Chapman v. Tyler Bank & Trust Company, 155

• Citation: 396 S.W.2d 143
• Decision Date: 14 October 1965
• Docket Number: No. 155,155
• Court: Court of Appeals of Texas. Court of Civil Appeals of Texas
• Parties: C. H. CHAPMAN, Appellant, v. TYLER BANK & TRUST COMPANY, Appellee.

Page 143

396 S.W.2d 143

C. H. CHAPMAN, Appellant, v. TYLER BANK & TRUST COMPANY, Appellee.

No. 155.

Court of Civil Appeals of Texas, Tyler.

Oct. 14, 1965.

Rehearing Denied Dec. 2, 1965.

William F. Billings, Fanning, Billings, Harper, Pierce & Gilley, Dallas, Ben Johnson, Johnson, Hathaway & Jackson, Tyler, for appellant.

W. Dewey Lawrence, Lawrence & Lawrence, Tyler, for appellee.

MOORE, Justice.

Tyler Bank & Trust Company, a banking corporation hereinafter referred to as the Tyler Bank, brought this suit against Robert C. Smith and J. Breyer, Jr., individually and as a partnership doing business as Smith & Breyer, and C. H. Chapman, the appellant herein. Plaintiff's petition alleges that on the 30th day of May, 1962, the partnership of Smith & Breyer executed and delivered to Tyler Bank & Trust Company a promissory note in the principal sum and amount of $25,000.00 payable 45 days from the date thereof, and that the sum of $17,057.09 was due, owing and unpaid. The note was secured by an assignment by the said Smith & Breyer of an account receivable from appellant, C. H. Chapman, which said assignment was in writing and was executed and delivered to the bank. The bank alleged that the appellant Chapman had notice of the assignment of the account, but that he had failed to make the payment of the amount due and owing the partnership of Smith & Breyer in the sum and amount of $17,057.09 after allowing a credit for $8,442.91 which appellant had paid by reason of the assignment. Smith & Breyer failed to answer or make an appearance and the court entered interlocutory judgment by default against them. Appellant answered and denied generally the allegations of the petition.

The cause of action against Chapman was submitted to the court, without a jury, and at the conclusion thereof, the court rendered judgment against appellant Chapman for $17,057.09 from which judgment he has perfected this appeal.

Upon request of the appellant, the court filed findings of fact and conclusions of law, in which the court found that Smith & Breyer had assigned the account to the bank on May 30, 1962; that C. H. Chapman was advised in person of the assignment within a few days following May 30, 1962, and by telephone prior to August 27, 1962, and was further advised in writing by the plaintiff through a letter deposited in the United States mail on January 24, 1963, which notice was acknowledged by an agent of the appellant, C. H. Chapman, by a letter dated January 31, 1963. At all times prior to February 5, 1963, appellant was indebted to Smith & Breyer upon the assigned account for an amount of not less than $17,057.09, and that Smith & Breyer had not assigned the account to any other persons or company. The court concluded as a matter of law that appellant was on notice of the assignment at a time when he owed Smith & Breyer the sum of $17,057.09 on the assigned account and was thus obligated to pay Tyler Bank & Trust Company the sum of $17,057.09 with interest thereon from the date of judgment.

In his brief appellant admits that the facts found by the court are 'essentially correct and uncontroverted.'

It is undisputed that on July 26, 1961, Smith & Breyer entered into a contract with Chapman for the purpose of drilling three test wells in the state of Michigan. The contract was in the form of a letter, the pertinent portion of which was as follows:

'We agree to drill a test well for oil and/or gas on the above three mentioned deals as specified in Humble Oil and Refining Company's farmout letter. Smith & Breyer will turnkey the drilling of the Gun Prospect for $28,000.00 to the casing point. The Wayland Prospect will be turnkeyed to the casing point for $28,000.00, and the Calhoun County Prospect will be turnkeyed for $34,500.00 to the casing point. Smith & Breyer will have a 1/4 carried interest in the Gun and Wayland Prospects to the casing point. Smith & Breyer will have a 1/8 carried interest to the casing point on the Calhoun County Prospect. * * *'

A turnkey price was agreed upon as to each well. It was later determined by the parties, however, that the Gun Prospect well could not be drilled, and the parties thus orally agreed upon the drilling of the Pike well. This well was to be drilled to a more shallow depth than the Gun well and the consideration for drilling this well was $25,500.00 rather than $28,000.00.

Prior to the time Smith & Breyer obtained the loan at the Tyler Bank, they borrowed $36,000.00 from the Texas Bank & Trust Company of Dallas, and assigned as collateral the account receivable from Chapman for the drilling of the two wells other than the Pike well. Appellant had notice of this assignment prior to the time he had notice of the assignment of the Pike account to the Tyler Bank. He admitted that he knew that none of the account covering the Pike well was assigned to the Dallas Bank, and further admitted that he was not entitled to any offset or credit against the Pike account.

On or about the 15th day of August, 1962, when the Smith & Breyer note was approximately thirty days delinquent, W. A. Pounds of the Tyler Bank called Chapman and requested payment on the assignment. Appellant advised that he would have to check his books and determine the amount due and owing Smith & Breyer. Thereafter, the bank received two checks drawn upon Chapman and endorsed by Smith & Breyer totaling $8,442.91 which reduced the amount due on the note to $17,057.09.

Appellant then advised the Tyler Bank that nothing more was due and owing Smith & Breyer. Appellant's books and record, however, showed that he was indebted to Smith & Breyer in the amount of $30,442.38.

On January 24, 1963, while the appellant's books continued to reflect such indebtedness, the attorneys for the Tyler Bank wrote appellant again advising him of the assignment and requesting payment. Receipt of the letter was acknowledged.

Thereafter, on February 5, 1963, when the Smith & Breyer note in the amount of $24,030.00 became due at the Dallas Bank, appellant, with knowledge of the assignment to the Tyler Bank, personally assumed the note at the Dallas Bank and charged the amount thereof to Smith & Breyer as an offset or credit on the amount due and owing them. He later paid the note.

Appellant seeks a reversal of the judgment predicating liability and has presented 5 Points of Error. In Points 1 and 3 he asserts that he should not be held liable to the Tyler Bank on the assignment because the uncontroverted evidence shows that the contract for the drilling of the three wells was an indivisible contract, not subject to assignment in part, and therefore since Smith & Breyer assigned the Tyler Bank only that portion of the account covering the 'Pike' well, he was not obligated to recognize such assignment. We are not in accord with this contention.

It is generally held that any order, writing, or act, at least if communicated to the holder of the fund, directing his debtor to transfer to a named person any portion or all of particular funds in his possession, operates as...