Opinion ID: 2455879
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Heading: La Sara's DTPA Claim

Text: La Sara also contends that the bank has violated the Deceptive Trade Practices Consumer Protection Act. Tex.Bus. & Com.Code Ann. §§ 17.41-.63. (Vernon Supp.1984). La Sara claims that as part of the depository contract the bank impliedly warranted the dual-signature requirement adopted in La Sara's corporate resolution. La Sara alleges that the bank breached this warranty when it paid checks signed only by Jones and is therefore liable for treble damages under section 17.50(a)(2). In addition to the checks, La Sara contends that the bank's practice of splitting items payable to La Sara between the accounts of Jones and La Sara, of making loans in La Sara's name without proper authorization, and of allowing Jones to orally withdraw money from La Sara's account violated the general prohibition against (f)alse, misleading or deceptive acts or practices in the conduct of any trade or commerce contained in the 1977 act. Id. §§ 17.46(a), 17.50(a)(1). The trial court agreed. The court of appeals reversed the judgment of the trial court and rendered judgment that La Sara take nothing on its DTPA claim. The court of appeals found no evidence of a false, misleading, or deceptive act or practice in violation of sections 17.46(a) and 17.50(a)(1). The court did agree that the bank had breached an implied warranty in paying La Sara's checks on only one signature, but held that La Sara's cause of action for breach of warranty accrued in 1975 when the checking account was first opened. The court of appeals reasoned that La Sara was not a consumer then because the 1975 version of the DTPA defined services as work, labor, or services purchased or leased for use for other than commercial or business use. See Farmers & Merchants State Bank v. Ferguson, 617 S.W.2d 918, 920 (Tex.1981).
Section 17.50(a)(2) provides that a consumer may maintain an action if he has been adversely affected by the breach of an express or implied warranty. A consumer is defined as an individual, partnership or corporation, or governmental entity who seeks or acquires by purchase or lease any goods or services. Tex.Bus. & Com. Code Ann. § 17.45(4) (Vernon Supp.1984). The services provided by a bank in connection with a checking account are within the scope of the DTPA. Farmer's & Merchants State Bank v. Ferguson, 605 S.W.2d 320, 324 (Tex.Civ.App.Fort Worth 1980), aff'd on other grounds, 617 S.W.2d 918 (Tex.1981). The court of appeals erred in applying the 1975 act to all of La Sara's checks. The applicable version of the DTPA is determined by the date the deceptive act or practice occurs. Woods v. Littleton, 554 S.W.2d 662, 666 (Tex.1977). If the bank breached a warranty by honoring La Sara's checks on an unauthorized signature, La Sara's cause of action accrued under the version of the DTPA in force at the time the checks were paid. The 1977 Act would therefore apply to those checks paid after May 23, 1977, the effective date of the amendment which deleted the phrase for other than commercial or business use from the definition of services. Because La Sara qualifies as a consumer under the 1977 act, we must determine whether the bank breached an implied warranty by paying checks contrary to La Sara's instructions. The DTPA does not define the term warranty. [4] Furthermore, the act does not create any warranties; therefore any warranty must be established independently of the act. Cheney v. Parks, 605 S.W.2d 640, 642 (Tex.Civ.App.Houston [1st Dist.] 1980, writ ref'd n.r.e.); D. Bragg, P. Maxwell, & J. Longley, Texas Consumer Litigation § 5.01 (2d ed. 1983). While express warranties are imposed by agreement of the parties to the contract, Rinehart v. Sonitrol of Dallas, Inc., 620 S.W.2d 660, 662-3 (Tex.Civ.App.Dallas 1981, writ ref'd n.r.e.); Tex.Bus. & Com. Code Ann. § 2.313 (Tex.UCC) (Vernon 1968), implied warranties are created by operation of law and are grounded more in tort than in contract. Humber v. Morton, 426 S.W.2d 554 (Tex.1968). Implied warranties are derived primarily from statute, although some have their origin at common law. See Kamarath v. Bennett, 568 S.W.2d 658 (Tex.1978); Jacob E. Decker & Sons, Inc. v. Capps, 139 Tex. 609, 164 S.W.2d 828 (1942). One statutory source of implied warranties is the Uniform Commercial Code. See, e.g., Tex.Bus. & Com.Code Ann. §§ 2.314, 2.315 (Tex.UCC) (Vernon 1968). Although the UCC imposes a number of warranties on customers and collecting banks in the payment process, see id. § 4.207, there is no mention of a warranty by a payor bank in favor of its customer. All of the warranties created in section 4.207 concern either the item itself (for instance, that it has not been materially altered) or the holder's relationship to it (that he has good title, for example). Each of these warranties goes to a present fact. On the other hand, when section 4.207 speaks of a promise to accept the return of a dishonored item, it speaks of an engagement. Generally, courts are to construe statutes so as to harmonize with other relevant laws, if possible. State v. Standard Oil Co., 130 Tex. 313, 107 S.W.2d 550 (1937). We hold that the bank's implied promise that it will not pay checks on an unauthorized signature is not a warranty, but only an implied term of the contract. A mere breach of contract is not a violation of the DTPA. Ashford Development, Inc. v. USLife Real Estate Services Corp., 661 S.W.2d 933, 935 (Tex.1983).
La Sara next contends that the bank's practice of paying its checks on an unauthorized signature violated the 1977 act's general prohibition against (f)alse, misleading or deceptive acts or practices in the conduct of any trade or commerce. Tex.Bus. & Com.Code Ann. §§ 17.46(a), 17.50(a)(1) (Vernon Supp.1984). We, however, like the court of appeals find no evidence that the bank's payment of La Sara's checks on only one signature was a deceptive trade practice. La Sara was fully informed of the bank's practice; each month the bank returned La Sara's cancelled checks with a statement of its account. Before 1979, it was an open question whether the failure to disclose material facts was a violation of 17.46(a). See Robinson v. Preston Chrysler-Plymouth, 633 S.W.2d 500 (Tex.1982) (failure to disclose an unknown material fact not a deceptive trade practice). This case, however, does not even involve a failure to disclose; the bank sent La Sara notice of all transactions. Although the bank's conduct may have been in bad faith under the UCC, it was not false, misleading, or deceptive. In addition to the checks, the trial court found the $14,000 oral withdrawal and the two unauthorized loans to be deceptive trade practices. La Sara argues the court of appeals has erred in failing to address and affirm these findings. The first loan and the oral withdrawal, however, provide no basis for a DTPA claim because both occurred during the period governed by the 1975 act when La Sara did not qualify as a consumer of services. Only the second loan originated after the 1977 amendment to the DTPA which expanded the definition of services to include business and commercial uses. [5] La Sara maintains that this loan was a deceptive trade practice under sections 17.46(a) and 17.50(a)(1) because it was made without proper authorization and the proceeds were split between the accounts of La Sara and Jones. We first considered whether a loan might provide the basis for a DTPA claim in Riverside National Bank v. Lewis, 603 S.W.2d 169 (Tex.1980). In Riverside the plaintiff Lewis sought to refinance the loan on his automobile through Riverside Bank. Riverside advised Lewis that the loan had been approved, but subsequently refused to lend the money. After his car was repossessed and sold, Lewis sued Riverside Bank alleging that the Bank's conduct violated the DTPA. We held that Lewis was not a consumer and therefore had no claim under the DTPA. We said that a person who seeks only to borrow money is not a consumer because the lending of money involves neither a good nor a service. Since the holding in Riverside, we have twice limited the case to its facts, emphasizing that Lewis sought only the extension of credit from Riverside, and nothing more. In Knight v. International Harvester Credit Corp., 627 S.W.2d 382, 389 (Tex. 1982), we held a lender subject to a DTPA claim because the lender and seller were so inextricably intertwined in the transaction as to be equally responsible for the conduct of the sale. In determining that the borrower was a consumer, we considered the borrower's purpose for the loan. We distinguished Riverside because the borrower there sought only the extension of credit, whereas Knight's objective in the transaction was the purchase of a dump truck. 627 S.W.2d at 389. In Flenniken v. Long-view Bank & Trust Co., 661 S.W.2d 705 (Tex.1983), we held the purchaser of a home could sue the bank under the DTPA for an unconscionable course of conduct in foreclosing on his partially constructed home. The bank had agreed to provide the interim financing to the builder in return for an assignment of the purchaser's note and mechanic's lien contract. Again we viewed the transaction from the purchasers' perspective and concluded the Flennikens did not seek to borrow money; they sought to acquire a house. 661 S.W.2d at 708. The rule of law that Knight and Flenniken announced is not restricted to cases involving financial institutions. In Cameron v. Terrell and Garrett Co., 618 S.W.2d 535 (Tex.1981) we held that a buyer of a house could bring a DTPA action against a realtor from whom he had purchased nothing. In Cameron, the realtor, who was the seller's agent, represented to the buyer that the house in question was larger than it actually was. We held that the buyer was a DTPA consumer because of the purchase of the house; therefore, he could bring a DTPA action against anyone in the transaction who violated the act. Under Knight and Flenniken, a lender may be subject to a DTPA claim if the borrower's objective is the purchase or lease of a good or service thereby qualifying the borrower as a consumer. Obviously, we cannot determine La Sara's objective concerning this loan, because La Sara's complaint is that it did not authorize the transaction. There is no evidence, however, that Jones represented to the bank that the loan was to purchase or lease goods or services, that the bank thought the loan was for that purpose, or that the loan was one of a series with which La Sara obtained goods or services. In fact, there is no evidence that La Sara ever borrowed money from the bank for goods or services. Because the loan involves only the extension of credit, La Sara has not shown itself to be a consumer and therefore has no DTPA claim.