Reclamation Co. v. Western Brokerage & Supply Co., 1002.

• Decision Date: 23 December 1932
• Docket Number: No. 1002.,1002.
• Citation: 57 S.W.2d 274
• Parties: RECLAMATION CO. v. WESTERN BROKERAGE & SUPPLY CO., et al.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

57 S.W.2d 274

RECLAMATION CO. v. WESTERN BROKERAGE & SUPPLY CO., et al.^*

No. 1002.

Court of Civil Appeals of Texas. Eastland.

December 23, 1932.

Rehearing Denied February 24, 1933.

Appeal from District Court, Eastland County; Geo. L. Davenport, Judge.

Suit by the Reclamation Company against the Western Brokerage & Supply Company and others. From an adverse judgment, plaintiff appeals.

Reversed and rendered.

Turner, Seaberry & Springer, of Eastland, for appellant.

Scott W. Key, of Eastland, and L. E. Richardson, of Longview, for appellee.

HICKMAN, Chief Justice.

This is the second appeal of this case; the former being reported in 293 S. W. 194. Appellant originally brought suit against A. C. Simmons, C. W. Hoffman, and K. F. Page, as partners doing business under the trade-name of Western Brokerage & Supply Company, upon a series of notes signed "Western Brokerage & Supply Company, by A. C. Simmons." These notes were excuted after Hoffman and Page had withdrawn from the partnership, and in their answer they alleged the fact of their withdrawal from the firm prior to the execution of the notes, and pleaded non est factum as to the notes. Appellant, by supplemental pleading, alleged that the indebtedness represented by the notes was incurred prior to their withdrawal, and that, if they were not liable on the notes, they were liable, jointly and severally, with Simmons on the account. To this pleading of appellant the appellees, Hoffman and Page, by supplemental answer, pleaded, among other defenses, the payment or novation of the account by the acceptance of the notes. They further pleaded an estoppel, the nature of which will be more fully stated hereinafter.

On the first trial appellants took nothing as against Hoffman and Page, from which judgment an appeal was prosecuted to this court. On that appeal this court held, as reflected by its opinion, that the evidence did not support the defense of novation. The case was remanded upon a cross-assignment of appellees complaining of the ruling of the trial court in sustaining a special exception to their plea of estoppel.

After the case was remanded, appellant recast its pleadings, alleging its final judgment against Simmons and the company and its inability to collect same, and again declared on the open account against Hoffman and Page. Said defendants filed an amended answer, again pleading, among other defenses, novation and estoppel. Many special issues were submitted to the jury, and upon the answers to these various issues judgment was rendered, as upon the first trial, that appellant take nothing, from which judgment this appeal is duly prosecuted. It is the position of appellees that the evidence and the verdict of the jury support both their plea of novation and their plea of estoppel, and that the judgment should be sustained on one or both of these grounds.

The first question presented complains of the action of the trial court in submitting any defense except that raised by the plea of estoppel. The claim is that, by our original opinion and the mandate from this court to the lower court, the cause was remanded with instructions limiting the authority of the district court upon retrial to the issue of estoppel, as pleaded by appellees, and the further issue pleaded by appellant of an estoppel against appellees to plead estoppel. This assignment is overruled. The judgment entered by this court upon the former appeal was one reversing the judgment of the trial court generally, and neither by that judgment nor by our opinion did we limit the trial court to the submission of any particular issues upon retrial. This question, and the kindred question raised by the second assignment of error, that our holding on the former appeal became the law of the case on the question of novation, are rendered of no importance by the views adopted upon this appeal, as reflected hereinafter, wherein we hold that the present record does not support the defense of novation.

On the defense of novation there is but slight difference between the evidence as presented in this record and that before us on the former appeal, as reflected by our former opinion. Hoffman and Page withdrew from the partnership under an agreement with Simmons that they would turn over to him all of the assets of the firm in consideration that he pay off all of the firm's indebtedness, including that owing to the partners as accrued profits and otherwise. After this withdrawal they informed one Ross, a representative of appellant, of their agreement with Simmons, and later were informed by Ross that one Marshall, appellant's general manager, had stated that appellant was not looking to them for the payment of said account, but was looking alone to Simmons for the payment thereof. Still later appellant placed the account in the hands of its attorney, George Thompson, Jr., of Fort Worth, for collection. As a result of his negotiations with an attorney representing the Western Brokerage & Supply Company, the notes above mentioned were executed by "Western Brokerage & Supply Company, by A. C. Simmons." The record contains copies of letters and telegrams from Thompson to appellees, and also to appellant, which correspondence, appellees claim, discloses that it was the intention of appellant on the acceptance of said notes to substitute the obligation thereof for the obligation of the account, and thereby release Hoffman and Page from any liability. The strongest evidence supporting this contention which we have discovered from the correspondence consists of the fact that 8 per cent. interest on the account was added to the face thereof, and notes executed for the amount of the account, plus 8 per cent. There is also to be found this statement in a letter written by Mr. Thompson to the Western Brokerage & Supply Company after one of the notes had become past due and unpaid: "You will recall that your attorney made a proposition to us that if we would permit the account to be paid, part in cash and part by these notes, the notes, when due, would promptly be taken care of."

In considering the question of whether or not Hoffman and Page have been released from their obligation to pay the account in suit, it is well to keep in mind that they and Simmons were jointly and severally liable for the entire amount of the account at the time same was incurred, and appellant, by promising to look alone to Simmons for the payment thereof, did not increase Simmons' liability, or procure any additional security for the indebtedness. Its promise amounted to no more than a voluntary relinquishment of the liability of two of its debtors. It is the settled law of this state that an agreement between the retiring and remaining members of a partnership, that the latter will pay the debts owing by the partnership, is not binding upon the creditors of the partnership, unless such creditors are parties to the agreement for a consideration. In the case of White v. Boone, 71 Tex. 712, 12 S. W. 51, 52, it is stated: "Such an agreement would be binding between the parties themselves only, unless creditors became parties to the agreement for a consideration."

This language was quoted with approval and reaffirmed in an opinion by Justice Brown in the case of Shapleigh Hardware Company v. Wells, 90 Tex. 110, 37 S. W. 411, 59 Am. St. Rep. 783. The statement made to appellees by Ross to the effect that Marshall, the general manager, had stated to him (Ross) that he was not looking to appellees for the payment of the account, but to Simmons alone, if construed as an agreement to release Hoffman and Page from liability, is clearly lacking in consideration; an essential element of all valid contracts. A release of appellees cannot be predicated upon that agreement.

But it is contended that the acceptance of the notes under the circumstances evidenced an intention on the part of appellant to substitute the obligation of the notes for the obligation of the account so that suit could no longer be maintained upon the account, and that the surrender or payment of the account constituted the consideration for the notes. A novation by this means is never presumed, but must be established either by an express agreement or by acts which clearly establish an intention to discharge the obligation of the original debt. There is no contention that there was any such express agreement either between appellant and Simmons, or between appellant and appellees. On the contrary, the evidence discloses that appellees were not aware of the existence of the...