Opinion
February 21, 1940.
1. BANKRUPTCY: Moral Obligation. The discharge of the debtor in bankruptcy merely releases the debtor of his legal obligation to pay.
The moral obligation to pay remains, and furnishes a sufficient consideration in law for a new promise to pay.
The new promise may be oral or written, and the action is not on the original note but on the new promise.
2. BANKRUPTCY: Promise to Pay. In an action on a note more than twenty years after its date, the evidence set out is sufficient for the jury to find an express, positive and unconditional promise on the part of the maker to pay the note sued on.
3. STATUTE OF LIMITATIONS: Note Barred. Where a note was barred by the Statutes of Limitation, endorsements of payments thereafter made do not revive the note unless such endorsements are made at the direction of, or with the knowledge and consent of, the debtor.
4. ACTION ON NOTE: Interest. In a suit on a note an erroneous instruction in regard to interest was not prejudicial where the jury did not award any interest in their verdict.
5. APPEAL AND ERROR: Assignments Too General. Where appellant states that "an instruction which comments on the evidence and amounts to a directed verdict is erroneous," such assignment is too general to preserve anything for review.
6. TRIALS: Instruction Ignoring Testimony. On a trial of an action on a note, an instruction asked by defendant which ignores testimony in relation to repeated promises to pay the note sued on, was properly refused.
Appeal from Jefferson Circuit Court. — Hon. E.M. Dearing, Judge.
AFFIRMED.
Terry, Terry Terry for appellant.
(1) A discharge in bankruptcy is an in rem judgment, conclusive as to the status of the bankrupt and frees him from future liability, as to all dischargeable obligations in effect prior to his adjudication in bankruptcy. 8 C.J.S., Bankruptcy, pp. 1490, 1507, 1571, 1572; Flemming v. Lullman, 11 Mo. App. 106; U.S.C.A., Title 2, sec. 35, p. 206. (2) In order to revive the liability on a debt discharged in bankruptcy or to create a new enforceable obligation there must be a clear, distinct and unequivocal recognition and renewal of the debt as a binding obligation, anything short thereof being insufficient and a mere acknowledgment of the discharged debt or the expression of hope, desire, expectation, or intention to pay or revive the same is not sufficient. Monroe v. Herrington, 110 Mo. App. 512; Cochrane v. Cott, 156 Mo. App. 667; Flemming v. Lullman, 11 Mo. App. 106; Interstate Paper Co. v. Gresham, 116 S.W.2d 232. (3) In order to maintain suit on a note from which the defendant has been discharged in bankruptcy, action can only be maintained upon the new promise. The original cause of action, being discharged by the certificate in bankruptcy, is gone, although a new promise is, therefore, the cause of action and the only cause of action, and where it is oral and made more than five years before suit was brought, it is barred by the express terms of our statute. If it be written, and more than ten years before suit is brought, it is barred by the express terms of our Statute of Limitations. Fleming v. Lullman, 11 Mo. App. 108; Secs. 861, 862, 883, R.S. 1929. (4) Part payment does not take a debt out of the statute unless made under such circumstances as to warrant the inference that the debtor thereby recognized the debt and signified his willingness to pay it. The payments must be made by or with the consent of the payor, and if credits are entered by the holder, without the knowledge or consent or at his direction, they are ineffective to check the running of the statute. Eubank v. Eubank, 29 E.W.2d 214; Crow v. Crow, 124 Mo. App. 129; Regan v. Williams, 185 Mo. 631; Interstate Paper Co. v. Gresham, 116 S.W.2d 232; Philips v. Mahan, 52 Mo. 199; 37 C.J., Limitations of Actions, pp. 1147, 1148. (5) When a Statute of Limitations has run against the note at the time of the credit of a payment shown by the endorsement and it is clear that the note was barred by the statute unless it was saved by that credit, the burden is upon the plaintiff to prove the fact of resuscitating payment by evidence aliunde the endorsement, which standing alone, is no evidence of that fact as it takes too much the nature of a self-serving act of the payee. Brown v. Carson, 132 Mo. App. 376; 8 C.J.S., Bankruptcy, pp. 1571, 1572; 37 C.J., Limitations of Actions, pp. 1147, 1148; Interstate Paper Co. v. Gresham, 116 S.W.2d 232. (6) It was within the power of the jury to affix the amount of recovery and it is erroneous for the trial court to fix the amount of interest creditable or to be recovered, and an instruction in accordance therewith is erroneous. Meffert v. Lawson, 315 Mo. 1097; Sec. 973, R.S. 1929; Bank v. McCallister, 246 S.W. 609; Bank v. Stamper, 250 S.W. 961; Hackett v. Dennison, 19 S.W.2d 544. (7) An instruction which comments on the evidence and amounts to a directed verdict is erroneous. Hackett v. Dennison, 19 S.W.2d 544; Milling Co. v. Lowery, 248 S.W. 625.
Jeffries, Simpson Plummer for respondent.
(1) A discharge in bankruptcy is personal to the bankrupt, and may be waived by him. 7 Remington on Bankruptcy (5 Ed.), sec. 3499; Diamant v. Stein, 116 S.W.2d 273; Chitwood v. Jones, 56 S.W.2d 147. (a) The defense of discharge in bankruptcy is waived if not pleaded. Chitwood v. Jones, 56 S.W.2d 147; Blackman v. McAdams, 131 Mo. App. 408, 111 S.W. 599; Farmers Merchants Bank v. Richards, 119 Mo. App. 18, 95 S.W. 290; Traders Natl. Bank v. Hermer, 202 Mo. App. 402, 218 S.W. 937. (2) A debt discharged by bankruptcy may be revived by a new promise to pay. No particular form of words need be used. The promise is constituted by words which, in their natural import, express the present intention to obligate or undertake to pay. 75 A.L.R., p. 580, Annotation entitled "What amounts to promise to pay which will avoid effect of discharge in bankruptcy." (a) The new promise need not be in writing. Farmers Merchants Bank v. Richards, 119 Mo. App. 18, 95 S.W. 290; Reith v. Lullman, 11 Mo. App. 254; Wislizenus v. O'Fallon, 91 Mo. 184, 3 S.W. 837; Swan v. Lullman, 12 Mo. App. 584; 75 A.L.R. 601; 7 Remington on Bankruptcy, sec. 3503. (3) A debt discharged by bankruptcy, although unenforceable, constitutes the existence of a liability sufficient to form a consideration for a new promise to pay the discharged debt. The cause of action is the new promise reviving the old debt. Chitwood v. Jones, 56 S.W.2d 147; Boone County Milling Elevator Co. v. Lowery, 248 S.W. 623; Zavelo v. Reeves, 57 L.Ed. 676, 227 U.S. 625; 8 C.J.S., p. 1491; 40 A.L.R., p. 1446; 7 Remington on Bankruptcy, sec. 3500. (4) Part payment of a debt against the enforcement of which the Statute of Limitations has run, revives the debt. Gardner v. Early, 78 Mo. App. 346; Elsea v. Pryor, 87 Mo. App. 161; Mo. Interstate Paper Co. v. Gresham, 116 S.W.2d 232; Koyl v. Lay, 194 Mo. App. 291, 187 S.W. 279; Weir v. Carter's Estate, 224 S.W. 147. (5) The verdict of the jury, based on conflicting evidence that a new promise was made reviving the debt, the enforcement of which was barred by the Statute of Limitations, and which was discharged by bankruptcy, is conclusive upon the appellate court. Diamant v. Stein, 116 S.W.2d 273; Genta v. Ross, 37 S.W.2d 972, 225 Mo. App. 673; Reugsegger v. C.G.W. Ry. Co., 29 S.W.2d 221, 225 Mo. App. 211; Poindexter v. Ellison, 34 S.W.2d 554; Amer. Packing Co. v. Milwaukee Mechanics' Ins. Co., 35 S.W.2d 956; Jackson v. Mo. Pac. Ry. Co., 42 S.W.2d 936, 226 Mo. App. 29. (6) Instruction 1, given at the request of the respondent, covering the whole case, was correct. (a) The instruction did not amount to a comment on the evidence. Fowler v. M., K. T. Ry. Co., 84 S.W.2d 206, 229 Mo. App. 561; Nance v. Landsdell, 73 S.W.2d 348. (b) The instruction did not fix the amount of interest which the jury must find, but allowed the jury to compute same. (7) Instruction 2, given at the request of the respondent, was correct. (a) It correctly stated the amount of interest to be allowed as par of the credit dated December 21, 1932, and allowed the jury to calculate the other interest involved. Home Trust Co. v. Josephson, 95 S.W.2d 1156, 339 Mo. 170; State ex rel. Witte Hardware Co. v. McElhinnel, 100 S.W.2d 26, 231 Mo. App. 860. (8) The instruction requested by the appellant, marked "Refused Instruction 1," was properly refused.
On January 1, 1914, the appellant, R.S. England, executed and delivered his note in the sum of $8878.73, due one year after date, to respondent, Jesse F. Donnell. On February 18, 1937, the respondent recovered a judgment on this note in that sum against the appellant in the Circuit Court of Jefferson County, Missouri. From this judgment the appellant has duly appealed.
The appellant admitted the execution of the note, but relied upon the defense that on September 2, 1919, he was adjudicated a bankrupt, and was discharged on February 20, 1920, from all debts listed in his schedule, among which was the note sued on herein. He also relied upon the Statutes of Limitation.
The respondent admitted the bankruptcy of appellant, but sought to avoid this defense by showing that the appellant promised on several different occasions to pay this note after his discharge in the bankruptcy proceeding. "The discharge of the debtor in bankruptcy does not satisfy the debt, but merely releases the debtor of his legal obligation to pay. The moral obligation to pay remains, and furnishes a sufficient consideration in law for the new promise to pay. This promise, to be enforceable, `must be an express, positive and unconditional promise.'" [Farmers Merchants Bank of Vandalia v. Richards, 119 Mo. App. 18, l.c. 22, 95 S.W. 290.] The promise may be oral or written and the action is not on the note but on the new promise, the discharged debt being the consideration therefor. [Fleming v. Lullman, 11 Mo. App. 104.]
In regard to the promise to pay this note, the respondent testified that appellant said: "He said he was going to go through bankruptcy to keep from paying this lawyer, and he said, `I will pay you every cent I owe you.' Following this conversation I received a card from the Referee in Bankruptcy. When I got that card I had a conversation with Mr. England. He said, `Pay no attention to that card, I will pay you every cent.' Following along about March, 1920, he said he had been discharged in bankruptcy and he said I want you to understand I will pay you every cent I owe you. I told him that was all right; I thought he would." Again, in February, 1921, the appellant said to respondent, "I am going to pay every cent I owe you on that old note. I will pay you right away." A similar conversation took place December 1, 1932, and as late as January 17, 1936, the appellant told respondent, "Doctor, there is no use in getting mad about this thing, I will pay you all of that note."
In the case of Reith v. Lullman, 11 Mo. App. 254, the Court of Appeals held that the statement, "Tell Harry (meaning the plaintiff) to come down and I will pay him," was an unconditional promise to pay the plaintiff. [See also Farmers Merchants Bank of Vandalia v. Richards, supra; Traders' Natl. Bank v. Hermer, 202 Mo. App. 402, 218 S.W. 937; Boone County Milling Elevator Co. v. Lowery, 248 S.W. 623; Chitwood v. Jones, 56 S.W.2d 147; Diamant v. Stein, 116 S.W.2d 273.]
We hold that the evidence is sufficient for the jury to find an express, positive and unconditional promise on the part of the appellant to pay the note in the case at bar.
The appellant next contends that this action was barred by the Statutes of Limitation. Without deciding whether the various promises made by appellant between the year 1919 and January 17, 1936, to pay this note prevented the debt from being barred by the Statutes of Limitation, we think the evidence was sufficient for the jury to find a payment of $6678.95 on the note on December 21, 1932.
For the purposes of this opinion, we will assume that the note was barred by the Statutes of Limitation, yet there was endorsed on the back of the note a payment of the above sum on December 21, 1932. "`Indorsements of payments made after the note is barred do not revive the note unless such indorsements are made at the direction of, or with the knowledge and consent of, the debtor (citing cases).' [Sugent v. Arnold's Estate, 340 Mo. 603, 101 S.W.2d 715, l.c. 716.]" [Caneer v. Kent, 342 Mo. 878, 119 S.W.2d 214, l.c. 217.] In other words, the endorsement of payment on the note, standing alone, is no evidence that the payment was actually made; the holder of the note must prove payment by evidence aliunde the endorsement.
The facts in reference to the payment of December 21, 1932, are as follows: The appellant, R.S. England, and his brother, Charles C. England, operated the Waggener Store Company, and they were kinsmen of the respondent, Jesse F. Donnell, who was a doctor. On May 30, 1926, the respondent executed a note to the Waggener Store Company for $4275.89, which, with interest, amounted to $6678.95, on December 21, 1932.
When asked if he had a conversation with the appellant about December 2, 1932, the respondent testified:
"I did, at my office, and Mr. David Dial was present; it was December 1st, 1932. Mr. England's step-father wasn't very well and he was coming down that evening to see me as I was going to leave the next morning for the south, and he wanted to talk to me about his father, in connection with Dr. Commerford. He called me up and said he would like to talk to me about that matter, and he came to my office to see me. I figured up the amount of the note and he figured up an old store account, and he said, `I want to give you credit on that old account, as I have taken care of the Waggener Store Company bill.' He said, `I want to straighten that up with you.' I had signed a note to the Waggener Store Company at one time. I told Mr. England I would give him credit on the old note. I endorsed the credit on his note. . . . The endorsement is, `There is credited on this note on account of R.S. England assuming payment of and procuring the cancellation of my note dated May 30th, 1926, to Waggener Store Co. the sum of $6678.95, this 21st day of December, 1932.' Mr. England brought the computed amount of interest in. The Waggener Store Company is Charles and Sid England. Following this conversation I went away. Sid said, `Well, when you come back, I will hand you the note.' . . . Sid said to me, `I will have to settle up with Charlie and I will hand you the note.' Charles England was President of the Waggener Store Company. In December, 1935, Charlie and I talked the matter over and he said Sid had paid the Waggener Store Company."
We think the above evidence is sufficient for the jury to find, as they did, that the endorsement of payment of December 21, 1932, was made with the knowledge and consent of the appellant, and, therefore, the note was revived and not barred by the Statutes of Limitation on the date the suit was commenced.
Appellant further contends that the instruction in regard to interest is erroneous. Since the jury did not award the respondent any interest, the error, if any, is not prejudicial to the appellant. If the appellant's contention refers to the Waggener note, it was not error to give this instruction because the amount of interest on that note is not in dispute. [Home Trust Co. v. Josephson, 339 Mo. 170, 95 S.W.2d 1148, 105 A.L.R. 1063.]
In his points and authorities, appellant states that "an instruction which comments on the evidence and amounts to a directed verdict is erroneous." This assignment of error is too general to preserve anything for review. [Diamant v. Stein, supra.]
Appellant also complains of the trial court's refusal to give his requested Instruction Number One which told the jury that "if defendant during the year 1921 promised to pay said note but failed to do so for a period of five years or more thereafter then your verdict will be in favor of the defendant." This instruction ignores the testimony showing that the appellant made repeated promises to pay the note subsequent to the year 1921. In the case of Reith v. Lullmann, supra, the debtor made a promise to pay in the year 1871 and also in the year 1877. That court held that the promise made in the year 1877 was the enforceable one and not the one made in the year 1871. We therefore hold that the trial court correctly refused to give this instruction.
Finding no reversible error in the record, the judgment is therefore affirmed. All concur.