Behring Intern., Inc. v. Greater Houston Bank
| Decision Date | 20 October 1983 |
| Docket Number | No. 01-82-0135-CV,01-82-0135-CV |
| Citation | 662 S.W.2d 642 |
| Parties | 38 UCC Rep.Serv. 544 BEHRING INTERNATIONAL, INC., Appellant/Cross-Appellee, v. GREATER HOUSTON BANK, Appellee/Cross-Appellant, v. NORWEGIAN AMERICAN LINE, Cross-Appellee. (1st Dist.) |
| Court | Texas Court of Appeals |
Charles Gregg, Timothy T. Read, Houston, for appellant/cross-appellee.
Barry L. Racusin, Houston, Stephen L. Goldberg, Houston, for Greater Houston Bank.
William H. Seele, Houston, for Norwegian American Line.
Before DOYLE, DUGGAN and WARREN, JJ.
Behring International, Inc., (Behring) plaintiff and cross defendant at trial, appeals from a take nothing judgment entered on its suit against Greater Houston Bank (GHB) for wrongful offset and conversion. GHB appeals from the parts of the judgment denying it indemnity on its cross-action against Norwegian American Lines (NAL), and denying it punitive damages on its counterclaim against Behring. The trial was to the court.
Behring is a freight forwarder, with offices in Houston and New Orleans. GHB is a bank located in Houston. NAL is a steamship company doing business as a common carrier of freight. Nordship Agencies Inc. (Nordship), at some times material to this suit, acted as a general agent for steamship companies.
Both Behring and Nordship maintained accounts with GHB, but NAL did not. Nordship was the general agent for NAL in the Gulf Coast area before this relationship was terminated in September or October of 1977.
In the latter part of September or in early October, 1977, Behring, on behalf of its customer, Pineville Kraft Corp. (Pineville) contracted with NAL to transport certain goods from Lake Charles, Louisiana to Belfast, North Ireland, on a NAL vessel called the Topdalsfjord. Nordship was then the general agent of NAL in the gulf coast area, which includes Lake Charles, Houston, and New Orleans. On October 10, 1977, Behring received a bill of lading numbered 0309252, from Nordship which included these notations and instructions:
This is your freight invoice
No other billing issued
Please make check payable to
Nordship Agencies, Inc.
and mail to
Nordship Agencies, Inc.
P.O. Box 30652
Shortly thereafter, Behring received a written notice from NAL instructing it not to pay Nordship, but to make payment to:
Norwegian American Line
care of Norton Lilly
Norton Lilly is a general agent for several steamship companies and a competitor of Nordship.
On October 17, 1977, Behring issued its check numbered 3784, on its account at Allied Bank in Houston in the amount of $67,950.74, to the order of Norwegian America Lines, c/o Norton Lilly. Somehow, the check ended up in the possession of Nordship in New Orleans. Nordship sent the check to its Houston office and thereafter Mr. Fernandez, Nordship's Houston manager, took it to GHB, endorsed it "For Deposit Only by Nordship Agencies, Inc., as agents", and presented it to a teller with instructions to deposit it to Nordship's account at GHB. The teller, without making any inquiry, followed Mr. Fernandez' instructions. Two days later, Nordship had the funds transferred from GHB to a Chicago Bank. Shortly thereafter, Nordship filed a petition for bankruptcy. The check was transmitted from GHB to Allied Bank, which credited GHB's account, debited Behring's account, and returned the check to Behring. When Behring's comptroller noticed that the check had not been endorsed by the payee, he returned the check to Allied Bank, which then reversed the previous entries by debiting GHB's account and crediting Behring's account at Allied.
After GHB received the returned check it attempted collection from Nordship, but learned that it had filed a petition in bankruptcy. GHB then attempted to negotiate an escrow arrangement between it and Behring. After this attempt failed, it offset Behring's accounts for the amount of the check.
Behring sued GHB, alleging that GHB had breached its contract of deposit and that GHB had wrongfully converted its money on deposit. GHB's answer alleged that because of negligence and fraud, Behring was estopped from recovering against GHB, that Allied Bank and Behring had conspired to defraud GHB, and that Behring had breached its contract or waived its rights under the contract.
GHB filed a counterclaim against Behring and a cross action against Allied Bank of Texas (Allied), Nordship Agencies, Inc., and Norway American Lines, (NAL) alleging a conspiracy by Behring and Allied against GHB, and gross negligence by Behring in delivering the check to Nordship. It asked for compensatory and exemplary damages against Behring and indemnity from Allied and NAL. The trial court denied relief to all parties.
The court made extensive findings of fact and conclusions of law, including these listed below.
Behring did not use ordinary care in forwarding the check to its New Orleans office for delivery and such negligence was a proximate cause of damages to Greater Houston Bank.
The delivery of the check by Behring to Nordship, its agents or employees, was negligence by Behring and a proximate cause of damages to Greater Houston Bank.
Behring's delivery of the check to Nordship substantially contributed to the making of the endorsement on the reverse thereof which reads as follows: "For Deposit Only by Nordship Agencies, Inc., as agents".
When Nordship deposited the check in its account at GHB it had apparent authority to do so.
At the time of the deposit of the check, GHB (1) gave value; and (2) took same in good faith; (3) was without notice that it was overdue or had been dishonored or of any defense against or claim to it on the part of any third party.
GHB acted in a commercially reasonable manner in accepting the check for deposit.
GHB paid the check in accordance with reasonable commercial standards.
All time material hereto, GHB acted in good faith.
GHB did have notice of the termination by Norwegian America Lines of the agency of Nordship prior to the time GHB set off the amount of the check against the accounts of Behring at GHB.
Greater Houston Bank was negligent in not making inquiry concerning the notation on the face of the check "c/o Norton Lilly, New Orleans, La." and that such negligence was a proximate cause of damages to Behring.
Behring was negligent in delivery of the check in question, and that such negligence was a proximate cause of damages to GHB.
The negligence of Behring in connection with the check in question was greater than that of GHB in connection with the check in question.
Norwegian America Lines was negligent in failing to give notice of the termination of the agency of Nordship to GHB, and that such negligence was a proximate cause of damages to GHB.
Norwegian America Lines was negligent in failing to give notice of the termination of the agency of Nordship to Behring and that such negligence was a proximate cause of damages to GHB and to Behring.
The negligence of Behring in connection with the check in question was greater than that of Norwegian America Lines.
The negligence of Behring in connection with the check in question was greater than that of Norwegian America Lines and that of GHB combined.
Behring's delivery of the check to Nordship substantially contributed to the making of the endorsement on the reverse thereof.
GHB was at all material times hereto, a holder in due course of the check.
Behring is precluded by U.C.C. Section 3.406 from asserting a question of unauthorized endorsement.
Behring's negligence precludes Behring from asserting any alleged impropriety of the endorsement.
Nordship had the apparent authority to negotiate the check on behalf of its principal, Norwegian America Lines.
Nordship had the implied authority to negotiate the check on behalf of its principal, Norwegian America Lines.
The debt owed to GHB by Behring was a mature obligation.
Behring was indebted to GHB for Behring's refusal to honor the check, in the amount of $67,950.74.
The offset effected by GHB against the account of Behring was proper.
GHB did not breach its contract of deposit with Behring when it offset Behring's account.
The negligence of GHB did not prohibit its offsetting the accounts of Behring.
In 14 points of error, Behring claims the following:
Point 1. There was no evidence to support the trial court's findings that Nordship had authority to negotiate the check by endorsement on behalf of NAL.
Point 2. The trial court's findings that Nordship had authority to negotiate the check by endorsement on behalf of NAL were against the great weight of the evidence.
Point 3. The trial court erred in holding that Behring was indebted to GHB as a result of Behring's refusal to pay the check, because Behring was required to pay only NAL or a valid holder as defined by statute.
Point 4. The trial court erred in holding that Behring is precluded from asserting the unauthorized endorsement on the check, because there was insufficient evidence to support the court's finding that GHB was a holder in due course.
Point 5. There was no evidence to support the trial court's finding that GHB took the check without notice of any defense against it or claim to it on the part of any third party.
Point 6. The trial court erred in holding that Behring is precluded from asserting the unauthorized endorsement, because there was insufficient evidence to support the court's finding that GHB paid the check in accordance with the reasonable commercial standards of GHB's business.
Point 7. The trial court erred in holding that Behring is precluded from asserting the unauthorized endorsement, because there was insufficient evidence to support the court's findings that Behring was negligent in delivering the check, and that such negligence substantially contributed to the making of the endorsement by Nordship.
Point 8. There was no evidence to support the trial court's finding...
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