreement the said W. D. Gordon is legally bound and obligated to pay all of said note and to pay off whatever judgment that may be rendered herein against the defendant, James V. Polk and to hold him completely harmless in this suit and any judgment that may be rendered herein against the makers and signers of the said note sued upon by plaintiff; and this defendant is entitled to have judgment on his cross-action over against said W. D. Gordon for whatever judgment may be rendered against him.

"Wherefore, defendant, James V. Polk, prays that the defendant, W. D. Gordon, be cited on this, his cross action, and that the clerk of this court immediately issue a citation to the said W. D. Gordon and legal service be had thereon before this cause is set down for trial and he further prays that in the event judgment be taken against him, the said James V. Polk, that he have judgment on his cross action against said W. D. Gordon for the amount and to the extent of such judgment against him; and he further prays for all costs of court and for such other relief, both general and special, to which he may be entitled in law or in equity."

Defendant W. D. Gordon answered the cross-action of defendant Polk as follows:

"I. This defendant demurs to said cross-action and says that the facts and allegations contained therein are insufficient in law to make any cause of action against this defendant and of this he prays judgment of the court.

"II. And if required further to answer said cross-action, then this defendant denies all and singular all the facts and allegations contained in said cross-action, and of this he puts himself upon the country.

"III. And for special answer to said cross-action this defendant shows that as a part of the contract and agreement whereby the defendants W. D. Gordon, M. S. Duffie and James V. Polk became indorsers on the said note of the defendant, the Liberty Oil & Sulphur Company, sued on herein by the plaintiff, that the defendant Liberty Oil & Sulphur Company entered into a writing with said defendants W. D. Gordon, M. S. Duffie and James V. Polk the indorsers on said note, indemnifying them as indorsers on said note by making a deed of trust upon its properties to protect them as indorsers on said note, and that there was no other contract or agreement in writing or verbally made by this defendant to the said James V. Polk to indemnify him against loss as indorser on said note, and of this this defendant prays judgment of the court."

The defendants W. D. Gordon and M. S. Duffie answered the bank's action by general denial and specially:

"And in the event the plaintiff is entitled to judgment as prayed for in its petition, and that these...