Baldwin v. Peoples Nat. Bank of Tyler, 7150
| Decision Date | 01 September 1959 |
| Docket Number | No. 7150,7150 |
| Citation | 327 S.W.2d 616 |
| Court | Texas Court of Appeals |
| Parties | Fred BALDWIN et ux., Appellants, v. PEOPLES NATIONAL BANK OF TYLER, Appellee. |
Sam Dawkins, Jr., Leffingwell, Dawkins & Oehmann, Dallas, for appellants.
Spruiell, Lowry, Potter, Lasater & Guinn, Tyler, for appellee.
The opinion of August 4, 1959, in this cause is withdrawn and the following opinion is substituted in lieu thereof. Appellants' motion for rehearing is overruled and the judgment of the trial court is affirmed.
Fred Baldwin and wife sued appellee bank for damages for the allegedly wrongful offset from their deposit accounts with appellee bank and also sued for an alleged double usury penalty. Defendant bank's motion for summary judgment was granted by the trial court and plaintiffs have appealed.
On July 27, 1957, appellants opened a savings account with appellee by depositing $4,000. On July 29, 1957, appellant Fred Baldwin borrowed $2,500 from appellee, executing a note in that amount payable to appellee in 12 months from date, which note contained the following provision:
'If the holder of this note at any time deems the Maker or any endorser, the debt or the security for the debt, if any, unsafe or insecure then upon the happening of any of said contingencies it may declare the unpaid balance due and payable without notice to any party.'
On August 12, 1957, appellants deposited an additional sum of $2,500, in their savings account, making a balance of $6,500 in said account. On September 23, 1957, appellant Fred Baldwin borrowed an additional $2,500 from appellee, executing a note in that amount payable to appellee in six months from that date, which note contained the identical provision above quoted from the July 27, 1957, note.
On July 17, 1957, appellants executed a chattel mortgage instrument to Roy Ramsey Radio Shop payable in monthly installments. This instrument contained the following provision:
'If you or your assigns deem yourself insecure for any reason or if the undersigned fails to make any of said monthly installments particularly as above specified all remaining installments may be declared immediately due and payable.'
On September 10, 1957, appellants executed a conditional sales contract instrument which contained the following provision:
'If the Purchaser defaults in the payment of any of the aforesaid installments or the interest due thereon, then the owner may declare the entire sum remaining unpaid hereunder to be immediately due and payable.'
The last two above described written instruments were assigned to appellee bank and appellants when notified of such assignments authorized appellee bank to deduct the monthly installments payments from their personal deposit account with appellee bank.
On December 31, 1957, an interest credit of $62.50 was credited to appellants' savings account. On January 2, 1958, appellants withdrew the sum of $500 from their savings account, leaving a balance of $6,062.50 in this account which remained at that total until the date of offset by appellee.
On February 6, 1958, appellants were delinquent in the payment of the monthly installments on the Roy Ramsey instrument and the Specialty Sales instrument, which indebtedness had been assigned to appellee bank (and other things had occurred causing the bank to feel insecure as hereinafter related), and on said date appellee bank wrote a letter to appellants advising them to the effect that the bank felt insecure on the bank's notes and the Ramsey note and that the appellants were delinquent in the payment of the monthly installments on the Ramsey and Specialty Sales notes, with there then being unpaid balances due on all four notes as follows: $2,567.36, $2,545.88, $731.15 and $230.62, aggregating $6,075.01, and that appellee bank had offset appellants' three deposit accounts in the amount of $6,070.78 in payment of these notes, with appellants still owing the bank the sum of $4.23. The three deposit accounts of appellants at that time and the amount in each were as follows: Savings account $6,062.50; Baldwin Pharmacy account 87cents; and Mr. and Mrs. Fred Baldwin account $7.41, aggregating $6,070.78.
Appellee bank offered evidence that the Roy Ramsey and Specialty Sales notes were delinquent which evidence was not controverted by appellants.
Appellee bank offered evidence that it felt insecure as to the bank notes and the Ramsey note on the date of the offset. See affidavit of Wilton J. Daniel, President of appellee bank. We quote from said affidavit in part as follows:
'As President of Defendant Bank it was called to my attention the latter part of January, 1958, that Plaintiff, Fred Baldwin, had been arrested and was confined in the Smith County jail, charged with having sold narcotics in violation of law. I further determined that his place of business was closed and his Attorney called on Defendant Bank to release certain funds on deposit to Fred Baldwin in order that he might get Mr. Baldwin out of jail. His Attorney advised us that he was out of funds except for those in our Bank. After this conference I, with the Bank's Attorneys, checked the Notes of Fred Baldwin against the amount on deposit and determined that Mr. Baldwin did not have enough funds on hand to pay his current indebtedness to the Bank, which in my opinion placed him in an insolvent condition, coupled with his arrest and the closing of his business. This, in my opinion, placed the Bank in an insecure position so that all of his Notes matured.
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'Fred Baldwin also had a note dated July 17, 1957, with the Roy Ramsey Radio Shop, which had been assigned to the Defendant Bank for a valuable consideration. This Note called for payments of $36.21 per month. A payment was due on January 16, 1958 which was paid on January 28, 1958, by check which was turned down for insufficient funds on January 29, 1958. Said Note contained a provision that 'If you or your assigns deem yourself insecure for any reason or if the undersigned fails to make any of said monthly installment payments as above specified, all remaining installments may be declared immediately due and payable.' Under this provision and because of said delinquencies and my determination that our Bank was insecure I declared this Note due and payable and offset the then balance of $731.15.
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Appellant Olivia Baldwin by affidavit denied that the Baldwin Pharmacy was closed on February 6, 1958. Appellants by their pleadings admitted execution of the Roy Ramsey and Specialty Sales instruments, referring to the Ramsey instrument as a chattel mortgage and the Specialty Sales instrument as a conditional sales contract; however, by affidavit they denied executing any 'notes' with reference thereto. We think it is immaterial as to what these instruments are called as they contained obligations to pay the installments of indebtedness stated therein and the Baldwins were obligated to pay such indebtedness.
Also appellants did not deny by affidavit the following portion of the affidavit of Wilton J. Daniel: * * *'
It was undisputed that Fred Baldwin was in jail charged with a violation of the Narcotics Act at the time the bank matured such notes. It was also undisputed that Fred Baldwin's stock of goods in his drug store was destroyed by water damage in January, 1958. It was undisputed that a $36.21 monthly payment on the Ramsey note was due on January 16, 1958, and was attempted to be paid by appellants by check on January 28, 1958, which was turned down for insufficient funds on January 29, 1958. It was also undisputed that on February 6, 1958, the balance on deposit in the Baldwin Pharmacy account was $.87 and the balance in the personal account of Mr. and Mrs. Fred Baldwin was $7.41, and a balance of $6,062.50 in their savings account, making a total of deposits of $6,070.78. It was also undisputed that on the date of offset Fred Baldwin owed appellee bank $6,075.01, being $4.23 more than he had on deposit in his accounts.
Appellants contend that the trial court erred in failing to hold that appellee had no legal right to accelerate the maturity of the two $2,500 notes and collect on them by offset of appellants' deposits.
A general statement of the law pertaining to offsets by banks is set out in 6 Tex.Jur., Ba...
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...F.2d 1300, 1302 (5th Cir.1986). In a similar vein, Texas courts have found that no notice is required to offset funds. Baldwin v. Peoples Nat'l Bank, 327 S.W.2d 616, 621 (Tex.Civ.App. — Texarkana 1959, no writ); see also Elizarraras v. Bank of El Paso, 631 F.2d 366, 371-72 (5th Estoppel By ......
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