Court Opinion

ID: 7172308
Source: CourtListenerOpinion
Date Created: 2022-07-24 16:27:43.045957+00
Date Added: 2024-06-11T16:15:46.503204
License: Public Domain

On Rehearing.
BAKER) J.
The plaintiff’s petition reads:
“(1) That R. R. Smith, a resident of Kansas City, Mo., and Nelson L. Barnes, a resident of the city of Chicago, but now temporarily in your said parish and state, are justly and legally indebted unto your petitioner in the full sum of $20,000, represented by six notes signed by the Tex-La-Homa Oil Corporation, less a credit of $273.65 of date February 13, 1920; all of said notes being dated at Tulsa, Okl., and due 90 days after their date and payable at the Union National Bank of Tulsa, Old., with 8 per cent, per annum interest thereon, and $500 additional if placed in the hands of an attorney for collection, the payment of which is guaranteed by the said R. R. Smith and Nelson L. Barnes.
“(2) Also in the additional sum of $30,000, represented by six notes each for the sum of $5,000, signed by the Tex-La-Homa Oil Corporation, dated March 12, 1920, due 90 days after date to their own order, with interest at 8 per cent, per annum from maturity, payable at the Commercial National Bank of Shreveport, La., with 10 per cent, additional attorney’s fees on the amount collected if placed in the hands of an attorney for collection, the payment of which notes were guaranteed by the said Smith and the said Barnes.
“(3) Also the additional sum of $25,000, represented by one note of the Tex-La-Homa Oil Corporation, dated February 18, 1920, due 60 days after date, less a credit of $6,000 on March 2, 1920, and a credit of $2,158.41 on April 15, 1920, with 8 per cent, per annum interest from maturity and 10 per cent, additional on said amount as attorney’s fees, the payment of which was duly guaranteed by the said Smith and Barnes by their indorsement and guaranty on the reverse thereof, but which note was duly protested at maturity.
“(4) That the said Smith is indebted unto it in the additional sum of $37,500, represented by a note dated January 28, 1920', and due March *24328, 1920, for the payment of which it holds 500 shares of the preferred stock, and 500 shares of the common stock, of said Tex-La-Homa Oil Corporation.
“(5) Tour petitioner further- shows that the said parties owe said amount to it in solido and that they have demanded payment of the same in vain.”
An exception of no cause of action was filed below, and was sustained. The grounds of this exception are not stated in the exception itself, but they are stated in the defendant’s brief as follows:
“In the first place, there is no allegation that the plaintiff in this case is the holder or owner in due course, or otherwise, of the notes referred to in plaintiff’s petition. There is nothing to even show that these notes were in the possession of the plaintiff company. They were not attached and made a part of the petition, nor were they filed with it.
“Moreover, the petition shows that these notes are payable at certain particular banks, yet there is no allegation that payment of the notes was demanded at these banks, all of which was a condition precedent to the right to proceed against these defendants. It is not alleged that these notes were presented for payment at the banks or that the Tex-La-Homa Oil Corporation did not have sufficient funds in such banks to pay the notes. And while the petition fails to show a cause of action, by reason of the fact that it contains no allegation that the plaintiff is the owner, holder, or possessor of these notes, it does show that the defendants did not sign these notes as makers, for it is alleged that the notes were signed by the Tex-La-Homa Oil Corporation and that the defendants guaranteed the payment; hence, if defendants were liable at all on these notes, it was in the capacity of indorsers only. * * *
“The petition having disclosed that defendants signed the notes as indorsers, it was absolutely necessary, in order to show a cause of action, to allege that defendants had notice of dishonor or nonpayment of the notes at their maturity, or that such notice was waived, and while it is true that under article 3 of the original petition in reference to one particular note, it is alleged that ‘the note was duly protested at its maturity,’ yet this conclusion of law amounts to nothing, and will be ignored in considering this petition, and, at any rate, such an allegation is not an averment of dishonor or notice of nonpayment to your defendant.”
[4] The objection that the petition contains no allegation of the plaintiff being the holder or the owner of the notes is fully met by the decision of this court in the case of Butler v. Stewart, 18 La. Ann. 554, where the court said:
“The defendant excepted that the plaintiff does not set out any cause of action in his petition in this, that he alleged that defendant is indebted unto him on a promissory note given to W. M. D. Cautkorn; but plaintiff does not aver that the note was delivered to him, or that he is the holder or owner of the same. Plaintiff avers that defendant is indebted unto him, but does not state how that indebtedness or liability accrued to plaintiff from defendant.
“These exceptions were overruled by the court. We are of opinion that the court decided correctly.
“The petition clearly states that the indebtedness of defendant, in favor of the plaintiff, is upon this note, which is sufficiently described to advise--the defendant of the cause of action. The statement that the defendant is indebted to the plaintiff on the note virtually and substantially carries with it the idea that plaintiff is the holder and owner of the note; for, if the plaintiff did not hold the note, the defendant would not and could not be indebted to him on that note.”
The objection as to abs.ence of the allegation of demand and of notice of protest is founded on the assumption that the defendants are being sued as indorsers, whereas in fact they are being sued as guarantors. For the distinction between the contract of guaranty and that of indorsement, see 20 Cyc. 1403. “An express contract of guaranty cannot, under any circumstances, be converted into a contract of indorsement.” Id. The notes, by the way, are in the transcript— they having been annexed to a supplemental petition that was filed in the ease — and they show that the defendants are guarantors, and not indorsers merely.
As to the supplemental petition, we reaffirm all that was said concerning it and the service of citation to it in the original opinion herein.
The judgment appealed from is therefore *245set aside, and the case is remanded for trial. Defendants to pay the costs of this appeal.