Case Name: SWEST, INC., Appellant, v. AMERICAN AIRLINES, INC., Appellee
Court: Texas Courts of Appeals
Jurisdiction: Texas
Decision Date: 1985-05-16
Citations: 694 S.W.2d 399
Docket Number: No. 05-83-00279-CV
Parties: SWEST, INC., Appellant, v. AMERICAN AIRLINES, INC., Appellee.
Judges: Before STEPHENS, VANCE and ALLEN, JJ.
Reporter: South Western Reporter Second Series
Volume: 694
Pages: 399–410

Head Matter:
SWEST, INC., Appellant, v. AMERICAN AIRLINES, INC., Appellee.
No. 05-83-00279-CV.
Court of Appeals of Texas, Dallas.
May 16, 1985.
Rehearing Denied June 25, 1985.
Arch M. Skelton and Thomas W. McKenzie, Besing, Murphy & Skelton, Dallas, for appellant.
Royal H. Brin, Jr., Kevin H. Good, David A. Schwarte, American Airlines, Inc., Dallas, for appellee.
Before STEPHENS, VANCE and ALLEN, JJ.

Opinion:
ALLEN, Justice.
Appellant, Swest, Inc., appeals from a judgment entered against it and in favor of appellee, American Airlines, Inc. (American), in a suit brought by Swest against American for breach of contract based on American's failure to collect C.O.D. charges on two jewelry shipments. Swest raises fourteen points of error on appeal. Points one through eight basically contend that the trial court erred in entering judgment for American because Swest proved breach of contract by American for both C.O.D. shipments as a matter of law. The other points of error complain of the charge, certain evidentiary rulings, and the trial court's award of attorney's fees to American. American asserts three cross-points concerning the trial court's refusal to submit a special issue on ratification, the alleged insufficiency and impropriety of Swest's proof of damages, and the trial court's action in striking American's counterclaim for a declaratory judgment. We agree with Swest's points of error three and seven, which contend, in essence, that American breached its contract as a matter of law. Consequently, we reverse and render judgment in part in favor of Swest and .remand in part for a determination of attorneys' fees, if any, due Swest.
Swest, a jewelry supply house based in Dallas, sent a number of gold and silver shipments C.O.D. to New York on appellee American, a common carrier, to a person identifying himself as Scott Barter. There were no problems with the first two shipments, which were for relatively small amounts, with delivery accomplished and payment made by cashier's check and certified personal check. The last two shipments, also sent C.O.D., were priced on the airbill at $48,220 and $38,160, respectively. American accepted payment by what appeared to be certified personal checks, but actually the bank certifications were forged. American turned over the $48,220 shipment to Barter on November 11, 1980 and turned over the $38,160 shipment to Barter on November 12, 1980. In both instances, American turned the merchandise over to Barter around midnight, when the banks were closed, and made no attempt to verify the forged certified checks. The checks were subsequently dishonored, resulting in Swest's suit against American for the value of the merchandise, in which Swest alleged breach of contract, fraud, negligence, breach of duty of good faith and fair dealing, and breach of duty to comply with reasonable commercial standards. The cause was tried before a jury, which found that American did not breach its C.O.D. contracts with Swest. The trial court accordingly entered judgment for American.
Although Swest raises fourteen points of error, we conclude that points of error three and seven are dispositive of the case. Swest complains in these points of error that the trial court erred in overruling its motion for judgment notwithstanding the verdict because the jury's findings of no breach of contract were against the great weight and preponderance of the evidence. Although these points of error use "factual insufficiency" language, the language used to characterize a point of error is not controlling. Instead, the procedural steps to which the points relate are determinative. McKinney v. Air Venture Corp., 578 S.W.2d 849, 862 (Tex.Civ.App.— Fort Worth 1979, writ ref'd n.r.e.). Thus, since Swest's points of error three and seven complaint of the trial court's refusal to grant Swest a judgment notwithstanding the verdict, we construe them to be legal insufficiency points. Murray Corp. of Maryland v. Brooks, 600 S.W.2d 897, 903 (Tex.Civ.App. — Tyler 1980, writ ref'd n.r. e.); Flesher Construction Co., Inc. v. Hauerwas, 491 S.W.2d 202, 205-07 (Tex.Civ.App. — Dallas 1973, no writ); see also, McDonald v. New York Central Mutual Fire Insurance Co., 380 S.W.2d 545, 548 (Tex.1964). We therefore construe them to be asserting that the jury findings of no breach of contract are erroneous as a matter of law. In other words, Swest by these points of error contends that it established breach of contract as a matter of law. In reviewing "matter of law" points, we must consider all the evidence in the record. Bobbitt v. Electronic Data Systems Cory., 652 S.W.2d 620, 622 (Tex.App. — Dallas 1983, no writ); Precipitair Pollution Control v. Green, 626 S.W.2d 909, 911 (Tex.App. — Tyler 1981, writ ref'd n.r.e.).
It is undisputed that American made no attempt to verify the purported certified checks in question. The issue to be resolved, then, is whether American was required to make sure that the purported certified checks were genuine and not forgeries. This is a question of first impression in Texas. The only authority we have found from any jurisdiction which rules directly on the question of whether a C.O.D. carrier has a duty to verify a certified check is Mogul v. Lavine, 247 N.Y. 20, 159 N.E. 708, 709 (1928) (Cardozo, C.J.). Mogul is a leading ease, perhaps the leading case, on the duties and liabilities of C.O.D. carriers. A Texas court has quoted with approval Mogul's basic analysis of those duties and liabilities. Herrin Transportation Co. v. Robert E. Olson Co., 325 S.W.2d 826, 827-28 (Tex.Civ.App. — San Antonio 1959, no writ). Mogul holds that a C.O.D. carrier which may accept a certified check under its C.O.D. contract has a duty to verify any purported certified check tendered as payment for a C.O.D. shipment. We concur. As Chief Judge Cardozo stated in Mogul, a C.O.D. contract which allows payment by a certified check allows the carrier to accept a certified check, "and not a mere pretense of one." 159 N.E. at 709.
Moreover, holding that a C.O.D. carrier does not have the duty to verify a purported certified check would undermine the policy and purpose of C.O.D. shipments. The policy is to "assure that the carrier cannot make an absolute delivery without collecting, thereby leaving the shipper to his recourse against the consignee." National Van Lines, Inc. v. Rich Plan Corp., 385 F.2d 800, 803 (5th Cir.1967). The Ninth Circuit Court of Appeals, in Cermetek, Inc. v. Butler Avpak, Inc., 573 F.2d 1370, 1379 (9th Cir.1978), stated the purpose behind the policy as follows: "The seller generally utilizes a C.O.D. contract because he either does not trust the buyer or does not intend to advance credit . [W]hen utilizing the C.O.D. method the seller clearly indicates he wants liquid assets, not a contract claim against a distant buyer who may be insolvent, litigious, dishonest, or all three." If we were to hold that a C.O.D. carrier need not verify purported certified checks, we would significantly undermine the confidence of shippers that they would receive cash or its equivalent in payment for their C.O.D. shipments. This we decline to do. Hence, we sustain Swest's points of error asserting that the trial court erred in refusing to grant Swest a judgment notwithstanding the verdict. We hold that the evidence establishes as a matter of law that American breached its contractual duty to verify the checks.
Our holding does not, as the dissent maintains, impose strict liability on C.O.D. carriers for failure to collect, even when the failure is the result of the carrier's acceptance of a forged certified check. If a C.O.D. carrier, in the exercise of reasonable care and skill, fulfills its duty to verify a purported certified check (when the C.O.D. contract allows payment by certified check), it is not liable for loss. The evidence in this case shows that American made no effort whatsoever to fulfill its duty. Therefore, as a matter of law, it breached its contractual duty to collect the amounts due.
The dissent argues that The Video Station v. Frey's Motor Express, Inc., 188 N.J.Super. 494, 457 A.2d 1217, 1220 imposes a lesser duty on C.O.D. carriers. The Video Station does hold that "[a] defendant which is in the business of accepting C.O.D. shipments for delivery should reasonably be required to educate its agents and employees as to the identifying characteristics of a certified check." Id. 457 A.2d at 1220. The dissent seems to take this holding to mean that a C.O.D. carrier only has the duty to inspect a certified check to see if it is void on its face. However, The Video Station did not reach the question of whether a C.O.D. carrier has the duty to verify a certified check precisely because the check in The Video Station was void on its face. There is nothing inconsistent between The Video Station's holding that a C.O.D. carrier must inspect a purported certified check for facial defects and our holding that a C.O.D. carrier must go on to verify those purported certified checks which pass this inspection.
Our decision on points of error three and seven, which compels a reversal, makes it unnecessary to discuss Swest's remaining complaints. We now turn to American's cross-points. American's first cross-point is that the trial court erred in refusing to submit a special issue on ratification to the jury. We find no error in the trial court's refusal to submit such a special issue, since there was no evidence that Swest had ratified American's acceptance of purported, but unverified, certified checks. When American delivered the purported certified checks to Swest, Swest did accept and deposit them. This action would count as evidence of Swest's willingness to accept verified, valid certified checks in lieu of cash or cashier's checks. However, there is no evidence that Swest had knowledge that American had accepted purported, but unverified, certified checks. Since there is no evidence that Swest had knowledge of all the material facts surrounding American's acceptance of these bogus checks, American was not entitled to a jury issue on the defensive issue of ratification. Hernandez v. Southern Pacific Transportation Co., 641 S.W.2d 947, 953 (Tex.App. — Corpus Christi 1982, no writ) (no error in trial court's refusal to submit special issue if there is no evidence raising it); Jackson v. Gray, 558 S.W.2d 138, 139 (Tex.Civ.App. — Tyler 1977, writ ref'd n.r.e.) (ratification requires knowledge by principal of all pertinent facts); see also Land Title Co. of Dallas, Inc. v. F.M. Stigler, Inc., 609 S.W.2d 754, 756 (Tex.1980) (ratification may occur after principal acquires full knowledge).
American's second cross-point is that the evidence offered by Swest to prove its alleged damages was insufficient and improper under the Texas law of damages. This is not actually a cross-point, since it does not complain of any ruling or action of the trial court. TEX.R.CIY.P. 420; Jackson v. Ewton, 411 S.W.2d 715, 717 (Tex.1967). It is instead an argument for upholding the trial court's judgment despite any error in the jury's findings on liability. Since the trial court's judgment would be correct if Swest did not prove damages, we shall consider this argument. The sum to be collected on the C.O.D. shipment is pri-ma facie evidence of the shipper's damage when the carrier fails to collect. Herrin Transportation Co., 325 S.W.2d at 827; National Van Lines, 385 F.2d at 803 (apparently applying Texas law), Mogul; 159 N.E. at 709. Swest offered uncontroverted evidence of the sum to be collected on delivery of the goods. The carrier may mitigate damages, however, if there is sufficient evidence that the debt was uncollec-tible. Herrin Transportation Co., 325 S.W.2d at 828; National Van Lines, 385 F.2d at 803; Mogul, 159 N.E. at 709. In such a circumstance, though, the carrier cannot escape liability for all damages. The damage award in such a case must reflect the actual loss to the consignor. That loss is the value of the goods wrongfully surrendered. Mogul, 159 N.E. at 710.
American argues that it is entitled to mitigation of damages, that damages should consequently be assessed according to the actual value of the goods at the time of delivery, that Swest did not prove the actual value of the goods at delivery, and that Swest, therefore, did not prove damages. However, it is established law in Texas that the defendant has the burden of proof on all matters relating to mitigation of damages. Stanley Manly Boys Clothes v. Hickey, 113 Tex. 482, 487-88, 259 S.W. 160, 163 (1924); Hardison v. Beard, 430 S.W.2d 53, 57 (Tex.Civ.App. — Dallas 1968, writ ref'd n.r.e.); see also, Herrin, 325 S.W.2d at 828; National Van Lines, 385 F.2d at 803-04. American therefore had the burden not only to prove the predicate for mitigation, the debt's uncollectibility, but also to prove that the actual value of the goods on delivery was less than the sum to be collected. American has not cited this court to any part of the record which would indicate that the actual value of the goods at delivery was less than the sum to be collected. Indeed, it contends that there was no evidence of the actual value of the goods. Since American had the complete burden on its defensive plea of mitigation and produced no evidence on an essential element of that plea, we must conclude that Swest's prima facie proof of damages stands unrebutted. Swest has thus proved as a matter of law that its damages amounted to the sum to be collected on delivery of the goods. See Lesi- kar v. Lesikar, 251 S.W.2d 555, 559 (Tex.Civ.App. — Galveston 1952, writ ref d n.r.e.) (unrebutted -prima facie case is established as a matter of law).
American's final cross-point complains that the trial court erred in striking its counterclaim against Swest for a declaratory judgment. A successful party which has some complaint about the judgment must inform the trial court of its complaint or objection before it can assert a cross-point on appeal. Failure to do so deprives the court of appeals of jurisdiction to consider the cross-point. West Texas Utilities Co. v. Irvin, 161 Tex. 5, 9, 336 S.W.2d 609, 610 (1960); Atlantic Richfield Co. v. Holbein, 672 S.W.2d 507, 517 (Tex.App.—Dallas 1984, writ ref'd n.r.e.). American's complaint essentially is that the judgment did not include declaratory relief. American did not file a notice of appeal; nor did it in any other way inform the trial court of its dissatisfaction with the judgment. This court consequently has no jurisdiction to consider the third cross-point.
We conclude that Swest established its breach of contract case as a matter of law. We therefore reverse and render judgment that Swest, Inc. recover from American Airlines, Inc. the sum of $86,380.00, the total amount to be collected on the two C.O.D. shipments, plus applicable interest, and that American Airlines, Inc. take nothing from Swest, Inc. Moreover, since Swest pleaded for attorneys' fees under TEX.REV.CIY.STAT.ANN. art. 2226 (Vernon Supp.1985) and prayed for attorneys' fees in its motion for judgment notwithstanding the verdict, and since the parties agreed that the trial court would decide the issue of attorneys' fees for the prevailing party in a post-verdict hearing, we remand this case to the trial court solely for a determination of the attorneys' fees, if any, due Swest.
Reversed and rendered in part and remanded in part.