Crow v. Home Savings Association of Dallas County
| Decision Date | 30 April 1975 |
| Docket Number | No. B--4925,B--4925 |
| Citation | 522 S.W.2d 457 |
| Parties | James D. CROW et al., Petitioners, v. HOME SAVINGS ASSOCIATION OF DALLAS COUNTY, Respondent. |
| Court | Texas Supreme Court |
Lyne, Klein, French & Womble, Erich F. Klein, Jr. and Ron Edmondson, Dallas, for petitioners.
Haynes & Boone, Robin P. Hartmann and Donald C. Templin, Dallas, for respondent.
This is a usury case. Petitioners here, who instituted the suit, are James D. Crow and two of his entities, K. C. Corporation and Buckner Plaza Apartments, Ltd. Respondent is Home Savings Association of Dallas County. The claim arises out of a loan consummation transaction of October 27, 1971, and the payment to Home of the sum of $24,985 under the circumstances and in the manner later detailed. Upon trial, the jury found that one of the transactions on October 27, 1971, in which the First National Bank in Dallas loaned Crow the sum of $150,000, was a device for accomplishing a loan from Home to Crow; and that the payment to Home of the sum of $24,985 was compensation for the use or detention of this sum of $150,000 and not for services rendered Crow by Home. 1 The trial court entered judgment for Crow in the sum of $199,970 in usury damages and $30,000 in attorney's fees. See Article 5069--1.06(2), Vernon's Annotated Texas Civ. Statutes. The Court of Civil Appeals reversed and rendered judgment that Crow take nothing. 514 S.W.2d 160. It was the view of the Court of Civil Appeals that under the evidence the transaction in question was a bona fide loan by the First National Bank in Dallas, the repayment of which was guaranteed by Home, and hence not subject to the penalties of usury under the established rule of Greever v. Persky, 140 Tex. 64, 165 S.W.2d 709 (1942). We agree and affirm.
The facts are reviewed in detail in the opinion of the Court of Civil Appeals and will be restated here only as necessary. Crow was the owner of land in northeast Dallas upon which he projected the construction of an apartment complex to be known as Buckner Plaza. A financing loan of approximately.$2,498,500 was required. In May, 1970, Crow applied to Modern American Mortgage Company for a loan in such amount to be insured by the Federal Housing Administration. Modern American agreed to make the loan, the closing of which was delayed for eighteen months incident to obtainment of the FHA commitment. Approximately two months prior to closing, Modern American informed Crow that it would not furnish letters of credit required by the FHA notwithstanding its previous agreement to do so. Other letters of credit tendered by Crow were refused by Modern American. Crow testified that he then began searching for a substitute mortgagee and contacted Home, among others, in an effort to obtain financing. He wrote Home under date of October 20, 1971, to the attention of Jim T. Terry, President, and referencing 'Buckner Plaza, FHA 112--35160--PM' as follows:
In reference to the above mentioned project, we would like to solicit your services in helping to arrange for the initial closing and funding on this project. If you are successful in helping us carry this project to the initial closing, we will pay your company a fee of $24,985.00.
Along with this letter, I will be furnishing you a copy of all the documents pertaining to the above mentioned project and ask that you proceed as fast as possible in getting all the final arrangements made.
A sum of $24,985.00, representing 1% Of the loan, had been deposited by Crow with Modern American as earnest money. Soon thereafter Crow renewed his efforts to obtain the project loan from Modern American and to this end sought to utilize a payment bond to be issued on his K. C. Corporation. Apparently in response to this, Modern American agreed to accept the formerly rejected letters of credit upon the understanding that such payment bond would be obtained. But as to this, the bonding company required that K. C. Corporation have at least $150,000 in working capital and Crow unsuccessfully sought a loan in such amount from the First National Bank in Dallas. At this point Crow appears to have once again turned to Home and the following sequence of events is undisputed. Jim T. Terry, president of Home, instructed Crow to go to the office of Tack Thomas, a loan officer for the First National Bank, and on October 27, 1971, Crow there signed a promissory note in the sum of $150,000 payable in thirty days to the First National Bank in Dallas, and providing for interest from date at the rate of 7% Per annum. Home guaranteed in writing payment of the loan and in addition secured its payment by pledging an existing certificate of deposit in the sum of $150,000 owned by Home and issued by the First National Bank. The proceeds of the loan were deposited to the account of the K. C. Corporation, subject to the condition of withdrawal only with the approval of Home. Thereafter, on November 3, 1971, the loan transaction with Modern American was consummated. Among the numerous finalizing details on such date, Modern American issued its check to Home in the sum of $24,985, the amount of Crow's deposit with Modern American, bearing the notation:
FHA Project No. 112--35160--PM
Buckner Plaza
Fee for Services Rendered in Connection with Origination of Mortgage.
Later, by means of a check dated November 3, 1971, in the sum of $150,233,33, Buckner Plaza Apartments, Ltd., over the signature of Crow, paid the note to First National Bank, with accrued interest.
This suit against Home for usury penalties was filed by Crow under date of August 17, 1973, approximately twenty-one months after the transactions in question. The suit is not against the First National Bank in Dallas, the actual lender, claiming a usurious loan by adding the interest rate in the note with the commission paid Home. It is not alleged or claimed that Home was the agent of the lender Bank or that Home and the Bank were otherwise engaged in any character of joint enterprise. Nor does Crow seek a recovery from Home of the commission of $24,985 upon any claim of duress, or fraud, or breach of contract, or failure of consideration. This suit is for usury penalties and the problem to be resolved is whether the Court of Civil...
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