State Nat. Bank v. Vickery

• Decision Date: 11 December 1918
• Docket Number: (No. 18-2611.)
• Citation: 206 S.W. 841
• Parties: STATE NAT. BANK OF FT. WORTH v. VICKERY.
• Court: Texas Supreme Court

206 S.W. 841

STATE NAT. BANK OF FT. WORTH v. VICKERY.

(No. 18-2611.)

Commission of Appeals of Texas, Section A.

December 11, 1918.

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

Action by the State National Bank of Ft. Worth against R. Vickery and others. Judgment for plaintiff against defendant named, and, on appeal by first-named defendant, the Court of Civil Appeals reversed judgment against the first-named defendant and rendered judgment in his favor (159 S. W. 874), and plaintiff brings error. Judgment of Court of Civil Appeals reversed, and that of lower court affirmed.

W. B. Paddock, F. M. Bransford, and Theodore Mack, all of Ft. Worth, for plaintiff in error.

Orrick & Terrell, of Ft. Worth, for defendant in error.

SONFIELD, P. J.

Suit by plaintiff, the State National Bank of Ft. Worth, against George Bury and W. S. Heaton, as principals, and R. Vickery, as surety, on a promissory note. A trial before the court without the intervention of a jury resulted in judgment discharging Bury and in favor of plaintiff against the other two defendants. From this judgment, defendant Vickery alone appealed. The Court of Civil Appeals reversed the judgment against defendant and rendered judgment in his favor. 159 S. W. 874. The note in suit contained the following provision:

"The makers and all indorsers hereof severally waive presentment for payment, protest, and notice of protest and consent that time of payment may be extended without notice thereof."

The court finds that there were eleven extensions of time of payment of the note; that, at the time of the several extensions, interest was paid in advance to the time when payment was extended; defendant had no notice of the extensions and did not consent to same; and that plaintiff had knowledge that defendant signed the note as surety.

The question involved is whether the stipulation that "time of payment may be extended without notice thereof" permits more than one extension of time of payment without the consent of the defendant as surety.

The question has never been determined in this state. Notes containing provision waiving all defenses growing out of "any extension" of time of payment have been construed by the courts of several states, some holding that the provision permitted of but one extension, others that the right was not so limited. Some of these cases and cases dealing with similar provisions in other character of contracts are cited and quoted from in the opinion of the Court of Civil Appeals. The case of Rochester Saving Bank v. Chick, 64 N. H. 410, 13 Atl. 872, is in largest measure relied upon by defendant and is approved and followed by the Court of Civil Appeals. The note stipulated that "all signers agree to be holden should the time be extended." The note had been extended several times, and Clark, one of the defendants, pleaded that he signed the same as surety and was released through such extensions of time. The court said:

"The time of payment fixed upon in the note is six months, and the agreement, `to be holden should the time of payment be extended,' naturally and by the ordinary force of language and taken in connection with the first part of the note, means a reasonable extension for a definite time, and not a series of extensions indefinite in number and endless in repetition. When the plaintiffs, at the end of six months from the date of the note, extended the time of payment for a definite period of time, the extension was in accordance with the agreement of all parties; all parties were bound by it, and the defendant Clark was not thereby discharged. But the agreement in the note was met and satisfied by such an extension. Any further extension, upon a valid consideration and binding upon the plaintiffs, made without the consent of the surety, had the effect of discharging him."

The case of Bonart v. Rabito, 141 La. 970, 76 South. 166, not cited in the briefs or called to the attention of the court in argument, involved the release of an accommodation indorser on the ground that several extensions of the time of payment had been granted. The note sued upon contained the following stipulation:

"The makers, indorsers, guarantors, and sureties of this note hereby severally * * * consent that time of payment may be extended without notice thereof."

The court reviews the case above cited and the other cases relied upon by defendant. Construing this stipulation, the court said:

"We cannot conceive of any reasonable theory on which to hold that the indorser's consent, as expressed in the note sued on, authorized the payee to grant the maker only one extension of the time of payment, however long, and did not authorize two extensions, however short. To maintain such a doctrine would lead to the anomalous conclusion that the indorser would not have been released if the payee had granted to the maker of the note, without notice to the indorser, one extension of the time of payment for one year, but that she would have been released by the granting of two extensions, for one month, or one week, or one day each. Our interpretation of the indorser's consent that time of payment might be extended without notice thereof is that the payee and the maker of the note could agree to extend the payment from time to time without notice to the indorser and without releasing...