Court Opinion

ID: 9646524
Source: CourtListenerOpinion
Date Created: 2023-08-23 13:02:04.428265+00
Date Added: 2024-06-11T18:11:38.920553
License: Public Domain

JAMES, Justice,
dissenting.
I respectfully dissent. I would affirm a portion of the trial court’s judgment, reverse and render a part thereof, and reverse and remand a part thereof. More specifically, I would sustain Appellant’s points numbers 8, 9, 14, and 15.
Appellant’s point of error no. 8 complains that the trial court erred in rendering judgment awarding to Fender the 100 shares of Kilgore Bank stock “retained by Mann” pursuant to the May 17,1974, stipulation by the parties. For convenience in discussion, where appropriate I will refer to Mr. Fender and his interests as “Fender,” and to Mr. Mann and his interests as “Mann.”
The so-called “stipulation” is denominated by the heading, “Agreement,” is dated May 17, 1974, and is signed by counsel for Fender and Mann. This agreement is not ambiguous, insofar as the disposition of the 100 shares is concerned, in my opinion, and was executed subsequent to Mann’s letter to Fender dated April 30, 1974 (Pl.Ex.No. 11) and Fender’s reply to Mann dated May 9, 1974 (Pl.Ex.No. 12).
The three paragraphs pertaining to the 100 shares are numbers 2, 6, and 7, and read as follows:
“2.
“Defendants will transfer to Harris R. Fender, Individually and as Trustee for Harris R. Fender, Jr. and David M. Fender, 9484 shares of stock in Kilgore First National Bank of Kilgore, being all of the stock held by Defendants (Mann) in said Bank with the exception of the 4635 shares to which Plaintiff (Fender) asserts a claim of ownership and 100 shares being retained by Robert A. Mann.
‡ $ ⅝ $ ‡
“6.
“Defendants acknowledge and agree that the remaining 4635 shares of stock in Kil-gore First National Bank of Kilgore mentioned in the preceding paragraph represent one-half of the 9270 shares of stock in said Bank acquired by Robert A. Mann from Southwest Bancshares, Inc. on or about November 15, 1972.
“7.
“This agreement and the transfer of the 9484 shares of stock in Kilgore First National Bank of Kilgore from Defendants to Plaintiff, as herein provided, shall be with*203out prejudice to the rights of any party to this suit and without prejudice to the rights, if any, of any of said parties to the 4635 shares.”
At the time the May 17, 1974, Agreement was executed, 14,219 shares of Kilgore Bank stock were in issue, with different questions involved with respect to different portions. The stipulation provided that Mann would transfer to Fender 9484 shares, being all the stock held by Mann in said Bank except (1) the 4635 shares which Fender was claiming and (2) 100 shares being retained by Mann.
It is significant that the final paragraph (7) provides that this transfer of the 9484 shares and the 4635 shares would be without prejudice to any party, but does not say anything about Mann’s retention of the 100 shares being without prejudice.
It is to be remembered that all of this stock was in Mann’s name, and that Fender as Plaintiff had the burden of establishing his entitlement thereto before he would be allowed to divest Mann of same. By the clear and unambiguous provisions of this Agreement, the 100 shares retained by Mann were removed from consideration in this suit. Fender sued Mann to establish his right to the 14,219 shares of Kilgore Bank stock held by Mann and in Mann’s name. Appellee Fender relies upon Mann’s letter to him of April 30, 1974, as an offer to sell him these 14,219 shares, which he (Appellee Fender) asserts he accepted by his reply letter to Mann of May 9, 1974. The trial court’s judgment recites that Mann’s letter of April 30,1974, constituted an offer by Mann to sell these 14,219 shares, which was accepted by Fender. These findings in the trial court’s judgment are in direct conflict with the clear provisions of the May 17, 1974, agreement. Mann’s letter of April 30, 1974, and Fender’s reply letter of May 9, 1974, are preliminary negotiations leading up to the written Agreement of May 17, 1974, wherein it was expressly provided that Mann would retain these 100 shares. Appellee Fender neither offered any evidence nor requested any issues which would cause him to be entitled to these 100 shares, nor has Appellee made any effort to modify, explain, or otherwise attack the Stipulation. To the contrary, Appellee has at all times stood upon and confirmed the Stipulation. Appellee Fender as Plaintiff had the burden to establish his right of ownership to these 100 shares of stock; however, he neither offered evidence to support such claim nor requested the submission of special issues supporting such claim. After jury verdict, the 100 shares of stock still stood in Mann’s name and possession. The “without prejudice” part of the Stipulation by express wording only related to the 9484 shares and the 4635 shares, and by necessary implication did not refer to or include the 100 shares, and therefore cannot be relied upon by Appellee as a basis for avoiding the effect of Mann’s retention of the same. Appellee Fender’s failure to present evidence or secure jury findings entitling him to the 100 shares resulted in a waiver of his claim of ownership to such shares. An independent ground of recovery or defense not conclusively established by the evidence is waived if no issue is given or requested. Rule 279, Texas Rules of Civil Procedure; Glens Falls Insurance Co. v. Peters, (Tex.1965) 386 S.W.2d 529 and the cases cited therein on page 531.
For the foregoing reasons, I would hold that that portion of the trial court’s judgment wherein Mann was divested of the 100 shares in question and that Fender was awarded such shares for a payment of $14,-000 plus interest from May 10, 1974, to the date of judgment in the amount of $3282.37 be reversed and rendered, and that said judgment adjudge Mann to be the owner of such 100 shares with a corresponding reduction in the money Mann is to receive by the amount of $14,000.00 plus $3282.37 interest to the date of judgment.
Appellants’ point of error 9 contends the trial court erred in rendering judgment to the effect that the Mann defendants take nothing by their counterclaim against Fender for breach of contract, because the jury’s failure to find that the $600,000.00 note was not in default is so against the great weight and preponderance of the evidence as to be *204manifestly wrong and unjust; and because of the jury findings that Pender had notice of a claim of usury (Special Issue No. 3), and that upon such notice, a reasonable man would not have taken out the $600,-000.00 note (Special Issue No. 4) are immaterial and constitute no defense as a matter of law. I would sustain these contentions.
By points of error numbers 14 and 15, Appellants assert that the jury’s answers to Special Issues Numbers 3 and 4 (relative to usury) had such a prejudicial effect that it permeated the entire charge to Mann’s prejudice, thereby increasing Mann’s burden on all the issues as well as constituting an incurable comment on the weight of the evidence. I would sustain these contentions and would hold that the jury’s answers to Special Issues Numbers 3 and 4 concerning usury did permeate the entire charge to Mann’s prejudice and thereby increased Mann’s burden of proof, particularly insofar as Mann’s cross-action against Pender for damages for breach of contract and his cause of action based upon duress are concerned.
Special Issue No. 5 submitted to the jury read as follows:
“Do you find from a preponderance of the evidence that immediately prior to March 24, 1974, the $600,000.00 note executed by First Madison Corp. was not in default?
“Answer: ‘It was not in default’ or ‘It was in default.’ ”
To which the jury’s answer was: “It was in default.”
I believe this jury’s failure to find that this note was not in default is so against the great weight and preponderance of the evidence as to be manifestly wrong and unjust, under the doctrine of In re King’s Estate (Tex.1951) 150 Tex. 662, 244 S.W.2d 660, and should be set aside. To show my reasons for this conclusion I have weighed all the evidence on both sides of this issue, as mandated by our Supreme Court, and will now review such evidence:
On March 23, 1972, Fender executed a written “Take-Out” agreement by which he agreed to purchase a $600,000.00 promissory note made by the First Madison Corporation and payable to Great Southwest Mortgage and Investment Co., Inc. This $600,-000.00 note was endorsed to Mann’s children’s trusts, with Mann at that time Trustee. The note was secured by a 425 acre tract of land located in Rains County, Texas. Under said agreement, Fender agreed to purchase the take-out note if called upon to do so between February 24, 1974, and • March 24,1974. For this agreement Fender received $30,000.00 cash plus the right to purchase one-half of the Rains County land for $1,000.00, which land was at that time appraised at $956,800.00. The take-out agreement enabled First Madison Corporation (maker of the take-out note) to obtain funds to purchase the Rains County land. The Mann Defendants agreed to loan First Madison Corp. the $600,000.00 purchase price if First Madison would repay or refinance the amount within two years. Therefore, the effect of the take-out commitment was that the Mann Defendants would fund the purchase of the Rains County land from March 1972 through March 1974, and thereafter, Fender, by the performance of the take-out agreement, would fund the purchase.
The Mann Defendants advanced $600,-000.00 and became holders of the take-out note. To fund the note the Mann Defendants obtained a $600,000.00 loan from Continental National Bank in Fort Worth, which loan was personally guaranteed by Mann. Moreover, the take-out note was assigned to the Continental Bank as collateral for the Mann Defendants’ loan.
The take-out agreement provided that Fender would be given 30 days notice by Mann or his nominee prior to Fender’s obligation to purchase the take-out note, and required that said note not be in default at the time of purchase by Fender. On February 15, 1974, Continental Bank as nominee of Mann, gave written notice by letter to Fender providing that Continental Bank desired Fender to exercise his take-out obligation on or before March 24, 1974.
*205Fender responded by letter inquiring whether all conditions precedent were satisfied. Continental Bank, by letter of Frank C. McDowell, an officer of said Bank, by letter of March 18, 1974, notified Fender that all closing requirements had been met; and concerning whether the note was current or not, the letter read as follows:
“4. To the best of my knowledge, the note which will be assigned to you is current in all respects with no conditions of default.”
Replying to this, Fender on March 26, 1974, sent a telegram to McDowell at Continental Bank with a copy to Mann, saying in its pertinent parts: “_ Please advise whether March 24, 1974, installment has been paid and whether all interest quarterly installments have been paid to a current date. We also wish to know what you propose to do with regard to the claim by maker of note that interest is usurious. If all conditions of our commitment have been met, we will be in a position to close this matter.”
In response to Fender’s telegram, Mann on the next day sent a telegram to Fender stating: “Re your telegram March 26, all interest paid to current date STOP I warrant no usury STOP all conditions met STOP please proceed.” In spite of the foregoing, Fender, although recognizing that all other conditions had been met, claimed that he was not satisfied that the note was not in default, and therefore refused to honor his take-out agreement.
Mann filed a counterclaim against Fender for breach of contract because of Fender’s refusal to perform on the take-out agreement. Fender defended, contending: (1) that he did not receive evidence prior to March 24, 1974, that the take-out note was current; (2) that the interest on the note was not in fact current as of March 24, 1974; and (3) that he (Fender) was put on notice that the maker of the take-out note was claiming that the note was usurious. Upon these asserted grounds, Fender claimed he was released from his obligation to perform the take-out agreement. Mann pleaded and offered evidence to the effect that because of Fender’s refusal to perform the take-out agreement that he was placed under great financial pressure from several sources which was tantamount to duress caused by Fender for which he sought actual and exemplary damages.
It is my opinion that the great weight and preponderance of the evidence overwhelmingly established that the take-out note was not in default immediately prior to March 24,1974. The issue narrows itself actually down to whether the interest was current on the take-out note at said time.
Walter J. Rusek, a certified public accountant, was at the times pertinent to this issue the Trustee of the trusts for Mann’s three children, and primarily responsible for Mann’s financial and accounting matters. Rusek testified that Mann and the makers of the take-out note entered into an arrangement whereby the interest due under the take-out note was to be offset against certain interest payments owed by Mann. The interest offset involved the Mann trusts (who were the owners of the take-out note), Mann individually, First Madison Corporation (the maker of the take-out note), and a group of investors, including Mann and shareholders of First Madison. Rusek testified that the interest due on the take-out note was offset against interest due another entity (to wit, Premier Properties) by Mann. Rusek was the man primarily responsible for the keeping and handling of the financial records of Mann and the Mann Trusts, and testified how those books and records were kept. Rusek testified that the interest offsets were actually made and therefore that the take-out note was current.
Robert A. Mann testified concerning the agreement to offset interest which was being implemented at the time critical to the take-out agreement, to wit, March 24, 1974, which agreement involved Mann, L. L. Wood, Fred N. Neely and others interested in First Madison Corporation. Mann further testified that all the conditions precedent to Fender’s take-out agreement had been satisfied, and that he had informed the Continental National Bank that the *206note was current in all respects with no conditions in default. Moreover, when Fender telegraphed Continental Bank on March 26, 1974, with copy to Mann, inquiring as to whether the note was current, Mann on the next day sent a telegram to Fender stating, “Re your telegram March 26, all interest paid to current date STOP I warrant no usury STOP all conditions met STOP please proceed.”
L. L. Wood, an attorney, was the personal guarantor of the take-out note and was a shareholder in the First Madison Corporation, the maker of the take-out note. Wood testified concerning the arrangements with respect to the interest offsets, explaining that certain interest payments owed by Mann were paid on Mann’s behalf by a group of investors with whom Mann was associated and that such interest payments were offset against interest due on the take-out note. Wood testified that he personally made the offsetting interest payments on behalf of Mann and considered such payments to be offset against interest due by First Madison Corporation on the take-out note.
Fred N. Neely, a former owner of First Madison Corporation, corroborated the offset arrangement, testifying:
“The deal was set up, Mr. Mann was a participant in a joint venture that we referred to as the Premier Properties, 181, or joint venture; and we all offset the interest, or it was set up initially for the interest to be offset. We owed him so much interest, on the $600,000.00 and he owed interest payments on our deal.”
Frank C. McDowell was a vice-president of Continental National Bank and the officer responsible at Continental National Bank for the $600,000.00 loan to Mann’s children’s trusts, and was generally familiar with the take-out note. On February 15, 1974, McDowell wrote a letter to Fender that Continental Bank as Mann’s nominee, was requesting Fender to exercise his takeout obligation. Fender replied by his letter to McDowell dated March 14, 1974, inquiring whether the note was in default. McDowell answered Fender’s letter by his (McDowell’s) letter of March 18, 1974, and after stating that all the other requirements had been met, stated, “To the best of my knowledge, the note which will be assigned to you is current in all respects with no conditions of default.” McDowell testified to several conversations he had with Charlie Woolridge, who was Fender’s employee designated by Fender to determine for Fender whether the take-out note was current. McDowell in this regard testified as follows:
“I told Mr. Woolridge that we were looking primarily to Mr. Mann, personally, for the repayment of our loan and that the note that was assigned to us, we were not receiving the interest payments that were due under that note directly but that I had conferred with Mr. Mann and he had told me that the note was current and the note that we had with the Mann Trusts was also current. I told Mr. Woolridge that.”
“Q. If they came forward with the takeout you were in a position to transfer the note as being current, were you not, sir?”
“A. Yes, sir.”
The evidence clearly showed that the specific arrangements agreed upon were carried out; that is to say, that the interest due under the take-out note was satisfied by offsets against interest owed by Mann in regard to other unrelated transactions.
Fender’s testimony was to the effect that the only condition precedent to his performance of the take-out agreement was whether the interest due on the note was current. Fender gave no testimony to the effect that the note was in default, and apparently had no personal knowledge as to whether the note was in default or not.
Likewise, Charles R. Woolridge, Fender’s employee who was requested by Fender to determine whether all conditions were fulfilled, testified that the only condition in dispute was whether the note was in default. Woolridge likewise was unable to testify to any facts to the effect that the note was in default.
The only evidence that the take-out note might be in default was circumstantial evi*207dence growing out of the lack of written records reflecting the interest offsets after 1972. In other words, the interest was posted on the note through the year 1972, but was not posted thereafter. Rusek explained that this gap was due to negotiations with the Internal Revenue Service relating to the amendment of Mann’s income tax returns and Rusek’s election not to record the offsets as income to Mann until the problems with Internal Revenue Service were resolved. In my opinion, this absence of interest postings is factually insufficient to support the jury’s failure to find that the take-out note was not in default.
Continental National Bank was the holder of the take-out note, since said note had been assigned by the Trustee of the Mann’s children’s trusts to said Bank as collateral. However, Continental Bank had designated Mann to receive the interest on the take-out note, and had in effect made Mann its agent for purposes of determining whether the note was or was not current. Thus, Mann and his agent Rusek were more than mere “interested parties,” whose testimony is to be discounted; to the contrary, they were in the actual position as the holder of the note insofar as having the power to determine discharge and satisfaction of the interest obligation of the take-out note. Moreover, the interest offset arrangement testified to by Mann, the maker of the take-out note corroborated by others having knowledge of same, does not conflict or violate the Texas Business & Commerce Code. Section 3.603(b) provides:
“Payment or satisfaction may be made with the consent of the holder by any person including a stranger to the instrument.”
Section 3.601(b) provides:
“Any party is also discharged from his liability on an instrument to another party by any other act or agreement with such party which would discharge his simple contract for the payment of money.”
Under these provisions the maker’s obligation to pay interest on the take-out note can be and was here satisfied and discharged by the agreement between the maker and Mann.
We now move to a discussion of the trial court’s submission to the jury of Special Issues Numbers 3 and 4 and the jury’s answers thereto:
“Special Issue No. 3: Do you find from a preponderance of the evidence that prior to March 24, 1974, Harris R. Fender was put on notice of a claim of usury by the maker of the $600,000.00 First Madison Corp. note?” To which the jury answered, “He was.”
Then conditioned upon an affirmative answer to Special Issue No. 3, the court submitted this issue:
“Special Issue No. 4: Do you find from a preponderance of the evidence that upon receiving such notice of usury, if you have so found, a person of ordinary prudence in the exercise of ordinary care would not have taken out such $600,000.00 note?” To this issue the jury answered: “He would not have.”
Neither Special Issues Nos. 3 or 4 are controlling issues and in my opinion it was error for them to be submitted to the jury. Fender testified that he was told prior to March 24,1974, that the maker of the takeout note or its guarantors might claim that the note was usurious, and this was one of his asserted reasons for refusing to perform his take-out agreement. However, Fender neither alleged nor proved that the note was usurious, and there is no showing that after Fender heard of such possible claim of usury, that he made any investigation to determine whether the note was in fact usurious. There is no evidence in the record whatever that the note was in fact usurious.
Fender was contractually obligated to purchase the take-out note. His hearing about the possibility of a usury claim which might be made does not constitute a defense to his failure to honor his take-out agreement. The only provision in the takeout agreement touching on usury or the possibility thereof is paragraph 9 which reads as follows:
*208“9. In no event shall I be entitled to receive, nor shall the maker of said note be obligated to pay any amount as interest in excess of the highest rate permitted by the laws of the State of Texas. If I should ever receive an amount which would exceed the highest lawful rate, the amount which would be excessive interest shall be applied to the reduction of the principal of the loan and not to the payment of interest. The provisions of this paragraph shall control over the provisions of every other agreement between us.” By the foregoing language, the take-out agreement specifically provided for the possibility that the takeout note might be usurious.
The jury’s answer to Special Issue No. 4, wherein the jury found that a reasonable man would not perform a contractual obligation, is no defense to Fender’s breach of contract. The man who reasonably breaches his contract is nevertheless liable for damages resulting therefrom. In other words, reasonable care is no justification for breaching a contract. See City of Dallas v. Shortall (Tex.1938) 131 Tex. 368, 114 S.W.2d 536; State v. F. & C. Engineering Co. (Houston 14th CA 1969) 438 S.W.2d 647, NRE (where contractor’s failure to perform was not excused by the fact that performance would be more expensive than contractor expected); Radio News Assn. v. Eagle Broadcasting Co. (San Antonio Tex.Civ.App.1940) 144 S.W.2d 915, writ dismissed (where performance of a contract was not excused because it would work a hardship); McCoy v. Dolph Construction Co. (Waco Tex.Civ.App.1947) 203 S.W.2d 661, no writ. Thus, the jury findings that Fender received notice of usury and that a reasonable person would not have exercised the takeout agreement are immaterial and provide no basis for a defense to Fender’s breach of contract. More than that, the submission of these two special issues concerning usury created a prejudicial atmosphere against Mann and permeated the entire charge insofar as all of Mann’s claims for damages are concerned. Usury has been condemned in the Bible as well as in man-made law. During jury deliberations, the jury sent a note to the court asking for a definition of the term “usury.” The trial court refused to furnish a definition of same; therefore the jury was required to speculate about what usury meant and whether notice of usury was a defense to Mann’s claim of duress. I believe these issues increased Mann’s burden concerning his duress defense and counterclaims. Once the jury concluded that a reasonable man, after receiving notice of a claim of usury, would refuse to honor his contractual obligation, then Mann’s burden to show that Fender’s failure to honor the take-out agreement amounted to duress was greatly increased, in my opinion.
For the foregoing reasons, I would:
(1) Reverse and render that portion of the trial court’s judgment wherein Mann was ordered to sell and transfer 100 shares of the Kilgore Bank stock for $14,000.00 plus $3282.37 interest to date of said judgment. In this connection I would hold that Mann is adjudged to be the owner of such stock, and that the total amount of money Mann is to receive in said judgment be reduced by the stated value of said stock plus interest, to wit, $17,282.37;
(2) I would reverse and remand for retrial on the merits all of the matters set out in Mann’s crossaction based upon Fender’s alleged breach of contract and duress; in other words, all those matters embraced in Special Issues Numbers 3 through 14, inclusive;
(3) I would assess the costs in the trial court and on appeal equally against Mann and Fender; and
(4) In all other respects I would affirm the trial court’s judgment.