DoAll Dallas Co. v. Trinity Nat. Bank of Dallas

• Court: Texas Civil Court of Appeals
• Writing for the Court: CORNELIUS
• Citation: DoAll Dallas Co. v. Trinity Nat. Bank of Dallas, 13 UCCRep.Serv. 666, 498 S.W.2d 396 (Tex. Ct. App. 1973)
• Decision Date: 04 September 1973
• Docket Number: No. 8169,8169
• Parties: 13 UCC Rep.Serv. 666 DoALL DALLAS COMPANY, Appellant, v. TRINITY NATIONAL BANK OF DALLAS, Appellee.

Page 396

498 S.W.2d 396

13 UCC Rep.Serv. 666

DoALL DALLAS COMPANY, Appellant, v. TRINITY NATIONAL BANK OF DALLAS, Appellee.

No. 8169.

Court of Civil Appeals of Texas Texarkana.

Sept. 4, 1973.

Rehearing Denied Sept. 4, 1973.

Donald J. Hahn, Jr., McCullouch, Ray, Trotti & Hemphill, Dallas, for appellant.

A. Hardcastle, Jr., Geary, Brice, Barron & Stahl, Dallas, for appellee.

CORNELIUS, Justice.

The opinion of July 17, 1973, is withdrawn and this opinion, reaching the same result, is substituted therefor.

This suit was filed by DoAll Dallas Company as plaintiff against James E. Melton and the Trinity National Bank of Dallas as defendants to recover a sum of money converted by Melton from DoAll Dallas Company while Melton was its employee. The money was taken by a scheme wherein Melton received checks payable to DoAll Dallas Company from its customers and, rather than depositing said checks to the account of DoAll Dallas Company in its depository bank, he typed the words 'DoAll Dallas Company' on the back of said checks as an endorsement and then wrote thereon in his handwriting 'James E. Melton' or 'Jim Melton,' and deposited such checks to his own personal account in the Trinity National Bank. The jury found that the endorsements were not authorized and that the bank was negligent in depositing such checks to the personal account of Melton and that its negligence was the proximate cause of the loss suffered by DoAll Dallas Company. The defendant Melton admitted the conversion and did not defend the suit .

The jury found that there had been an accord and satisfaction between Melton and DoAll Dallas Company and the trial court rendered judgment for DoAll Dallas Company against Melton but denied any recovery against the Trinity National Bank. Although the jury found that $10,823.68 had been paid to DoAll Dallas Company and that an additional $14,241.09 would be needed to fully compensate it for its loss, the trial court rendered judgment against Melton for $25,064.77, the total amount of funds it was stipulated had been converted.

DoAll Dallas Company has appealed, bringing forward sixteen points of error. The case was submitted on special issues. The answers of the jury thereto are briefed as follows:

No. 1--The endorsements on the checks were not authorized.

No. 2--The Trinity National Bank was negligent in depositing said checks to the personal account of Melton.

No. 3--The negligence of the bank was the proximate cause of the loss suffered by DoAll Dallas Company.

No. 4--The sum of $14,241.09 would fully compensate DoAll Dallas Company for its loss.

No. 5--The restitution agreement, promissory note and assignment of wages executed by Melton to DoAll Dallas Company on August 12, 1970, did not constitute payment of all of the indebtedness owed to DoAll Dallas Company.

No. 6--The restitution agreement, promissory note and assignment of wages of August 12, 1970, did constitute an accord and satisfaction.

No. 7--The restitution agreement, promissory note and assignment of wages of August 12 1970, did not constitute a novation.

No. 8--The Trinity National Bank did not act in accordance with reasonable commercial banking standards in Dallas in accepting such checks for deposit.

No. 9--Melton did not have implied authority to make such endorsements.

No.10--DoAll Dallas Company was negligent in its hiring of Melton.

No.11--The negligence of DoAll Dallas Company in hiring Melton did not substantially contribute to its loss.

No.12--The managerial arrangements at DoAll Dallas Company were negligence.

No.13--The negligence of DoAll Dallas Company in its managerial arrangements substantially contributed to its loss.

No.14--The failure of DoAll Dallas Company to discover the conversion was negligence.

No.15--The negligence of DoAll Dallas Company in failing to discover the conversion substantially contributed to its loss.

No.16--The sum of $10,823.68 had been paid to DoAll Dallas Company toward payment of the converted funds.

The trial court defined 'accord and satisfaction' as follows:

'. . . 'accord and satisfaction' means an agreement between two parties to give and accept something of value in satisfaction of a right of action which one party has against the other, and the execution of this agreement.'

The trial court defined 'novation' as follows:

'. . . 'novation' means the creation of a new obligation in the place of an old one by the substitution of a new agreement between the same parties, accomplished by mutual consent and agreement of the parties, to extinguish the old obligation.'

Appellant DoAll Dallas Company contends that the jury was not authorized to find an accord and satisfaction under the evidence and that there is an irreconcilable conflict between the finding by the jury that there was an accord and satisfaction but that there was not a novation.

We have concluded that there was evidence supporting the jury's findings of accord and satisfaction and that such finding and the finding that there was not a novation can be reconciled, but we have further concluded that the trial court failed to reconcile the jury's findings in a proper manner, and thus failed to give effect to All the jury findings by rendering a judgment consistent therewith.

As concerns the issues of accord and satisfaction and novation, the evidence showed that, upon the discovery of the conversion after Melton's employment had been terminated and after the suit had been filed, discussions were had between representatives of DoAll Dallas Company and Melton. As a result of these discussions, Melton and DoAll Dallas Company signed a 'restitution agreement' dated August 12, 1970. The restitution agreement acknowledged that Melton had converted certain funds of DoAll; provided that the purpose of the restitution agreement was to repay All of Melton's indebtedness to DoAll and make Full restitution of all funds converted, plus all expenses, attorney's fees, court costs and other expenses incurred in connection therewith; agreed to repay all of such funds; provided that the exact amount of the funds converted was unknown, but was believed to be approximately $15,000.00; agreed that a note would be executed to DoAll Dallas Company in the sum of $25,000.00, and that when the correct amount of the converted funds was determined a renewal note would be executed for the proper amount, less such sums as had already been paid; agreed to an assignment of Melton's wages to apply on the indebtedness and for the transfer of certain shares in the Gryphon Fund, Inc., to further secure the debt; and acknowledged the receipt by DoAll of $5,423.68 from Melton as a 'partial payment' against the indebtedness. Also, on August 12, 1970, Melton executed a promissory note to DoAll Dallas Company for $25,000.00 and an assignment of wages as provided for in the restitution agreement. It was later stipulated that the actual amount converted was $25,064.77.

The Trinity National Bank was not a party to nor mentioned in the restitution agreement and nothing is contained therein concerning a release of the cause of action or a settlement of the lawsuit, either as to Melton or the Bank. The testimony was in conflict as to whether or not both DoAll Dallas Company and Melton intended the restitution agreement, note and assignment of wages to be an accord and satisfaction.

DoAll Dallas Company contends that the findings of accord and satisfaction and lack of a novation conflict. The trial court did not so conclude and apparently rendered judgment on the basis that the accord and satisfaction was substituted for the original cause of action and therefore released the Trinity National Bank, the joint tortfeasor. In doing so, we believe the trial court failed to give effect to the other answers of the jury and its verdict as a whole.

It is the duty of the courts to reconcile apparent conflicts in the jury findings if this can be reasonably done in the light of the pleadings and the evidence, the manner in which the issues were submitted, and In view of the other findings when considered as a whole. Perkins v. Mitchell, 153 Tex. 368, 268 S.W.2d 907 (1954); Cox v. Huffman, 159 Tex. 298, 319 S.W.2d 297 (1958); Casualty Underwriters v. Rhone, 134 Tex. 50, 132 S.W.2d 97 (1939, opin. apprvd.). A reasonable, rather than a technical, construction should be given to special issues and the answers to them as a whole, which permits the disregard of conflicts of contradictions which are apparent rather than real. Texas Indemnity Insurance Co. v. Staggs, 134 Tex. 318, 134 S.W.2d 1026 (Tex.Comm'n App. 1940, opin . apprvd.); Texas Employers Insurance Association v. McDowell, 278 S .W.2d 444 (Tex.Civ.App. Amarillo 1955, writ ref'd, n.r.e.); Service Life Insurance Co. v. Miller, 271 S.W.2d 301 (Tex.Civ.App. Fort Worth 1954, writ ref'd, n.r.e.).

In construing the answers of the jury in this case, it is helpful to summarize the findings regarding accord and satisfaction, novation and payment. They are that:

1). There was an accord and satisfaction between Melton and DoAll Dallas Company by their agreements of August 12, 1970;

2). Such agreements of August 12, 1970, did not constitute payment of all of the debt;

3). Such agreements of August 12, 1970, did not constitute a novation;

4). Payment of $10,823.68 had been made on the total indebtedness of $25,064.77;

5). Leaving $14,241.09 necessary to fully compensate DoAll Dallas Company for its loss.

Accord and satisfaction and novation are usually defined in general terms as they were defined by the trial court here, but there are fine distinctions which become important in a case such as this one. The satisfaction in an accord and satisfaction is usually the Performance of the new promise, rather than the New promise itself. 1 Tex.Jur.2d 208; 1 Am.Jur.2d 303, Annotation 96 A.L.R. 1133. However, the satisfaction may be the new promise itself. Ferguson-McKinney Dry Goods Co. v. Garrett, 252 S.W. 738 (Tex.Comm'n App. 1923,...