law-surety | suit on bond | suits on bond | supersedeas bonds | appeal from JP court to county court requires
bond | temporary injunctions require bond to be valid | void order in absence of bond | indemnity | personal
guaranty of corporate liability, debt |
A contract that creates a suretyship must also comply with the statute of frauds. See TEX. BUS. & COM.
CODE ANN. § 26.01(a), (b)(2) (Vernon 2002 & Supp. 2008). To satisfy the statute of frauds, there must be
a written memorandum which is complete with itself in every material detail and that contains all of the
essential elements of the agreement, so that the contract can be ascertained from the writing without
resorting to oral testimony. Cohen v. McCutchin, 565 S.W.2d 230, 232 (Tex.1978); Frost Nat'l Bank v.
Burge, 29 S.W.3d 580, 594 (Tex.App.-Houston [14th Dist.] 2000, no pet.).
Does the statute of frauds apply to an agreement to enter a surety contract?
C. Springs, however, argues that the statute of frauds does not apply to the August 8, 2000 letter "[b]
ecause the letter binds Hartford only to issue the bonds, not actually to perform in accordance with their
terms[.]" Essentially, C. Springs argues that a promise to enter a surety relationship is different from the
surety relationship itself. Thus, C. Springs argues that the promise to issue the bonds need not contain all
the essential terms of the bonds themselves. We disagree.
"A promise to sign a written contract as surety for the performance of a duty owed to the promisee ... is
within the Statute of Frauds." RESTATEMENT (SECOND) OF CONTRACTS § 117 (1981). Similarly, an
agreement to make a future contract is enforceable only if it is specific as to all essential terms. Fort Worth
Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000). A contract to enter a contract
covered by the statute of frauds must also meet the statute of frauds. See Baylor Univ. v. Sonnichsen, 221 S.
W.3d 632, 635 (Tex. 2007) (holding that statute of frauds bars breach of contract claim based on oral
promise to enter contract not performable in one year). Thus, the argument that this is a contract to issue
the bonds rather than the bond contract itself is irrelevant. The same requirements apply to both.
Does the letter adequately describe the essential terms of the alleged agreement?
We turn to whether the letter in this case contains sufficient "essential terms" to comply with the statute of
frauds, or whether it fails for indefiniteness. The letter in this case provides that, "[u]pon receipt of an
acceptable contract, Hartford Fire Insurance stands ready to issue 100% performance and payment bonds
in the full amount of the contract." The letter, however, provides little more information.
To comply with the statute of frauds, a memorandum of a guaranty or suretyship must contain (1) the parties
involved, (2) a manifestation of intent to guarantee the obligation, and (3) a description of the obligation
being guaranteed. Park Creek Assocs., Ltd. v. Walker, 754 S.W.2d 426, 429 (Tex.App.-Dallas 1988, writ
denied). Hartford argues that the second element — a manifestation of intent to guarantee Williams's
obligation — is missing from the August 8, 2000 letter. Specifically, Hartford argues that the letter shows no
present intent to be bound, but instead contemplates further actions by the parties. We agree.
Under Texas law, a writing that contemplates a contract or promise to be made in the future does not satisfy
the requirements of the statute of frauds. See Martco, Inc. v. Doran Chevrolet, Inc., 632 S.W.2d 927, 928-29
(Tex.App.-Dallas 1982, no writ); Southmark Corp. v. Life Investors, Inc., 851 F.2d 763, 767 (5th Cir.1988);
Document Imaging, Inc. v. IPRO, Inc., 952 F.Supp. 462, 468 (S.D.Tex.1996). Writings that contain "futuristic"
language are insufficient to confirm that a contract or promise is already in existence. Martco, 632 S.W.2d at
928; Southmark 851 F.2d at 767.
The writing in this case provides that, "upon receipt of an acceptable contract," Hartford "stands ready" to
issue the bonds. This "futuristic" language clearly contemplates a future contract, and cannot be reasonably
construed as reflecting a present intent by Hartford to guarantee Williams's performance. Indeed, the
language clearly contemplates that Williams or C. Springs will first provide Hartford 779 with an "acceptable
contract." Second, Hartford's statement that it "stands ready" also indicates that Hartford had no present
intent to be bound at the time the August 20 letter was signed. See Maderas Tropicales v. Southern Crate &
Veneer Co., 588 F.2d 971, 974 (5th Cir.1979) (holding Southern Crate's letter that it "stands willing and able
to purchase all the cleats that (Willimgham) can manufacture" insufficient to comply with statute of frauds
because it shows offer to purchase in the future, not present intent to contract).
Harford Fire Ins. Co. v. C. Springs (Tex.App.- Houston [1st Dist.] Apr. 16, 2009)(Radack)
(construction law, bondability, statute of fraud, suretyship, sufficiency of the pleadings)
REVERSE TRIAL COURT JUDGMENT AND RENDER JUDGMENT: Opinion by Chief Justice Radack
Before Chief Justice Radack, Justices Alcala and Bland
Hartford Fire Insurance Company v. C. Springs 300, Ltd.
Appeal from 270th District Court of Harris County
Trial Court Judge: Hon. Brent Gamble
Because an essential term of the August 8, 2000 letter — particularly, Hartford's intent to guarantee
Williams's obligations — cannot be ascertained from the writing, the letter is too indefinite, as a matter of
law, to form a binding promise that complies with the statute of frauds. At best, the August 8, 2000 letter
shows an agreement to agree at some future date. As such, the trial court erred in submitting the breach of
contract issue to the jury.
MORE SURETY CASES / CASELAW FROM HOUSTON COURTS OF APPEAL
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AFFIRM TRIAL COURT JUDGMENT: Opinion by Justice Bland
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01-09-00291-CV Michael Whitmire and Sureties R.O. Whitmire and Elsi O. Whitmire v. Greenridge Place
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Adi v. Rapid Bail Bonding Co. (Tex.App.- Houston [1st Dist.] Feb. 18, 2010)(Sharp)
(summary judgment improperly granted in favor of surety)
REVERSE TRIAL COURT JUDGMENT AND REMAND CASE TO TRIAL COURT FOR FURTHER
PROCEEDINGS: Opinion by Justice Jim Sharp
Before Justices Keyes, Sharp and Massengale
01-08-00290-CV John Adi v. Rapid Bail Bonding Company and Martin Halick
Appeal from 190th District Court of Harris County
Trial Court Judge: Hon. Jennifer Walker Elrod
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