Binge v. Gulf Coast Orchards Co. , 67 S.W.2d 1045 ( 1934 )

MURRAY, Justice.

Appellant, H. Binge, instituted this suit seeking to recover the sum of $500 from ap-pellees, Gulf Coast Orchards Company and D. E. Kirgan, which appellant alleged was due him as a result of a contract entered into with him hy appellees.

The trial court sustained a general demurrer to appellant’s petition, and upon appellant’s refusal to amend dismissed the cause from the docket.

The primary question here presented is, Did appellant’s petition state a cause of action?

The Templeman Bros, were liable for the payment of certain vendor’s lien notes secured by a lien on 80 acres of land. B. S. Graham held these notes, but they were in truth and in fact the property of the Gulf Coast Orchards Company, of which company D. E. Kirgan was the president and general manager.

The notes were past due and appellant undertook to secure an extension of the time of payment. . In this connection appellant discussed the matter with D. E. Kirgan.,, Binge, the appellant, informed Kirgan that the Templemans wanted him to loan them $500 to be applied on this past due indebtedness hut that he would not do so because he could not afford to lose the money. Kirgan informed Binge that if he would make a $500 payment on the notes for the Templemans, that he and his company would return to Binge the $500 in the event they took the land either by foreclosure or by any other method. With this understanding Binge gave his check to Kirgan and Kirgan indorsed it to his company, which cashed the check. Later the company took the land and Binge brought this suit to recover the $500 under his alleged contract with Kirgan and the orchards company. The above facts are set out in appellant’s petition, and, as against a general demurrer, are to be accepted by us as absolutely true.

The above facts show a contract based upon a promise for a promise. Binge promised to advance $500; appellees agreed to return the money in the event they later took the land. It is clear that ordinarily a contract based upon a promise for a promise is a valid contract. It is contended by appellees that this contract is void for want of consideration. Unquestionably, if the Templemans had made this payment there would have been no consideration for the promise to repay for the reason that they owed the notes and were legally bound to pay them. The company held the notes and had the legal right to receive such payment and there would have been no consideration for the agreement to repay. Appellees would have received nothing more from the Templemans than they already had a perfect legal right to receive. On the other hand, Binge did not owe the la-gal duty to advance the $500, neither did ap-pellees have the legal right to receive the $500 from Binge. Thus, as a result of thi¡3 agreement Binge was induced to pay the $500' which he did not theretofore owe the legal duty to pay, and appellees received the $500 which they did not theretofore have the legal right to require Binge to pay. Therefore, we think, the contract was based upon a consideration.

Appellees further contend that this contráct constituted an agreement on their part to answer for the debt of another and was under the statutes of fraud void, because not in writing. We do not agree with' this contention for two reasons, in the first place, there being consideration for the agreement, it was binding on appellees, even though it constituted an agreement to pay the debt of another, and, in the second place, this was an agreement between appellees and Binge and was not an agreement to pay the debt of another, but an original contract with Binge to return the $500 to him in the event they took the land.

Appellees’ third contention is that this agreement constituted a loaning of the credit of the corporation to another which is prohibited by articles 1348 and 1349 (Vernon’s Ann. Civ. St.). These articles prohibit a corporation from gratuitously lending its credit. This agreement was not gratuitous but was entered into for the purpose of getting $500 from Binge, which Binge refused to deliver to them only upon their promise of repayment in the event the land was taken by appellees.

The petition stated a cause of action and the general demurrer should have been overruled.

The judgment is reversed and the cause remanded.