Kirby v. American State Bank of Amarillo

18 S.W.2d 599, 63 A.L.R. 1528
CourtTexas Commission of Appeals
DecidedJune 28, 1929
DocketNo. 1188—5188
StatusPublished
Cited by16 cases

This text of 18 S.W.2d 599 (Kirby v. American State Bank of Amarillo) is published on Counsel Stack Legal Research, covering Texas Commission of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Kirby v. American State Bank of Amarillo, 18 S.W.2d 599, 63 A.L.R. 1528 (Tex. Super. Ct. 1929).

Opinion

LEDDY, J.

Plaintiff in error seeks by this appeal to obtain relief from a judgment awarded against him as indorser upon certain notes sued'upon by defendant in error. Plaintiff in error pleaded as a defense against his liability as such indorser that the notes sued upon were extended by defendant in error for a valuable consideration without his knowledge or consent and without expressly reserving any right of recourse against him.

The basis for this plea exists in a letter written by defendant in error bank to S. W. Sibley, who was the agent of O. S. Carlton, the maker of the notes involved. The letter reads ¿s follows:

“Amarillo, Texas, September 27, 1926.
“Mr. S. W. Sibley, Dallas, Texas. Dear Mr. Sibley: We have your wire under this date which reads as follows: ‘Instruct North Texas National Bank by wire not to place Carlton notes in hands of Attorney. Arrangements being made to pay.’
“We are complying with your request and wiring North Texas to-day to delay placing these notes in the hands of an attorney until Wednesday noon, but will instruct them by letter to-day, if not paid by that date, to place in hands of an attorney and have suit filed.
“We trust that these notes will be taken care of by Wednesday noon, so that it will not be necessary to have them placed in the hands of an attorney.
“We have been out the expense of three telegrams on these items which we feel should be paid for our account at North Texas at the time of payment of notes.
“Yours very truly,
“[Signed] J. H. Paul, President.”

We are of the opinion it conclusively appears that there was no valid consideration for the extension pleaded. Where an extension for a definite period is agreed to by the parties, the effect is to consummate a contract obligating the creditor to forbear suit during the time of the extension, and binding the debtor to forbear his right to pay the debt before the expiration of the extension period. This principle is clearly enunciated by Chief Justice Gaines, in Benson v. Phipps, 87 Tex. 578, 29 S. W. 1061, 47 Am. St. Rep. 128, wherein he states: “The latter secures the benefit of the forbearance; the former ' secures an interest-bearing investment for a definite period of time. One gives up his right to sue for a period in consideration of a promise to pay interest during the whole of the time; the other-relinquishes his right to pay during the same period, in consideration of the promise of forbearance.”

The maker of the note was not obligated to forego payment until Wednesday noon, but was expressly permitted under the terms of the agreement to pay at any time up until that time. He could have paid off the same immediately upon -receipt of the letter, as he was not required or bound under the bank’s proposition to withhold payment for any definite period of time.

In Benson v. Phipps, cited above, Chief Justice Gaines distinguishes cases which seemingly support a contrary doctrine to that announced by the court as being cases where the facts were identical with those of the case before us. He says: “In many cases which seemingly support the contrary doctrine, there was a mere promise by the creditor to forbear, without any corresponding promise on part of the debtor not to pay during the time of the pronvised forbearance. In such cases, it is clear that there is no consideration for the promise."

Real Estate & Abstract Co. v. Bahn, 87 Tex. 582, 29 S. W. 646, 30 S. W. 430, presented a case in which the purported extension was supported by an agreement absolutely identical with that claimed in this case, as appears from the agreement quoted by Chief Justice Gaines, the same being as follows: “That a few days after the note sued on became due, and just before it was assigned to the plaintiff, N. E. Fain presented same to the defendant for payment, when said Stacy, as president of defendant company, requested that an extension of one week from that date be given on said note, and that the same be not placed in the hands of attorney for collection until one week; and agreed, if this was done, that he would pay the note within that time,” etc.

In commenting on the insufficiency of this agreement to constitute a valid extension, the Chief Justice said: “Here the creditor agrees to extend for one week, and the debtor agrees to pay within the week. He does not agree that he will not pay until the end of the week, or that in case he does pay, he will pay interest for the entire period of, the extension. Hence there was no consideration for the promise of the creditor.”

Here the debtor requests that the creditor forbear putting the notes in the hands of an [601]*601attorney before the following Wednesday. In response to this reguest, the creditor expressly agrees that the debtor may pay at any time not later than Wednesday noon, as it is stated that it is instructing the collecting bant “if not paid by that time to place in the hands of an attorney,” etc., and this statement is followed with the further language: “We trust that these notes will be taken care of by Wednesday noon.” It is clear from this language that the maker of the note was not obligated to pay interest for any definite time. He was privileged to pay the note under the agreement without incurring any obligation whatever for any additional interest over and above that already owing by him, if he desired to do so.

It is insisted that the following language contained in the letter constituted a valuable consideration for the forbearance not to sue until the date specified: “We have been out the expense of three telegrams on these items which we feel should be paid for our account at North Texas [Bank] at the time of payment of the notes.” This language cannot be used as a basis for a valuable consideration for the forbearance granted by the letter for two reasons: First, because it appears from the face of the letter that the same is not made a condition of the alleged forbearance. When the letter is read as a whole, it shows conclusively that the request to forbear collection of the notes until Wednesday was granted absolutely, without being conditioned upon the maker of the note paying the cost of the telegrams which the bank had incurred. The writer of the letter, after agreeing to the request to forbear immediate collection of the notes, merely expressed an indication of his feelings to the effect that because of the extension granted the maker should pay the expense he had been out for telegrams in connection with the matter.

The second reason, which prevents plaintiff in error from availing itself of the payment of the telegrams as a consideration for the forbearance granted, is that the record is utterly devoid of any evidence showing that Sibley as agent for the maker of the notes accepted the bank’s proposition to pay the cost of these telegrams. The Court of Civil Appeals recites in its opinion that Sibley testified he agreed to such payment, but a careful examination of his testimony discloses that court was in error in stating his testimony upon this point. Nowhere does he state that hfe agreed to pay the cost of the telegrams the bank had paid, nor is there any evidence whatever that he communicated his acceptance of the request to pay the cost of the telegrams to the defendant in error bank.

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Bluebook (online)
18 S.W.2d 599, 63 A.L.R. 1528, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kirby-v-american-state-bank-of-amarillo-texcommnapp-1929.