Speer v. Rushing

In November, 1913, appellant loaned M. D. Sharp $4,000, upon a promissory note signed by said Sharp and R.S. Glass Co., Will Rushing, and J. W. McCrary, payable January 1, 1914. Sharp was a member of the firm of R.S. Glass Co. While all parties appear on the face of the note as principals, in fact Sharp was the principal and the other parties were sureties, which fact was known to appellant at the time the money was loaned. Sharp and Glass Co. became bankrupt in March, 1914. The only issue presented by this appeal is as to whether appellant agreed with Sharp to extend the time of payment of the note to January 1, 1915.

A mere forbearance to sue, without an agreement not to do so, will not release a surety from payment of a debt. Russell v. Miller, 40 Tex. 501; Houston v. Braden, 37 S.W. 468; Titterington v. Murrell, 90 S.W. 510; Bank v. Gilvin, 152 S.W. 654, 655; Hunter v. Clark, 28 Tex. 163. On the other hand, an agreement by the payee with the principal, for a valuable consideration, to extend a note for a definite time, made without the consent of the surety, will release the surety. Guerguin v. Boone,33 Tex. Civ. App. 622, 77 S.W. 631; Wybrants v. Lutch, 24 Tex. 310; Pilgrim v. Dykes, 24 Tex. 383, 384. The consideration must be valid. Payne v. Powell, 14 Tex. 601; Andrews v. Hagadon, 54 Tex. 577, 578.

Where the payee of an interest-bearing obligation promises to forbear the collection of the same for a definite time, and the principal therein agrees to pay the interest for such time, such mutual promises, giving the creditor, on the one hand, a profitable investment, and the debtor, on the other hand, the use of the money for a definite time is a valuable consideration, and will be sufficient to enforce such agreement and to discharge the surety, if made without his consent. Benson v. Phipps,87 Tex. 580-582, 29 S.W. 1061, 47 Am. St. Rep. 128. Such agreement, to amount to a valid consideration, must be mutual. Norris v. Graham,42 S.W. 576. It must be for a definite time, so that until the expiration of that time the hands of both parties are tied, in that the creditor could not enforce the collection of the debt, and the debtor could not tender payment and stop the Interest; hence the agreement must be unconditional, or, if upon a condition precedent, it must be shown that such condition has been complied with. Benson v. Phipps, supra,87 Tex. 580, 29 S.W. 1061, 47 Am. St. Rep. 128; Barlow v. Frederick Stearns Co., 44 Tex. Civ. App. 321, 98 S.W. 456; Burke v. Cruger, 8 Tex. 70, 71, 58 Am.Dec. 102.

The court submitted the case to the jury on a general charge, and their verdict necessarily includes a finding that there was such an agreement between appellant and Sharp as would discharge the sureties. Appellant, under a proper assignment of error, contends that the verdict is unsupported by the evidence. Had Sharp testified positively to such agreement, that would have been sufficient to sustain the verdict, and his testimony would have found circumstantial corroboration in the testimony of McCreary and several other witnesses who testified as to alleged statements by appellant. But the evidence shows that, if such agreement was made, but two parties knew that fact, viz. appellant and Sharp. Appellant positively denies making such agreement. We think that Sharp's testimony shows only a conditional agreement, to wit, that appellant would extend the note for 12 months if it was agreeable to the appellees herein. The evidence shows that the appellees never agreed to such extension. The evidence as to the alleged agreement is not, in our opinion, sufficient to sustain the verdict of the jury, for which reason the judgment of the trial court is reversed, and this cause is remanded for a new trial.

Reversed and remanded.