Martindale Mortg. Co. v. Crow
| Decision Date | 18 September 1941 |
| Docket Number | No. 4112.,4112. |
| Parties | MARTINDALE MORTG. CO. v. CROW. |
| Court | Texas Court of Appeals |
Appeal from District Court, Bexar County; Bryce Ferguson, Judge.
Suit by the Martindale Mortgage Company against O. K. Crow to recover on two promissory notes. Judgment for the defendant, and the plaintiff appeals.
Judgment affirmed in part and reversed in part and remanded.
Russell B. Wine and Truehart, McMillan & Russell, all of San Antonio, for appellant.
Keys & Holt, of Corpus Christi (Hayden W. Head, of Corpus Christi, of counsel), for appellee.
This is an appeal from the judgment of one of the District Courts exercising jurisdiction in Bexar County, the Judge of the 92nd Judicial District presiding. The parties will be here designated as they were in the trial court.
Martindale Mortgage Company, as plaintiff, sued O. K. Crow, defendant, seeking recovery on two promissory notes, one in the sum of $2,700, the other in the sum of $3,000; the $2,700 note dated the 10th day of October, 1931, same being payable in installments, the last installment maturing on the 1st day of November, 1936, the note contained an acceleration of maturity clause to be exercised at the option of the holder of the note; the $3,000 note was dated the 12th day of January, 1932, payable in installments, the last installment maturing November 1, 1936. It likewise had an acceleration of maturity at the option of the holder in case of default. Each of these notes was in the nature of a renewal note. Plaintiff pleaded several matters relating to each note to show that same was not barred by limitation; among other things, a certain letter dated the 1st day of February, 1935, admissions filed in a bankruptcy petition filed by the defendant October 14, 1935, and that defendant had likewise admitted the validity of the notes in certain petitions filed in the District Court of San Patricio County; and likewise in a certain amended petition that defendant's attorneys sent to plaintiff's attorneys; that the $3,000 note had not been declared due until sometime in 1936, plaintiff having rescinded its action in declaring same due in 1934.
Defendant replied by general denial, pleas of want and failure of consideration, a plea of partial payment of the $2,700 note, and the four years' statute of limitations, Vernon's Ann.Civ.St. art. 5527.
At the close of plaintiff's evidence the court instructed a verdict in favor of defendant. From the judgment rendered on such instructed verdict the plaintiff has appealed.
There is in reality but one question involved in this appeal, and that is, was plaintiff's asserted cause of action as a matter of law, barred by the four years' statutes of limitations.
Each of these notes was secured by deed of trust on land in San Patricio County. Each of these deeds of trust was secondary to deeds of trust held by the John Hancock Mutual Life Insurance Company, which will hereinafter be designated as "Insurance Company."
Plaintiff's original petition was filed on the 14th day of February, 1939, and an amended petition on July 8, 1940, which was the trial petition. The original petition was a stereotyped action on the two notes above described.
This judgment is based on the instructed verdict, hence it will be necessary to discuss the evidence in some detail.
The $2,700 note, as has been stated, was dated the 10th day of October, 1931, originally secured by deed of trust on a tract of land of 390.63 acres in San Patricio County. It was secondary to a large indebtedness held by the Insurance Company. On May 8, 1934, there being default, appellant exercised its option and declared this note due, and caused the deed of trust to be executed through a substitute trustee, purchasing at the sale and crediting the note with $1,500. This note is clearly barred by the four years' statute, unless the scheduling of same by the defendant in a schedule accompanying his voluntary petition in bankruptcy under the Frazier-Lemke Act was such an acknowledgment of the debt from which a promise to pay might be inferred. This petition was filed by defendant in the United States District Court for the Southern District of Texas on the 14th day of October, 1935. This petition was dismissed by that court on the 3rd day of March, 1936 on the ground that no proposal for composition or extension of any character had been submitted by the debtor for the consideration of his creditors. It is claimed that the $2,700 note was included in a $14,700 indebtedness scheduled.
If the acknowledgment of the debt by scheduling same in bankruptcy was such acknowledgment from which a promise of payment is to be implied, this note was not barred by limitation on February 14, 1939, the date of the filing of plaintiff's original petition.
The nature of a voluntary bankruptcy is surrender of the bankrupt's property to the creditors to the end that after the subjection of the property to the debts of the creditors he may be discharged from such debts. It is a proceeding to be relieved from personal responsibility for the payment of debt. 8 C.J.S., Bankruptcy, p. 416, § 6.
From an unconditional written acknowledgment of a debt a promise to pay same is inferred. However, if in connection therewith there is an indication of the intention not to pay, or to pay only upon condition, there is no room for the implication of promise.
We are of the opinion, taking into consideration the purpose and nature of a bankruptcy proceeding, from the mere scheduling of a liability a promise to pay same is not to be inferred.
We have carefully read and considered the case of Bowie v. Henderson, 6 Wheat. 514, 5 L.Ed. 319. The Supreme Court of the United States was there dealing with the law of the District of Columbia, a law which did not give the bankrupt a discharge from the debt. The relief conditionally offered was from imprisonment for the debt, but personal liability for the debt continued. An admission of a debt under these circumstances might well support an implied promise to pay same. After all, what Chief Justice Marshall said in that case was dictum. The basis of the ruling was, granted that the admission in the schedules constituted a new promise, this new promise was itself barred by limitation.
We hold that the unpaid balance of the $2,700 note was barred as a matter of law.
What has been said here applies as to the scheduling of the $3,000 note. As to that note we think, also, that there was a claim that same should have been liquidated by offsets had such offsets been properly applied. As to the $3,000 note, defendant throughout made this contention: He consistently claimed that he had an agreement with plaintiff whereby certain commissions, which exceeded $5,000 in amount, should by agreement operate as a credit on the note we are discussing. At all relevant times herein the plaintiff was the fiscal agent for the Insurance Company, servicing its loans, which seem to have been rather extensive. A short history of the $3,000 note will aid in an understanding of the issues relative thereto.
On February 24, 1923, George T. McGehee executed and delivered to the Texas Farm Mortgage Investment Company (the name of which was thereafter changed to Martindale Mortgage Company) a deed of trust on 918.63 acres of land to secure one note for $32,000, and one for $3,000, executed by him, payable to that concern. Defendant Crow acquired the property subject to these liens. The smaller note was secondary to the larger one. The larger note and the extensions thereof were at all relevant times held by the Insurance Company. On January 12, 1932, defendant executed the note in question reciting that it was an extension of the McGehee note and given in consideration and extension of such note, securing same by a deed of trust on said 918.63 acres. On January 4, 1932, plaintiff endorsed this note to Major Clarkson, trustee. On December 5, 1934, the trustee named in the deed of trust resigned and plaintiff thereupon appointed a substitute trustee who, on December 10, 1934, at the instance of plaintiff advertised the property for sale under the deed of trust. On December 28, 1934, defendant sought and obtained from the District Court of San Patricio County a restraining order forbidding the sale, sought an accounting of plaintiff here, alleging that he had overpaid the $3,000 note, in that plaintiff owed him for services an amount in excess of $5,000, and the agreement was that the indebtedness for services should be offset against this note from time to time as such indebtedness accrued.
As has been stated, on October 14, 1935, defendant filed a voluntary petition in bankruptcy under the Frazier-Lemke Act, 11 U.S.C.A. § 203. The note was scheduled therein as a liability, but the schedule showed that defendant claimed he was entitled to credit thereon in an amount in excess of the amount of the note. As stated, this petition was dismissed by the court on March 31, 1936.
On February 4, 1936, the substitute trustee resigned and plaintiff appointed in his place another trustee for the purpose of selling the land. On March 2, 1936, defendant here obtained another injunction restraining the sale. Again plaintiff took the position that plaintiff here owed him money in excess of the $3,000 note and the sale would be inequitable. On March 1, 1937, Major Clarkson transferred back the note to plaintiff here. On February 1, 1935, defendant wrote the following letter to plaintiff:
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