Home Savings Association v. Tappan Company

• Decision Date: 06 January 1969
• Docket Number: No. 25706.,25706.
• Citation: 403 F.2d 201
• Parties: HOME SAVINGS ASSOCIATION, Appellant, v. The TAPPAN COMPANY, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

403 F.2d 201 (1968)

HOME SAVINGS ASSOCIATION, Appellant, v. The TAPPAN COMPANY, Appellee.

No. 25706.

United States Court of Appeals Fifth Circuit.

November 13, 1968.

Rehearing Denied January 6, 1969.

Ken Griffin, Odessa, Tex., for appellant.

Charles E. Galey, Brock, Wright, Waters & Galey, Lubbock, Tex., John P. Dennison, Pecos, Tex., for appellee.

Before BELL and SIMPSON, Circuit Judges, and ROBERTS, District Judge.

ROBERTS, District Judge:

Lawrence Black Homes, Inc., a contractor from Odessa, Texas, wanted to build an apartment building in Pecos, Texas. Black applied to appellant on March 14, 1966, for financing commitments on the proposed construction. A commitment letter was issued to Black on April 15, 1966, granting a loan for $305,000. at 6½ per cent interest for twenty (20) years. Another commitment letter was issued on the same day from appellant to Black, granting an interim financing loan on advances made as to the date of the final loan closing. On April 18, 1966, pursuant to the commitment letter, Black executed and delivered a note for $305,000. to appellant and a deed of trust securing the note by a lien on the land on which the apartment house was to be constructed.

Also on April 18, 1966, appellee entered into a contract with Black to furnish appliances for the apartments, for which appellee was to be paid $19,456.70. This contract was signed and witnessed by an officer of appellant. The contract provided in part:

"Terms of payment: Close of loan — not later than September 1, 1966.

Special conditions: Letter from Home Savings and Loan to pay Tappan on close."

On the same date appellant wrote the following letter to appellee.

"Home Savings Association hereby agrees to withhold from loan proceeds and pay to the Tappan Company $19,456.70 for equipment as enumerates on the builder\'s sale contract # 4128, signed by Lawrence Black Homes, Inc. and R. A. Batson, District Manager for the Tappan Company, issued April 18, 1966.

The funds will be disbursed upon completion and acceptance of the improvements by Home Savings Association and closing of the permanent loan."

Appellee performed its part of the contract by furnishing the appliances, and it submitted invoices to appellant for payment. In that regard, the following letter was written appellee by appellant on August 18, 1966:

"Thank you for the invoices submitted to be paid from the proceeds of the captioned loan.

We will forward our check upon closing of this loan in accordance with the terms of your contract with Mr. Black and our letter of commitment to you.

We have just made another inspection of the property and the progress is very good, so the loan should be closing in the near future.

If we may be of further service to you please let us know."

On September 1, 1966, there was $69,686.90 in Black's account held by appellant from which disbursements could have been made. However, appellee was never paid for the appliances and on December 15, 1966, filed suit against Black and appellant.

Black was unable to close the permanent loan because of financial problems. On June 6, 1967, appellant foreclosed its deed of trust, and a trustee's deed to the property was executed by the president of appellant conveying the property to appellant. The purchase price recited was $275,000.00. On June 28, 1967, appellant sold the apartment house to a George Johnson, the consideration being $20,000.00 cash and a note for $305,000.00 bearing 6¾ per cent interest. Appellee then joined Johnson as a defendant.

In his suit below, appellee sought to establish a constitutional lien on the land and...