Court Opinion

ID: 5028554
Source: CourtListenerOpinion
Date Created: 2021-10-01 05:10:54.447603+00
Date Added: 2024-06-11T08:18:03.885648
License: Public Domain

HUGHES, Justice
(concurring).
In 1849, when Ritter v. Hamilton, 4 Tex. 325, was decided, the only statutes relating to sureties were embraced in an Act of the First Legislature of the State of Texas, 1846, entitled, “An Act to Regulate Proceedings in the District Courts,”1 which are:
“INSTITUTION OF SUITS '
* * * * * *
“Sec. 4. * * * Be it further enacted, That no person shall be sued as endorser, as guarantor, or as security, unless suit shall have been, or is simultaneously commenced against the principal, except in cases where the principal resides beyond the limits of the State, or in a county that is not organized, or where he is insolvent.”
“PLEADINGS.
% Hs * * * *
“Sec. 45. * * * (relating to discontinuances) Provided, that this section shall not be so construed as to allow a plaintiff to discontinue, as to the principal, and take judgment against the endorser or surety [who is] jointly sued.
“Sec. 46. The principal and the endorser, or surety upon any instrument in writing, may be joined in the same suit, but no judgment in any such suit, shall be rendered against the endorser or surety, unless judgment is at the same time rendered against the principal, except where the plaintiff discontinues, as to the principal, because he resides beyond the limits of the State, or because he is insolvent, in which cases he may discontinue and take judgment.”
In 1858, and subsequent to the decision-in any Supreme Court case following Ritter v. Hamilton, 4 Tex. 325,2 the Legislature (7th) passed an Act further regulating proceedings in District Courts in which the following sections appear:
“Sec. 14. Any person bound as surety upon any contract for the payment of money, or the performance of any act otherwise than by a bill of exchange or promissory note assignable or negociable by law, when the right of action has accrued, may require, by notice in writing, the creditor or obligee forth*503with to institute a suit upon the contract.
“Sec. IS. If the creditor or obligee, not being under legal disability, shall fail to bring his suit to the first term of the Court thereafter, or to the second term, showing good cause why he did not bring it to the first term, and prosecute the same to judgment and execution, the surety giving such notice, shall be discharged from all liability thereon.
- “Sec. 16. When any suit is brought against two or more defendants upon any contract, any one or more of the defendants being surety for the others, the surety may, upon a written statement of the matter being set out in his or her answer, cause the question of suretyship to be tried and determined upon the issue made for the parties defendant at the trial of the cause or at any time before or after the trial, or at a subsequent term; but such proceedings shall not delay the suit of the plaintiff.
“Sec. 17. If the finding of such issue be in favor of the surety, the court shall make an order directing the Sheriff to levy the execution first upon the property of the principal, subject to execution, and situate in the county in which the judgment is rendered, before a levy shall be made upon the property of the surety; provided, so much property of the principal can be found, as will in the opinion of the Sheriff, be sufficient to make the amount of the Execution, otherwise the levy to be made on so much property of the principal as may be found, if any, and upon so much of the property of the surety as may be necessary to make the amount of the Execution; and the Clerk shall endorse a memorandum of the order of the Execution.
“Sec. 18. When any person being surety in any undertaking whatever, shall be compelled to pay any judgment, or any part thereof, or shall make any payment which is applied upon such judgment, by reason of such suretyship, or when any Sheriff or other officer, shall be compelled to pay any judgment or any part thereof, by reason of any default of such officer, except for failing to pay over any money collected, or for wasting property levied on, the judgment shall not be discharged by such payment, but shall remain in force for the use of the surety, officer, or other person making such payment; and after the judgment creditor is paid, so much of the judgment as remains undischarged, but having been paid by such surety, officer or other person, may be prosecuted to execution for the use of such surety, officer or other person.
“Sec. 19. Any one of several sureties, having paid and satisfied the judgment creditor, shall have the remedy provided" in the preceding Section, against the 'co-sureties, to collect of them the ratable proportion each is equitably bound to pay.
“Sec. 20. The remedy provided for sureties by this act, extends to endorsers, guarantors, drawers of bills which have been accepted, and every other suretyship, whether created by express contract or by the operation of law.”
As authorized and directed by the Constitution of .1876, the Legislature in 1879 adopted and, established the “Revised Civil Statutes of the State of Texas.”
This statutory revision contained chapters relating to Practice in the District and other Courts which' included these Articles:
“Art. 1207. The acceptor of any bill of exchange, or any other principal obligor in any contract, may be sued either alone or jointly with any other party who may be liable thereon; but no judgment shall be rendered against such other party not primarily liable on such bill or other contract, unless judgment shall have been previously, or shall be *504at the same time, rendered against such acceptor or other principal obligor, except where the plaintiff may discontinue his suit against such principal obligor as hereinafter provided:
“Art. 1208. The assignor, indorser, guarantor and surety upon any contract, and the drawer of any bill which has been accepted, may be sued without the necessity of previously or at the same time suing the maker, acceptor or other principal obligor, when he resides beyond the limits of the state, or in such part of the same that he can not be reached by the ordinary process of law, or when his residence is unknown and can not be ascertained by the use of reasonable diligence, or when he is dead, or actually or notoriously insolvent.”
Laws relating to the rights of sureties were placed in “Title LXXV, PRINCIPAL and SURETY.” They read:
“ART. 3660. Any person bound as surety upon any contract for the payment of money or the performance of any r.ct when the right of action has accrued, may require, by notice in writing, the creditor or obligee forthwith to institute suit upon such contract.3
“ART. 3661. If the creditor or ob-ligee, not being under legal disability, shall fail to bring his suit to the first term of the court thereafter, or to the second term, showing good cause why he did not bring it to the first term and prosecute the same to judgment and execution, the surety giving such notice shall be discharged from all liability thereon.
“ART. 3662. When any suit is brought against two or more defendants upon any contract, any one or more of the defendants being surety for the others, the surety may, upon a written statement of the matter being set out in his answer, cause the question of suretyship to be tried and determined upon the issue made for the parties -defendant at the trial of the cause or at any time before or after -the trial, or at a subsequent term; ■ but such proceedings shall not delay the suit of the plaintiff.
“ART. 3663. If the finding of such issue be in favor of the surety the court shall make an order directing the sheriff to levy the execution first upon the property of the principal subject to. execution, and situate in the county in. which the judgment was rendered, before a levy shall be made upon the property of the surety, if so much property of the principal can be found as will in the opinion of the sheriff be sufficient, to make the amount of the execution; otherwise the levy to be made on so. much property of the principal as may be found, if any, and upon so much of the property of the surety as may be necessary to make the amount of the execution; and the clerk shall make a memorandum of such order on the execution.
“ART. 3664. When any person, being surety in any undertaking whatever, shall be compelled to pay any judgment, or any part thereof, or shall make any payment which is applied upon such judgment by reason of such suretyship, the said judgment shall not be discharged by such payment, but shall remain in force for the use of such surety, and shall be considered as assigned to such surety, together with all the rights of the creditor thereunder, to the extent of the payment thereon made by such surety, and interest thereon;' and such surety shall be entitled to have execution thereon in the name of the creditor for the use of such surety against'the principal debtor for the full amount of such payment and interest thereon and *505all -costs, , which execution shall be issued upon the application of such surety .to the clerk, or court, as the case may be, and shall be levied, collected and returned as in other cases.
-“ART. 3665. Should there be more than one surety, and one or more of them has failed to pay his proportionate part of the judgment, execution may issue, as provided in the preceding article, against the principal for the use of the surety who has paid more than his proportionate part for the whole amount paid by him and interest thereon, and also against his co-sureties for their proportionate part of the excess so paid by him, and interest thereon.
“ART. 3666. If a sheriff or other officer shall be compelled to pay any judgment, or any part thereof, by reason of any default of such officer, except for failing to pay over any money collected, or for wasting property levied on, such sheriff or other officer shall be entitled to have execution therefor against the principal defendant in such judgment as provided in the case of a surety.
“ART. 3667. No surety shall be sued unless his principal is joined with him, or unless a judgment has previously been rendered against his principal, except in the cases provided for in article 1208.
“ART. 3668. The remedy provided for sureties by this title extends to indorsers, guarantors, drawers of bills which have been accepted, and every other suretyship, whether created by express contract or by the operation of law.”
Art. 2284, R.C.S., 1879, under the Title Execution, provided for levy of execution first to be made on the property of the principal.
The next codification of the Civil Statutes of Texas was in 1895. These statutes followed the same pattern in regulating the rights of sureties as established in.the Revised Civil Statutes of 1879. See Arts. 1203 and 1204, Ch. 5, Parties to Suits, R.C.S., 1895 and Title LXXXIV, PRINCIPAL and SURETY, Arts. 3811-3819 and Art. 2341, R.C.S., 1895. Similar treatment of the subject was accorded in the Revised Civil Statutes of-1911. See Arts. 1842-3, Ch. 5, Parties to Suits, and Title 109, Principal and Surety, Arts. 6329-6337 and Art. 3732, R.C. S., 1911. The same is true of the statutory revision of 1925. See Arts. 1986-7, Title 42, Sec. 3, Parties to Suits, and Title 110, Principal and Surety, Arts. 6244-52, R.C.S., 1925. See also Arts. 2088 and 3786, R.C.S., 1925, respectively, regulating discontinuance as to principal obligor and levy of execution against property of surety.
The only changes made in these statutes since the 1925 recodification were that the substance of repealed Art. 6246 is now incorporated in Rule 32, T.R.C.P. and, similarly the substance Art. 6251 is now incorporated in Rule 31, id.
The Supreme Court in reversing our decision herein erroneously stated that our failure to follow Ritter v. Hamilton was because it had not been cited in recent years. What we said was that its force had been dispelled in the “light of subsequent legislation and judicial decisions.” 363 S.W.2d 485.
Arts. 6244 and 6245, V.A.C.S., provide that a surety may require the obligee to institute suit against a principal and if not done the surety shall be discharged from liability. Under Buck v. Reed, the obligee upon receiving such request from the surety could, with impunity, reply, “Although I know full well that you are surety on the obligation which I hold, since you did not put ‘surety’ beneath your signature, I do not have to sue your principal. I will wait [limitations considered] until the wastrel (principal) has become insolvent and then I will sue you.”
It will not do to say that the rights afforded a surety by these articles are not available to .sureties who do. not sign as *506sureties. It has been held that they are so available. Sullivan v. Dwyer, 42 S.W. 355, San Antonio Civil Appeals, Georges v. Fricke, 283 S.W. 221, Austin Civil Appeals, writ reí.
In our previous opinion we cited and quoted from First Nat’l. Bank v. Alexander, Tex.Civ.App., 4 S.W.2d 298, to the effect a surety may avail himself of the, protection which the law affords a surety where the creditor has knowledge of such relationship even though the suretyship doqs not-appear on the face of the written obligation. This quotation was copied approvingly in-Stetson v. First National Bank of Cleveland, Tex.Civ.App., 44 S.W.2d 792, also cited by us previously, in which a writ of error was refused by the Supreme Court. Neither of these cases was referred to by the Supreme Court in reversing our decision herein.
The effect of the refusal of a writ of error in the Cleveland Bank Case (1931) was to make its language the language of the Supreme Court. The result is that the Supreme Court has stated that the protection which the law gives a surety is available under the circumstances here. Certainly it cannot be denied that one of the protective enactments is contained in Rule 31, T.R.C.P.
Since this Rule is not quoted by the Supreme Court, I quote it:
“Rule 31. Surety Not To Be Sued Alone
“No surety shall be sued unless his principal is joined with him, or unless a judgment has previously been rendered against his principal, except in cases otherwise provided for in the law and these rules.”
In fact this Rule, which we held was not properly observed, is cited only once in the opinion of the Supreme Court. I quote the whole paragraph in which the Court cites Rule 31 :
“We hold that when a party signs a note in the capacity of a maker, the payee (or one standing in the shoes of a payee) may sue such'ma'ker singly and proceed to judgment upon the note without joining in the suit another or others who may also appear upon the note as co-makers. If in truth and in fact one of the co-makers stands in the relationship of a surety jra another comaker, the burden evolves upon the one claiming a surety’s rights to- set up those rights by proper pleading and bring into the suit such other parties as may be required to afford him appropriate relief. Rules 30, 31 and 32, Texas Rules of Civil Procedure. We do not have before us a case in which a party defendant signed a negotiable instrument which shows upon its face that he signed in some other capacity than that of a maker.”
Rules 30 and 32, which the Court -did not quote or give their substance,-provider- -
“Rule 30. Parties To Suits
“Assignors, indorsers and other parties not primarily liable upon any instruments named in the title of the Revised Civil Statutes of Texas, 1925, dealing with Bills and Notes, may be jointly sued with their principal obli-gors, or may be sued alone in the cases provided for in Articles 1986 and 1987 of such statutes.
“Rule 32. May Have Question of Suretyship Tried
“When any suit is brought against two or more defendants upon any contract, any one or more of the defendants being surety for the other, the surety may cause the question of surety-ship to be tried and determined upon the issue made for the parties defendant at the trial of the cause, or at any time before or after the trial or at a subsequent term. Such proceedings shall not delay the suit of the plaintiff.”
I have read and re-read these three Rules and I simply cannot find any language in them which supports the Court’s holding that they require a surety to bring in his *507principal under the circumstances present here. In fact, I cannot find anything in these Rules which supports any holding of the Supreme Court in the paragraph in its opinion citing such Rules.
Rule 30 authorizes suits against parties primarily and secondarily liable jointly, but it clearly restricts suits against those secondarily liable alone to the exceptions contained in Arts. 1986 and 1987, R.C.S., 1925.
Comment on Rule 31, in this regard, would be superfluous.
Rule 32 applies, by its lucid language, only to suits against “two or more defendants.” This suit was against a single defendant, the surety.
The Supreme Court does not say that Rule 31 is vague, ambiguous or for any reason invalid. In Rudman v. Railroad Commission, 162 Tex. 579, 349 S.W.2d 717, we were reminded that,
“ ‘Courts must take statutes as they find them.’ ”
The application of this mandate requires obedience to Rule 31 with the result that a surety would be accorded his lawful rights. The Courts have frequently referred to a surety as a favorite of the law, and that a surety’s liability is strictissimi juris. 39 Tex.Jur. p. 918. This is “a rule of substantive law relating to the nature of the surety’s liability and his special defenses.” Houston Fire and Casualty Ins. Co. v. E. E. Cloer Gen. Con., 217 F.2d 906, Fifth Cir.
In First National Bank of Victoria v. Skidmore, 30 S.W. 564 [1895], Galveston Civ.App., opinion by Williams, J., it was held that when it is known to the payee of a note that the relation of principal and surety exists between the makers of the note, although such relationship is not shown by the note, that an agreement, without the consent of the surety, not to sue the principal for a definite time, will release the surety.
In Shapleigh Hardware Co. v. Wells & Chestnutt, 90 Tex. 110, 37 S.W. 411, (1896), the Court denied application of the rule stated in the preceding case to a situation where the parties obligated subsequently agreed between themselves, without the consent of the obligee, that one should be surety for the other.. The Court, Judge Brown writing, in discussing the question states:
“In the case of Smith v. Shelden, Chief Justice Cooley undertakes to reason to the conclusion that such agreement would have the effect to change the contract without the consent of the creditor. He first lays down the correct rule that, as between themselves, the retiring partner became a surety for the other partner. Also another proposition to the effect that, if a contract be made by two or more persons as joint obligors therein, but it does not appear from the face of the writing that one of them is surety for the others, and if it be not known to the obligee in the contract that such is the case, then all the obligors will be regarded as principals in so far as it affects the obligee until the fact of suretyship is made known to him, after which he must observe the rights of the surety in his dealing with the principal in the contract. The learned judge then proceeds to reason that because, under such circumstances, the fact of suretyship being made know to the creditor imposed upon him the obligation to treat the surety as such from the time the information is received, it follows that the principal obligors in a contract may, by agreement between themselves, change the obligation of one or more from that of principal debtor to that of surety, and upon notice of such agreement to the obligee the same effect will be given as if the suretyship originated in the contract itself. This is evidently unsound reasoning. In the first case stated the contract was made by the party as a surety, but he was deprived of the protection given to a surety by the law, because the payee was an innocent holder of it for value without notice of his *508rights as surety, and, upon notice being: given, the character of the creditor as' innocent holder ceased, and the terms-' of the contract became operative and • in full effect as to all the parties; * * ;
The doctrine asserted as to the rights of the surety, who contracted as such,' after the suretyship was made known to the holder of the contract, is equitable in itself, and consistent with sound legal principles', * * *” (Italics added.)
I am unable to distinguish, in principle, the enforcement of the surety’s rights in cases where his relation to his principal is learned by the obligee after the execution -of the contract from this case where it was known from the inception of the transaction.
Attention is also directed to present Article 6252, copied above as Art. 3668, R.C.S. 1879, not noticed in Reed and not in existence when Ritter was decided. 'This article extends the “remedy provided for sureties” to “every other suretyship.” The preceding article, present Rule 31, provided that no surety shall be sued unless his principal is joined with him. Certainly the language of Art. 6252, R.C.S.1925, is broad enough to include the present express but unwritten suretyship. If so, then this statute alone should suffice for the purpose of holding that Ritter has been legislated away.
The Court in Reed cites and quotes from cases from California and .Wisconsin to sustain its decision. This is indeed strange. The Courts of those -states are in conflict with the decision of the Supreme Court of Texas in Howth cited in Reed by this Court and the Supreme Court regarding the effect of the Uniform Negotiable Instruments Act, Art. 5933, V.A.T.S., upon the rights of undisclosed sureties on negotiable instruments. See 11 C.J.S. Bills and Notes § 752 b, p. 321; Mortgage Guarantee Co. v. Chotiner, 8 Cal.2d 110, 64 P.2d 138, 108 A.L.R. 1080, S.Ct. of California.
The opinion in the California case contains a thorough and exhaustive discussion of this question and it reluctantly follows the'majority rule in holding that the U.N.I, A. supersedes the general law of surety-ship in determining rights and liabilities- ■ under negotiable instruments. Texas does not follow the majority rule as Howth discloses. ■ By statutes, rules and Court decisions, Ritter and Buck to the contrary, the-rights and remedies of sureties in Texas have been preserved to them even as to negotiable instruments when the obligee was-not a holder in due course.
I commend the opinion in Chotiner and’ the authorities there cited to those who may be interested in a now academic' study of the plainly given right of a surety to insist, that his principal be joined with him when: sued unless excused in accordance with law.
The Supreme Court in Brick regarded the question presented as “being one of procedure relating to necessary parties” and ' not one “of a plea in bar — an extension of payment which was not consented to by the obligor secondarily liable upon the note.!’'
In Chotiner, supra, it was stated:
“While the cases so far cited have-dealt almost entirely with the defense of' an extension of time without the consent of the accommodation maker, the rulings have in general been broad enough;. to include the entire category of surety-ship defenses.”
The defense of a surety based on ttn- ■ authorized extension of time of payment,, which our Supreme Court would seemingly honor, is characterized by the Court in Chot-iner in this language:
■’ “We are the less reluctant to sc hold (that the U.N.I.A. abrogated surety defenses to negotiable instruments) because of the fact that the defense of' an extension of time is one of the more-technical suretyship defenses, the injuries resulting to the surety by reason thereof being more likely to be theoretical than real.”
This technical common law defense is-preferred as indicated by Reed, to the plain*509ly worded Rule deliberately placed by the Supreme Court in our Rules of Civil Procedure for the guidance of attorneys, their clients, and Courts. I submit that there is no reasonable basis for this preferment. Whatever name may be given to Rule 31, in this case its enforcement would, it appears, preclude suit against Buck. As to him, it is -the equivalent of a plea in bar.
I have tried to amplify here the basis of our previous decision which was that Ritter in the “light of subsequent legislation and judicial decisions” was no longer law. I also accept the suggestion made by the Supreme Court that the deseutude into which the early Supreme Court cases have fallen is highly significant. That the rule they stand for has not been invoked in this century is strong evidence that it does not exist. This case was pled and tried by the parties, their eminent counsel, and by the Trial Court as they and this Court considered the law to be. It is simply incredible to me that the Bench and Bar of this State have overlooked Ritter v. Hamilton for three quarters of a century, the Supreme Court for more than one hundred years.

. This case, of course, excepted.

. It is to be noted that tbe exception of a “bill of exchange or promissory note assignable or negociable by law” contained in See: 14 of the 1858 statutes is omitted.