Allied Bank West Loop, N.A. v. C.B.D. & Associates, Inc.

• Decision Date: 12 February 1987
• Docket Number: No. 01-85-0923-CV,01-85-0923-CV
• Citation: 728 S.W.2d 49
• Parties: ALLIED BANK WEST LOOP, N.A., Appellant, v. C.B.D. & ASSOCIATES, INC., et al., Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 49

728 S.W.2d 49

ALLIED BANK WEST LOOP, N.A., Appellant, v. C.B.D. & ASSOCIATES, INC., et al., Appellees.

No. 01-85-0923-CV.

Court of Appeals of Texas Houston (1st Dist.).

Feb. 12, 1987.

Rehearing Denied March 26, 1987.

Louis H. Salinas, Jr., Karen Beasley Lukin, Robert M. Hardy, Jr., Butler & Binion, Houston, for appellant.

J. Mark Breeding, Ronald E. Hood, Sears & Burns, Houston, for appellees.

Before SAM BASS, COHEN and DUNN, JJ.

OPINION

COHEN, Justice.

C.B.D. sued Allied alleging negligence, conversion, and breach of contract arising from Allied's treatment of C.B.D.'s accounts. Specifically, C.B.D. alleged that Allied negligently put restricted funds into C.B.D.'s "escrow" account, without informing it of the restriction, and then corrected that error by withdrawing other funds from the account, even though Allied knew that the money was held by C.B.D. in trust for others. C.B.D. alleged that the withdrawal resulted in a conversion by Allied of funds held in trust for two of C.B.D.'s clients, James Roeder, d/b/a American International Steel Company, hereafter A.I.S., and Drilling Structures, Inc., hereafter D.S.I., both of whom intervened as equitable owners of the funds in the account. The jury found for C.B.D. on all its causes of action, and awarded $267,000 actual and $550,000 punitive damages. The jury also found Allied liable to D.S.I. for $100,693 and to A.I.S. for $151,624. Allied appeals only from the judgment in favor of C.B.D.

C.B.D. was created by its president, Carol DeGeorge, as a personnel agency serving the oil and gas industry. Through the agency, DeGeorge met many oil field equipment buyers and sellers, and during late 1980 and early 1981, she began working as an oil field equipment broker.

In March of 1980, C.B.D. opened a general corporate checking account at Allied. The officer in charge of the account was Mildred Walters. In February of 1981, DeGeorge talked to Walters about her new venture in equipment brokerage. She explained that C.B.D. would be receiving large deposits of customers' money, which C.B.D. would not own. She consulted Walters regarding the type of account that should be used to enable C.B.D.'s buyers and sellers to verify deposits. C.B.D. conducted its first three transactions through its general account. Further discussions between DeGeorge and Walters resulted in C.B.D. opening a second account, styled "C.B.D. & Associates, Inc.--Escrow Account," on March 1, 1981. The written agreement and signature card were for a general corporate checking account. It was the transactions in this "escrow account" that led to this lawsuit.

In mid-March 1981, Constructors Exchange agreed to sell and D.S.I. agreed to buy two two-hundred ton swivels, with C.B.D. being the broker. On March 26, 1981, Allied received a wire transfer of $64,000 from D.S.I. instructing it to create a cashier's check payable jointly to C.B.D. and Phillip Rivera, president of D.S.I. Allied told DeGeorge that the funds had arrived, and, without informing her that the funds were jointly payable to Rivera, deposited the funds to C.B.D.'s escrow account. On March 27, 1981, C.B.D. wired $51,000 from the escrow account to Constructors Exchange for payment of the swivels and kept $13,000 in the escrow account as its commission. Prior to the transfer, DeGeorge had asked Walters to confirm with Rivera that she was sending the funds to Constructors Exchange. Walters never contacted Rivera.

During the first week of April 1981, C.B.D. agreed to broker the sale of 50,000 feet of pipe by Alamo Pipe Company to A.I.S. On Friday, April 10, 1981, A.I.S. wired $143,250 to C.B.D., as a 10 percent deposit on the contract. The wire was addressed to "Allied Bank-Texas," a different entity than the appellant, Allied Bank West Loop.

By this time, D.S.I. had received the swivels and was dissatisfied. Rivera contacted his banker, Tom Suoy, and asked him to recall the $64,000 wire transfer. Suoy called Walters the afternoon of April 13, 1981, and told her that he, as agent for D.S.I., was recalling the wire. Walters then discovered Allied's error in depositing the $64,000 to C.B.D.'s account without Rivera's endorsement.

On the afternoon of April 13, 1981, Walters met with Allied's president, Wayne Lapham, to discuss the problem. Walters testified that they decided to take possession of $64,000 from C.B.D.'s escrow account. The transaction debiting C.B.D.'s account for $64,000 was made on the morning of April 14, 1981. The record reflects that before Allied debited the account, the account contained $10,739.50. The debit created a temporary overdraft that was covered several hours later by the A.I.S. wire of $143,250.

On the morning of April 14, 1981, DeGeorge called Carol Sligar, the clerk in Allied's wire room, to see if the wire from A.I.S. had arrived. Sligar said that she would find out. At 11 a.m., DeGeorge called Sligar again and was tersely informed that Sligar would call her back if she heard anything. DeGeorge then contacted Allied Bank of Texas, who told her to call Sligar back, because they had already told Sligar that the wire had arrived.

The wire from A.I.S. was received by Allied Bank of Texas at 9:39 a.m. on April 13, 1981, and by Allied Bank West Loop at 11:20 a.m. on April 14, 1981. Handwritten notes made by Walters on the afternoon of April 13, 1981, show "143,250," the exact amount of the A.I.S. wire, although Walters testified that she did not learn of the A.I.S. wire until the afternoon of April 14, 1981. C.B.D. was not informed that Allied had debited the account for $64,000. On April 14, 1981, Allied created a cashier's check for $64,000 payable jointly to C.B.D. and Rivera, and refused to release the money without the endorsements of both C.B.D. and Rivera.

After the close of business on April 14, 1981, James Roeder, owner of A.I.S., called DeGeorge and told her that because of the delay, the pipe contract was canceled and that he wanted his $143,250 returned. Roeder learned from Walters that there were not sufficient funds in C.B.D.'s account to return his money. This was because Allied had taken $64,000 from funds in C.B.D.'s escrow account, including A.I.S.' money, to repay itself for its error in paying Rivera's $64,000 check. On the morning of April 15, 1981, DeGeorge and her attorney told Walters and Lapham that the A.I.S. wire was held by C.B.D. as a deposit in trust for A.I.S.. They demanded return of the $64,000, and Allied refused.

Shortly thereafter, C.B.D. closed its account at Allied. $79,250 was wired to A.I.S. ($143,250 less $64,000) and $10,739.50 was retained by C.B.D. Roeder contacted the F.B.I., which began an investigation. DeGeorge testified that C.B.D. was no longer able to act as a broker, because its reputation was ruined by these events. Unable to generate revenues, C.B.D. had its office furniture, equipment, and art seized by its landlord for failure to pay rent. C.B.D. conducted no other transactions and ultimately went out of business.

The first two points of error contend that there is no evidence or insufficient evidence to support the award of actual damages for lost net profits ($200,000), lost office furnishings ($17,000), and lost commission on the A.I.S. sale ($50,000). Initially, Allied contends that the jury's award of $50,000 to C.B.D. for lost commissions from the lost sale to A.I.S. is not supported by the evidence, because the delay of the $143,250 wire transfer was not caused by Allied, but by the fact that the wire transfer bore an incorrect address, which caused it to be routed to Allied Bank of Texas in downtown Houston, rather than to Allied Bank West Loop.

C.B.D. contends that the 26 hour delay in transferring the funds between Allied Bank of Texas in downtown Houston and Allied Bank West Loop was intentionally caused by Allied West Loop officers, in order to give them time to decide how to cover their mistakes and to slow the movement of funds in order to assure that $64,000 would still be in the account, if and when they decided to seize it.

It is undisputed that when Roeder canceled the contract late in the afternoon of April 14, neither he nor DeGeorge knew of the bank's $64,000 withdrawal. Therefore, the withdrawal, no matter how improper or malicious, could not have caused the cancellation of the sale and the consequent loss of the $50,000 commission by C.B.D.

While there was a fact issue as to the cause of the delay in Allied West Loop's receipt of the wire, the jury was not asked whether Allied caused that delay, or whether the delay proximately caused the loss of the commission. The jury found that Allied's negligence in six specific respects proximately caused C.B.D.'s damage, but all six instances pertained to the handling of the $64,000 deposit from D.S.I. and its withdrawal, and none to the handling of the A.I.S. wire transfer of $143,250. ¹

It is well established that failure to submit a ground of recovery to the jury waives any right of recovery on that ground. Pickens v. Harrison, 151 Tex. 562, 252 S.W.2d 575, 582 (1952). Accordingly, it was error to award C.B.D. $50,000 for lost commission on the A.I.S. sale, absent a jury finding that Allied intentionally or negligently delayed the arrival of the $143,250 wire from A.I.S. and that the delay proximately caused C.B.D.'s damages. This portion of the point of error is sustained.

Allied next contends that the jury's award of $17,000 for loss of furniture, equipment, and art is not supported by the evidence. The jury found that Allied was negligent in its handling of the $64,000 transaction and converted those funds. There is ample evidence that C.B.D.'s inability to return the $64,000 to A.I.S. injured its reputation as a broker and that C.B.D. conducted no transactions thereafter. The evidence showed that in the brokerage business, a company's reputation is vitally important. Based on such evidence, it was within the province of the jury to find that Allied's...