Court Opinion

ID: 3466200
Source: CourtListenerOpinion
Date Created: 2016-07-05 20:31:27.100758+00
Date Added: 2024-06-11T14:01:52.098857
License: Public Domain

I agree with the majority opinion wherein it is held that the indorsers on the notes sued on have been released from liability for the failure to protest the notes and give notice of dishonor to the indorsers. I also agree with the majority opinion on the legal principle that plaintiff had a right to file the second supplemental petition and base its right to recover on the guaranty agreement signed by the indorsers on September 7, 1929, if that guaranty agreement is still in effect. But I respectfully disagree with the holding of the majority that this guaranty agreement is in force and effect.
By signing the guaranty agreement in favor of plaintiff on September 7, 1929, these indorsers, who were the guarantors in that agreement, obligated themselves to pay any past or future indebtedness that the motor company might owe plaintiff up to a fixed amount. On May 23, 1931, when the notes herein sued on were executed, *Page 147 
this agreement of guaranty was in full force and effect, and the guarantors in that agreement were liable to plaintiff for the balance then due it by the motor company on the account, which then amounted to some $1,393. The business relations between the plaintiff and the motor company had then been closed for some time, leaving the motor company still due this balance on its account with plaintiff. In order to close the account, the notes were executed by the motor company for the balance due plaintiff, and these notes were indorsed by the identical persons who then stood liable for the balance on the account under the guaranty agreement. These notes were paid down to the amount herein sued for. No account was claimed by plaintiff against the motor company after the execution of these notes, so far as the record shows.
Plaintiff filed a suit on the notes for the balance due thereon against the motor company and the indorsers on the notes, and said nothing in its original petition about the guaranty agreement. Although more than five years elapsed from the time the notes were signed and the account closed before suit was filed, nothing was ever said about the guaranty agreement, nor did plaintiff ever indicate that it considered the guaranty agreement still in force as security for the payment of the balance on these notes. It was not until the suit was filed and it developed that the indorsers on the notes might not be held liable because of the failure to give them timely notice of dishonor, that the old guaranty agreement was brought forward and made the basis of the plaintiff's claim against the indorsers instead of their liability as indorsers on the notes. Moreover, plaintiff has prosecuted its suit to judgment on the notes against the motor company and now has a final judgment against that company for the balance due on the notes, including interest and attorney's fees called for by the notes.
Obviously, the plaintiff cannot now claim that the balance of the account due it by the motor company was not merged into the notes, and the judgment now held by it against the motor company represents the only debt that company owes it. Therefore, if the indorsers-guarantors are liable to plaintiff, they are liable for the debt represented by the notes which they indorsed, and not for any balance due on open account. Yet we have the anomalous situation resulting from the judgment now rendered against the guarantors of holding them liable for a balance due on account, while the judgment against the motor company is for the balance due on the notes. The judgment against the motor company includes the balance on the notes, with interest and attorney's fees provided for in the notes, and now a judgment is rendered against the guarantors for the balance due on the account, with interest only at the legal rate and without attorney's fees. Surely, if the guarantors are liable at all, they are liable for the balance due on the notes, with interest and attorney's fees the same as the motor company for whom they are sought to be held as guarantors.
It is true that novation is never presumed. However, even though there is no express intention to substitute the new obligation for the old one, and thereby extinguish it, yet such a result may follow if the circumstances under which the new obligation was entered into and the conduct of the parties relative thereto indicate an intention on their part to discharge the old obligation and substitute the new one in its place. Nor would the fact that the old obligation was not returned by the creditor in itself necessarily indicate an intention to keep the old obligation alive, if all of the other facts and circumstances surrounding the taking of the new obligation leads to the irresistible conclusion that the parties intended to supersede the old obligation by the new one. Amoss v. Burleson,8 La.App. 359; White Company v. Hammond Stage Lines, 180 La. 962,158 So. 353.
After the notes were taken for the balance due on the account, there was no more occasion for the guaranty; as before stated, the relations of the parties had ceased for some time, and the account represented the only remaining matter between them that had resulted from their former dealings under the guaranty agreement. When the account was closed by the notes, plaintiff not only had the same persons as security on the notes as it had on the open account, but the debt was then definitely fixed in amount, with a specified date fixed for its payment, and with a higher rate of interest running against the debt than under the open account, as well as attorney's fees provided for in case of forced collection. If the old obligation of guaranty was intended to continue *Page 148 
in effect in so far as it affected the payment of the notes, it could serve no other purpose, and be viewed in no other light, than to guaranty the payment by the guarantors of their liability as indorsers on the notes, which, to say the least, would be a rather unusual situation. It is not to be presumed that the parties intended to create such an unusual and unreasonable situation.
My conclusion is that the trial judge correctly held that the plaintiff's claim must be determined on the notes alone, and as the indorsers were discharged by a failure to give the required notice of dishonor, they cannot be condemned in this suit for the balance due on the notes.
I therefore respectfully dissent.