Bonham State Bank v. Beadle

• Decision Date: 08 June 1995
• Docket Number: No. 94-0838,94-0838
• Citation: 907 S.W.2d 465
• Parties: 38 Tex. Sup. Ct. J. 768 BONHAM STATE BANK, Petitioner, v. Raymond G. BEADLE, individually and d/b/a The Blue Max, Blue Max and Blue Max, Inc., RGB Investments, Inc., Blue Max, Inc., and Blue Max Racing, Inc., Respondents.
• Court: Texas Supreme Court

Page 465

907 S.W.2d 465

38 Tex. Sup. Ct. J. 768

BONHAM STATE BANK, Petitioner, v. Raymond G. BEADLE, individually and d/b/a The Blue Max, Blue

Max and Blue Max, Inc., RGB Investments, Inc.,

Blue Max, Inc., and Blue Max Racing,

Inc., Respondents.

No. 94-0838.

Supreme Court of Texas.

Argued Jan. 18, 1995.

Decided June 8, 1995.

Paula L. Miano, Millard O. Anderson, Jr., Dallas, for petitioner.

Robert H. Westerburg, Dallas, Elizabeth Redchuk, Flower Mound, for respondents.

Justice OWEN delivered the opinion of the Court in which all the Justices join.

This case presents two questions: whether a declaratory judgment proceeding is appropriate for obtaining an offset of two prior judgments and whether venue for such an action is proper in a county in which neither judgment was rendered or domesticated. We hold that a declaratory judgment action may be maintained to offset two final judgments, and accordingly, we reverse the judgment of the court of appeals on that issue. We further hold that venue is proper in a county in which either of the judgments was rendered or domesticated, and accordingly, affirm the judgment of the court of appeals on the issue of venue.

I

The history leading up to the suit in Fannin County from which this action emanates is somewhat complex. The Fannin County proceeding is the third of four suits between the parties before us.

In 1991, Bonham State Bank filed two actions against Raymond G. Beadle (individually and d/b/a The Blue Max, Blue Max, and Blue Max, Inc.), RGB Investments, Inc., Blue Max, Inc., and Blue Max Racing, Inc. (collectively Beadle) to recover amounts owed under certain notes and guaranty agreements. Bonham Bank first filed suit in the 191st District Court in Dallas County, Texas, on January 30, 1991. An additional party, Chaparral Trailers, Inc. (Chaparral), was included in that suit, although Bonham Bank attempted to nonsuit Chaparral prior to judgment. On January 31, 1991, the day after the Dallas County suit was filed, Bonham Bank brought a second suit in a North Carolina state court against Beadle and Chaparral. Chaparral was dismissed from this action by Bonham Bank prior to judgment.

In the Dallas County proceedings, Bonham Bank sought a writ of sequestration on certain property of Beadle and Chaparral. The property was seized, and Bonham Bank posted a replevy bond. Without court order or approval, Bonham Bank subsequently sold the property.

During the pendency of the Dallas County suit, on May 7, 1991, Bonham Bank obtained a judgment in the North Carolina proceedings in excess of $1,650,000. ¹ Beadle promptly asserted res judicata as a defense in the Dallas County suit. Although neither Beadle nor Chaparral had initiated that suit and neither sought affirmative relief in that case, and although Chaparral had been dismissed as a defendant, the Dallas County district court entered a judgment dated February 18, 1992, in favor of Beadle and Chaparral, jointly and severally, and against Bonham Bank in the amount of $75,000, which was the value of the property replevied, on a theory of res judicata. No pre-judgment or post-judgment interest was expressly awarded in the judgment, and there was no award of attorneys' fees. Bonham Bank appealed that judgment. In an unpublished opinion, the court of appeals affirmed. We declined to grant the writ of error in that case. Bonham State Bank v. Beadle, 37 Tex.Sup.Ct.J. 24 (Oct. 20, 1993).

The summary judgment evidence in the Fannin County suit reflects that on April 16, 1991, Raymond Beadle, Blue Max, Inc., Blue Max Racing, Inc., RGB Investments, Inc., and Chaparral Trailers, Inc., assigned to their counsel all of their respective interests in their cause of action against Bonham Bank for recovery on the replevy bond. On February 20, 1992, the same parties similarly assigned to their counsel the judgment in the Dallas County suit. Notice of assignment was not given to Bonham Bank until February of 1993.

It is undisputed that both the North Carolina and the Dallas County judgments are final and non-appealable.

In April of 1993, Bonham Bank brought this declaratory judgment action (the third suit) in Fannin County, Texas, to obtain a judicial determination regarding its right to offset the adverse $75,000 judgment against the $1,650,000 judgment in its favor. Beadle filed a motion to transfer venue to Dallas County, which was denied by the trial court. The trial court subsequently rendered summary judgment in favor of Bonham Bank offsetting the North Carolina and Dallas County judgments. ²

The fourth suit, immaterial to our disposition of this case, is an application for turnover relief subsequently brought by Bonham Bank in Dallas County against Beadle to obtain the $75,000 awarded in the Dallas County judgment.

Beadle appealed the summary judgment entered by the Fannin County district court, and the court of appeals reversed, holding that declaratory judgment was inappropriate because there was no uncertainty as to any party's rights or status under the judgments. 880 S.W.2d at 163. The court of appeals further held that venue was not proper in Fannin County and that the case should have been transferred to Dallas County in accordance with Beadle's motion to transfer. Id. We first consider the court of appeals' holding as to the propriety of a declaratory judgment proceeding in this case.

II

The stated purpose of the Declaratory Judgments Act is "to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations." TEX.CIV.PRAC. & REM.CODE § 37.002(b) (Vernon 1986). The statute expressly provides that it is "remedial" and "is to be liberally construed." Id.

A declaratory judgment is appropriate only if a justiciable controversy exists as to the rights and status of the parties and the controversy will be resolved by the declaration sought. Texas Ass'n of Business v. Texas Air Control Bd., 852 S.W.2d 440, 446 (Tex.1993). "To constitute a justiciable controversy, there must exist a real and substantial controversy involving genuine conflict of tangible interests and not merely a theoretical dispute." Bexar-Medina-Atascosa Counties Water Control & Improvement Dist. No. 1 v. Medina Lake Protection Ass'n, 640 S.W.2d 778, 779-80 (Tex.App.--San Antonio 1982, writ ref'd n.r.e.); Chapman v. Marathon Mfg. Co., 590 S.W.2d 549, 552 (Tex.Civ.App.--Houston [1st Dist.] 1979, no writ); Davis v. Dairyland County Mut. Ins. Co., 582 S.W.2d 591, 593 (Tex.Civ.App.--Dallas 1979, writ ref'd n.r.e.); Sub-Surface Constr. Co. v. Bryant-Curington, Inc., 533 S.W.2d 452, 456 (Tex.Civ.App.--Austin 1976, writ ref'd n.r.e.); Littlejohn v. Johnson, 332 S.W.2d 439, 441 (Tex.Civ.App.--Waco 1960, no writ).

This case presents a bona fide, concrete controversy ripe for resolution by way of declaratory judgment. Bonham Bank asserts that it has a right to offset a $75,000 judgment obtained by Beadle and Chaparral against Bonham Bank's domesticated North Carolina judgment in the amount of $1,650,000 against Beadle. Beadle disputes that Bonham Bank has such a right.

As early as 1855, Texas courts held that "[t]here is no doubt of the power of courts independent of statute to set off mutual judgments against each other. Such power has long been exercised by both courts of law and equity." Simpson v. Huston, 14 Tex. 476, 481 (1855); see also McManus v. Cash & Luckel, 101 Tex. 261, 108 S.W. 800, 802 (1908); Hanchett v. Gray, 7 Tex. 549, 553 (1852) (allowing setoff of two previous judgments); Citizens Indus. Bank of Austin v. Oppenheim, 118 S.W.2d 820 (Tex.Civ.App.--Austin 1938, writ dism'd w.o.j.); Pierson v. Farmers' State Guar. Bank, 206 S.W. 730, 731 (Tex.Civ.App.--San Antonio 1918, no writ) (courts' power to set off mutual judgments is well settled). We have thus recognized that setoff is an appropriate judicial response to the serious practical difficulties encountered when parties have mutual judgments, particularly when one of them is impecunious. Simpson, 14 Tex. at 481. While this line of cases is an old one, it has never been disavowed by our Court.

A declaratory judgment action is an appropriate vehicle for the offset of two final judgments. The subjects enumerated in the Declaratory Judgments Act are not exclusive, as the statute itself clearly states:

The enumerations in Sections 37.004 and 37.005 do not limit or restrict the exercise of the general powers conferred in this section in any proceeding in which declaratory relief is sought and a judgment or decree will terminate the controversy or remove an uncertainty.

TEX.CIV.PRAC. & REM.CODE § 37.003 (Vernon 1986). The authority to grant a declaratory judgment like the one sought in this case flows from the "general powers" of the courts to enter a declaratory judgment given under the Declaratory Judgments Act. Id.; see also Great Am. Ins. Co. v. Fred J. Gallagher Constr. Co., 16 Ariz.App. 479, 481, 494 P.2d 379, 381 (1972) (holding that trial court should have awarded declaratory judgment offsetting mutual judgments, with the result that surety would only be liable on supersedeas bond for the difference between the two). A trial court has discretion to enter a declaratory judgment so long as it will serve a useful purpose or will terminate the controversy between the parties. James v. Hitchcock Indep. Sch. Dist., 742 S.W.2d 701, 704 (Tex.App.--Houston [1st Dist.] 1987, writ denied); United Interests, Inc. v. Brewington, Inc., 729 S.W.2d 897, 905 (Tex.App.--Houston [14th Dist.] 1987, writ ref'd n.r.e.).

The court of appeals likened the suit by Bonham Bank to a suit to "interpret" the judgments and noted there is a split of authority in other jurisdictions as to whether a declaratory judgment may be used to interpret a prior judgment. 880 S.W.2d at 162. Bonham Bank does not seek a declaration of the meaning of either judgment. It seeks a judicial determination that it is entitled to offset the two judgments.

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