276 S.W. 177 | Tex. Comm'n App. | 1925
The bank sued Barton, declaring upon a negotiable demand note of date November 29, 1921, for the principal sum of $5,000, interest, and attorneys’ fees. The petition was filed September 6, 1922. B'arton promptly answered, setting up a general demurrer, a general denial, and facts, which, if true, would show that the note in question was but manually delivered for a restricted purpose, and that whatever rights the bank had grew out of a debt for which the bank’s officers, J. T. Hutto and one Mc-Cann (with Barton), were jointly liable; it being shown that McCann was insolvent. Those facts were presented defpnsively, and, as the basis of a cross-a.ction against Hutto, coupled with a prayer for the impleading of Hutto, etc., and for relief against him in the event the bank should have judgment against Barton. Hutt-o was duly cited, and appeared
At the next succeeding term of the court (and on May 29, 1923) the so-called special exceptions interposed by Hutto and by the bank (presenting alleged misjoinder of parties and actions) were sustained, and thereupon judgment was rendered against Barton alone for the full amount sued for; the court excluding all evidence offered by Barton to support his averments and denials. The action of the trial court was rightly presented 'by appropriate assignments of error in the Court of Civil Appeals, where the judgment was affirmed, and the same questions have been brought to the Supreme Court.
Because the case was determined on exceptions, we assume (as we must) the truth of Barton’s allegations.
1. Barton’s motion to strike was properly overruled, because it was directed at the first supplemental petition as a whole, and that petition included a general demurrer. But for this, the motion should have been sustained for reasons disclosed in the next connection.
2. No actual delay was encountered by reason of Barton’s “cross-action” and the impleading of Hutto. The ease made by the bank’s pleading was first triable at the January term, 1923; and Hutto was vouched in prior to the beginning of that term; he answered on its appearance day, and thereafter remained a party defendant. Both Hutto and the bank had ample opportunity, on January 2d, and throughout the January term, to press any objection of misjoinder of causes or parties. Hutto did not insist upon disposition of the questions at that term, and the bank did not even suggest them, but, on the contrary, they consented (on the third day of the term) to a continuance of the case to the May term, 1923. Prior to the continuance, Hutto had filed his contemplated impleader of the oil companies; and to this pleading and prayer the bank did not, at the January term or subsequently, respond or object in any way, although it had the chance as early as January 2d. If Hutto had diligently embraced the opportunity to have the court determine whether the oil companies were necessary parties, and it had been found they were such, they would have been duly cited and served and compelled to answer to the May term, presumably ready for trial. Like means of preventing delay were open to, hut ignored by, the hank. In view of the fact that the rule sometimes forbidding misjoinder of causes or parties is one of convenience, which ought not to be permitted to defeat the general policy of avoiding multiplicity of suits (Great Southern Life Ins. Co. v. Dolan [Tex. Civ. App.] 239 S. W. 242; Lawrence v. Cooper Co. [Tex. Civ. App.] 237 S. W. 961), the db-jection should be pleaded in limine (Kemendo v. Fruit Dispatch Co., 61 Tex. Civ. App. 631, 131 S. W. 73, 76), or at the first reasonable opportunity in any event. If the objection be not seasonably made,' the right to make it is waived; and we believe it was waived here (Adams v. First National Bank [Tex. Civ. App.] 178 S. W. 993), and, therefore, the court erred in sustaining the demurrers. It is proper, here, to correct the statement of the Court of Civil Appeals to the effect that Hutto was dismissed from the case January 3d, and the bank, therefore, had nothing to which objection could be made. Until May 29th Hutto remained a party, and the bank’s opportunity and duty were that already shown.
3. A paradox would be committed if it were held that Hutto could object to the alleged misjoinder of parties on 'the score of delay in trial, even if he had not waived in the manner shown last above. He became a party as early as January 2d, and the proposal to bring in still others was his, not Barton’s; and it was not pressed until May 29th. If he has a cause of action against the oil companies, or if he should have one as a result of present litigation between himself and Barton, he can declare upon it in another suit, if he objects to delayed trial in the present case. This is said upon the assumption that on the showing made the oil companies are not necessary parties to Barton’s cross-action, and the reasons for this assumption will appear in paragraph 6 below.’ If the companies are merely proper parties, Hutto can easily preclude delay, and yet have means of protection, by waiving his request for their bringing in; and, if he does not care to waive, the trial court can properly exert discretion to keep them out.
4. One basis of the demurrer, and one reason which moved the trial court and the Court of Civil Appeals to sustain it, is that delay will result to the prejudice, and without the fault of the bank. Reasons why the bank is not “without fault” have been stated already in paragraph 2. But in another important sense, whatever delay, actual or potential, has or may be encountered is attributable to the bank and to its managing officer, Hutto. According to Barton’s pleading (which must he taken as true) both the bank and Hutto had actual knowledge, from the beginning, of all the facts disclosed, and knew (long before the suit was filed) that the note was signed by Barton solely because of (and upon) the terms and conditions agreed to. which measurably restricted the purpose for which the paper was made. With this knowledge, they should have expected, and, if they were reasonably prudent men, they did expect, the exact form and nature of Barton’s defense and effort at recoupment. With the agreements and condi
Por these additional reasofis we do not believe the trial court’s action can have support in, or be justified by, the idea that the supposed prejudice to the bank is without its fault. ’
5. The only additional ground of the demurrers, and the only additional reason which impelled the trial court, and one of the reasons which moved the Court of Civil Appeals, is that there is no identity in, or connection between, the causes of action as between the hank and Barton on the one hand and as between Hutto and Barton on the other. In passing upon the question, the Court of Civil Appeals said:
“A suit on a note against the maker is not the same transaction as a suit against the maker of the note and others, not signers, upon a collateral agreement” etc.
True enough, in a sense; but the suits themselves are not the “transactions” embraced in the test of multifariousness. The subject-matter of the suits may well relate to, or be different parts of, the same “transaction,” or the subject-matter of one suit (e. g., Barton’s “cross-action”) may include, as a part of it, the whole of the subject-matter of the other. The note itself relates back to, and obviously is a product of, the course of dealing which began (as between Hutto, Mc-Cann, Barton, and the bank) in 1920. Its present nominal amount includes a portion | of the original loan made to the three individuals in Jbne, 1920, as, also, the unpaid portions of the additional loans made them, at various times, subsequent to June, 1920. Neither this note, nor any precedent one would ever have come into existence except for the making and partial performance of the agreement (of the bank, Hutto, McCann,' and Barton) to the effect that the loans would be made as the obligations of Hutto, McCann, and Barton, but that the notes would be signed only by the latter because the others were managing officers of the bank, and their signatures upon the paper were “deemed inadvisable.” So much is the note but an inferior part of the “transaction” which Barton avers, and a product of it, that it is extremely doubtful whether it ever took effect as an enforceable obligation in prassenti, because of the special and restricted purpose for which it was signed and manually delivered. Section 16, Uniform Negotiable Instruments Act, 1919 (article 6001—16, Vernon’s Ann. Civ. St. Supp. 1922); Miller v. Murphy (Tex. Civ. App.) 206 S. W. 968; Storey v. Storey, 214 P. 973, 131 C. C. A. 269; Straus v. Citizens’ State Bank, 164 Ill. App. 420; Paulson v. Boyd, 137 Wis. 241, 118 N. W. 841; Waukee Savings Bank v. Jones, 179 Iowa, 261, 159 N. W. 691; Norman v. McCarthy, 56 Colo. 290, 138 P. 28; Niblock v. Sprague, 200 N. Y. 390, 93 N. E. 1105; Smith v. Doetterweich, 200 N. Y. 299, 93 N. E. 985, 33 L. R. A. (N. S.) 892, 894. See, also, Schmidt & Story v. Bank of Commerce, 234 U. S. 64, 34 S. Ct. 730, 58 L. Ed. 1214; Martineau v. Hanson, 47 Utah, 549, 155 P. 432; National Bank v. Shaw, 218 Pa. 612, 67 A. 875; Laing v. Hudgens, 82 Misc. Rep. 388, 143 N. Y. S. 763; Rische v. Bank, 84 Tex. 418, 19 S. W. 610; Williams v. Wood Mowing Mach. Co. (Tex. Civ. App.) 154 S. W. 366; Gillean v. Bank (Tex. Civ. App.) 219 S. W. 896; Rahe v. Yett (Tex. Civ. App.) 164 S. W. 30, 34, and cases there cited; Waters v. Byers Bros. & Co. (Tex. Civ. App.) 233 S. W. 572, and the many authorities cited and discussed on pages 574-580; Bell v. Mulkey (Tex. Civ. App.) 248 S. W. 784; Meeks v. Holmes Commerce Co. (Tex. Civ. App.) 154 S. W. 365; Waters v. Byers Bros. & Co., supra; Rahe v. Yett, supra; Burke v. Dulaney, 153 U. S. 228, 14 S. Ct. 816, 38 L. Ed. 698; Ware v. Allen, 128 U. S. 590, 595, 9 S. Ct. 174, 32 L. Ed. 563. To us it is obvious that the two causes of action directly relate to, form parts of, and together constitute, one and the same transaction.
It is the general policy of our law (administered in a' blended legal and equitable jurisdiction) to have all controversies relating to the same subject-matter settled in one suit so far as that may be done without unduly prejudicing the rights of some of those interested; and, to effectuate the great purpose of avoiding multiplicity of litigation and sequent expense to parties and the pub-
We say, therefore, Barton had the right to plead his facts; and, because his facts are of the nature described, he had the right to implead Hutto and force him to bear his proper share of the burden; and in doing that there is no objectionable misjoinder of causes. His rights, in this respect, are considerably broader than those included in mere “contribution,” and they rest upon the general policy and principle and privilege of avoiding multiplicity of suits.
6. But an application of the principles enforced in Fidelity Co. v. Fossati, supra, will eliminate .the necessity of the oil companies as parties to Barton’s cross-action. As between those companies and the bank there is no contractual relationship whatever. The bank in no way dealt with them. On the contrary, it dealt exclusively with Hutto, McCann, and Barton, and upon the basis only that it was making the loans to them, and that they should be liable on the obligation. Nor did Hutto, Barton, and McCann, or either of them, deal with the bank in the capacity of agents for the oil companies. At no stage of the dealings did the companies take any part in the transactions. There is no direct relationship whatever between the oil companies and the transactions themselves; the only indirect relationship, if it can be called that, lies in the mere fact that McCann, Barton, and Hutto may have loaned the money to the companies at some time after they borrowed it from the bank. If such subsequent loan was made, the bank had nothing to do with ■ it; and, further, it does not appear that the money was not paid back to Hutto, McCann, or Barton, or some of them, if the loan was made. It is claimed that Barton’s pleading alleges “the money obtained on the note in suit was loaned for the use” of the oil companies, and that those companies, therefore, are primarily liable. We do believe the pleading is rightly subject to that interpretation, but, if so, it remains clear that the bank did not so loan it — Barton specifically declares that the bank loaned it for the use of the three individuals, and'up•on their obligation alone, and, as remarked, the mere fact that those individuals may have intended to or may have reloaned it to the companies, is unimportant, in the ab-. senee of an effort by the bank to trace the funds, etc., and impress them with a trust character. An inspection of Hutto’s averment shows that Hutto himself was misl taken as to what Barton had said, for Barton had not alleged that the note was made
The effect of the averments are that the bank contracted with McCann, Barton, and Hutto, and them alone; and it is upon the contract (to which the oil companies were in no sense parties) that Barton’s claim for relief is founded. All issues there involved can rightly be determined in the absence of the oil companies; hence they are not necessary parties.
Whether they are proper parties need not be determined, for that question has not yet arisen. And. when it does arise, if ever, the trial court may, or may not, in its sound discretion, admit them as to it then appears just, having in view the probability, vel non, of prejudice to other parties already before the court.
7. The Court of Civil Appeals treated the cause of action attempted to be asserted by Mr. Barton as being one purely' of contribution. And then, because it was thought he did not show prior payment of the joint indebtedness, it held his pleading insufficient to present an existing cause of action, that is to say, his suit is premature, and, per force, Hutto is not a proper party. But Barton’s power to litigate is somewhat broader than his right as a mere contributee. See paragraph 5 above. Nor can we agree with that court on the proposition that he does not, as contributee, disclose a present right. It states that—
“It is well settled in this state that payment by one co-ob-ligor of more than his proportionate part of a common debt must be made before a cause of action exists in favor of him against another co-obligor for contribution.”
But this announcement of a general principle must be taken with recognition of the fact that there are many, exceptions to its application and of the additional fact that the payment (when actually required) can be made in a number of ways.
Prior payment has never been exacted as a condition to the maintenance of actions for contribution or indemnity between active and passive joint tort-feasors, whether relief is sought in original suits between them or in cross-actions in suits brought by the injured parties. M., K. & T. Ry. Co. v. Maxwell (Tex. Civ. App.) 130 S. W. 722; Id., 104 Tex. 632, 143 S. W. 1148; Pullman Co. v. Hoyle, 52 Tex. Civ. App. 534, 115 S. W. 315; Kemendo v. Fruit Dispatch Co., 61 Tex. Civ. App. 631, 131 S. W. 76; Adams v. First National Bank (Civ. App.) 178 S. W. 996; City of San Antonio v. Smith, 94 Tex. 266, 59 S. W. 1109. Such actions have been maintained, even though, as regards the injured parties, the cause of action sounded in tort and as between the tort-feasors the liability was ex contractu. Pullman Co. v. Hoyle, Kemendo v. Fruit Dispatch Co., M., K. & T. Ry. Co. v. Maxwell, supra. Other exceptions to the rule of payment are illustrated by such cases as Adams v. First National Bank (Tex. Civ. App.) 178 S. W. 993; Bank v. Bank (Tex. Civ. App.) 77 S. W. 241; Skipwith v. Hurt, 94 Tex. 333, 60 S. W. 423; Haberzettle v. Dearing (Tex. Civ. App.) 80 S. W. 539; Pope v. Hays, 19 Tex. 378; Courchesne v. Fuel Co. (Tex. Civ. App.) 155 S. W. 684; Twichell v. Askew (Tex. Civ. App.) 141 S. W. 1072. See, also, Brandt on Suretyship & Guaranty (2d Ed.) §§ 285, 287; 7 Am. & Eng. Ency. of Law, p. 332, and note 4. The Court of Civil Appeals cited Twiehell v. Askew, supra, to its proposition (quoted above). But that is a case where allowance of contribution as between original joint debtors before payment was approved. Twiehell and eight others were signers and principal obligors of a note. Each of five of the signers had paid on the note a sum equal to one-ninth of its amount —Twitchell paid nothing. The holder brought suit against the nine persons. The five (who had paid part) prayed for contribution from Twiehell and the other three both as to the amount paid by them and as to the unpaid part, and this was allowed. The holder recovered, and the judgment (after reciting the five payments) decreed that execution first issue' against Twiehell (and the other three nonpayers), and that, if as a result the judgment was not satisfied, and the five (who had already paid parts) should have to satisfy the judgment, they also should have execution against Twiehell et al. The result, of course, was that the five were allowed indemnity as to the whole of the unpaid portion of the obligation and contribution as to both the paid
“The judgment nowhere entitles- [Twichell'] to contribution from his five co-obligors who were solvent in the event the sheriff collected the whole amount of said judgment, or more than his pro rata share thereof [i. e., one-sixth, since three were insolvent] from him. This would entitle him to a correction and a reformation of the judgment [i. e., so as to give him contribution].”
The court also approved—impliedly at least—the award of contribution (to the extent of one-sixth) to each of the five in respect to the amount of the' note which had not been paid by them or by anybody else. The case, therefore, is not authority for the proposition enforced by the Court of Civil Appeals, but it does sustain Barton’s right to relief, even if he has npt “paid” the joint obligation.
The basic idea upon which the joint tort-feasor cases and others permitting contribution or indemnity without prior payment rest is the thought that the burden should fall, as speedily as possible, upon the parties who are ultimately liable. The effort is to avoid circuity of action, and fix, or apportion, responsibility at once and where justice places it. And it must be conceded that wherever there is an element of primary and secondary liability as between the obligors, or actors, the courts properly recognize that prior payment need not be made. That element exists here in an important sense. For while,.in respect to the bank, Barton, Hutto, and McCann are principal debtors, jointly and severally bound, yet, as between themselves, each is a principal only to the extent of his aliquot part of the debt and a surety for the remainder. Traders’ National Bank v. Clare, 76 Tex. 47, 13 S. W. 183; Magill v. Brown, 20 Tex. Civ. App. 662, 50 S. W. 143, 642; Brownlee v. Young, 25 Mont. 38, 63 P. 798; Goodall v. Wentworth, 20 Me. 322; Hatch v. Norris, 36 Me. 419; 32 Cyc. p. 34; Owen v. McGehee, 61 Ala. 440, 444, and authorities there cited; Crafts v. Mott, 4 N. Y. 604; Brandt on Suretyship & Guaranty (2d Ed.) § 38; 27 Am. & Eng. Ency. of Law (2d Ed.) p. 433; Twichell v. Askew (Tex. Civ. App.) 141 S. W. 1072. As between Hutto and Barton (since McCann is insolvent), Barton is principal in respect to one-half of the debt and surety for Hutto as to the other one-half. We believe that the authorities do not require actual prior payment in a ease of this sort, or that the strict technicality of the rule can justly be permitted to make noneffective the litigant’s right to avoid a multiplicity of suits.
In a ease such as this, where there is an undoubted equity in favor of a defendant, plus a condition where the whole matter can be litigated as between all the solvent parties without undue prejudice to any of them, especially where the pleading avers an element of bad faith or unfairness in the original form of. the suit, we believe that prior payment is not essential to contribution. Especially does this rule appear to be correct when it is considered that, if Barton should secure the judgment he asks for, necessarily he would have to make further payments on it before he could enforce collection against Hutto.
8. But within the true concept of the principle of contribution Barton’s pleading, considered with the petition, shows either prior “payment” or such a condition as to make the fact, vel non, of “payment” an issue for the jury. Payment, where required, does not have to be made with money. This is recognized in every authority that we have seen. In the statement of the general rule made in 9 Cyc. 798, and 13 C. J. 823, it is said that the right of contribution is not “enforceable until there has been an actual payment * *. * of the common obligation or till something is done which is equivalent to a discharge thereof.”
Mr. Brandt says that one cannot enforce contribution against another until he has “made a payment of the obligation, or assumed more than his share of the debt.” Suretyship & Guaranty (2d. Ed.) § 254. See, also, Backus v. Coyne, 45 Mich. 584, 8 N. W. 699. It may properly be said, therefore, that anything of detriment to one obli-gor (whether principal or surety)'which has' 'the effect of discharging his coprineipal or cosurety from the joint obligation is a suffi.cient payment upon which to base contribution.
Ayid amongst the familiar media of such payments are promissory notes, where the notes are taken with intent of extinguishing the prior debt: In several jurisdictions, if the note taken on a pre-existing debt is negotiable in form, its mere taking im-, ports discharge of the debt, and is a payment adequate to support a suit for contribution. Robertson v. Maxcey, 6 Dana (36 Ky.) 101; Greene v. Anderson, 102 Ky. 216, 43 S. W. 195, 197, and cases there cited; Witherby v. Mann, 11 Johns. (N. Y.) 519; Pearson v. Parker, 3 N. H. 366; Cornwall v. Gould, 4 Pick. (Mass.) 444; Amos v. Bennett, 125 Mass. 120, 123; Gooding v. Morgan, 37 Me. 419. In those jurisdictions it is generally thought that, if the note, etc., be nonnegotiable in form, the question of extinguishment of the debt is one of fact about the intent of the parties. There appears to be no dissent anywhere to the proposition that, if the parties so intended, the note (regardless of its form) discharges the debt. Id.; Boulware v. Robinson, 8 Tex. 328, 58 Am. Dec. 117; Bell v.
The bank’s petition declares upon the note as the sole obligation of Barton, and upon that position it recovered judgment against him. At the same time it could have sued and recovered upon the joint debt against Hutto, McCann, and Barton, if it had not taken the note as a discharge of the joint debt. This clearly imports a claim by the bank that the prior debt was discharged, 'and, having recovered solely because of that, claim, it cannot, on this appeal, be heard to assert the contrary. It cannot both approbate and reprobate. Having asserted that Barton alone is liable to it, and having secured advantage on that score, it cannot now “mend its hold” (Ry. Co. v. McCarthy, 96 U. S. 258, 267, 24 L. Ed. 693), and, in order to retain the advantage, say that Hutto and McCann are still liable on the old obligation. It is estopped by conduct and the record. That it may be able in the future to commit this inconsistency by repleading and suing upon the joint debt is not important now, because we must judge the matter on the record as we find it. Erom the standpoint of the bank, therefore, there has been “prior payment” by Barton. And, if this is not conclusive upon the point, its inconclusiveness is due solely to the fact that Barton’s averments (considered with those of the petition) raise an issue of fact about the purpose of the note.
9. This situation, which Barton described, was pleaded by him, defensively, as a reason why the bank.should not be allowed recovery in the form sought by it as against him alone. On the trial he offered to prove his allegations, but the court excluded the' evidence upon the mistaken idea that action on the demurrers had also cut off proof of the defense. That proof (with the bank’s rebuttal, if any) would have determined whether or not the note. was unconditionally delivered in extinguishment of the then existent debt. It results that Barton in his answer first showed facts which, ■if proved, probably would have defeated recovery by the bank in the present form of its suit. And, in the event he was bested in the attempt to prove these facts, and it was found that, the note was delivered, without condition, his pleading, rightly interpreted, presented, alternatively, his right to relief against Hutto. Patently, then, the question of whether there was an unconditional delivery of the note as extinguishment of the existent debt was presented by the answer on the one hand and the petition on the other, and this, necessarily, was an issue of fact. If the case had been properly tried, and as a result the jury had found against Barton on the issue, this finding would have been tantamount to a finding of “prior payment” (by the giving of the note) by him, and his' right to recoupment for part against Hutto would have followed as a matter of course even under the strictest application of the rule announced by the Court of Civil Appeals.
We therefore recommend reversal of the judgments of the district court and of the Court of Civil Appeals and a remand of the cause.
The judgment recommended in the report of the Commission of Appeals is adopted, and will be entered as the judgment of the Supreme Court.
We approve the holding of the Commission of Appeals on the questions discussed in its opinion.
