Court Opinion

ID: 9778540
Source: CourtListenerOpinion
Date Created: 2023-08-29 21:12:00.28281+00
Date Added: 2024-06-11T07:33:11.437532
License: Public Domain

Mr. Justice Smith,
joined by Justices Griffin and Wilson, dissenting.
I respectfully file this dissent to that portion of the majority opinion relative to the controversy between Mr. Chastain and the Whiteley-Phillips Drilling Company. Mr. Chastain made the contention that he had not entered into an oral contract with Whiteley-Phillips, but that in the event the court should find that such an oral agreement existed, then there was a novation thereof when Whiteley-Phillips executed the written contract with Mr. Humphrey Marshall. The burden of proof rested with Mr. Chastain to prove that Whiteley-Phillips accepted Mr. Marshall as a new debtor with the intent to release Mr. Chastain. While it is true that assent to, and acceptance of, the terms of novation ordinarily need not be shown by express words to that effect, but the same may be implied from the facts and circumstances attending the transaction and the conduct of the parties thereafter; nevertheless, the facts and circumstances must be such that the intention to work a novation may be clearly implied. 66 C. J. S., Novation Sec. 4a, p. 684. The *334trial court found as a fact that Mr. Chastain failed to discharge his burden, and, therefore, held that he was liable under the oral contract for all obligations which accrued up until October 28, 1948. The Court of Civil Appeals held, as a matter of law, that there was a novation and the majority opinion has affirmed such holding. In so holding, the majority has shifted the burden of proof. The question for us to determine is this: Has Mr. Chastain discharged his burden through competent evidence showing that it was the intention of Whiteley-Phillips to release him and accept Mr. Marshall’s contract in lieu of the original debtor, Mr. Chastain? To uphold the holding of the Court of Civil Appeals in this case we would necessarily be compelled to hold that, as a matter of law, there was no evidence of probative force supporting the findings of fact and judgment of the trial court that Mr. Chastain had failed to discharge his burden of proving a novation. At this point, I wish to set out out a summary of testimony of the witnesses, M. B. Chastain, respondent; Vernon Whiteley, an officer of Whiteley-Phillips; Ellison Miles, also an officer of Whiteley-Phillips; A. 0. Phillips, and officer of Whiteley-Phillips; W. E. Rembert, office manager for Mr. Chastain, and Bill Campbell, attorney for Mr. Marshall. This testimony is on the question of novation.
Mr. M. B. Chastain testified:
“On November 9, 1948, Ellison Miles presented the contract calling for my signature and that of Marshall. I had never agreed to be responsible for anything. All I had was an override. * * * I imagine they knew it. I told Mr. Miles I had nothing to do with drilling the well, that was Marshall’s well it wasn’t mine. I had just come back from a hunting trip and met Miles with Rembert in front of the building, I didn’t get out of the car. Miles asked me to sign. I told him it wasn’t my well, I didn’t feel that I should sign it, that was about all that was said. I wasn’t on any contract and there wasn’t anything said about me being released if Marshall signed. I didn’t feel I had an obligation. * * * Warren Wright was going to drill the well for Marshall and was to get an interest in the well. Marshall told me this. I told Marshall I would like to have 50c a foot to cover my expenses. I haven’t received anything for any of my work. The first time that I knew Whiteley-Phillips was contending I was mixed up in the contract was November 9, when Miles came to Shreveport and asked me to sign the contract. I told Miles all I had was a working interest in the well, free and clear in the well. I told him T don’t believe it is my place to sign it’. The next morning Mr. Miles called me and asked me if there *335was any use to come back. I told him no, it wasn’t my well. He didn’t comeback to my office. As well as I remember it has been two years ago. It was about October 26-27 when I learned that Warren Wright’s deal with Humphrey Marshall had broken down, I called Mr. Rembert and told him to advise Mr. Whiteley. I never said anything to Mr. Miles about guaranteeing Chastain.”
Vernon Whiteley testified as follows:
“The first time I heard about Warren Wright was from Chastain after Chastain had already ordered me to move on to the location. Chastain said he wanted to change the contract and make it out for Warren Wright at $6.50 per foot to him and give Chastain a letter agreeing to give the other 50c back to Chastain after the completion of the job. Nothing was said in this conversation with reference to releasing Chastain. I had nothing to do with drawing the contract. This was done by the main office. * * * Several days later Chastain called me again and said he would like to change the contract to Marshall. (Referring to the letter dated October 28). This was the time of the telephone conversation. Nothing was said in this conversation as to whether we were going to release Chastain. I have never told anyone we were going to release him. Prior to October 28, I had never heard anything about Marshall agreeing to pay the contract. This was the first time. * * * Chastain told me T would like for you to make the contract to Mr. Marshall’. I didn’t call the Atlanta bank about Marshall but I think Mr. Miles did. I cannot say exactly the date when Mr. Rembert called me. I didn’t have anything to do with making the written contract with Marshall. Chastain asked me to send the invoice to Marshall. It was first sent to Mr. Chastain. (Referring to a letter and invoice dated November 15,1948, addressed to Humphrey Marshall for certain charges). As well as I remember we sent a letter like that to Chastain. (Referring to a letter and invoice dated November 30, 1948, to Marshall for certain charges). I don’t think we sent an invoice like that to Chastain.”
Ellison Miles testified:
“On November 8, 1948, I went to Shreveport and met Chastain in front of his building as he came up in his car. He had notified us that he wanted a contract written up for Humphrey *336Marshall and he told me that he had made the deal with Marshall to pay him for the well. I told him I didn’t know anything about Marshall. We had agreed to drill the well for him, not Marshall. He said he would appreciate it if we would make this contract with Marshall since he had made this deal and he would guarantee the contract. He would see that Mr. Marshall was financially able to pay for the drilling of the well. He asked me on what terms we would accept Marshall and I told him the only way we would take over this contract would be to have the money in the bank in escrow. He said that he would see to it that Marshall put up the money in the bank to cover the drilling costs but this was never done. He told me that if I would go on back to Dallas he would get hold of Mr. Marshall and arrange for the money to be put in the bank and would contact me with regard to it. I didn’t hear any more from him and was unable to get him on the phone. He was a hard man to get on the phone. We continued drilling the well and since I was unable to ever contact Mr. Chastain again I got in touch with Bill Campbell, representing Marshall, about signing the contract. Campbell arranged for us to meet in our office to sign. At the time the contract was signed nothing was said about releasing Chastain. The accounts in our office were set up in the name of Humphrey Marshall because Chastain requested it. The request I refer to is my meeting Chastain on November 9, at Shreveport and in the letter of October 28, from Chastain. * * * Chastain told me on November 9, to make the contract with Marshall to cover the entire cost of drilling the well. He told me that he wasn’t responsible, that he had made a deal with Marshall. * * * I would say all the records on this well are charged to M. B. Chastain. The accounts attached to the lien are charged to Marshall at the request of Chastain. The lien does not show anything about Chastain. About Chastain owing the money, these accounts were originally mailed to Chastain and he returned them to our office and said we had billed" him in error. I cannot produce a copy of any letter where we sent copies of the invoices to him. We added Chastain’s name on the bills when we brought the suit. I made an investigation of Mr. Marshall’s finances by calling the bank at Atlanta. The banker told me he thought Marshall was financially able to handle the contract. I asked him to send me a financial statement on Marshall and he said he would but several days later said he was unable to furnish it. * * * The contract with Marshall was signed in our office in the presence of myself, Marshall and Bill Campbell. There is a notation at the top of the contract “All strikeouts of the name of M. B. Chastain are approved.” At the time this notation was made I *337said to Mr. Marshall that we were taking this contract from him at the request of Mr. Chastain but we did not in taking this contract relieve Mr. Chastain of his responsibility in carrying out his contract that he made with us on November 9. It was in September. Mr. Chastain refused to sign the contract but he did look at it.”
A. 0. Phillips testified:
“The only time I ever talked to Chastain was on the telephone about the Warren Wright deal. He said he had made a deal with Warren Wright to drill the well and would it be satisfactory for us to make the contract with Warren Wright. At this time drilling operations had already been commenced. He said that he had made this deal with Warren Wright for 50c a foot more than he had with us and asked me if it would be all right to cut the 50c back to him. I told him it would. After the conversation I had my office man draw the contract with Warren Wright and sent it to Mr. Chastain with a letter dated September 21. * * * I never heard any more about the Warren Wright contract and don’t know why Chastain didn’t get it signed. Concerning whether we would release Chastain my conversation with him was that ‘it would be satisfactory to take Warren Wright on the contract’. I told him it would be satisfactory to make the contract to Warren Wright. That is my best recollection of what we said.”
Mr. Rembert testified as follows:
“In September Whiteley and Miles came to Shreveport to talk about getting the contract to drill the well. Chastain told them that he had gotten the lease, had farmed it out to Marshall and that Marshall was making a deal with Warren Wright; that he believed he could £et the contract for Whiteley-Phillips, but he wanted 50c a foot as a commission. On October 27 I talked with Whiteley on the phone saying that Chastain had called me and asked me to call Whiteley, that Marshall had decided to drill the well himself and to fix the contract for his signature. Whiteley said that would be all right and to confirm the conversation with a letter to Dallas, * * * November 9, Miles came to Shreveport to Chastain’s office with a contract for Chastain to sign. I told him I didn’t believe he would sign it. We met Chastain in front of the building when he arrived and Miles asked him to sign the contract. Chastain told him it was not his contract, it was Marshall’s and he would not sign it. Chastain did not look at the contract. Chastain did not say he would guarantee *338Marshall’s contract. Up to October 27, neither Chastain nor myself ever put anyone from Whiteley-Phillips in contact with Humphrey Marshall. * * * On November 9, when Miles asked Chastain to sign the contract and he refused, nothing was said about releasing Chastain. * * * Nor was anything at all said about a previous contract having been made with Chastain.”
Bill Campbell testified:
“I was present when Marshall and Miles (for Whiteley-Phillips) signed the drilling contract. It was in Ardis Phillips’ office in Dallas. I remember the notation at the top of the contract that strikeouts were approved. Miles made the statement that they were striking this name (Chastain) out. I could have done the striking out myself, I don’t know, I don’t think I did. Miles said ‘we are still looking to Humphrey Marshall on this’ * * * I mean ‘we are still looking to Mr. Chastain on this’ at that time. * * * I am not going to say I didn’t make the strikeouts on there, I do know that Chastain’s name was stricken from the instrument. Humphrey Marshall had been on a trade with Warren Wright in early September, 1948. The abstract was delivered to my office with instructions to give them to Warren Wright’s attorney. * * * I am pretty positive I made a statement to them (Miles and Marshall at the time the contract was signed) about the possibility that all these strikeouts might be considered by some party as an alteration. I am sure that this notation at the top 'grew out of some suggestions of mine although it is not written in the language I would write it. I am sure that I suggested to Miles and Marshall that some notation ought to be made about the strikeouts, I am positive of that, it would be a natural attorney’s comment.”
The defense of novation is based on circumstantial evidence that Whiteley-Phillips impliedly intended to release Mr. Chastain. But, in my opinion, it only raises an inference, and does not meet the requirement that the intention to work a novation must be clearly implied. At most, the evidence presented an issue of fact, which the trier of the facts has determined against Mr. Chastain. Not only is it necessary to prove the creditor took a new debtor, but it must also be made to appear, in order to release the old debtor, that there was an agreement to look to the new debtor alone. The mere taking of a new debtor for the old debt would not, standing alone, be sufficient to show novation. Scott v. Atchison. 36 Texas 76, Id. 38 Texas 385; M. Gimble & Sons v. King, 43 Texas Civ. App. 188, 95 S.W. 7; Rushing v. Citizens National Bank, 162 S.W. 460, writ refused; Pierce*339Fordyce Oil Ass’n. v. Woods, Tex. Civ. App., 180 S.W. 1181, 1183, writ refused. At this juncture it might be well to analyze the testimony and see if it isn’t fair to say that reasonable minds can differ as to the effect of the evidence. Mr. Chastain admits that Whiteley-Phillips never, at any time, mentioned the matter of releasing him from his obligation under the contract. But he claims that the fact that Whiteley-Phillips was willing to accept Mr. Warren Wright is evidence that it intended to release Chastain when it entered into the contract with Mr. Marshall. The trial court said it was not. Mr. Wright entered into the picture at the instance of Mr. Chastain some time after the oral agreement and at a time when Whiteley-Phillips only knew of Mr. Chastain in the transaction. Whiteley-Phillips was willing to accept Mr. Wright because it knew that Mr. Wright was financially able to carry out the contract. Then, after Mr. Wright failed to enter into the contract, Mr. Chastain suggested Mr. Marshall. This was about October 28, 1948, and the witnesses testified that they had never heard of Mr. Marshall until this suggestion was made by Mr. Chastain. The trial court, no doubt, could understand why it was to the interest of Mr. Chastain to include Mr. Marshall as an additional debtor. Mr. Chastain had obtained a lease from the Murchisons, which contained a drilling clause that lessee was to begin operations within thirty days. On August 19, 1948, Mr. Chastain assigned this lease to Mr. Marshall, but the assignment was not placed of record until September 22, 1948, which was after Mr. Chastain entered into the oral agreement with Whiteley-Phillips to drill the well. AH negotiations were with Mr. Chastain until October 27, 1948 or October 28, 1948. Certainly, Mr. Chastain would have been in a much stronger position with Mr. Marshall. Under the evidence, Mr. Chastain, by virtue of his oral contract; was bound to meet his obligations, and it was not necessary for him to guarantee Mr. Marshall’s contract. Mr. Chastain made the offer to guarantee the Marshall contract on the theory that he had never entered into the contract, but the trial court found against him on that theory, and he now stands before this Court under full and complete obligation to comply with the terms of the contract unless he has clearly proved a novation. His letter dated October 28, 1948, states that “Mr. Humphrey Marshall has decided to pay for the cost of drilling the Murchison No. 1 well * * Now, isn’t it reasonable to conclude, as the trial court did, that no sane man would give up a certainty for an uncertainty? The testimony of Ellison Miles indicates clearly that he had no such intention when he testified as follows: “At that time he said — in the meantime he had notified us that he *340wanted this contract written up in the name of Humphrey Marshall. When I met him on November the 9th, I told him I had this contract, I wanted him to sign, he said, ‘I have made a deal with Humphrey Marshall to drill this well, and for him to pay for it’. I told Mm we didn’t know anytMng about Mm. We had agreed to drill this well for Mm and not Mr. Mar'shall. He said he would appreciate it if we would make this contract with Mr. Marshall since he had made this deal, and he would guarantee the contract.”
The trier of the facts is the judge of the credibility of the witnesses and the weight to be given their testimony. No doubt, the trial court considered the underlined testimony above to mean that Mr. Miles told Mr. Chastain that “we had agreed to drill the well with him and not Mr. Marshall.” Of course, if one wants to view the matter from a technical standpoint and say that the first italicized sentence has no relation to the italicized sentence immediately following you could say that Mr. Miles didn’t tell Mr. Chastain that he had agreed to drill the well for him and not Mr. Marshall. But, in view of the trial court’s findings and judgment, we must say that the court con-concluded from this and other evidence that Whiteley-Phillips was still looking to Mr. Chastain to pay his obligations under the oral contract.
The respondent, Mr. Chastain, further contends that the fact that his name was stricken from the contract is conclusive evidence of a novation. He contends that this is true for the reason that the notation at the top of the contract “all strikeouts of the name of M. B. Chastain are approved.” Now, are we going to follow this contention, or follow the evidence, which definitely and clearly explained this notation? Mr. Campbell testified “I am pretty positive I made a statement to them (Miles and Marshall at the time the contract was signed) about the possibility that all these strikeouts might be considered by some party as an alteration”.
The majority refers to certain evidentiary excerpts and says they offer, on their face, strong support for the conclusion reached by the Court of Civil Appeals. What the Court of Civil Appeals concludes in regard to the facts is not the test. The trial court had the sole right to weigh the evidence. It had the right to say, and reasonably so, that from all the facts and circumstances in this case, the taking of additional security from Mr. Marshall did not show a novation as a matter of law. The *341taking of collateral security or promise from a debtor or a stranger does not effect a novation, inasmuch as one may accept money or performance of a contract from a third party without releasing the original obligor. The fact that the new party is also liable, whether jointly or collaterally, to the creditor does not operate as a novation, since the mere addition of a party is not a substitution. See 66 C. J. S. Novation Section 2, 682; McCartney v. Kipp, 171 Pa. 644, 33 Atl. 233. This Court should never set aside findings of fact by the trial court merely because the court could have drawn different inferences or conclusions. The trial court has considered all the facts admitted in evidence, and has selected that which it considered most reasonable. Burlington-Rock Island Ry. Co. v. Ellison, 140 Texas 353, 167 S.W. 2d 723; Lockley v. Page, 142 Texas 594, 180 S.W. 2d 616.
Reverting now to the contention of respondent, Mr. Chastain, with reference to the effect of the notation “all strikeouts of the name of M. B. Chastain approved”, Mr. Campbell testified that this notation was put at the top of the instrument to avoid the possibility that some party would think the contract had been altered. He also testified that at- the time this notation was being made, he heard Mr. Miles tell Mr. Marshall that “we are still looking to Mr. Chastain on this.” At the time this last quoted testimony was offered, the respondent, Mr. Chastain, objected to the introduction thereof “for the reason that it was not made in the presence of M. B. Chastain and would not be binding on him in any manner”. The objection was overruled, and thereupon, Mr. Winn, an attorney for Mason Bland, further objected to the question and answer and asked that the answer be stricken “because any statement made by Ellison Miles would be a self-serving declaration * * *”. This objection was overruled. I think there was sufficient evidence in the record, aside from this testimony, to support the findings of the trial court. However, in my opinion, this testimony was admissible on the vital issue of the intention of Mr. Miles at the time the name of Mr. Chastain was stricken from the contract and the notation made. When question of intent is an issue, declarations may be relevant evidence, and when acts are admitted in evidence, declarations accompanying such acts and explanatory of them are always admissible. Southland Life Ins. Co. v. Greenwade, Tex. Civ. App., 143 S.W. 2d 648, writ granted; affirmed, 138 Texas 450, 159 S.W. 2d 854; O’Fiel v. Janes, Tex. Civ. App., 269 S.W. 1074; affirmed, Texas Com. App., 280 S.W. 163; Prater v. Traders & General Ins. Co., Tex. Civ. App., 83 S.W. 2d 1038; Whit-low v. Durst, 20 Cal. 2d 523, 127 Pac. 2d 530; Ayoob v. Ayoob, *34274 Cal. App. 2d 236, 168 Pac. 2d 462; Commonwealth v. Trefethen, 157 Mass. 180, 31 N.E. 961, 24 L.R.A. 235; Mutual Life Ins. Co. v. Hillman, 145 U.S. 285, 12 Sup. Ct. 909, 36 L. Ed. 706; 31 C. J. S. Evidence Section 256, 1007, 1008.
In this case, Whiteley-Phillips has made the contention throughout that it never, at any time, had any intention of releasing Mr. Chastain. Ellison Miles had so told Mr. Chastain just prior to meeting with Mr. Marshall and his attorney, Mr. Campbell. The evidence that he made the same statement to Mr. Marshall was admissible. As stated by the court in the case of Mutual Life Ins. Co. v. Hillman, supra: “The existence of a particular intention in a certain person at a certain time being a material fact to be proved, evidence that he expressed that intention at that time is as direct evidence of the fact as his own testimony that he then had that intenion would be.” In this same case, the court, in discussing the admissibility of letters written by a party expressing his inteniton to make a journey, said: “A man’s state of mind or feeling can only be manifested to others by countenance, attitude, or gesture, or by sounds or words, spoken or written. The nature of the fact to be proved is the same, and the evidence of its proper tokens is equally competent to prove it, whether expressed by aspect or conduct, by voice or pen. When intention to be proved is important only as qualifying an act, its connection with that act must be shown, in order to warrant the admission of declarations of the intention. But whenever the intention is of itself a distinct and material fact in a chain of circumstances it may be proved by contemporaneous oral or written declarations of the party.” This case, as well as the case of Commonwealth v. Trefethen, supra, was quoted with approval in the case of Traders & General Ins. Co., supra, and this last mentioned case was cited as authority for the holding in the case of Southland Life Ins. Co. v. Greenwade, supra.
For the reasons stated, the judgment of the Court of Civil Appeals that Whiteley-Phillips Drilling Company take nothing as against M. B. Chastain should be reversed, and the judgment of the trial court affirmed.
I agree with the opinion of the majority as to the claims of respondents, Cooper and Reed and National Supply Company against the petitioner, M. B. Chastain.
Associate Justices Griffin and Wilson join in this dissent.
Opinion delivered April 1, 1953.