Titus v. Gulf Liquid Fertilizer Co.
| Decision Date | 29 March 1961 |
| Docket Number | No. 5472,5472 |
| Citation | 345 S.W.2d 422 |
| Parties | James TITUS, Appellant, v. GULF LIQUID FERTILIZER COMPANY, d/b/a Western Chemicals, Appellee. |
| Court | Texas Court of Appeals |
Preston & Tomlin, Pecos, for appellant.
Dennison & Naylor, Pecos, for appellee.
Appellee, Gulf Liquid Fertilizer Company, doing business as Western Chemicals, brought this suit against Lonzo Stracner and appellant, James Titus, to recover on a promissory note executed by defendant Stracner and delivered to appellee, as well as on an open account created by Lonzo Stracner and appellant, James Titus, in behalf of Titus and Stracner Farm, a copartnership.
Trial was had to the court without the intervention of a jury, and judgment was rendered in favor of appellee and against the defendant, Stracner, and appellant, Titus (jointly and severally), for the amount of the Stracner note (less certain credits), plus interest and attorney's fees on the unpaid balance; the amount of the sworn account plus interest thereon at the rate of six per cent per annum from January 1, 1959; and, in addition thereto, the sum of $1,250 attorney's fees. The judgment against Lonzo Stracner was rendered on default, and this appeal is brought by defendant James Titus, only.
Appellant's appeal is predicated upon fifteen points of error. The first three points are based on the contention that the trial court erred in rendering judgment against appellant, James Titus, on the promissory note sued on herein, because:
(1) Appellant Titus was not a party to said note, either by name, signature or endorsement;
(2) The agreement of Titus, if any, to pay said note was collateral, constituted a promise to answer for the debt of another, and was barred by the Statute of Frauds; and
(3) The agreement of Titus, if any, to pay said note was wholly without consideration and was, therefore, nudum pactum.
In sworn pleadings, appellant denied that he assumed or agreed to pay any part of the promissory note of Lonzo Stracner, and said if there was a promise or agreement by appellant to pay such note, such promise--if any was made--was without consideration and, therefore, without legal effect. Appellant plead the Statute of Frauds in bar thereof, alleging that appellee sought to impose an obligation upon appellant to answer for the debt of another under an alleged oral agreement. He also denied, under oath, that he was indebted to appellee in the amount alleged, and said that he was indebted to appellee on open account for fertilizer and insecticides furnished him during the 1958 crop year, in the sum of $697.80, and tendered such sum into the registry of the court to be paid to appellee pending final determination of the suit, in full satisfaction of his indebtedness.
The promissory note involved in this litigation was dated January 29, 1958. It was in the principal sum of $7,183.58, and had been executed by Lonzo Stracner and delivered to appellee to evidence a personal indebtedness owed by Stracner to appellee since 1957.
Shortly before or after the execution and delivery of the above note, appellant James Titus and defendant Lonzo Stracner formed a farming partnership. Appellant Titus testified that he did not know about the Lonzo Stracner note to appellee until about July 15, 1958, when he was told by Mr. Ferguson (Assistant Manager of Western Chemicals) that there was such a note. Admittedly, appellant James Titus was under no obligation to pay the note at the time it was executed and delivered to appellee by the defendant Stracner. It was no more than a personal obligation owed by Stracner to appellee, and it did not become a partnership obligation merely because Stracner and appellant agreed to become partners in the farming business.
The trial court, in its Findings of Fact filed herein, made the following finding:
'That the Defendant James Titus * * * agreed to pay to plaintiff the indebtedness represented by the said note dated January 29, 1958, in the sum of $7,183.58, or to see that same was paid.' (Emphasis supplied.)
The promise was admittedly not in writing. Assuming that the trial court correctly found, on sufficient evidence, that such a promise was made--does such promise constitute an unconditional promise to pay the debt of another, or is such promise conditional? If the promise found by the trial court to have been made was a conditional promise to pay, then even if such promise was made for a valuable consideration, it would be unenforceable under the Statute of Frauds (Article 3995, subdivision 2, Vernon's Annotated Texas Civil Statutes). What did appellant James Titus promise to do? Did he make an unconditional promise to pay the debt of Stracner and, in effect, agree to make such debt his own and to become primarily liable on it, or did he merely promise 'to see that same was paid'? The trial court found that appellant promised to do one, or the other, but does not specifically find which of the two promises was actually made.
It has been held many times that a promise 'to see that same is paid' is a collateral undertaking only, and does not constitute an independent undertaking or promise to pay the debt of another, in the absence of evidence to the contrary. Such a promise is nothing more than an offer to 'guarantee' the debt of another, to pay if the debtor does not do so; and, as such, the promise is collateral and therefore within the purview of the Statute of Frauds, and consequently unenforceable. Hoffer Oil Corp. v. Haynes, Tex.Civ.App., 28 S.W.2d 1113; Nichols v. Dixon, Tex.Civ.App., 85 S.W. 1051; Id., 99 Tex. 263, 89 S.W. 765; 20A Tex.Jur. 298-299, sec. 27, Statute of Frauds.
We hold that the promise made by appellant, as found by the trial court, was not an unconditional promise to answer for the debt of another, but was a conditional or collateral promise; and, as such, was insufficient to remove this case from the operation of the Statute of Frauds. We therefore sustain appellant's Points 1 and 2.
In the event we are found to be in error in holding that appellant's promise to pay the note in question was a conditional promise to pay, it becomes important to determine whether such promise, if not otherwise barred by the Statute, is supported by adequate consideration.
The trial court found that defendant James Titus made the promise 'in order to obtain credit for the partnership of Stracner and Titus from plaintiff during the 1958 crop year.'
What is to be regarded as sufficient consideration to take the promise out of the Statute of Frauds, involves the determination of the relation which the consideration in the contract bears to the transaction itself.
The promise, or undertaking, is not sustainable if it was not supported by a consideration which appears to be adequate, sufficient, or independent. Waggoner v. Herring-Showers Lumber Co., 120 Tex. 605, 40 S.W.2d 1; Higginbotham-Bartlett Co. v. Dickey, Tex.Civ.App., 27 S.W.2d 248; Fletcher v. Puckett, Tex.Civ.App., 170 S.W. 831.
In the case at hand, appellee contends that appellant promised to pay the debt of Stracner, amounting to $7,183.58, and in effect promised to make such debt his own and to become liable on it 'in order to obtain credit for the partnership of Stracner and Titus from plaintiff during the 1958 crop year.'
The evidence in this case is undisputed that appellant James Titus and defendant Stracner had already made arrangements for financing their 1958 crop long prior to July 15, 1958, when the alleged promise was elicited from Titus that he would pay the note or see that it was paid.
The evidence was that Titus and Stracner had secured a loan from Western Cottonoil Company 'early in 1958' and had signed a joint note therefor for the purpose of financing their 1958 crop. Defendant's Exhibit 4 is a copy of their 1958 Farm Budget prepared by Western Cottonoil Company. It appears that the total requirements for the partnership farming operations for the year 1958 amounted to $32,671, and of this sum the amount of $7,596 was allocated to 'poison and fertilizer' which, so far as this record reflects, were the only products sold by appellee, and were the only ones upon which appellee might have extended credit to appellant.
As set up, the budget provided for expenditures for poison and fertilizer, among other items, as follows:
1958 Poison Fertilizer
February --- $2,000.00
June $ 563.00 740.00
July 1,125.00 740.00
August 1,125.00 740.00
September 563.00 ---
The funds allocated for the above...
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Gulf Liquid Fertilizer Co. v. Titus
...the Statute of Frauds, and that the payments on the Stracner note out of the funds of the Titus and Stracner partnership were invalid. 345 S.W.2d 422. The facts are these: Lonzo Stracner accumulated an indebtedness of $7,183.58 with Gulf Liquid Fertilizer Company, for merchandise purchased ......