Jeanes v. Hamby

685 S.W.2d 695, 1984 Tex. App. LEXIS 6973

• Court: Court of Appeals of Texas
• Decided: October 30, 1984
• Docket: 05-83-00452-CV
• Status: Published

Opinions

AKIN, Justice.

Jack K. Jeanes appeals a summary judgment declaring that Jeanes released Paul M. Hamby and Charles C. Shaver from liability on a prior judgment obtained by Jeanes on a note of indebtedness against them and others. Additionally, Jeanes appeals a finding that Jeanes’ counterclaim for fraud against Hamby, Shaver, and R.L. McSpedden was precluded as a matter of law by the affirmative defenses of res judi-cata and the statute of limitations. By cross-point, Hamby and Shaver contend that the trial judge erred in failing to grant them summary judgment against Jeanes on their breach of contract claim based upon releases of the prior judgment executed by Jeanes. We hold that the trial judge properly rendered summary judgment against appellees on their breach of contract claim because the releases were not supported by consideration. We also hold that the trial judge erred in declaring valid and binding the releases, signed by Jeanes, which purported to relieve Hamby and Shaver of their judgment debt to Jeanes. Additionally, we hold that the court erred in summarily ordering that Jeanes take nothing for damages allegedly resulting from appel-lees’ fraud because neither res judicata nor the statute of limitations precludes Jeanes’ suit. Consequently, we affirm the judgment with respect to the denial of appel-lee’s breach of contract claim against Je-anes but reverse and render the judgment with respect to the void releases. As to Jeanes’ suit for fraud, the judgment is reversed and remanded for trial.

Appellees were guarantors on a note which evidenced a $150,000 loan made by Jeanes to Gar-Dal, Inc., a company in which the appellees were shareholders. Gar-Dal defaulted on the note. Jeanes sued Gar-Dal and its five shareholders, including the appellees, who had personally guaranteed payment of the note. In that lawsuit, Je-anes recovered judgment against all opposing parties. In that same cause of action, the appellees in this case won a judgment of indemnity against the two other shareholders for their liabilities to Jeanes. Thereafter, Jeanes attempted to collect on his judgment by numerous means, including garnishment of appellees’ judgment of indemnity against O.K. Jones, one of the other Gar-Dal shareholders.

The present appeal arose when appellees intervened in a garnishment suit brought by Jeanes against Jones seeking satisfaction of his judgment against appellees. Appellees alleged in their plea in intervention, later severed from the garnishment proceeding, that Jeanes’ judgment against appellees on the note had been extinguished when Jeanes garnished appellees’ judgment of indemnity against Jones. However, before this cause of action was severed, Jeanes executed two documents, referred to as releases, wherein he promised to forego all legal recourse against appellees Hamby and Shaver, including his efforts to collect from them pursuant to his judgment on the note, in return for payment of $100,000, which was less than Je-anes’ judgment. Nevertheless, Jeanes later counterclaimed in this suit to have these releases declared unenforceable.

In this respect, Jeanes contends that the trial judge erred in granting summary judgment for Hamby and Shaver on the issue of the validity of the releases because, among other reasons, the releases were not supported by consideration. We agree. It is well settled that the payment of less than the full amount of a judgment debt alone cannot be consideration for an accord and satisfaction. Blaylock v. Akin, 619 S.W.2d 207 (Tex.Civ.App.—Texarkana 1981, writ ref’d n.r.e.); Reeves v. Hall, 437 S.W.2d 424 (Tex.Civ.App.—Austin 1969, no writ). In this case, it is undisputed that an amount of over $100,000 remained unpaid on the judgment held by Jeanes against Hamby and Shaver. Consequently, payment by Hamby and Shaver to Jeanes of only $100,000 is not consideration that will support the releases, thereby rendering these releases invalid. Although Hamby and Shaver correctly note that the rule in Blaylock applies only to liquidated debts, we disagree with their characterization of this judgment debt as an unliquidated obligation. Their sole support for this contention is that at the time Jeanes signed the releases, litigation was pending concerning the question of whether the judgment debt owed by appellees to Jeanes was extinguished by his garnishment of their judgment against Jones. But the mere pleading of such an allegation does not convert a liquidated debt arising from a valid final judgment into an unliquidated debt or put the obligation in dispute. In this respect, we note that Hamby and Shaver did not allege that Jeanes’ judgment had been satisfied from the garnishment of their judgment of indemnity against Jones. Furthermore, appellees cite no authority, nor have we found any, to support their theory that the mere garnishment of an obligation owing to a judgment debtor extinguishes the debt owed to the holder of the judgment. Consequently, we hold that the releases executed by Jeanes were invalid for lack of consideration.

Nevertheless, Hamby and Shaver persist in contending that Blaylock is not controlling because Jeanes received consideration other than the $100,000 payment for Je-anes’ signature on the releases. According to Hamby and Shaver, Jeanes’ received consideration which will support the releases in the form of a promise by Hamby and Shaver to forego their attempts to have Jeanes’ judgment declared extinguished. We disagree because the only basis for these attempts were founded on Hamby and Shaver’s allegations that the judgment debt was extinguished when Jeanes garnished the judgment held by Hamby and Shaver against Jones. As noted previously, we are not of the opinion that a cause of action against Jeanes was pleaded on this issue. Consequently, no consideration existed because Hamby and Shaver could not be said to have abandoned any legal rights by foregoing their attempt to have the judgment extinguished.

Moreover, even if their pleadings had alleged a cause of action, the releases signed by Jeanes do not state that they were signed in consideration of appellees terminating any cause of action. Instead, the releases merely state that Jeanes released Hamby and Shaver from any claims held by him by virtue of Jeanes’ prior judgment and nowhere do the releases mention additional consideration in the form of a release of Jeanes from any controversy, claims, or actions held against him by Ham-by or Shaver. Moreover, because the releases are unambiguous, any attempt by Hamby and Shaver to prove that the releases were signed by Jeanes in return for additional consideration not mentioned in the releases would violate the parol evidence rule. Crozier v. Horne Children Maintenance and Educational Trust, 597 S.W.2d 418 (Tex.App.—San Antonio 1980, writ ref’d n.r.e.). Because the $100,000 payment was the only consideration for the release of a judgment debt of a greater amount, we hold that, as a matter of law, these releases were not supported by consideration and are, therefore, invalid and unenforceable to discharge Jeanes’ judgment. Because the contracts of release are invalid, appellees’ cross-point by which they contend that the court erred in not allowing them to proceed against Jeanes for breach of that agreement is also without merit.

Since we have held that the releases of the judgment are invalid for lack of consideration, it is unnecessary to address Je-anes’ other points of error attacking the validity of the releases. We now turn to the question of whether the trial judge erred in granting summary judgment against Jeanes on his pleading that he had been defrauded by all three appellees. In this respect, the record shows that Jeanes specifically alleged that appellees wrongfully conspired to obtain loans from him on behalf of Gar-Dal, Inc. with the intent to withhold payment when due and to hinder collection of any judgment that he might obtain on the note so as to pressure him into signing the releases involved in this appeal. According to Jeanes, appellees concealed and secreted their assets for the purpose of delaying his collection efforts, and this concealment is evidenced by the fact that Hamby and Shaver were able to deliver the $100,000 in cash at the time when he had agreed to the release even though his previous extensive attempts to discover assets to satisfy the judgment had been unsuccessful.

In considering Jeanes’ point with respect to his cause of action for conspiracy to defraud him, we first note that the burden was on appellees, as movants, to establish that Jeanes’ cause of action was precluded, as a matter of law, as to at least one essential element of Jeanes’ cause of action.¹ Williamson v. Tucker, 615 S.W.2d 881 (Tex.Civ.App.—Dallas 1981, writ ref’d n.r.e.). Appellees do not contend that they have met this burden because they argue that Jeanes’ cause of action was barred by the doctrine of res judicata and by the statute of limitations, both of which are affirmative defenses.

With respect to res judicata, ap-pellees argue that Jeanes had already had his day in court when he obtained his original judgment on the note against appellees and that Jeanes should have pursued his allegation of a conspiracy to defraud him in that suit. We cannot agree because Je-anes’ allegations assert a continuing fraudulent conspiracy by appellees to assure that he would never recoup his money in the form of continuing actions by appellees to prevent collection of his judgment. Res judicata precludes litigation of causes of action which, with the use of diligence, could have been adjudicated in a prior suit between the same parties. That doctrine is only applicable if the questions at issue in the first suit constituted a defense to, or a part of, a cause of action finally adjudicated. Griffin v. Holiday Inns of America, 496 S.W.2d 535, 538 (Tex.1973) (a final judgment on the merits in an action for breach of contract did not preclude a later action, based on related events, in the form of a suit on quantum meruit). In Gilbert v. Fireside Enterprises, Inc., 611 S.W.2d 869, 879-80 (Tex.Civ.App.—Dallas 1980, no writ), we noted that res judicata is a harsh doctrine, which should be applied narrowly and with caution. In light of Griffin and Gilbert, we hold that even though Jeanes’ cause of action for fraudulent conspiracy arose from some of the same events which gave rise to his original suit against appel-lees for payment on the note, the two causes of action depend upon the determination of altogether different factual and legal questions and are sufficiently distinct so as to prevent the doctrine of res judicata from precluding Jeanes’ suit.

As to the statute of limitations, we are unpersuaded by appellees’ argument that Jeanes’ cause of action for fraudulent conspiracy was barred by the applicable statute. In this respect, appellees argue that Jeanes filed his fraud claim on April 7, 1981, and the two year statute of limitations commenced in 1975 when the loan note was reduced to judgment. But the record shows that Jeanes’ theory of appellees’ fraudulent conduct consisted of his allegation that the goal of their conspiracy was to obtain his signature on contracts which would relieve appellees of the full amount of any obligations owed to Jeanes. As Jeanes points out, he signed documents releasing Hamby and Shaver on July 19, 1979. Jeanes argues that the obtaining of his signature on these documents was an overt act in furtherance of the conspiracy, and since it occurred within two years of the filing of the fraud suit, his cause of action was not barred by the statute of limitations. See Harang v. Aetna Life Insurance Company, 400 S.W.2d 810 (Tex.Civ.App.—Houston 1966, writ ref’d n.r.e.). Nevertheless, appellees contend that Jeanes failed to tender summary-judgment evidence to overcome the rule that in a fraud case the statute of limitations begins to run when the victim knew or should have known that he had been defrauded. We agree with Jeanes because when overt acts in furtherance of a conspiracy to defraud occur within two years of the filing of suit, that suit is not barred by limitations. Moreover, the burden was on appel-lees to establish by summary-judgment evidence that Jeanes’ counterclaim was precluded as a matter of law. Williamson, supra. Accordingly, we hold that the trial judge erred in granting summary judgment on Jeanes’ suit for fraud.

Finally, we consider Jeanes’ argument that the trial judge erred in refusing to declare, pursuant to his counterclaim, that post-judgment interest on his original judgment on the note against ap-pellees should accrue at the rate of 10%, compounded annually. The judgment in question provides that interest on the principal amounts awarded should accrue at the rate of 10% per annum from the date of judgment until paid. Jeanes argues that the court should have declared that the interest should compound annually because the award of interest at 10% per annum was contrary to the “spirit” of the judgment. We cannot agree. In the first place, the judgment does not provide for interest compounded annually. To hold as Jeanes would have us do would be to change the clear language of a final judgment, which the trial judge lacked jurisdiction to do. In the second place, the law does- hot favor compound interest, which will be only allowed when equity requires it. E.g. Grand Fraternity v. NicoSia, 41 S.W.2d 684, 686 (Tex.Civ.App.—Waco 1931, writ ref’d n.r.e.) (per Justice Alexander, later Chief Justice of the Texas Supreme Court). Obviously, if the law or equity required that the interest should be compounded annually, the trial judge who rendered the earlier judgment would have so provided in that judgment. Accordingly, the trial judge in this case correctly refused to disturb the prior judgment.

In summary, we reverse the summary judgment granted by the trial judge and render judgment in favor of Jeanes declaring that the releases executed by Jeanes are void. TEX.R.CIV.P. 434. We also reverse and remand for trial the judgment denying Jeanes’ counterclaim against ap-pellees for fraud. In all other respects, the judgment is affirmed. Costs are assessed against the appellees.

GUILLOT, J., dissenting.

1 . We do not pass on the question of whether Jeanes has a cause of action for damages when he has already recovered judgment on his note.