Pugh v. Turner

• Citation: 197 S.W.2d 822
• Decision Date: 27 November 1946
• Docket Number: No. A-991.,A-991.
• Parties: PUGH v. TURNER et al.
• Court: Supreme Court of Texas

Page 822

197 S.W.2d 822

PUGH v. TURNER et al.

No. A-991.

Supreme Court of Texas.

November 27, 1946.

Error to Court of Civil Appeals of Seventh Supreme Judicial District.

Action by Mary Virginia Scott Turner, individually and as independent executrix of the will of J. H. Scott, and husband, against T. O. Pugh to recover on two notes. From a judgment in favor of the defendant the plaintiffs appealed to the Court of Civil Appeals. To review a judgment of the Court of Civil Appeals, 195 S.W.2d 374, reversing judgment for defendant and rendering cause, instructing trial court to enter an appropriate judgment for plaintiffs, the defendant brings error.

Judgment of Court of Civil Appeals reversed and trial court's judgment affirmed.

R. T. Correll, of Perryton, Hoover, Hoover & Cussen, of Canadian, and Sanders, Scott, Saunders & Smith and Howard Saunders, all of Amarillo, for petitioner.

Boyer, McConnell & Hankins and A. B. Hankins, all of Perryton, for respondents.

SHARP, Justice.

Mary Virginia Scott Turner instituted this suit, individually and as independent executrix of the will of her then husband, J. H. Scott, to recover on two negotiable promissory notes, aggregating $8832, plus interest and other charges. Such notes were executed by petitioner, T. O. Pugh, to J. H. Scott, and at the time of their execution they were secured by a mortgage on Pugh's farm machinery and wheat crop. Pugh defended the suit, on the contention that, at Scott's suggestion, it was agreed between them that if Pugh would sell his machinery and bring the proceeds to Scott, together with whatever Pugh might make from his wheat crop, Scott would accept such sum in satisfaction of the debt. The machinery was sold for $700; but the wheat crop was a total failure. Nevertheless, when Pugh brought the $700 to Scott, Scott accepted it; and although he did not return the notes, he executed a release to Pugh of the mortgage on the machinery and the wheat. The release recited payment of the debt in full. Scott died afterwards, and his surviving wife brought this suit to collect the balance due on the notes, allowing a $700 credit. Before the trial Mrs. Scott married Turner, who was joined as a party plaintiff. On a former trial the district court entered a judgment denying recovery on the notes, based on a jury's finding in Pugh's favor. The Court of Civil Appeals reversed and remanded the cause, holding that, although Article 3716 of the Revised Civil Statutes was not applicable, the compromise agreement lacked consideration, and that there was further error in the submission of special issues to the jury. 187 S.W.2d 598. No writ of error was applied for. On retrial, Pugh again obtained a jury verdict; and again the trial court denied recovery on the notes, and decreed that Mrs. Turner take nothing. On this appeal the Court of Civil Appeals reversed and rendered the cause, instructing the trial court to enter an appropriate judgment for Mrs. Turner on the notes, on the theory that, as a matter of law, the compromise agreement was not supported by consideration. 195 S.W.2d 374. Upon that point this Court granted a writ of error.

Two points are necessary for a decision in this case: (1) Whether the evidence of the compromise agreement between Pugh and Scott, now deceased, was admissible under Article 3716, Revised Civil Statutes; and, if so, (2) whether such agreement is supported by a sufficient consideration.

The debt in question arose in 1930, and was renewed from time to time. The notes sued upon were secured by a mortgage on Pugh's farm machinery, including a combine, two trucks, two tractors, two listers, and other machinery, and on Pugh's two-thirds interest in wheat to be produced on 400 acres of Section 1004, the west one-half of Section 1003, containing 320 acres, and the north one-half of Section 933, containing 320 acres, totaling 1040 acres in Ochiltree County. The parties contemplated the withholding of some acreage under the government's wheat allotment reduction program. The exact amount of acreage in growing wheat at the time of the alleged compromise agreement is not in evidence, but Pugh estimated on the trial that "Scott's part" was about 600 acres; that the harvest should have yielded about 25 bushels to the acre; and that it looked good in April of 1941. There was no evidence of the market value of the wheat.

In April, 1941, after maturity of the notes, which were due on July 27, 1939, and July 27, 1940, respectively, Pugh and his wife went to Scott's residence in Dallas to borrow more money from Scott. At such meeting Scott's wife, now Mrs. Turner, was present. Scott declined to extend further credit to Pugh. Pugh testified, over objection, that such testimony was in violation of Article 3716, Revised Civil Statutes; that Scott stated that he wanted to clean up his business, that is, collect on the notes. Upon Pugh's declaration that he was unable to pay, Scott said, "I can fix it so you can. * * * You go back home and sell that machinery, and bring me the money, and give me what the crop makes, and I will call it square with you." Pugh accepted the proposal. Mrs. Pugh, who was also present, gave testimony, over objection, that corroborated the facts recited by her husband. Mrs. Turner testified that such meeting occurred, but denied that the above agreement was made.

Thereafter Pugh and wife returned to Ochiltree County. Handbills were printed stating that the machinery would be sold at public auction. The advertisements were scattered in Booker and Beaver City and other places. An auctioneer and clerk were hired, and all the machinery was sold for $700. The wheat crop was a complete failure.

On June 25, 1941, Pugh and wife made another trip to Dallas to see Scott. Again a conference was held at Scott's residence, at which Pugh and his wife and Scott and his wife were present. Over objection, Pugh testified that Scott accepted a check for $700 in full settlement of the debt; that he explained to Scott's satisfaction that the money represented all that was received from the sale of the machinery, and that the wheat was not worth harvesting; that Scott's wife was unable to locate the notes or a mortgage release form, and it was agreed that the notes would later be mailed to Pugh. A release obtained at a near-by garage was corrected to meet the situation by Mrs. Turner. It read:

"* * * on this day personally appeared J. H. Scott * * * as the holder (s) of a lien * * * in the amount of Approx. $9200.00, and who is (are) the holder(s) of said lien against the following described All Farm Machinery and All Wheat Grown By Me in 1941. This is held against T. O. Pugh.

"And that said lien is hereby released, full payment to satisfy said lien having been received by the above mentioned party (parties), and that said lien may be removed from Records."

Mrs. Turner testified that the meeting occurred on June 25, 1941, but that the $700 was not accepted to discharge the debt; that the mortgage only was released so that Pugh could obtain credit elsewhere. The notes were not mailed to Pugh, but no demand for further payment was made until June, 1943, several months after Scott's death. One of the notes shows a notation of a $700 payment. The notation was made by Mrs. Turner at some later date.

The jury found: (1) That Scott agreed to accept in full satisfaction of the debt whatever proceeds were received from the sale of the farm machinery and the wheat crop; (2) that Scott accepted the $700 on June 25, 1941, in full payment of the two notes sued upon; (3) that in April, 1941, Pugh was insolvent, and that Scott knew of such insolvency; (4) that Scott accepted the above proceeds in consideration of Pugh's insolvency; (5) that upon delivery of the $700, Scott intentionally cancelled the balance due on the notes; and (6) that Scott did not accept the $700 in consideration only for the release of the mortgage.

Further facts which are necessary in the consideration of the applicability of Article 3716 are as follows: Scott died January 6, 1943, and his will was admitted to probate soon thereafter. Under the will Scott bequeathed a sum of money to each of two persons other than his wife, left all the rest of the estate to his wife, and appointed her independent executrix without bond. She qualified as executrix on January 26, 1943, and took over management of the estate. In June, 1943, she made demand for payment of the notes in suit, and this suit was filed thereon in July, 1943. In such suit she sought recovery both in her capacity as independent executrix and in her individual right. At the time suit was filed debts of the estate had not been paid, and the legatees had not been given their bequests. The legacies to the two beneficiaries were paid in full in August, 1943. An inventory and list of claims was filed by the executrix in November, 1943, which listed one note executed by Pugh; which note was treated by the parties as the debt in question. Under the listing of the above note was the comment that such claim was disputed and that suit had been filed to determine the validity thereof. The Federal estate tax was paid in April, 1944. This suit was first tried in November of 1944. On such trial Mrs. Turner testified that at that time, i. e., in November, 1944, all of the debts of the estate had been paid and all of the bequests to others than herself had been satisfied in full. On the second trial of the case she was not present. By agreement of counsel her testimony at the second trial was given by reading her testimony from the record of the first trial. Although Mrs. Turner testified that she was still acting as executrix of the estate at the trial in November, 1944, the only unfinished business of the estate grew out of the collection of the notes sued upon.

In his second amended answer, filed November 21, 1945, apparently to meet the requirement of Article 2010, Section 3, Pugh denied under oath that Mrs. Scott...