Collin County Sav. & Loan of Plano, Tex. v. Miller Lumber Co., Inc., 05-82-00526-CV

• Decision Date: 02 June 1983
• Docket Number: No. 05-82-00526-CV,05-82-00526-CV
• Citation: 653 S.W.2d 114
• Parties: COLLIN COUNTY SAVINGS & LOAN OF PLANO, TEXAS, Appellant, v. MILLER LUMBER CO., INC., Appellee.
• Court: Texas Court of Appeals

Page 114

653 S.W.2d 114

COLLIN COUNTY SAVINGS & LOAN OF PLANO, TEXAS, Appellant, v. MILLER LUMBER CO., INC., Appellee.

No. 05-82-00526-CV.

Court of Appeals of Texas Dallas.

June 2, 1983.

Lynn Phillips, Dallas, for appellant.

Howard Shapiro, Plano, for appellee.

Before STOREY, GUILLOT and STEWART, JJ.

STOREY, Justice.

This is an appeal from a suit to recover money that Miller Lumber Company deposited with Collin County Savings and Loan in exchange for a $100,000 certificate of deposit. Collin Savings' appeal raises questions regarding the finality of the judgment, the propriety of recovery in conversion, the sufficiency of the evidence to support the award of interest damages, and the exclusion of an auditor's positive written confirmation that purportedly constitutes Mr. Miller's acknowledgment of his personal debt to the bank. Concluding that we have a final judgment and that the Collin Savings' points of error cannot be sustained, we affirm.

In 1975, Von Miller deposited $100,000 with Collin Savings on behalf of Miller Lumber Company, a corporation. Collin Savings in turn issued its certificate of deposit (account number 1300644-4) in the name of Miller Lumber Company. During the following year Von Miller individually borrowed $90,000 from Collin Savings and signed a promissory note payable to the bank. Miller did not sign this note in a representative capacity for the lumber company. However, the note recites that Miller "pledges [his] account ... in said Association, No. 13-000644-4, as security for said debt and authorizes ... in the event of any default ... withdrawal ... of the funds ... for interest and principal payment." There is no evidence nor is it contended that the company authorized Miller to pledge its certificate to secure his debts.

In 1977 Miller defaulted on the note. In 1979 he attempted to withdraw the $100,000 deposit, presumably on behalf of the corporation. Collin Savings informed Miller that the deposit was collateral for Miller's promissory note and refused to return the deposit without offsetting the balance due on the note. Miller Lumber Company then filed suit to recover the deposit represented by the certificate, damages for the loss of the use of its money, punitive damages, and attorneys' fees. Collin Savings filed a counterclaim asserting "its right to judgment against account no. 13-000644-4 ... to satisfy the unpaid balance on the note ...." The counterclaim did not seek a judgment on the note personally against Miller, but only sought to foreclose an interest in the certificate. Miller and his wife have had possession of the certificate at all times. Collin Savings' president testified that standard banking procedure for pledging a certificate of deposit as collateral for a loan called for Collin Savings to take possession of the certificate. See First National Bank v. Lone Star Life Insurance Co., 524 S.W.2d 525, 530 (Tex.Civ.App.--Dallas), writ ref'd n.r.e. per curiam, 529 S.W.2d 67 (Tex.1975). Miller was not a party to the suit. After a trial before the court, the trial court's judgment decreed the release of the proceeds of the certificate to Miller Lumber Company and awarded it damages equivalent to its lost interest. This amounted to the difference between the prevailing market rate of interest, shown to be at least 14%, and the 7 1/2% rate earned by the certificate during the period its proceeds were withheld. Attorneys' fees and post-judgment interest were also awarded.

We are first confronted by the question of the finality of the trial court's judgment, which did not expressly deny relief on Collin Savings' counterclaim. We conclude that by decreeing the release of the deposit, the trial court determined by necessary implication that Collin Savings was not entitled to assert any claim to the funds of Miller Lumber Company in order to satisfy the personal note of Von Miller. See Transceiver Corp. of America v. Ring-Around Products, Inc., 581 S.W.2d 712 (Tex.Civ.App.--Dallas 1979, no writ); Kirkman v. Alexander, 280 S.W.2d 365, 368 (Tex.Civ.App.--Austin 1955, writ ref'd n.r.e.). The counterclaim only sought a recovery by way of offset against the certificate. We are supported in our conclusion by the trial court's conclusion of law stating that Miller Lumber Company is not indebted in any amount to Collin Savings on account of Miller's personal note. A person is not liable on a note he has not signed. A corporation signs a note by the authorized signature of its agent. Tex.Bus. & Com.Code Ann. §§ 3.401(a), 3.403 (Vernon 1968) (Tex. UCC). Miller Lumber Company could not be liable on Miller's personal note because Miller did not sign the note in a representative capacity and it was not shown that Miller had authority to secure his personal debt with collateral consisting of funds of the corporation. Because we conclude there is a reviewable final judgment, we proceed to the merits of the appeal.

Collin Savings first contends that the judgment must be reversed and the cause remanded because the case was tried on a theory of conversion of the money or of the certificate and neither theory of conversion is possible because, respectively: (1) it is conceded that Collin Savings never had possession of the certificate, cf. Montavon v. Alamo National Bank, 554 S.W.2d 787 (Tex.Civ.App.--San Antonio 1977, no writ); and, (2) a suit for conversion of money is only maintainable if there is an obligation to return specific, identifiable currency rather than a debtor-creditor relationship. In support of those contentions Collin Savings urges the case was pleaded and tried on a theory of conversion. It relies on First National Bank of Bellaire v. Hubbs, 566 S.W.2d 375 (Tex.Civ.App.--Houston [1st Dist.] 1978, no writ), for the proposition that a depositor may not sue his bank for conversion of money because the deposit creates a general debtor/creditor relationship between the bank and the depositor.

While we agree with these contentions as proper statements of the law relating to a suit for conversion, we cannot agree that they are applicable here. This is true because we conclude that the lumber company's pleadings and evidence support a theory of recovery of funds on deposit. See, e.g., Sears v. Continental Bank & Trust Co., 562 S.W.2d 843 (Tex.1977); Mesquite State Bank v. Professional Investment Corp., 488 S.W.2d 73 (Tex.1972); City National Bank of Bryan v. Gustavus, 130 Tex. 83, 106 S.W.2d 262 (1937), aff'g 77 S.W.2d 565 (Tex.Civ.App.--Waco 1934); Canyon Lake Bank v. New Braunfels Utilities, 638 S.W.2d 944, 945 (Tex.Civ.App.--Austin 1982, no writ). The court in Hubbs concluded that the plaintiff's recovery could not be sustained on an alternative theory of wrongful dishonor because some evidence of that claim was lacking. Here, the judgment decreed relief consistent with a claim for the recovery of a deposit and this claim was supported by the evidence. Therefore, we cannot say that the suit was tried on an erroneous theory. See Hubbs, 566 S.W.2d at 378; Gustavus, 106 S.W.2d at 265.

Collin Savings next complains of the exclusion of exhibit number 2, an auditor's confirmation letter signed by Von Miller by which he supposedly acknowledged a $90,000 debt to the bank. Assuming the exhibit is proof of the debt, it is not probative of Collin Savings' right to offset Miller's personal debt against the deposit of the corporation. Collin Savings did not have a right to apply the deposits of a third party to offset the debts of a depositor when it knew the deposits belonged to a third party. Hence, we conclude that the exhibit was properly excluded. See Steere v. Stockyards National Bank, 113 Tex. 387, 256 S.W. 586, 589-92 (1923); accord, South Central Livestock Dealers, Inc. v. Security State Bank, 614 F.2d 1056, 1059-60 (5th Cir.1980) (applying Texas law). See also National Indemnity Co. v. Spring Branch State Bank, 162 Tex. 521, 348 S.W.2d 528, 529 (1961); First National Bank v. Lone Star Life Insurance Co., 524 S.W.2d at 527-29.

Collin Savings next complains of the trial court's award of $15,636.80 as damages for the loss of use of the $100,000 deposit improperly retained by it. Aside from an attack on the sufficiency of the evidence, Collin Savings contends, citing Smith v. National Resort Communities, Inc., 585 S.W.2d 655, 660 (Tex.1979), that this award permitted an improper recovery of prejudgment interest because the applicable legal rate of interest was 6%, Tex.Rev.Civ.Stat.Ann. art. 5069-1.03 (Vernon Supp. Pamphlet 1971-1982), ¹ and the lumber company was paid 7 1/2% during the entire time the funds were withheld. This argument ignores the difference between prejudgment interest and interest as a measure of actual or consequential damages flowing directly or indirectly from the breach of an agreement to pay or loan money. Davis v. Small Business Investment Co., 535 S.W.2d 740, 743 (Tex.Civ.App.--Texarkana 1976, writ ref'd n.r.e.). See generally 17 Tex.Jur.2d Damages §§ 24, 53, 54 (1960). Compare Smith v. National Resort Communities, 585 S.W.2d 655, 660 (Tex.1979), with Farmers & Merchants State Bank v. Ferguson, 617 S.W.2d 918, 921-22 (Tex.1981), and F.B. Collins Inv. Co. v. Sallas, 260 S.W. 261, 264 (Tex.Civ.App.--Texarkana 1924, writ ref'd). From the date of the wrongful offset until the final judgment, the trial court allowed 6 1/2% interest on the deposit in addition to the 7 1/2%...