Case Name: DARNELL v. DOLAN
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1910-11-24
Citations: 132 S.W. 857
Docket Number: 
Parties: DARNELL v. DOLAN.
Judges: 
Reporter: South Western Reporter
Volume: 132
Pages: 857–859

Head Matter:
DARNELL v. DOLAN.
(Court of Civil Appeals of Texas.
Nov. 24, 1910.
On Motion for Rehearing, Dec. 15, 1910.)
1.Guabanty (§ 20 ) — Misrepresentation of Third Person — Effect.
One guaranteeing payment of a note would not be relieved from liability because of misrepresentations made to him by a third person that another note of the same maker, maturing before the one guaranteed, had been paid, where the one making the representation was not authorized to act for, and did not assume to act for, the one to whom the guaranty was given.
[Ed. Note. — For other cases, see Guaranty, Dec. Dig. § 20. ]
2. Guaranty (§ 20 ) — Effect of Misrepresentations.
One guaranteeing payment of a note cannot avoid liability on the guaranty because of a false recital therein that another note by the same maker maturing before the one guaranteed had been paid, on the ground that the instrument containing the recital was written at the instance of the person to whom the guaranty was given and by his attorney, as, when the guaranty was given, the recital therein became that of the guarantor.
[Ed. Note. — For other cases, see Guaranty, Dec. Dig. § 20. ]
3. Guaranty (§ 62 ) — Discharge of Surety —Relinquishment of Lien by Creditor.
The rule that, if the creditor relinquishes a lien he has on property of the principal debtor to secure the debt, the guarantor is, to the extent of the value of the lien relinquished, discharged from liability, does not apply where the guarantor consents that the principal shall be relieved and that the security shall be relinquished, in which case the guarantor will not thereby become discharged of liability on his guaranty, and, where a guarantor acted with the person guaranteed in negotiations resulting in the release of a lien on the land for payment of the note secured and consented to-the arrangement, he was not thereby discharged from his guaranty. ■
[Ed. Note. — For other cases, see Guaranty, Cent. Dig. 72; Dec. Dig. § 62. ]
On Motion for Rehearing.
4. Contracts (§ 93 ) — Mutuality—Effect of Mutual Mistake.
The rule that, except in cases where the uncertainty of the existence of the thing is the essence of an agreement, a mutual mistake-of the parties as to the existence of the subject-matter of their contract will invalidate it, does not apply to mistakes as to a collateral material fact, and mere mistake in the inducement to-a contract is not operative, and a contract induced by reason thereof is enforceable.
[Ed. Note. — For other cases, see Contracts, Cent. Dig. §§ 415-419'; Dec. Dig. § 93. ]
Appeal from District Court, Tarrant County; Jas. W. Swayne, Judge.
Action, by John Dolan against John R. Darnell. Judgment for plaintiff, and defendant appeals.
Affirmed.
June 13, 1906, one Males executed and delivered to one Siebold his (said Males’) five-promissory notes, aggregating the sum of $3,000, and, to secure the payment thereof, at the same time executed and delivered a deed of trust on lot 9 of an addition to the city of Ft. Worth. One of the notes was for-$500, due six months after its date, and another was for a like sum, due one year after its date. November 2, 1906, Males sold and conveyed the lot to one Crites, who as a part of the purchase price thereof executed and delivered to Males his (Crites’) four promissory notes aggregating the sum of $2,500, and, in addition thereto, assumed and undertook to pay to the holder of the Sie- bold notes mentioned above tbe indebtedness of Males which they evidenced. To secure the payment of the notes so executed by Crites, a vendor’s lien was retained by Males on the lot, and the payment thereof was further secured by a deed in trust on the lot executed and delivered by Crites. Males afterwards sold the Crites notes to appellee Dolan, who was induced to purchase same in reliance upon a representation made to him by Males that the first of the two notes mentioned above as having been made to Siebold had been paid, and in reliance upon an undertaking in writing which Males induced appellant Darnell to enter into, whereby he, appellant, guaranteed the payment by Crites of the second of the two notes mentioned above as having been made by Males to Siebold. The guaranty - as executed by appellant was written by appellee’s attorney at appellee’s instance, and, when written, was handed to Males, who induced appellant to execute it. In the instrument was a - recital that the first mentioned of said two 'Siebold $500 notes had been paid. Before executing the instrument, appellant inquired of Males if the recital was a true one, and he was informed by Males that it was. As a matter of fact the note had not been paid, but was then held by Siebold, and was wholly unpaid. Siebold also held the other of said two $500 notes executed by Males, and, the notes having matured and Crites having become insolvent and having failed to pay same, he (Siebold) was threatening to foreclose the trust deed made to secure the two notes, when appellee, then holding the notes made by Crites to Males, which were a lien on the lot subject to the Siebold notes, to save expense of a foreclosure suit by Siebold and the loss which he expected would result to him (appellee) therefrom, paid to Siebold the amount due on the notes held by him. Just before he so paid same, appellee learned for the first time that the representation made to him by Males that the first one due of the two Siebold notes had been paid was untrue. After he had paid same and the other one which appellant had guaranteed Crites would pay, appellee demanded of appellant that he comply with his undertaking, and pay the note he had undertaken to pay if Crites did not pay same. Appellant refused to do so. By an arrangement between appellee and Crites, the latter conveyed the lot mortgaged as stated to secure the payment of the notes he had executed and the Siebold notes as well to appellee, who agreed to cancel the indebtedness against said Crites and relieve him from liability on account of same. Crites at that time was insolvent, and so was Males. The latter assisted ap-pellee in the negotiations with Crites resulting in the cancellation of the indebtedness against him (Crites) held by appellee and the conveyance to the latter of the lot. Appellee invited appellant to participate in the negotiations, and was advised by him that whatever Males might do in the matter would be all right with him. It seems that Males during the time of the transactions mentioned was a “builder and dealer in real estate, constructing houses thereon for sale, and purchased the material entering into their construction from the Darnell Lumber 'Company,” in which appellant was in some way interested. After the lot had been conveyed by Crites to appellee, the latter again made demand on appellant that he pay the note he had guaranteed that Crites would pay, and offered, if he would do so and repay to him (appellee) the balance in excess of said note, he had expended on account of the property to convey same to appellant. The proposition was declined -by appellant. Aft-erwards appellee sold and conveyed the property to one Matthew for its fair market value, realizing therefrom, he testified, about $800 less than he had paid out on account of same. As the result of a suit brought by him against appellant, he recovered a judgment against appellant for the sum of $694.-65, the amount of the principal, interest, and attorney’s fees stipulated for in the note the payment of which the latter had guaranteed.
Smith, Turner, Bradley & Powell, for appellant. Wray & Mayer, for appellee.
For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep’r Indexes

Opinion:
WILLSON, C. J.
(after stating the facts as above). Appellant insists that he was not liable on the guaranty sued on because he was induced to execute it in reliance on a representation made to him by Males that the one first maturing of the two Siebold $500 notes had been paid, when, in fact, it had not been paid. But it does not appear from anything in the record that in making the representation Males was authorized to act for, or even that he assumed to act for, appellee. Appellee's rights under the guaranty could not, it should he needless to say, be affected by a misrepresentation made by a person who was without authority to act for him in making it.
Appellant next insists that he was not liable because of a recital in the guaranty that said note had been paid. But the recital was his own, and certainly he should not be heard to complain that it was false. Evidently the insistence is made on the theory that the representation should be treated as having been made by appellee to appellant, because the instrument contdining it was written at appellee's instance by his attorney. We think it is plain that such a theory is not maintainable. Appellee was not willing to purchase the notes Males wished to sell to him unless the first of said two Siebold notes had been paid and the payment of the other one by Crites was guaranteed by some one acceptable to him. He was in the attitude of saying to Males: "If you will have Darnell to execute an instrument recited as a fact that the first of the two Siebold notes has been, as you assure me it has been, paid, and guaranteeing tie payment by Crites of tbe other of said notes, I will purchase the notes you propose to sell to me." Appellant did not have a right, because the instrument Males asked him to execute had been prepared by appellee, to treat the recital in question as a representation made by appellee to him to induce him to execute it. On the contrary, he should be held to have known that appellee's purpose in embodying the recital in the instrument was to have him (appellant) to vouch for the truth of the representation. The right to complain because the recital in question was untrue accrued to appellee, and not to appellant. 1 Brandt on Suretyship and -Guaranty, § 52,56.
The remaining contention is that appellant was not liable on the guaranty, because, in the negotiations resulting in the conveyance of the lot to appellee (then the holder of all the incumbrances existing on it) by Crites, the lien existing to secure the payment of the second as well as the others of said Sie-bold notes had been canceled, and Crites had been released by appellee from liability on account of his (Crites') undertaking to pay the same. It is true as a general rule that, if the principal debtor is released by the creditor, the guarantor (is thereby also discharged. It is also true as a general rule that, if the creditor relinquishes a lien he has on property of the principal debtor to secure the debt, the guarantor is to the extent of the value of the lien relinquished discharged from liability. 1 Brandt, § 164, 480. But it is also true that if the guarantor consents that the principal shall be released, and that the security shall be relinquished, he will not thereby become discharged of liability on his guaranty. 1 Brandt, § 165, 480, and note 12. The trial court found as facts that Males acted with appellee in the negotiations resulting in the release of Crites and the ex-tinguishment of the lien of the Siebold notes on the lot, and that appellant, when requested by appellee to advise with reference to same, replied that "whatever Males did was all right." In view of the judgment rendered, we think this finding should be construed as a finding that appellant consented to and acquiesced in the arrangement made with Crites.
"We are of the opinion that error in the judgment rendered has not been shown. Therefore it is affirmed.