Barrett v. Featherstone , 89 Tex. 567 ( 1896 )

In this case I find myself constrained to dissent from my brothers in their conclusions of fact as well as of law, and my reasons are as follows:

On July 20, 1893, appellees instituted this suit to recover against appellant upon the following note:

"$857.50. Henrietta, Texas, May 20, 1892.

"Six months after date, I, we, or either of us, promise to pay to the order of Worsham, Davidson, Featherston and Easley, at Citizens' Bank, eight hundred fifty-seven and 50-100 dollars, with interest at the rate of ten per cent per annum from date until paid, and ten per cent additional for attorney's fees, if collected by law or if placed in the hands of an attorney for collection. Value received.

"(Signed) L.C. Barrett."

Appellant answered, in effect, that in February, 1891, appellees, with others, were engaged in getting up a subscription to aid in the building of a railroad from Henrietta to Archer City; that as one of the subscribers he (appellant) executed to C.W. Easley, treasurer, his two notes, one for $700 and the other for $100; that these notes were payable, one-fourth when the first five miles of said road should be completed, one-fourth when the second five miles should be completed, one-fourth when the third five miles should be completed, and the remaining fourth when the grade should be completed to the west boundary line of Clay county; that no part of said road had in fact ever been completed as called for. That at the time the note sued upon was executed, appellees fraudulently represented to appellant that they had made arrangements with the Union Trust Co. to advance the money with which to procure the iron for the road, and desired him to make a new note which they could use as collateral security with it; that by this means they intended to obtain the iron and complete the road; that these representations were all false; that appellees had made no such arrangements with the Union Trust Co., nor did they intend or expect to iron the road; that they were relied upon by appellant, however, and by means thereof he was induced to execute this note, which he otherwise would not have done. He also alleged that at the time he executed this note it was understood and agreed between him and appellees that it was only to have the effect of accommodation paper, and was not to take the place of the previous notes, in case appellees did not negotiate it as they expected to do.

This note was also secured by a mortgage, which contained this recital: "That I, L.C. Barrett, * * * for and in consideration of the sum of $857.50 to me in hand this day paid by Worsham, Davidson, Featherston and Easley, of said county and State, and for and in consideration that they have this day and do by these presents release me of and from the payment of certain obligations due from me to the amount of $800 and interest, payable to the Red River Southwestern Railroad, this being the real and only consideration, together with the debt and trust hereinafter mentioned, and that by the acceptance of this obligation the said C.W. Easley, trustee, together with the said Davidson, Worsham and Featherston, do hereby release a certain trust deed to secure $700 and interest, dated 5th day of February, 1891, * * * which said trust deed was made to secure $700 and interest, the real consideration of this instrument, have granted, bargained," etc.

This recital was explained in the answer to have been made at the request of appellees, upon the representation that it was necessary to show the release of the previous mortgage before the Trust Co. would accept the note in question.

Appellees filed numerous exceptions to appellant's answer, some of which were overruled and some sustained; — also replied by general and special denials of all fraud, but did not ask a recovery upon the original notes, in case they failed upon the one described in the petition.

A trial was had before a jury, which resulted in a verdict and judgment in favor of appellees for the full amount of the note, interest and attorney's fees.

I cannot agree with my brothers on the third conclusion of fact as found by them, that appellant's original note was made payable as each five miles of the grade was completed. There is equally as much and as satisfactory evidence tending to prove that the first note was payable as each five miles of the railroad was completed. The mortgage given to secure the note recites that such were the terms thereof. At all events this was one of the pivotal points in the case, and most sharply contested.

I cannot agree to the fourth conclusion of fact, that the proposition to grade the road from Henrietta to Archer City was carried out by the railroad company. The evidence is sharply contradictory on this point, as to what is a finished grade, and as to whether the grade stopped a half mile before reaching the corporate limits of Henrietta.

I cannot agree to the fifth conclusion of fact, that the amount paid by appellees for the grading of the road exceeded the value of the subsidies received by them. The evidence shows that appellees paid about $21,000, while the Henrietta subsidy alone was $30,000, and Mr. East refused to testify what the Archer subsidy, turned over to him, amounted to, and there is absolutely no evidence as to the value of the subsidies.

I cannot agree to the sixth conclusion of fact, that the sole consideration of the note and mortgage declared on was as specified in the mortgage. The evidence of defendant is positive that the consideration was not as expressed in the mortgage sued on, but as expressed in the original mortgage given to secure the debt in the first instance.

I cannot agree to the seventh conclusion of fact, that no fraudulent misrepresentations or promises whatever were made to appellant to obtain either the original notes or the note sued on, without usurping all the functions of the jury. This conclusion assumes as proven the very question in the case, when the evidence was sharply contradictory from beginning to end, and much evidence was excluded by the court that, as circumstances tending to throw light upon the acts and intentions of the appellees, I think, was competent and might have weighed much with an impartial jury. This, taken in connection with the erroneous charges given as hereinafter shown, and with the erroneous admission of a corrected and abandoned pleading filed in the case, all bearing directly upon this very question, could not fail to lead irresistibly to the verdict found by the jury, and to no other.

Nor can I agree with my brothers on the final conclusion of fact found by them, that "a contrary verdict on the issues involved in conclusions 6 and 7 would have been contrary to the manifest weight and great preponderance of the evidence." I find the evidence nearly equally balanced, and amply sufficient to sustain a verdict either way.

In the second paragraph of the court's charge, the jury was instructed that: "If you find and believe from the evidence that about the time of the execution of the note in controversy herein, W.H. Featherston, acting for himself and for the other plaintiffs; fraudulently represented to and promised the defendant that they had made arrangements with the Union Trust Co. to iron the Red River Southwestern Railway from Henrietta, Texas, to Archer, Texas, and intended to and would build said railroad within a reasonable time, and that said representation was false and said promises broken, and that at the time of making such representations and promises said Featherston did so with the design of cheating and defrauding the defendant, and had no intention of performing said promises or having it done, but used them merely as false pretenses to induce the defendant to execute the note in controversy, and that defendant relied upon said representations and promises and was deceived thereby, and thereby induced to execute the note in controversy, then you will find for the defendant."

It will be observed that, both by the pleading and this charge, two kinds of misrepresentation are presented: 1. The representation of an existing fact, viz., they (appellees) had made arrangements with the Union Trust Co., etc.; 2. That appellees intended to and would build the road within a reasonable time. The charge, in order to invalidate the note, required that both of these representations should have been made "with the design of cheating and defrauding the defendant." My view of the law is, that if one by making an untrue statement of an existing fact induces another to believe and rely thereon to his prejudice, the transaction is fraudulent in law, whether the one making the statement so intended it or not. He has no right to avail himself of a contract obtained by his own untrue statement of a material matter, even though he may have himself honestly believed it to be true. Culberson v. Blanchard, 79 Tex. 492. That part of the charge, therefore, which required the statement that appellees had already made arrangements with the Union Trust Co. to have been made with fraudulent intent, was erroneous.

In the fourth paragraph of the court's charge, the jury were instructed that: "If you find and believe from the evidence that the note in controversy herein was given in renewal of two other notes theretofore given by the defendant to C.W. Easley, treasurer of the Red River Southwestern Railway Co., and by said company transferred to plaintiffs, and in consideration of the cancellation of said two notes, then you will find for the plaintiffs, unless you find that said two notes were procured by fraud, under the fifth subdivision of this charge, and that defendant at the time of the execution of said note in controversy was ignorant of said fraud, if under the evidence and charge of the court you find such fraud."

It is now well settled that contracts of this character obtained by specious and false representations and promises, whether made in relation to existing facts or in relation to matters and things to be performed in the future, are alike viewed with disfavor by courts of law as well as by courts of equity, and are fraudulent and voidable; and such fraudulent conduct may be relied upon to cancel contracts based upon or induced by such promises and representations, as well as urged as a defense in bar of the enforcement of contracts thus obtained. Henderson v. Railway, 17 Tex. 560; Greenwood v. Pierce,58 Tex. 130; Railway v. Jones, 82 Tex. 156 [82 Tex. 156]; Railway v. Titterington, 84 Tex. 218 [84 Tex. 218]; Railway v. Pittman, 23 S.W. Rep., 318; s. c., 4 Texas Civ. App. 172[4 Tex. Civ. App. 172]; History Co. v. Flint, 15 S.W. Rep., 912; 2 Pom. Eq. Jur., sec. 877, and note 3; Abbott's Trial Ev., (1st ed.), 294, 787.

I called attention above to the fact that appellees did not seek a recovery upon the two original notes referred to in this charge. I am of opinion that, no matter how fair the original transaction may have been, no recovery could have been had in this case by appellees, if the note sued upon was obtained by fraud as alleged by appellant. I am also of opinion that the fact that this note may have been given in renewal of previous notes which were valid, would not prevent it from being invalidated upon the ground of fraud, if in fact the renewal was obtained by such means. In that case it would be necessary to aver the terms of the original notes and ask to recover thereon. The charge in question was therefore both erroneous and misleading.

I am also of opinion that the evidence excluded by the court, as shown in bills of exception Nos. 1, 4, 6, 7, 11, 12, 13, 14, 15, 16 and 19, was admissible as facts and circumstances tending to show, in a greater or less degree, the fraud and failure of consideration averred in the answer.

In defendant's "original answer," which set up total failure of consideration, as well as his "amended original answer," upon which he went to trial, and both of which were sworn to, as all pleas of failure of consideration are required to be, under art. 1265 of Rev. Stats. of Texas, he plead that the original note first given by him to the railway company was payable as each five miles of the "grade" (instead of railroad) was completed, until the same reached the west boundary line of Clay County, when all was to become due. This "original answer" was abandoned, and in lieu, thereof the "amended original answer" was afterwards filed, in which it was alleged that the said first note executed by him was payable as each five miles of the railroad was completed, until the grade reached the west boundary line of Clay County, when all should be due.

This difference in the two pleadings touches a vital question in the case, and one of the very points in controversy, that is, whether the note given by defendant was payable as the grade or embankment was completed, or, as the road, with its trestles, culverts and bridges, ready for the ties and iron, was completed. A great deal of contradictory evidence was offered on each side, and the plaintiffs over the objections of defendant were permitted to read in evidence to the jury the above allegation from the original answer.

This, I think, was material error. The original answer had been sworn to, and while the court permitted the defendant to explain that it was prepared hurriedly to prevent a judgment by default, and that he did not have the note itself nor the mortgage given to secure it, before him at the time, and also that he used the word "grade" to signify "roadbed," yet the evidence was strongly calculated to influence the jury, probably more than any other evidence before them.

Rule 12 for the government of District and County Courts provides: "An amendment may be made by either party, upon leave of the court for that purpose, or in vacation, as prescribed by the statute — the object of an amendment, as contradistinguisbed from a supplemental petition or answer, being to add something to, or withdraw something from, that which has been previously pleaded, so as to perfect that which is or may be deficient, or to correct that which has been incorrectly stated by the party making the amendment."

A portion of Rule 13 provides: "The party amending shall point out the instrument, with its date, sought to be amended * * * * and amend such instrument by preparing and filing a substitute therefor entire and complete in itself."

Rule 14 provides: "Unless the substitute shall be set aside on exceptions for a departure in pleading, or on some other ground, the instrument for which it is substituted shall no longer be regarded as a part of the pleading in the record of the cause, unless some error of the court in deciding upon the necessity of the amendment, or otherwise in superseding it, be complained of, and exception be taken to the action of the court, or unless it be necessary to look to the superseded pleading upon a question of limitation."

These rules clearly indicate that the abandoned pleading is to be considered no longer any part of the record, unless for the purposes embraced in some of the exceptions given in Rule 14. So it is not competent as an admission of record.

Is it competent as an admission of any character? The fact that it is found in a pleading required by law to be sworn to, and which is sworn to, I think does not affect the question of its admissibility. It must be governed by the same rules of evidence that reject or admit admissions contained in abandoned pleadings not sworn to.

All pleadings setting up failure of consideration as a bar to recovery on any written contract are by our statute (art. 1265, sec. 10), required to be verified by affidavit.

The right to amend the pleadings proper in any case is not restricted to those not sworn to, but it applies equally to verified pleadings. No distinction is made by the rules above cited nor by our statutes.

Revised Statutes of Texas, art. 1192, provides: "The pleadings may be amended under leave of the court, upon such terms as the court may prescribe, before the parties announce themselves ready for trial, and not thereafter."

The rule is clear and well settled that the pleadings of a party in another suit involving the same issues, upon which he had relied on the trial of such suit, and which had been sworn to by him, are competent evidence against him as solemn admissions. Buzard v. McAnulty, 77 Tex. 445, and cases there cited. Wheeler v. Styles, 28 Tex. 245.

But I do not think the same rule applies to an abandoned or corrected pleading. Coates v. Elliott, 23 Tex. 606; Medlin v. Wilkins, 1 Texas Civ. App. 469[1 Tex. Civ. App. 469]; Railway v. Clark, 25 S.W. Rep., 504; Mecham v. McKay 37, Cal., 165; Ponce v. McElvy,51 Cal. 223 (where the pleading was verified); Stern v. Loewenthal, 77 Cal. 340; Wheeler v. West, 71 Cal. 126; s. c., 11 Pac. Rep., 871; Holland v. Rogers, 33 Ark. 253; Kimball v. Bellows, 13 N.H. 58; 1 Greenl. on Ev., sec. 171, note a; Starkie on Ev. (10th ed.), 450, 640.

Mistakes are often made in pleadings, and the office of an amendment is to correct the mistake; but if such mistakes, after having been withdrawn and corrected, may be read in evidence against a party, the law allowing him to amend and correct his pleadings would be almost worthless, and the case would be tried, perhaps, not upon the truth and facts, but upon the mistakes made by the parties in formulating their issues, which may have been discovered to be such and corrected. Phillips v. Smith, 110 Mass. 61; Taft v. Fiske,140 Mass. 250. It is his right to amend until he gets his pleadings correct and true, and when he has done this the pleadings upon which he stands on the trial may be read as admissions of record against him, whether sworn to or not; but not his mistakes made in his efforts to perfect his pleadings, as contained in papers abandoned by him, because, perhaps, of those very mistakes. One of the features of our system of pleading allows a defendant to plead and rely upon as many several matters, whether of law or fact, as he may think necessary for his defense, although they may be wholly inconsistent, provided they are filed at the same time and in due order of pleading. Rev. Stats., art. 1262; Welden v. Texas Meat Co., 65 Tex. 487.

In my opinion the fact, as in this case, that the party to the suit is a lawyer and drew the pleading himself and swore to it, would not change the rule. A lawyer is as much entitled to the privileges and protection granted by the rule as any other person, and is as liable to make mistakes as anybody else; and such mistakes in the preparation and perfecting of the pleadings in bringing the case to issue ought not to affect the trial of the case on its merits, or even be referred to before the jury. Coates v. Elliott, 23 Tex. 606; Medlin v. Wilkens 1 Texas Civ. App. 469[1 Tex. Civ. App. 469]; Railway v. Clark, 25 S.W. Rep., 504; 1 Greenl. on Ev., sec. 171, note a; Starkie on Ev. (10th ed.), 450, 640.

The case of Boots v. Canine, 94 Ind. 410, is not well considered, nor is it supported by the authorities cited on this subject. The court in that case fails to draw the distinction between pleadings which were relied on as final in other actions and the abandoned and corrected pleadings of the case being tried.

On page 414 of that opinion the court cited to sustain its views the case of Broadrup v. Woodman, 27 Ohio St. 553. In that case the pleading offered in evidence was the party's answer in another and different action.

It also cites Hobson v. Ogden, 16 Kan. 388. In that case Justice Brewer, in holding the evidence admissible, says it was a certified copy of a verified answer filed by the party in another previous action in another State.

It also cites Solomon Ry. Co. v. Jones, 30 Kan. 601, where the same distinguished Justice admits the evidence, because it was a certified copy of a verified pleading in a former and different case.

It also cites Ayers v. Hartford Ins. Co., 17 Iowa 176. The pleading offered in evidence was a copy of the answer in another and different action.

It also cites Meade v. Black, 22 Wis. 241. The pleadings there offered were the complaint and answer in ejectment in another suit for the same land.

And the court was equally as unfortunate in the citation of the case of Cook v. Barr, 44 N.Y. 156, and these cases are the main ones relied on to sustain the decision in that case, and not a single one is in point.

Besides, that court seems to have been impressed with the necessity of explaining to the profession that the question was there "presented in a peculiar form." The court say: "The record shows that there had been issues formed and a trial had; that the appellants successfully relied upon their answers, and the case came to this court, and the judgment was reversed, but not upon the answers; and that after this reversal the original answers were superseded by amendment." Ib., 410. After stating that the evidence offered was an allegation in the original answers that the agreement to arbitrate was oral and not in writing, and that it was offered as an admission, to contradict the amended answers of defendants then relied on, averring that the agreement was in writing, the court then continues: "It will be observed that the answers had stood through one trial and through an appeal as statements of the appellant's defense, and that they had placed these pleadings before the trial and appellate courts as true statements of the facts of their case. We can perceive no reason why the answers did not, under these circumstances, constitute some evidence of the facts stated in them." Ib., 411.

On the same page the court continues: "We think the rule is correctly stated by Mr. Wharton, who says: 'It is proper to add at this place that the pleadings of a party in one suit may be used as evidence against him in another, not as estoppel, but as proof, open to rebuttal and explanation, that he admitted certain facts.' 1 Whart. Ev., sec. 838. This is what we rule here, the answer having been affirmed to be true for several years, and acted upon through one trial and one appeal, should be deemed evidence of admissions, but evidence open to explanation."

The cause before us is entirely different. The record here shows that the defendant Barrett prepared and filed his answer hurriedly to prevent a judgment by default, and without examining the record of the mortgage or seeing the note, which, he says, was in the possession of the adverse parties, he alleged that the original note was payable as each five miles of the "grade" was completed, but that soon afterwards, and before any trial was had, he examined the mortgage and found that he had made an incorrect statement, for the mortgage described the note as payable as each five miles of "railway" was completed, and he at once prepared and filed his amended answer, stating such to be the condition of the note, and thus corrected the mistake made in the original answer.

The court charged the jury, at the instance of the plaintiffs, "that by false or fraudulent misrepresentations, as used in the main charge, is meant the false or fraudulent misrepresentation of a material fact, and not merely a statement of opinion, judgment, probability or expectation." This charge, it will be seen from my views herein previously expressed, is erroneous, and not the law of this case, as many of the alleged false and fraudulent representations relied on by the defendant, though not all of them, were made with reference to things to transpire in the future, and I hold are, if proven, as complete a bar as if they had been made concerning a present ascertainable fact, provided they formed the consideration which induced defendant to enter into the contract.

In this case it is made to appear by a bill of exceptions that a stenographer was appointed by the court below at the instance of the plaintiffs (appellees), and that for this reason his fees were taxed against them. If this stenographer was appointed by the court, as required by art. 1295, Rev. Stats., I think his compensation should have been taxed against the losing party, as other costs in the case. Article 1296 provides: "Reasonable compensation, not to exceed twenty cents per hundred words, shall be allowed such stenographer, to be fixed by the court and taxed in the bill of costs." Article 1421 provides: "The successful party to a suit shall recover of his adversary all the costs expended or incurred therein, except where it is or may be otherwise provided by law." I think the expense of writing out the shorthand notes made by the stenographer is a part of the costs contemplated by the statute.

I think the judgment of the court below ought to be reversed, and the cause remanded.

Filed February 22, 1896.

OPINION OF SUPREME COURT.