Case ID: sw_182/html/0892-01.html
Source: Caselaw Access Project
Author: {"author": "PHILLIPS, C. J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

PEUGH v. MOODY et al.
    (No. 2438.)
    
    (Supreme Court of Texas.
    Feb. 19, 1916.)
    PRINCIPAL AND SURETY <&wkey;ll 8 — RELEASE OF Principal — Consent of Surety — Evidence.
    Where the surety on a note was a party to an arrangement for the settlement of the principal’s debts, and participated in negotiations with the payee to accept the settlement proposed, held,, that the release of the principal by the payee’s acceptance of the settlement was made with the surety’s consent and did not discharge him from liability for the balance of the note.
    [Ed. Note. — For other cases, see Principal and Surety, Cent. Dig. §§ 280-295; Dec. Dig. <S&wkey;118i]
    Etror to Court of Civil Appeals of Seventh Supreme Judicial District.
    Action by Robert Moody and others against W. F. Peugh. From a judgment for the plaintiffs, affirmed by the Court of Civil Appeals (145 S. W. 296), defendant brings error.
    Affirmed.
    Ramsey, Black & Ramsey, of Austin, and E. O. Gray, of Higgins, for plaintiff in error. II. E. Hoover, of Canadian, for defendants in error.
    
      
       Motion for rehearing pending.
    
   PHILLIPS, C. J.

The suit was upon a note given to the First National Bank of Higgins, executed by the W. F. Peugh Mercantile Company, a corporation, as principal, and W. F. Peugh as surety, afterwards transferred to the plaintiffs. Peugh was president of the company and its principal stockholder. It became financially involved, and its affairs were turned over to a trustee to be administered for the benefit of its creditors, who obtained under such administration fifteen per cent, of their claims. Subsequently an arrangement was made whereby Peugh and certain of the creditors provided a fund for the payment of fifty per cent, of the remaining indebtedness to such of the company’s other creditors who were willing to acceiit that proportion of the amounts due them in settlement of their claims against it, the parties liroviding the fund to take over the company’s assets. The bank, then the owner of the note, through its cashier agreed to this, and such a settlement was made with it.

The defense of Peugh to the suit for the balance due upon the note was, that the bank’s settlement with the company released him as a surety. On the trial a verdict was instructed against him.

If the evidence conclusively established that Peugh consented to the bank’s release of the company from the indebtedness, the verdict was properly directed. He contends that such is not the force of the evidence. We have examined it fully, and are convinced that it presented no issue on the question. It is undisputed that Peugh was a party to the settlement proposal; that he personally contributed a portion of the fund provided for that purpose; and that he took part in the negotiation with the bank’s cashier for the bank’s acceptance of the plan of settlement with respect to its claim. He was, one of the promoters, in other words, as the nndisputed proof shows, of the settlement that was made with the bank; was interested in its procurement ; and, as one of those proposing it to the bank, took part in the transaction in which it was effected.

It is urged that to avoid his release as a surety from the obligation of the note, as the legal consequence of the settlement, the burden was upon the plaintiffs to establish his affirmative consent to the release of the principal debtor; that, according to the proof, he merely remained silent at the time the bank’s cashier expressed his willingness to make the settlement, which, it is said, did not evidence his consent to the principal’s release, or, at least, presented an issue of fact as to whether he was concluded in his defense by estoppel, which was not pleaded. But we do not think the question is in that attitude. A main object of Peugh and the four creditors associated with him in the settlement plan, in executing the transaction with the bank, was to obtain the company’s release from any further liability for its debt. The settlement was to be made with the bank on no other basis. He participated in the transaction itself, plainly acting as one of the promoters of the plan. It is difficult to perceive how, under these circumstances, his position in the transaction could have been other than one of positive agreement to the company’s release from the debt. It was that which he and his associates sought to accomplish in the' transaction, and which they did accomplish. Necessarily, he consented to a result that he intended to bring about and helped to effect.

The judgment of the Court of Civil Appeals is affirmed. 
      (Ss^Kor other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes