Court Opinion

ID: 9829055
Source: CourtListenerOpinion
Date Created: 2023-09-01 18:57:13.59+00
Date Added: 2024-06-11T07:42:56.828694
License: Public Domain

On Motion for Rehearing.
The earnestness of counsel for appellee, as well as the ability and research which they have put forth upon the motion for rehearing, has induced us to again go over the case carefully and to examine the authorities cited in the motion. In citing Greenwall v. Markowitz, 97 Tex. 479, 79 S. W. 1069, 65 L. R. A. 302, in the original opinion, we did not do so on the measure of damages, but as to the rights and remedies of the parties, when the contract is breached by one. The case of Mudgett v. Texas Tobacco Growing Co., 61 S. W. 149, cited by appellee, illustrates the principle involved. Judge Gill there said: “Conceding,- however, the correctness of his contention that he was wrongfully discharged, what right accrued to appellant, and whaf was his remedy? Clearly, not a suit upon the contract; for-that had been breached, and his remedy was either an action for damages for its breach, or to treat the contract as rescinded and sue for his wages already earned and due. The action for the breach of contract is not for wages, but for damages. The policy and purpose of the law in such a case is to compensate the servant for the damages suffered as a proximate result of the breach.” This is not a suit on the contract ; neither is it one treating the contract as rescinded and a suit to recover the money paid in the purchase of the bank; but it is simply a suit for damages occasioned by a breach- — compensation for the damages suffered as the result of the breach. What contract is breached? A guaranty of the col-lectibility of the indebtedness. What will compensate appellee for this loss? A payment of such indebtedness as is noncollectible. What facts must appellee allege and prove, showing damage and measure the compensation? The indebtedness not collected and that which cannot be. We certainly understand the rule to be that the burden is on the plaintiff in the first instance to allege and prove the breach, the injury, and the amount necessary to compensate him.
The ease of Johnston v. Mills, 25 Tex. 704, cited by appellee, is one in which Johnston and Dewberry occupied the position of Young or the old bank, and R. D. and D. G. Mills occupied the position of Martin or the new bank, with reference to the contract. It should also be borne in mind that was a suit on the contract — not for damages for its breach. Johnston and Dewberry bound themselves ultimately to pay certain indebtedness. Judge Roberts said in that case: “Johnston and Dewberry in effect guaranty the note to be good, and that it can be collected so as to complete the extinguishment of their debt to R. and D. G. Mills. Such a guaranty imposes on R. and D. G. Mills the duty to use reasonable diligence in the collection, by due process of law, in- its ordinary and regular .course, in the absence of any stipulation to the contrary.” In that case R. and D. G. Mills reduced to judgment the debt guaranteed and by agreement granted a stay of execution. The court, in that case, further discussing it, said: “It was incumbent on R. and D. G. Mills, in order to recover, to show they had not collected the money on this note, and having shown that, in the steps taken by them, they- had departed from the regular *443•course of tlie law by giving' a stay to Oox, that imposed upon them the burden of showing that their failure to collect was not in whole or in part caused by the stay which they gave.”
The contract by appellants in this case was that they guaranteed 19/20 of the indebted-mess so transferred; “that is, in case of failure to collect said notes as hereinafter indi•cated.” The fifth clause of the contract follows the above stipulation, and is headed “Collection of Guaranteed Notes — How to be Made.” They must be collected by the ap-pellees Martin and his associates. Demand is to be made immediately upon same becoming •due. If not promptly paid, placed in the hands of an attorney for collection by suit. Young and his associates reserving the right to designate the attorney. The suit was to be •pressed to judgment, and when obtained execution to be issued, and, if the money could not be made by execution, then appellants were to pay the same upon the transfer of the judgment to them. If this was a suit on the contract to enforce it according to its terms, as was' in Johnston v. Mills, supra, then appellees, before they could recover, •would have to show that they had not collected the indebtedness and had taken all the steps which the contract stipulated they •should, and that they were ready to transfer the judgment after a failure to collect on •execution. This contract only stipulated what the law required of appellees without the contract. In Texas City Improvement Co. v. Griswold, 41 S. W. 513, the court said: “The question is whether or not appellant, having guaranteed collection of notes, and not their payment, was subject to suit until a failure to collect from the principals by legal proceedings. As stated before, we have no doubt that if it was alleged and proved that the notes were, for some cause, uncob lectible, resort could be had on appellant, and the same would be the case, where the uncol-lectibility of the notes from the maker is demonstrated by judgment and return of nulla •bona.” If this had been a suit on the contract instead of for damages occasioned by its breach, the burden would have been on ap-pellees to show the notes had not been collected and were not collectible after prosecuting to execution and by failure to collect under execution. If, after a return nulla bona, appellants failed to pay, then they could be sued on the guaranty for the sum so due under the terms of the contract.
Under the breach of a contract upon sale •of property, if the warranty is breached, or the thing sold is not as represented, the party aggrieved has two remedies: He may rescind and recover the price paid, or he may rétain the thing sold and recover the difference between its value and the agreed price. If it should prove absolutely worthless, the measure of his damages would be the price paid and such additional special damages as may have resulted therefrom.
The appellees cite a line of authorities holding that, when the plaintiff alleges and proves damages resulting from the breach of a contract or from a wrong, then the burden is on the defendant to show that the plaintiff could: have mitigated or lessened the damages .by the exercise of ordinary care or diligence. This rule is not denied or controverted; but we think it will be hard to find a case where plaintiff’s cause of action, whether ex con-tractu or ex delicto, is made out by simply showing a breach or wrong without showing any injury or damage. Appellees assert simply that appellants must affirmatively prove the negative of the proposition in order to escape liability. The affirmative proposition resting on appellees was that appellants executed a guaranty that the indebtedness could be collected, and that they denied liability, and therefore breached the contract. That this action damaged them. If the indebtedness was paid, they were not damaged. This ap-pellees knew better than appellants, for they had the paper. If not paid, if they could collect, no damage would result under the guaranty of the collection. If not collectible, they should allege and prove that fact in order to show the damages. If it became noncollectible, because of negligence or the want of ordinary care on thie part of appellees, then the burden would shift to appellants to show such want of diligence or care. The case of Foster County State Bank v. Hester, 18 N. D. 135, 119 N. W. 1044, cited by appellees, we think sustains our view. Other cases by ap-pellees, we think, can be easily distinguished, either' on the facts proven or the contract upon which same is based. We believe the proper measure of damages was stated by us in the original opinion. Brightman v. Reeves, 21 Tex. 70. The case, in our opinion, was properly reversed on the grounds stated in the opinion.
The motion for rehearing is overruled.