Crawford v. Kelly Field Nat. Bank, 04-85-00529-CV

• Court: Texas Court of Appeals
• Writing for the Court: ESQUIVEL
• Citation: Crawford v. Kelly Field Nat. Bank, 733 S.W.2d 624 (Tex. App. 1987)
• Decision Date: 10 June 1987
• Docket Number: No. 04-85-00529-CV,04-85-00529-CV
• Parties: Donald K. CRAWFORD, et al., Appellants, v. KELLY FIELD NATIONAL BANK, Appellee.

Page 624

733 S.W.2d 624

Donald K. CRAWFORD, et al., Appellants, v. KELLY FIELD NATIONAL BANK, Appellee.

No. 04-85-00529-CV.

Court of Appeals of Texas San Antonio.

June 10, 1987.

Rehearing Denied July 14, 1987.

John T. Arnold, Roanoke, for appellants.

Thomas H. Crofts, Jr., Groce, Locke & Hebdon, San Antonio, for appellee.

Before ESQUIVEL, DIAL and CHAPA, JJ.

OPINION

ESQUIVEL, Justice.

This is an appeal from a judgment in a suit on a promissory note. The maker of the note is The Airplane Company, a partnership composed of Donald K. Crawford and William Allison, Jr. The note was guaranteed by Shelcy Mullins, Sr., Shelcy Mullins, Jr., and The Tractor Company. In addition, the note was secured by a security agreement granting the payee of the note, Kelly Field National Bank, a security interest in an airplane. The Bank, after unsuccessful demands for payment of the note, acquired possession of the airplane and sold it at a private foreclosure sale. Proceeds from the sale were applied to repossession expenses, to the payment of a repairman's lien on the airplane and to the interest and principal due on the note. The Bank then brought this suit against The Airplane Company and the guarantors to collect the remaining unpaid balance of the note. The suit was tried to the court on stipulated facts. We are concerned in this appeal primarily with the effect on the note of a subsequently executed compromise settlement agreement.

Ammex Leasing Corporation, which is not a party to the suit, acquired a 1971 Beechcraft airplane with financing obtained from the Bank. By a lease dated October 29, 1981, Ammex leased the airplane to The Airplane Company, and on the same day Ammex assigned the lease to the Bank. The Airplane Company's obligation to make lease payments was guaranteed by the defendant guarantors. While in possession of the airplane pursuant to the lease, The Airplane Company delivered it to Piedmont Aviation for engine repairs. The Airplane Company failed to pay the repair costs of $86,514.45, and Piedmont retained possession of the airplane pursuant to its possessory repairman's lien.

On June 1, 1982, Ammex executed an aircraft bill of sale to the Bank. Four days later, the Bank filed an aircraft registration application with the Federal Aviation Agency, and it became the registered owner of the airplane on August 17, 1982.

On July 31, 1982, The Airplane Company executed a promissory note to the Bank in the amount of $468,042.00. The note required monthly payments of interest, and it matured on October 29, 1982. The note was absolutely and unconditionally guaranteed by the Mullinses and The Tractor Company, and was secured by the execution of a security agreement by The Airplane Company on August 5, 1982, which granted the Bank a security interest in the airplane.

On August 19, 1982, the Bank, The Airplane Company, and Ammex entered into the compromise settlement. The pertinent provisions of this agreement are set out as follows:

This Agreement is by and among Kelly Field National Bank ... The Airplane Company, ... and Ammex Leasing Corporation ... [.] Bank, Airplane Company, and Leasing Company are collectively referred to as "Parties" and individually as Party.

WHEREAS, Airplane Company sought financing at Bank for its 100 King Air N70JL,B87,

WHEREAS, Airplane Company, Bank and Leasing Company signed documents known as Lease 561,

WHEREAS, Bank and Leasing Company warrant and represent that good and marketable title to the 100 King Air N70JL,B87 is held by Bank,

WHEREAS, Bank and Leasing Company warrant and represent that there are no outstanding liens against said plane,

WHEREAS, Bank and Leasing Company warrant and represent that all sales taxes due heretofore to the State of Virginia are fully paid,

WHEREAS, Bona fide disputes and controversies exist among the parties, both as to liability and the amount thereof, if any, and by reason of such disputes and controversies the Parties hereto desire to compromise and settle all claims and causes of action of any kind whatsoever which Parties have or may have in the future arising out of such transaction, and intend that the full terms and conditions of the compromise and settlement be set forth in this Compromise Settlement Agreement.

NOW, THEREFORE, for and in consideration of the recital set forth above; the rescission of all obligations of any Party arising from Lease 561 which is hereby acknowledged; the execution of a note for $468,042.00 dated July 31, 1982 by the Airplane Company and payable to the Bank, the receipt and sufficiency of which is hereby acknowledged; the transfer of the title of the 100 King Air N70JL,B87, to the Airplane Company; and the payment of $50,000.00 from Leasing Company to Bank, the receipt and sufficiency of which is hereby acknowledged; the Parties have this day released and by these presents do release, acquit, and forever discharge each other, from any and all claims or causes of action of any kind whatsoever, at common law, statutory, or otherwise, which any of the Parties has or might have, known or unknown, now existing or that might arise hereafter, directly or indirectly, attributable to the above-described transaction, it being intended to release all claims of any kind which any Party might have against any other Party hereby released, whether recited in this document or not. It is expressly understood and agreed that the terms hereof are contractual and not merely recitals, and that the Agreements herein contained and the consideration transferred is to compromise doubtful and disputed claims, avoid litigation, and buy peace, and that no payments made or other consideration given shall be construed as an admission of liability, all liability being expressly denied....

Pursuant to the compromise settlement agreement Ammex refunded the sum of $50,000.00 to the Bank, and that amount was credited on The Airplane Company's obligation. The Bank also executed an aircraft bill of sale to The Airplane Company dated August 5, 1982.

Meanwhile, on August 13, 1982, Piedmont threatened foreclosure of its lien. It had refused to relinquish possession of the airplane until its repair bill had been paid. It received assurances from the Bank that its bill would be paid, and it finally relinquished possession of the airplane to the Bank in December of 1982. Neither The Airplane Company nor the guarantors had possession or use of the plane from the time it was sent to Piedmont for repairs.

The note matured on October 29, 1982. On October 25, 1982, the Bank wrote The Airplane Company and the guarantors that the note was in default by the amount of $13,515.51, which amount constituted unpaid interest. Although the Bank had demanded payment, neither The Airplane Company nor the guarantors had made any interest payments on the note. On January 7, 1983, the Bank notified The Airplane Company and the guarantors that it had obtained possession of the airplane and that it was going to sell it at a foreclosure sale. On January 17, 1983, the Bank notified The Airplane Company and the guarantors that it was going to sell the airplane at a private foreclosure sale and that the proceeds would be applied to pay Piedmont, repossession expenses and interest, and that the balance would be applied to the principal. The airplane was ultimately sold on January 31, 1983, at a private foreclosure sale for an amount equal to $375,000.00. The balance of the note remaining unpaid as of June 13, 1985, was $385,940.86.

The Bank filed this action on September 27, 1983, seeking recovery of the deficiency on the note from The Airplane Company and the guarantors. In the alternative, the Bank sought the value of the lease. The trial court rendered judgment on the note in favor of the Bank and against the defendants, jointly and severally, in the amount of $384,639.02 plus interest, attorney's fees and court costs. The defendants have appealed and raise five points of error. The Bank, in a cross-point, seeks damages for the prosecution by appellants of a frivolous appeal.

Appellants first two points are based on the execution of the compromise settlement agreement. They argue that the compromise settlement agreement contains no language excluding application of its complete release provisions to all of the transactions it describes. Appellants therefore conclude that the agreement releases The Airplane Company and the guarantors from their obligations on the note. The Bank counters that the note is set out in the compromise settlement agreement as consideration for its execution and that the settlement agreement cannot operate to release the consideration given for it.

In construing a release, an effort will be made primarily to ascertain and give effect to the intention of the parties. Berry v. Guyer, 482 S.W.2d 719, 720 (Tex.Civ.App.--Houston [14th Dist.] 1972, writ ref'd n.r.e.); Loy v. Kuykendall, 347 S.W.2d 726, 728 (Tex.Civ.App.--San Antonio 1961, writ ref'd n.r.e.). The release will be considered as a whole in order to give effect to the general purpose and the true intention of the parties with...