Second Nat. Bank of Houston v. Dunn, 10081.

• Decision Date: 30 May 1935
• Docket Number: No. 10081.,10081.
• Citation: 84 S.W.2d 766
• Parties: SECOND NAT. BANK OF HOUSTON et al. v. DUNN et al.
• Court: Texas Court of Appeals

84 S.W.2d 766

SECOND NAT. BANK OF HOUSTON et al. v. DUNN et al.

No. 10081.

Court of Civil Appeals of Texas. Galveston.

May 30, 1935.

Dissenting Opinion June 11, 1935.

Rehearing Denied July 9, 1935.

Appeal from District Court, Harris County; Chas. E. Ashe, Judge.

Suit by the Second National Bank of Houston and another, as independent co-executors and trustees of the estate of S. F. Carter, Sr., deceased, and others against T. C. Dunn, Jr., and another, wherein defendants filed cross-action. From an adverse judgment, plaintiffs appeal.

Reversed and rendered.

Baker, Botts, Andrews & Wharton, of Houston (Palmer Hutcheson and John T. Maginnis, both of Houston, of counsel), for appellants.

Fulbright, Crooker & Freeman and Vinson, Elkins, Sweeton & Weems, all of Houston (Clyde A. Sweeton, John H. Crooker, David T. Searls, and Leon Jaworski, all of Houston, of counsel), for appellees.

GRAVES, Justice.

This, as merely a general statement of the nature and result of the suit below that is thought to be correct, is taken from the brief filed here for the appellants:

"Second National Bank of Houston, Texas, and Carrie B. Carter, as Independent Co-Executors and Co-Trustees of the Estate of S. F. Carter, Sr., deceased, and said Bank as Trustee for Carrie B. Carter, and Carrie B. Carter, individually, sued the defendants, T. C. Dunn, Jr., and L. J. Walling, upon three certain notes executed by Houston Development Company, endorsed by said Dunn and Walling, and also by S F. Carter, Jr., (son of S. F. Carter, Sr., and Carrie B. Carter), whose estate was also made a party defendant.

"The suit was brought in the district court of Harris County to recover on those notes, aggregating the principal sum of $162,213.74, together with interest and attorneys' fees provided for therein, and also to recover on a general guaranty agreement dated January 12, 1928, executed by Dunn and Walling and Carter, Jr., in favor of Carter, Sr., expressly guaranteeing the payment by Houston Development Company of all of its aforesaid indebtedness up to the sum of $100,000.00. The Houston Development Company was not made a party to the suit, because it was actually and notoriously insolvent.

"The notes mentioned above, executed by the Houston Development Company, and endorsed by Carter, Jr., Walling and Dunn, were as follows:

"(1) Note for $98,513.50, upon which there was a credit of $1,299.76, leaving a balance of $97,213.74, dated August 31, 1928, payable to the order of Second National Bank of Houston, and transferred to the estate of Carter, Sr.

"(2) Note for the sum of $35,000.00, dated June 20, 1928, payable to the order of South Texas Commercial National Bank of Houston, Texas, and transferred to the estate of Carter, Sr.

"(3) Note for the sum of $30,000.00, dated July 18, 1928, payable to the order of the First National Bank of Houston, Texas, and transferred to the estate of Carter, Sr.

"The payment of the indebtedness to the Houston Development Company to each of the aforesaid banks had been guaranteed by Carter, Sr., by separate general guaranty agreements executed by him, during the lifetime of both Carters, as follows:

"(1) General guaranty agreement dated October 20, 1927, guaranteeing the payment of all indebtedness of the Houston Development Company to the Second National Bank of Houston then or thereafter owing up to the sum of $100,000.00.

"(2) General guaranty agreement dated October 22, 1924, guaranteeing the payment of all indebtedness of the Houston Development Company to the South Texas Commercial National Bank of Houston, then or thereafter owing, up to the sum of $40,000.00.

"(3) General guaranty agreement dated January 19, 1927, guaranteeing the payment of all indebtedness of Houston Development Company to First National Bank of Houston, Texas, then and thereafter owing, up to the sum of $30,000.00.

"Upon the failure of the defendants Dunn and Walling to pay said notes to the banks, it became necessary for plaintiffs as executors of the estate of Carter, Sr., to pay the same to said banks by reason of said guaranties, and each and all of said banks duly assigned, transferred, endorsed and delivered said notes to the estate of Carter, Sr. Plaintiffs then (three and one-half years after the collection by the plaintiff-bank of the $200,000.00 of the two insurance policies described infra) brought this suit against the defendants.

"The defendants Dunn and Walling set up as a defense in their answers that Carter, Jr., after the death of his father, S. F. Carter, Sr., took out two insurance policies on May 7, 1928, with the Aetna Life Insurance Company, in the sum of $170,000.00 and $30,000.00, respectively, payable to the executors and trustees of the estate of Carter, Sr., deceased. They allege that such policies were taken out for the benefit of the Houston Development Company, and for the purpose of protecting them as endorsers on the notes sued upon in the event of the death of Carter, Jr., and that after said policies of insurance were bought the Second National Bank of Houston, acting as executor and trustee of the said S. F. Carter, Sr., deceased, was notified by Carter, Jr., Dunn and Walling that it was the purpose and intention of Carter, Jr., in procuring the policies to protect the Houston Development Company and the defendants Dunn and Walling as endorsers on said notes against liability therefor in the event of the death of Carter, Jr., and that the bank, acting in the aforesaid capacity, consented and agreed to apply the proceeds of said policies to the discharge of said obligations. They also allege that the premiums on said policies, or the greater part thereof, were paid by the Houston Development Company. The defendants Dunn and Walling further allege that the notes sued on were actually paid and discharged out of the proceeds of the insurance policies which were collected by the banks upon the death of Carter, Jr., and that if the notes sued upon herein were not actually discharged at that time, that they should be so discharged by an application of such insurance proceeds. They further ask for recovery against the plaintiffs for any amount the plaintiffs recover against them.

"The plaintiffs filed a supplemental petition in reply to the answers of the defendants Dunn and Walling, setting up general and special demurrers and a general denial to their answers, and alleged that the aforesaid insurance policies were issued and delivered to the executors and trustees of the estate of Carter, Sr., deceased, for the purpose of securing that estate against loss on obligations executed in favor of his father by Carter, Jr., and on obligations upon which Carter, Jr., was liable as maker or endorser, or otherwise, in favor of Carter, Sr., or in favor of third parties to whom Carter, Sr., was liable by guaranty or endorsement of said obligations. Plaintiffs further alleged that they, as executors and trustees of the estate of Carter, Sr., collected the proceeds of said policies upon the death of Carter, Jr., and applied them to the discharge of obligations of the nature above mentioned, other than those sued upon. They further alleged that such application of the insurance proceeds was made in good faith and without notice of any claim or understanding that such proceeds were to be applied on the obligations sued upon, and alleged that the defendants, Dunn and Walling, waived any rights which they had in the proceeds and were estopped to assert any claims or rights to the proceeds of such policies, and to set up such defense to this suit, and that the agreement and understanding alleged by the defendants Dunn and Walling relative to the purpose of taking out of said insurance policies and the application of the proceeds thereof constituted an effort to vary the written contracts of insurance by parol, and were not in anywise binding on the plaintiffs.

"The answer filed in behalf of the estate of Carter, Jr., deceased, consisted of a general demurrer to plaintiffs' petition, and to the answers of the defendants Dunn and Walling in so far as they sought indemnity or contribution against the estate of Carter, Jr., deceased, a general denial, and then by way of cross-action against the defendants T. C. Dunn and L. J. Walling, it adopted the allegations of the plaintiffs' amended supplemental petition and asked that if plaintiffs should recover any sum against it that it be given a judgment over against the defendants Dunn and Walling, for indemnity or in the alternative for contribution.

"Mrs. Carrie Carter, individually, dismissed her asserted cause of action during the progress of the trial.

"The case was submitted to a jury on special issues, and the findings thereon are in substance as follows:

"Issue I: That in the procuring of the insurance policies Carter, Jr., had the purpose and intention of protecting the Carter, Sr., estate and Dunn and Walling against the payment of the obligations sued upon in the event of the death of Carter, Jr.

"Issues Ia and Ic: That after Carter, Jr., secured the Aetna insurance policies, he did not notify the Second National Bank of this purpose and intention in securing the policies. That the Second National Bank, as executor and trustee of the estate of Carter, Sr., had no notice from any source before the application of the proceeds of the policies, that it was the intention of Carter, Jr., to have the proceeds applied to the payment of the obligation sued on.

"Issue II: That the Second National Bank did not agree with Dunn and Walling that the bank would collect the proceeds of said insurance policies and apply the same to the payment of the obligations sued upon herein.

"Issue III: That the Second National Bank, after it collected the proceeds of the insurance policies, did not apply the proceeds thereof to the payment of the obligations sued on.

"Issues IV and V: That the Houston Development Company paid Hans W. Rassmussen, the insurance agent, on...