Sustala v. North Side Ready-Mix Concrete Co.

• Decision Date: 16 October 1958
• Docket Number: READY-MIX,No. 13283,13283
• Parties: A. J. SUSTALA, Appellant, v. NORTH SIDECONCRETE COMPANY, Appellee.
• Court: Texas Court of Appeals

Page 64

317 S.W.2d 64

A. J. SUSTALA, Appellant, v. NORTH SIDE READY-MIX CONCRETE COMPANY, Appellee.

No. 13283.

Court of Civil Appeals of Texas, Houston.

Oct. 16, 1958.

J. Leonard Gotsdiner, Leonard Z. Finger, Houston, for appellant.

Spiner, Pritchard & Thompson, Clark G. Thompson, Houston, for appellee.

WERLEIN, Justice.

This suit on sworn account was brought by appellee, North Side Ready-Mix Concrete Company, against A. J. Sustala, appellant, to recover an alleged balance due appellee for concrete and building materials. In its first amended original petition, filed November 20, 1957, appellee claimed the amount due was $1,395.18. Appellant answered by a sworn denial of the account in its entirety and by a sworn plea of payment, alleging specially that the account was paid in full by the assignment to appellee of three promissory notes of third parties, and the liens securing the same, together with the execution of a certain instrument in which appellee agreed that said assignment constituted payment in full of appellee's claim. The case was tried to the court without a jury, and judgment was rendered in favor of appellee 'for its debt upon account in the sum of $1,395.18' together with interest and attorney's fees in the sum of $350. From such judgment appellant has perfected his appeal.

It is undisputed that on or about January 7, 1957, appellant and appellee entered into a written contract consisting of said instrument acknowledging payment and an assignment from appellant to appellee of three promissory notes together with the liens securing the same. The assignment with reference to the Ybarra note, with which we are primarily concerned, contained the following statement: '* * * and I do further represent, agree and covenant that there is a balance owing upon such note of One Thousand Fifty One and 94/100 Dollars ($1,051.94) as of January 5, 1957.' The assignment provided that the notes were assigned without recourse on appellant, and further provided that appellee was authorized to collect the same at its own cost and expense. As a part of the same contract and transaction appellee executed said written instrument expressly agreeing that such assignment constituted payment of the full amount of the indebtedness owing appellee. Said contract was never rescinded and the Ybarra note was never reassigned to appellant.

At the commencement of the trial the parties stipulated before the court (as shown by the statement of facts) that defendant (appellant) had ordered and received from plaintiff (appellee) the materials shown in appellee's first amended original petition, agreeing thereby to pay $1,395.18 for such materials. Further, that such sum was due and owing to appellee, unless the same had been paid by the transfer of three secured promissory notes, together with the liens securing same, to wit: (1) the Ramirez note, on which appellant covenanted there was a balance owing at the time of transfer of $575; (2) the Bible note, on which appellant covenanted there was a balance owing at the time of transfer of $450; and (3) the Ybarra note, on which appellant covenanted there was a balance owing at the time of transfer of $1,051.94. The parties thereupon proceeded to trial upon the issue of whether appellee's account had been paid by such transfer.

The assignment of the notes from appellant to appellee, and the instrument executed by appellee as a part of the same contract and transaction, were admitted in evidence without objection by appellee. Said instrument contains the following statement:

'North Side Ready-Mix Concrete Company, a corporation duly authorized and existing under the laws of the state of Texas, does hereby agree that the assignment of promissory notes executed by Kenneth Brown Bible and wife, Nancy Jane Bible, Edward Silva Ramirez and wife, Angeline Bernal Ramirez, and Rosa Alva Ybarra, together with the assignment of the deed of trust securing the payment of each of such notes, constitutes the payment of the full amount of the indebtedness owing to North Side Ready-Mix Concrete Company by A. J. Sustala, as reflected on the books of North Side Ready-Mix Concrete Company, together with statements mailed to A. J. Sustala.'

At the trial appellee called as its first witness Mrs. Rosa Alva Ybarra, the maker of the Ybarra note, who was permitted by the court to testify, over the objection of appellant, that in January, 1957, she did not owe the sum of $1,051.94 upon her note, but that such note was almost entirely paid. She produced 105 checks in the sum of $50 each, together with additional receipts and cancelled checks showing that there was only some $200 left due and owing upon her note. The appellant objected to such evidence on the ground that it was an attempt to vary, alter or contradict the terms of a written instrument, that the Ybarra note was assigned by appellant to appellee without recourse, and on the further ground that such evidence was not raised by the pleadings. The court overruled appellant's objection and admitted the evidence. Appellee then proved up its attorney's fees and rested.

The question for our determination is whether the trial court erred in permitting Mrs. Ybarra to testify relative to the balance unpaid on her note. Appellant contends there was no pleading that permitted such proof. Appellant had pleaded payment of the account by sworn plea and also by pleading the aforesaid assignment and the instrument executed contemporaneously therewith. Appellee filed no supplemental petition and pled nothing in avoidance of appellant's sworn plea of payment.

There can be no question that the notes of third persons may by agreement be received in payment of an indebtedness. As stated in 40 Amer.Jur., Payment, par. 102, p. 787.

'It is firmly established that the note of a third person may, by agreement, be received in payment. Thus the acceptance of a note of a third person unconditionally, and with the agreement that it shall be in full satisfaction of the amount due on previous notes held by the creditor, operates as payment, even though the old notes are not surrendered or canceled. In such case, the original contract is satisfied, and the party receiving the note must take his remedy thereon. Whether the taking of the notes of a third person by a creditor is intended as absolute payment of the debt or as collateral security merely is a question of fact dependent on whether an actual agreement to that effect is made by the parties.'

In the present case there is an express written contract which provides that the assignment constitutes payment in full of the debt. The assignment was not given as collateral security. The contract is clear and unambiguous. See Ralston v. Aultman, Miller & Company, Tex.Civ.App., 26 S.W. 746, 747, no writ history, where it is stated:

'If a creditor accepts from his debtor the note of a third party, with the understanding that it shall be in satisfaction of the latter debt, we see nothing to prevent this from being a legal contract, whether this be expressly stipulated or not.'

See also 32 Tex.Jur., Payment, Sec. 23, p. 666.

Appellee contends that the appellant failed to prove payment since the assignment and instrument in question, read together, contain a covenant, agreement and representation that the amounts stated were unpaid on the notes assigned, and hence it was up to appellant to prove that those amounts were actually owing. Appellee further contends that the agreement that the assignment of said notes should constitute payment was conditioned upon the amounts stated to be unpaid on said notes, and that since the amount stated to be owing on the...