Ashcraft v. Lookadoo

• Decision Date: 28 August 1997
• Docket Number: No. 05-95-01211-CV,05-95-01211-CV
• Citation: 952 S.W.2d 907
• Parties: W.R. ASHCRAFT, Appellant, v. Donald E. LOOKADOO, Appellee.
• Court: Texas Court of Appeals

Page 907

952 S.W.2d 907

W.R. ASHCRAFT, Appellant, v. Donald E. LOOKADOO, Appellee.

No. 05-95-01211-CV.

Court of Appeals of Texas Dallas.

Aug. 28, 1997.

Gary Pridavka, Spencer and Pridavka, P.C., Dallas, for appellant.

Gregory A. Whittmore, Dallas, for appellee.

Before the court en banc.

OPINION

HANKINSON, Justice.

W.R. Ashcraft purchased a note deficiency from the Resolution Trust Company. The principal issue presented here is whether, when Ashcraft purchased that deficiency, he also acquired Donald E. Lookadoo's guaranty, which secured the original note, so that he became the guaranty's owner and could enforce it against Lookadoo. According to the contract governing this transaction, the RTC agreed to transfer to Ashcraft only the note deficiency and any supporting documents located in the asset file. Ashcraft concedes that the asset file he received from the RTC did not contain Lookadoo's guaranty and that the RTC never expressly assigned that guaranty to him. But he argues that, after a nonjury trial, the trial court erroneously concluded from these facts that the RTC did not transfer the Lookadoo guaranty to him and that he does not own it. Instead, Ashcraft asks us to assume that when the RTC assigned him the underlying note deficiency, it also impliedly assigned him Lookadoo's guaranty. After reviewing the parties' contract, we conclude that the RTC did not assign the guaranty to Ashcraft. After reviewing the evidence, we further conclude that Ashcraft did not prove the RTC even held the guaranty and was therefore capable of assigning it to Ashcraft. Consequently, Ashcraft failed to prove that he was the owner and holder of the guaranty. We therefore affirm the trial court's judgment.

BACKGROUND

In 1984, United Savings Joint Venture executed a promissory note for $1,500,000, payable to Metropolitan Savings & Loan Association. Real property located in downtown Fort Worth partially secured the note. Although the note recites that Preston M. Carter, Jr., Douglas H. Kincaid, and Lookadoo executed personal guaranties securing the note, it does not recite the guaranties' terms. In 1985, the parties consensually modified and extended the note.

In 1990, after placing Metropolitan in receivership, the RTC declared the note to be in default, appointed a substitute trustee, and posted the property for foreclosure sale. The substitute trustee foreclosed on the property and sold it for $397,100. After crediting the foreclosure proceeds to the sum due on the note at default, $1,048,922.39 remained due.

Later, in 1992, Ashcraft successfully bid on the note deficiency at an RTC auction. Before the auction, Ashcraft, in his own words, did "due diligence" and reviewed the RTC asset file pertaining to the note deficiency. Although Ashcraft could not recall in detail the loan file's contents, at trial he stated with certainty that it did not include a copy of Lookadoo's guaranty. After examining the asset file and note (which referenced Lookadoo's guaranty), Ashcraft neither asked about any guaranties nor requested a copy of them from the RTC. Instead, without ever discussing with the RTC whether any guaranties existed, he submitted the winning bid and signed a document entitled Purchase and Sale Agreement.

The Purchase and Sale Agreement governed the parties' transaction. Under the agreement's terms, Ashcraft received only the assets described in the asset schedule. Later, the RTC issued Ashcraft a Bill of Sale that listed the asset Ashcraft purchased as a commercial deficiency on the note and forwarded the asset file to him. This file contained the loan agreement, the note (attached as an exhibit to a lost note affidavit), the deed of trust, and the modification. The loan file contained neither the original nor a copy of Lookadoo's guaranty.

Ashcraft turned the loan file over to his attorney for collection. Although he did not physically possess any guaranties, Ashcraft sued Carter, Kincaid, and Lookadoo, as guarantors of the note, for the deficiency. Because bankruptcy proceedings discharged Kincaid's and Carter's debts, Ashcraft nonsuited them. Thus, at trial Ashcraft sought only to collect on Lookadoo's guaranty. After a bench trial, the court entered a take-nothing judgment in Lookadoo's favor, issued findings of fact and conclusions of law, and determined that because Ashcraft was not the owner of the guaranty he could not enforce it. This appeal followed.

In fifteen points of error, Ashcraft challenges certain findings of facts ¹ and conclusions of law ² in which the trial court determined that under the terms of the sale, the RTC had not expressly or impliedly assigned the guaranty to Ashcraft; therefore, he was not the owner of the guaranty and could not enforce it. Although he does not specifically challenge the evidence supporting the trial court's fact findings, we assume that is his intent. We will discuss together the points of error necessary to our final disposition of this appeal.

When reviewing the trial court's findings of fact and conclusions of law, the fact findings have the same force and dignity as a jury's verdict on special issues. ³ We apply the same standards in reviewing the legal or factual sufficiency of the evidence supporting the trial court's fact findings as we do when reviewing the legal and factual sufficiency of the evidence supporting a jury's answer to a special issue. ⁴ And, we may not substitute our judgment for the fact finder's, even though, after reviewing the evidence, we would reach a different conclusion. ⁵ This is so because the trial court is the sole judge of the witnesses' credibility and the weight to be given their testimony. ⁶ In contrast, when reviewing the trial court's legal conclusions, we evaluate them independently and thus review the legal conclusions drawn from the facts found solely to determine their correctness. ⁷ Keeping these standards in mind, we now examine the evidence that supports the trial court's fact findings and the validity of its legal conclusions.

DISCUSSION

The determinative issue raised here is whether Ashcraft owns the guaranty and thus can enforce it. At trial, and on appeal, the parties take diametrically opposed positions. Lookadoo contends that to answer this question we can look only to the terms of the Purchase and Sale Agreement that governs this transaction. Because the agreement contains express provisions describing the asset purchased from the RTC that do not mention Lookadoo's guaranty, Lookadoo argues that we cannot imply that the RTC assigned the guaranty. In contrast, Ashcraft argues that we need neither consider nor be constrained by the terms of the parties' agreement. Ashcraft contends that the sale terms are irrelevant and would have us sweepingly pronounce that the assignment of a note automatically operates as an assignment of any separate guaranties that secure the note regardless of whether either party knew about, or possessed, the guaranty.

No Texas court has addressed or accepted Ashcraft's argument, and the court below refused to accept it. The trial court, adopting Lookadoo's approach, confined its inquiry to the terms of the transaction between the RTC and Ashcraft and concluded that based on the agreement's terms, the RTC did not assign the guaranty to Ashcraft, Ashcraft did not receive the guaranty, and he therefore failed to prove that he was the owner and holder of the guaranty. Based on our review of the evidence presented to the trial court, we conclude that the trial court properly interpreted the terms of the sale and the evidence before it to foreclose any implied assignment of the guaranty.

On appeal, Ashcraft claims that "[t]he RTC sold [him] the right to collect the deficiency amount remaining on the note" and that the deficiency is "only collectible through enforcement of the guaranties." Accordingly, Ashcraft urges us to imply that the RTC also assigned the Lookadoo guaranty to ensure that the deficiency he purchased is not rendered valueless. But the parties here made their own contract, and we lack the power to vary those terms to protect one of them from the unforeseen consequences of their agreement. ⁸

Further, "implied provisions in agreements are not favored by the law." ⁹ We permit them only when the parties so clearly contemplated the implied provision that they deemed expressing it unnecessary or when inferring a provision is necessary to effectuate the agreement's full purpose as gathered from the written instrument. ¹⁰ But "it is not enough that an implied provision is necessary to make an agreement fair or that without such provision the agreement would be improvident, unwise, or unjust; the implied provision must arise from the presumed intent of the parties as gathered from the instrument as a whole." ¹¹ And we cannot imply "terms in opposition to the express language that the parties themselves have written into the contracts." ¹²

In this case, the terms of the contract at issue (the Purchase and Sale Agreement) define what the RTC sold to Ashcraft. Initially, in the recitals, the RTC states it "is the owner of certain Assets, as defined below, and wishes to sell such Assets." The agreement then defines "assets" as "any Charge Off, Deficiency or Judgment described on the Asset Schedule or the Final Asset Schedule" and includes any related escrow accounts. In section 2.1, the RTC agreed to sell and Ashcraft agreed to buy "the Assets described in the Asset Schedule." Later, in section 2.3, the agreement states that "[o]nly the Assets described in the Final Asset Schedule shall be conveyed to the Buyer and the Asset Purchase Price shall be calculated only with respect to such assets." According to section 2.2 of the agreement, the Final Asset Schedule would be attached to a Bill of Sale, which was to be delivered on the transfer date. The Bill of Sale introduced at trial contained an exhibit entitled "Detail Asset Listing for Pool" and subtitled "Commercial...