Conte v. Greater Houston Bank

• Decision Date: 19 August 1982
• Docket Number: No. C2993,C2993
• Citation: 641 S.W.2d 411
• Parties: Joseph P. CONTE, Appellant, v. GREATER HOUSTON BANK, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 411

641 S.W.2d 411

Joseph P. CONTE, Appellant, v. GREATER HOUSTON BANK, Appellee.

No. C2993.

Court of Appeals of Texas,

Houston (14th Dist.).

Aug. 19, 1982.

Charles A. Botschen, Groom, Miglicco, Gibson, Bussell & Stewart, Houston, for appellant.

Don M. Kennedy, Gregg K. Saxe, Ladin & Engel, Houston, for appellee.

Before MILLER, MORSE and JAMES, JJ.

OPINION

MORSE, Justice.

Appellant Joseph P. Conte appeals from a summary judgment for appellee Greater Houston Bank declaring that it may, at its sole discretion, accelerate payment upon demand of the entire balance and accrued interest due and owing on a $1,700,000 real estate lien note bearing interest on unpaid principal at nine and one-half percent per annum, decreeing that appellant take nothing on his cross-actions and pay costs, and denying all other relief. We overrule all eleven points of error asserted by appellant and affirm the judgment of the trial court.

Appellee filed suit seeking a declaration of its rights under the following provision in the real estate lien note:

"ON DEMAND, BUT IF NO DEMAND IS MADE: principal and interest shall be due and payable in monthly installments of Fourteen Thousand Five Hundred Thirty Five and No/100 Dollars ($14,535.00) (or more) each, payable on the 4th day of each and every calendar month, beginning on the 4th day of May, 1978, and continuing regularly thereafter until the expiration of fifteen (15) years from the date hereof, when the entire amount hereof, principal and interest thereon remaining unpaid, shall then be due and payable; interest being calculated on the unpaid principal to the date of each installment paid and the payment made credited first to the discharge of the interest accrued and the balance to the reduction of the principal."

Appellant, the maker of the note dated April 3, 1978, answered with a general denial and affirmative pleas of usury, waiver and estoppel, and failure of consideration. He added a cross-action asserting four causes of action, alleging that the purpose of the note was for permanent long term financing as an extension and renewal of prior notes and that $17,000 was required to be paid to appellee bank as a one percent "brokerage" fee. Further, appellant asserted that he maintained certificates of deposit in the amount of $1,800,000 with appellee bank for the first sixteen months after the note was executed. Appellant prayed as defendant that the court declare that plaintiff-appellee bank "has no right to make a demand upon defendant for the principal balance due and owing together with interest thereon." Appellant's answer asserted usury as an affirmative defense and his first two cross-actions were "based on usury." The first of these asserted that the "brokerage point" of $17,000 was in fact interest contracted for, charged and received which made the demand note usurious in excess of double the amount of interest allowed by law contrary to Tex.Rev.Civ.Stat.Ann. art. 5069 Sec. 1.06(2) (Vernon 1971), so as to cause forfeiture of all principal. The second cause of action based on usury asserted that the bank's requirement of maintenance of his certificates of deposit, as a compensating balance, reduced the true principal to zero and made the interest contracted for, charged and received usurious in excess of double the amount allowed by law so as to cause a forfeiture. Appellant's third and fourth cross-actions asserted a breach of contract and negligence in failing to carry out an alleged agreement for permanent financing in consideration of the $17,000 deduction from the funds advanced by the bank. Appellant sought damages of double the amount of interest plus attorney's fees, consequential damages, expenses and punitive damages. The trial court entered summary judgment for the bank and against all defenses and cross-actions.

DECLARATORY JUDGMENT JURISDICTION

Appellant's first two points claim error in rendition of the declaratory judgment, for a lack of jurisdiction because of absence of a justiciable controversy and inability to fully resolve the controversy. The principal cases cited on by appellant as requiring our holding that the court had no power to grant advisory opinions or to determine matters not essential to the decision of an actual controversy are distinguishable as instances of attempted modification of earlier final judgments on the basis of hypothetical future facts. See Reuter v. Cordes-Hendreks Coiffures, Inc., 422 S.W.2d 193 (Tex.Civ.App.--Houston [14th District] 1967, no writ) and California Products Inc. v. Puretex Lemon Juice, Inc., 160 Tex. 586, 334 S.W.2d 780 (1960).

Appellant cites other cases which involve efforts to pre-judge possible future litigation, usually between unknown parties. In Byrd v. Fard, 539 S.W.2d 213 (Tex.Civ.App.--Dallas 1976, no writ) where the controversy between the parties before the court was already resolved, the court refused to pass on whether the Texas Deceptive Trade Practices Consumer Protection Act violated due process and was unenforceable as to other possible litigants. Similarly, in State of Texas v. Margolis, 439 S.W.2d 695 (Tex.Civ.App.--Austin 1969, writ ref'd n.r.e.) it was held improper, in the absence of a bona fide threat of prosecution, to declare that the Texas anti-trust laws would not be violated by a proposed scheme to avoid the laws requiring stores to close on Saturday or Sunday. Southern Traffic Bureau v. Thompson, 232 S.W.2d 742 (Tex.Civ.App.--San Antonio 1950, writ ref'd n.r.e.) merely held it improper to enter a declaratory judgment on facts which were particularly subject to mutation and change, where there were adequate criminal laws and procedures to provide relief against illegal practice of law. The court would not advise with regard to the admissibility in future cases of evidence which might be offered. In such cases, as in Firemen's Insurance Co. v. Burch, 442 S.W.2d 331 (Tex.1969) and Liberty Mutual Insurance Co. v. American Employers Insurance Co., 545 S.W.2d 216 (Tex.Civ.App.--Fort Worth), reversed on other grounds, 556 S.W.2d 242 (Tex.1977), where it was held that it was not proper for declaratory judgment to determine future liability on tort judgments which might be established, further litigation would necessarily be required despite the entry of declaratory judgment.

Accordingly, Texas courts dismissed for want of jurisdiction a case filed after the United States Court of Appeals, Fifth Circuit, stayed decision on a diversity case to allow a declaratory judgment by a Texas court on the construction of a life insurance clause, saying the federal court's reservation of jurisdiction made the requested declaratory judgment only advisory. United Services Life Insurance Co. v. Delaney, 386 S.W.2d 648 (Tex.Civ.App.--San Antonio), aff'd, 396 S.W.2d 855 (Tex.1965). The case before us on appeal does not involve such an "advisory opinion" on liabilities that could only be established in future litigation which is merely possible or between non-parties. Once the demandability of the note was adjudicated, the bank could resort to extra judicial foreclosure without the need to sue for any non-payment.

In appellant's cited cases of Joseph v. City of Ranger, 188 S.W.2d 1013 (Tex.Civ.App.--Eastland 1945, writ ref'd w.o.m.), and Harding Bros. Oil & Gas Co. v. Jim Ned ISD, 457 S.W.2d 102 (Tex.Civ.App.--Eastland 1970, no writ), declaratory judgments sought in tax cases which would not fully determine the tax liability were held properly refused. The Joseph case involved an interlocutory appeal, there being no final appealable adjudication; in the Harding case declaratory judgment was held properly denied on the merits by the trial court. In McKinnon v. Lane, 285 S.W.2d 269 (Tex.Civ.App.--Fort Worth 1955, writ ref'd n.r.e.), it was held proper for the trial court to refuse to rule on a declaratory judgment request "without prejudice to future rights to seek relief should the occasion arise." No actual controversy exists where a dispute is theoretical and a mere advisory opinion would result. In the instant case however, the declaratory judgment sought would determine the rights of the parties between themselves as to the propriety of a demand to mature the debt, the resulting obligation to make payment and the propriety of a foreclosure in the event of non-payment. Although appellant had not refused a demand made by appellee, at least after the assertion of the affirmative defenses and cross-actions related to the note on which both parties sought interpretation by declaratory judgment, the trial court was presented with a present justiciable controversy as to whether the obligation could be legally matured by the bank. Appellant's first two points of error are overruled.

SUMMARY JUDGMENT--DEFENSES REQUIRING PAROL EVIDENCE

Appellant contends by his third point of error that a summary declaratory judgment as to the bank's right to make demand should have been prevented by issues of fact with regard to appellant's affirmative defenses of usury, waiver and estoppel, and failure of consideration. Under the written transactions presented in the record, particularly in light of the parol evidence rule, there was no admissible evidence to raise the defenses of waiver, estoppel or failure of consideration. No assertion of fraud in the inducement was raised. In Town North National Bank v. Broaddus, 569 S.W.2d 489 (Tex.1978), where summary judgment against the makers of a promissory note was affirmed, the Court said at page 491:

... a negotiable instrument which is clear and express in its terms cannot be varied by parol agreements...

The Court continued at page 492, stating:

An unconditioned written instrument cannot be varied or contradicted by parol agreements or by representations of the payee that the maker would not be held liable according to the tenor of the instrument.

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The promise here complained of as being intended not to be performed was a collateral one in...