Court Opinion

ID: 9666001
Source: CourtListenerOpinion
Date Created: 2023-08-24 01:01:58.899744+00
Date Added: 2024-06-11T18:15:21.991047
License: Public Domain

ON MOTIONS FOR REHEARING
On consideration of appellees’ original motion for rehearing, we sustained their contention that we should remand the cause to the trial court so that they might plead and prove grounds for equitable relief against appellants’ claim for acceleration and foreclosure. Appellants have filed a second motion for rehearing insisting that under City of Fort Worth v. Pippen, 439 S.W.2d 660 (Tex.Sup.1969), we have no authority to remand for this purpose. After a careful study of that opinion we must agree. Consequently, we withdraw our opinion on the first motion for rehearing and reinstate our original judgment.
Under the Pippen decision, appellees’ claim for equitable relief on motion for rehearing in this court comes too late. In that case the city sued its agent for conversion of funds and joined a title company and its vice-president on the grounds that they paid money to the agent with knowledge of his conversions. .The jury found for the city, but the trial court rendered judgment for the defendants notwithstanding the verdict. On appeal defendants contended that the city had failed to discharge its burden to prove that the money was converted, since the evidence showed that some of the funds paid to the agent were used for the city’s benefit. The court of civil appeals reversed and rendered judgment on the verdict on the ground that such benefits were matters of offset which defendants had the burden to plead and prove. On rehearing, the court of civil appeals remanded for a limited new trial “in the interest of justice” so that defendants could amend their pleadings and prove the amount of the offsets. City of Fort Worth v. Pippen, 430 S.W.2d 239 (Tex.Civ.App., Fort Worth 1968). The Supreme Court agreed with the law as declared by the court of civil appeals, but reversed the order of remand on the ground that defendants waived their claim of offsets by failing to present it in the trial court. 439 S.W.2d 660, at 667.
We find no basis on which to distinguish the Pippen case. Here, as there, appel-lees failed to allege in the trial court the grounds upon which they now desire to obtain relief on a new trial. Appellees began this suit by an action for declaratory judgment, and appellants counterclaimed for acceleration and foreclosure. Appellees’ trial pleading was an amended original petition in which their only reference to advances from Red Ball was an allegation that Ramo was entitled to such advances *612without limitation. Though they now charge appellants with inequitable conduct in breaching warranties and in giving notice of default on grounds now found to be unjustified, they did not plead or prove that such conduct caused breach of the dividend limitation or kept appellees from remedying the default after they received the notice of March 16, 1970. Neither did they plead or prove that any attempted cure would have been futile. They did not ask the trial court, even alternatively, to fix the amount they should pay back to Red Ball, nor did they offer to pay Red Ball any amount in addition to the $1,400,000 which was used to pay a debt to TeleCom. They did not suggest until their motion for rehearing in this court that appellants’ breach of warranty, which entitled appellees to an offset to the notes, should be considered in determining whether they were in default in failing to cure their breach of the dividend limitation.
Like the Pippen case, this trial continued for six weeks and none of the parties were denied any opportunity to present any pleadings or evidence they desired, and after verdict appellees persuaded the trial court to enter a judgment which we now find to be erroneous. The trial court’s ruling cannot be said to have prevented appellees in any respect from pleading and proving grounds of equitable relief. They failed to present those grounds either in the trial court or in this court until judgment-in their favor had been reversed. Under Pippen we cannot now “fashion a remedy” to relieve them of the consequences of their default.
Neither can we justify a remand on the ground that the relief appellees are seeking is equitable rather than legal. The Pippen case was equitable in nature, according to the opinion of the court of civil appeals. 430 S.W.2d 239, at 244. Appel-lees cite no authority holding that equitable relief may be granted without pleading the grounds on which such relief is sought. Gause v. Gause, 430 S.W.2d 409 (Tex.Civ.App., Austin 1968, no writ), holds that a prayer for general relief will authorize any judgment justified by allegations and proof and consistent with the theory of recovery stated in the pleadings, but does not hold that such a prayer cures a lack of factual allegations. Gause also holds that the equitable defense of laches must be affirmatively pleaded, on authority of Gulf, C. & S. F. Ry. Co. v. McBride, 159 Tex. 442, 322 S.W.2d 492 (1958) and Culver v. Pickens, 142 Tex. 87, 176 S.W.2d 167 (1943). We see no basis for applying a different rule to the equitable defense now claimed by appellees.
The ancient distinction between law and equity cannot control our decision as to whether to render or remand. In both law and equity our duty is defined by Tex.R.Civ.P. 434, which requires us to render the judgment which the trial court should have rendered unless there is some matter of fact to be ascertained, and ap-pellees do not contend that their claim for equitable relief would involve determination of any fact issues. When a judgment notwithstanding the verdict is reversed, and no other error is found, remand is proper only in unusual cases and only for good and sufficient reasons shown in the record. Jackson v. Ewton, 411 S.W.2d 715 (Tex.Sup.1967). Since in Pippen the Supreme Court did not regard defendants’ claim of offsets as good and sufficient reason for a remand because it had not been presented in the trial court, neither can we hold here that appellees’ belated claim for equitable relief against acceleration justifies a new trial.
We now turn to other matters raised by appellees in their first and second motions for rehearing. In their first motion they challenge the statement in our original opinion that the only formalities evidencing the advances to Ramo were entries on the books of the two corporations. They direct our attention for the first time to a resolution of Red Ball’s board of directors dated June 21, 1968, authorizing a loan to Ramo in the amount of $1,500,000 “on an *613open account payable on demand.” This resolution does not change the situation in substance, and neither does it change our opinion that the advances were forbidden dividends under the undisputed evidence, regardless of the form of the transaction.
Appellees also argue that the advances should not be considered as breaches of the dividend limitation because appellants knew about the advances when they were made and did not object until their letter of March 16, 1970, almost two years later. Appellees make no supporting reference to any evidence properly before us. Neither do they point to any pleading of waiver or estoppel. Consequently, we have no basis to hold that appellants had knowledge of the advances under such circumstances as would bar them from contending that the advances are prohibited dividends.
Appellees seek clarification of our original order in several respects. One such matter concerns interest on the offset of $787,500, which the trial court allowed at the rate of 6 per cent per annum. In this connection appellants’ Points 99, 100 and 101 assign error with respect to application of the offset and the rate of interest. We sustain these points. The offset should not be a separate judgment bearing interest. It should be applied proportionately to reduce the principal of all the outstanding notes. The reduced principal should bear interest at the contract rate, and if any interest payments have been greater than would have been required in view of this reduction of the principal on which the interest has been computed, such excess should be credited as advance payments of principal.
Appellants’ Points 102 and 103, complaining of the provisions of the judgment for charges payable to the trustee, Mercantile National Bank, are also sustained, and no such charges should be included in the judgment to be rendered unless established by evidence and allowed by the court.
The amount of attorneys’ fees to be awarded is a matter for the trial court to determine in accordance with the instructions in our original opinion, and in this connection we note the stipulation and agreement of appellants’ counsel that the attorneys’ fees be limited to 10 per cent of the amount of principal and interest on the notes at the time they were placed in the hands of the attorneys for collection. The amount of principal should be determined after allowing the offset of $787,-500. We overrule appellees’ contention that appellants are entitled to no attorneys’ fees at all. Section 6 of the security agreement clearly provides for attorneys’ fees if collection of the notes is enforced by suit.
Appellees insist on the right to avoid foreclosure by paying the judgment, and nothing in our original or supplemental opinion should be interpreted as denying that right.
Appellees attack the verdict for improper communication with the jury. Though this matter is raised for the first time on motion for rehearing, appellees say they did not discover it until after submission of the appeal. Appellants deny any impropriety, and we have no jurisdiction to resolve the factual dispute. The verdict is not material to our decision on the dividend limitation, since we have held the advances to be dividends as a matter of law. Appellees point out, however, that the verdict was unfavorable to them on several issues material to their claims for breach of warranty. After the trial court renders final judgment as now instructed, appellants may file a motion for new trial on this ground. See De Winne v. Allen, 154 Tex. 316, 277 S.W.2d 95 (1955); Arrington v. Paschall, 352 S.W.2d 866 (Tex.Civ.App., Dallas 1961, writ ref’d n. r. e.); Bardwell v. Anderson, 325 S.W.2d 929 (Tex.Civ.App., Houston 1959, writ ref’d n. r. e.).
Appellants’ second motion for rehearing is granted to the extent that it complains *614of the change in our judgment on the original motion for rehearing. Accordingly, we withdraw our former opinion on rehearing and reaffirm our original and supplemental opinions. Otherwise, all motions for rehearing are overruled.