Alamo Bank of Texas v. Palacios

• Decision Date: 07 February 1991
• Docket Number: No. 13-89-242-CV,13-89-242-CV
• Citation: 804 S.W.2d 291
• Parties: ALAMO BANK OF TEXAS, Appellant, v. Oscar PALACIOS, Appellee.
• Court: Texas Court of Appeals

Page 291

804 S.W.2d 291

ALAMO BANK OF TEXAS, Appellant, v. Oscar PALACIOS, Appellee.

No. 13-89-242-CV.

Court of Appeals of Texas Corpus Christi.

Feb. 7, 1991.

H. Harman Camp, James D. Selman, III, McAllen, for appellant.

Israel Ramon, Jr., Robert D. Ralston, Edingburg, for appellee.

Before SEERDEN, BENAVIDES and DORSEY, JJ.

OPINION

SEERDEN, Justice.

Alamo Bank of Texas appeals from a take-nothing verdict rendered against it in a suit to collect on a promissory note from Oscar Palacios. By six points of error, the bank asserts that the trial court erred in failing to find that it proved all of the elements of its cause of action, in finding that the note was conditionally delivered and that it was equitably estopped from collecting on it, in denying it recovery for fraud, in failing to find consideration to support the note, and in allowing Palacios to rely on untimely discovery and pleadings. We affirm the judgment of the trial court.

In 1985, Ponciano Garcia worked as a construction supervisor for Tech Management, a construction company operating in the Rio Grande Valley. The company mailed checks to Garcia that were payable to various subcontractors. Garcia forged the endorsements and cashed the checks at the bank. The total amount the bank paid on these checks was $11,274.90. When the bank discovered the forgeries, a representative of the bank, Jeff Fitch, confronted Garcia and advised him that the bank would have to notify the Federal Bureau of Investigation (FBI). Appellee Palacios, Garcia's attorney and long time friend, contacted Fitch regarding the bank's loss on a note. At that time, Palacios was representing Garcia in a worker's compensation claim. Palacios anticipated that enough funds would be recovered in this claim to make up for the bank's losses. After discussing the matter with Fitch, Palacios and Garcia executed a note to the bank dated July 3, 1985, in the amount of $11,274.90. On October 28, 1985, this note was renewed in the amount of $8,663.42 and was again signed by Palacios and Garcia. On June 5, 1986, Garcia was found guilty of mail fraud by the United States District Court for the Southern District of Texas. He was sentenced to five years' probation and ordered to pay restitution to the bank for $11,274.90.

On October 22, 1986, the bank filed suit against Palacios, alleging that demand had been made on the note in the amount of $8,663.42 and that Palacios had failed to pay the indebtedness. Palacios counterclaimed alleging usury, unfair debt-collection conduct, and conversion. He further asserted the affirmative defenses of conditional delivery and equitable estoppel. ¹

After a bench trial on January 10, 1989, the court entered findings of fact that the note in question was delivered subject to the condition that criminal charges would not be brought against Garcia, that the bank submitted a "long-form report" to the FBI, that the filing of this report was tantamount to the filing of criminal charges, and that at the time Palacios signed the note, the bank had already filed the report and concealed this material fact from Palacios. The court further found that this concealment was made with the intention that Palacios act on it, and that Palacios did act on it, that Palacios would not have signed the notes had he known that the report had been filed, that the bank told Palacios that no criminal charges would be filed against Garcia, and that the bank created a false impression that no criminal charges had been or would be filed. The court further found that the bank did not suffer any loss by Palacios' signing of the note. The court then entered conclusions of law that the note was supported by legal consideration, that it was conditionally delivered to the bank, and that the affirmative defenses of conditional delivery and equitable estoppel barred the bank from recovering any amount from Palacios. The court entered a take-nothing judgment against both parties.

Initially, we note that the trial court's finding of fact that the filing of the "long-form report" was tantamount to the filing of criminal charges is improperly classified. This is a legal conclusion and will be properly treated as such on appeal.

By its sixth point of error, the bank claims the trial court abused its discretion in allowing Palacios to assert the affirmative defenses of conditional delivery and equitable estoppel. The bank claims that the trial court erred in allowing Palacios to amend his pleadings to include the affirmative defenses because he had previously sworn in amended answers to interrogatories that those defenses would not be pleaded in his second amended answer. The bank also argues that the trial court erred in allowing Palacios to amend his pleadings because at a prior hearing on Palacios' motion for continuance, the trial court ordered that no further discovery or pleadings would be allowed.

Tex.R.Civ.P. 63 provides that a pleading amendment offered within seven days of trial shall be filed only upon leave of court. The rule further provides that leave of court shall be granted unless there is a showing that the amendment will operate as a surprise to the opposite party. The decision to accept or reject an amendment is within the trial court's discretion. A trial court, however, has no discretion to refuse an amendment unless 1) the opposing party presents evidence of surprise or prejudice, or 2) the amendment asserts a new cause of action or defense, and thus is prejudicial on its face, and the opposing party objects to the amendment. Greenhalgh v. Service Lloyds Ins. Co., 787 S.W.2d 938, 939 (Tex.1990).

Here, the bank objected on two grounds. It claimed that the trial court had previously ordered no further amendments to the pleadings in exchange for allowing a continuance. Second, the bank argued that Palacios had abused the discovery process because he had previously sworn under oath that he would replead and not allege those affirmative defenses.

We note, with regard to the bank's first argument, that the trial court did rule at the hearing on motion for continuance that Palacios file no further amendments or discovery. However, the trial court also informed Palacios at that same hearing that he could submit an order requesting permission to file a motion for leave to file an amendment in accordance with the rules of civil procedure. This comment by the trial court clearly leaves the impression that he was not totally foreclosing the possibility of future pleading amendments.

The bank also claimed that Palacios swore under oath that the affirmative defenses would not be realleged. The answers to interrogatories to which the bank refers actually state that the pleading allegations would be deleted in the next amended answer. Palacios complied with this statement and did not urge those defenses in his next amended pleading. His argument before the court was that after discovery was completed, he decided that those claims should be reasserted.

In determining whether the trial court abused its discretion we look to whether he made his ruling without reference to any guiding rules or principles. Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.1986). Amendments should be liberally allowed. Tex.R.Civ.P. 63. The amendments here set up a defense which the bank may not have expected to be part of the case. However, the defenses that Palacios sought to include had been previously alleged and the bank had previously questioned Palacios in deposition on those defenses. The bank did not allege surprise; rather, it claimed unfairness in the trial court's action. The bank did not move for continuance to prepare for those defenses. While we, as jurists, may have decided the matter differently, we cannot say that the trial court's actions here were without reference to the rules concerning amended pleadings. We cannot say that the court's actions were so arbitrary that they amounted to an abuse of discretion. We overrule the bank's sixth point of error.

By a portion of its second point, the bank argues that evidence concerning conditional delivery and equitable estoppel are barred by the parol evidence rule. It claims that extrinsic evidence showing that Palacios was induced to sign the note by representations made by the bank is not admissible because it violates the parol evidence rule.

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