First Gibraltar Bank, FSB v. Farley

• Decision Date: 31 January 1995
• Docket Number: No. 04-93-00752-CV,04-93-00752-CV
• Parties: FIRST GIBRALTAR BANK, FSB, Appellant, v. Raymond B. FARLEY and E.J. Tanquist, Jr., Appellees.
• Court: Texas Court of Appeals

Page 425

895 S.W.2d 425

FIRST GIBRALTAR BANK, FSB, Appellant, v. Raymond B. FARLEY and E.J. Tanquist, Jr., Appellees.

No. 04-93-00752-CV.

Court of Appeals of Texas San Antonio.

Jan. 31, 1995.

Rehearing Denied March 1, 1995.

Stephan B. Rogers, Akin, Gump, Strauss, Hauer & Feld, L.L.P., San Antonio, for appellant.

Bruce Robertson, Jr., San Antonio, for appellees.

Before BUTTS, ¹ RICKHOFF and HARDBERGER, JJ.

OPINION

HARDBERGER, Justice.

This is an appeal from a summary judgment on a suit to recover a deficiency on a promissory note. First Gibraltar originally filed suit against Tanquist and Farley to collect the deficiency. Both parties moved for summary judgment which was granted to Farley and Tanquist. First Gibraltar now appeals.

Factual and Procedural Background

On November 30, 1972, Casa de Madre Limited, a limited partnership, executed a real estate lien note of $775,000.00 to Corpus Christi State National Bank. The payment of this deed of trust was secured by real property owned by Casa Madre Limited. Raymond B. Farley and E.J. Tanquist, Jr., were both general partners of Casa de Madre Limited. On June 7, 1974, a new note and deed of trust was executed in renewal and extension of the original note and deed of trust.

Also on June 7, 1974, Corpus Christi State National Bank transferred the first note to Corpus Christi Savings & Loan Association, which held the 1974 note renewing and extending the original note.

The Federal Home Loan Bank authorized, on September 12, 1972, that the stock of Corpus Christi Savings & Loan would be sold to the 8.8 Corporation. The 8.8 Corporation was a wholly-owned subsidiary of Oak Cliff Savings & Loan Assoc.

Following the stock acquisition by the 8.8 Corporation, Corpus Christi Savings & Loan continued to operate under that name until July 1, 1978, when it was merged into First Texas Savings Association. First Texas Savings Association later became insolvent and the assets were transferred to First Texas Bank, FSB. First Texas Bank became insolvent and was acquired by FSLIC. The FSLIC transferred all of the assets to First Gibraltar Bank which later changed its name to First Madison Bank.

Casa de Madre Apartments Limited defaulted on its promissory notes. First Gibraltar alleges that it made a demand for cure of the default and that it sent notice of acceleration and sale of the property. The real property securing the note was foreclosed and sold on May 2, 1989 to First Gibraltar leaving $259,965.45 remaining due on the note.

First Gibraltar brought suit against Farley and Tanquist for the deficiency. First Gibraltar filed its motion for summary judgment alleging that it was entitled to the deficiency as a matter of law. Tanquist and Farley filed a response to First Gibraltar's motion and then filed their own motion for summary judgment alleging that First Gibraltar had judicially admitted that it did not own the note, or at the very least could not show an unbroken chain of title based on the bank's summary judgment affidavits. First Gibraltar did not file a timely response to Farley and Tanquist's summary judgment motion.

The court granted Farley and Tanquist's motion for summary judgment. After the court signed the summary judgment and severed it from the rest of the case, First Gibraltar filed a motion for new trial and a motion for leave to file supplemental affidavits in support of the motion for new trial. The trial court allowed the filing of supplemental affidavits but overruled the motion for new trial.

Ownership of the Note

In its first two points of error, First Gibraltar contends that the trial court erred in granting Tanquist and Farley summary judgment because a material fact issue exists concerning ownership of the note. In its third point of error, First Gibraltar complains that the trial court erred in failing to grant its motion for summary judgment.

To recover from Farley and Tanquist on the note, First Gibraltar was required to show the existence of the note and guaranty, the debtor signed the guaranty, the bank legally owned or held the note and guaranty, that a default occurred on the note and guaranty, and that a certain balance remained due and owing. Thibodeaux v. Spring Woods Bank, 757 S.W.2d 856, 858 (Tex.App.--Houston [14th Dist.] 1988, no writ). Farley and Tanquist's motion for summary judgment alleged that the evidence conclusively proved that First Gibraltar did not own the note in question.

Because First Gibraltar failed to file a timely response to Farley and Tanquist's motion for summary judgment, the only issue presented is whether Farley and Tanquist's motion is legally insufficient to support a summary judgment. First Gibraltar is not precluded from arguing that Farley and Tanquist's summary judgment evidence raises issues of material fact. City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671, 678 (Tex.1979); Nava v. Steubing, 700 S.W.2d 668, 671 (Tex.App.--San Antonio 1985, no writ). When reviewing summary judgments this court applies the well known standard that the evidence in favor of the non-movant will be taken as true and that all reasonable inferences drawn from the evidence will be indulged in favor of the non-movant. Rodriguez v. Naylor Ind., Inc., 763 S.W.2d 411, 413 (Tex.1989).

Tanquist and Farley's motion for summary judgment was based on the affidavit of Kathy Love, Assistant Asset Manager for First Gibraltar. Love's affidavit was also the primary summary judgment evidence upon which First Gibraltar was relying in its motion for summary judgment. In her affidavit, Love makes the following statements:

As the First Madison Bank, FSB employee charged with the responsibility for supervising the collection of the Note and the payment history with respect to the Note. The Note is one of the assets which was transferred to First Madison Bank (f/k/a First Texas Bank) by the Federal Savings and Loan Insurance Corporation ("FSLIC") as Receiver for First Texas Savings Association ("First Texas Savings") f/k/a Oak Cliff Savings and Loan Association ("Oak Cliff") as successor by acquisition to Corpus Christi Savings and Loan Association.

The documents attached as Exhibits "G" and "H" and incorporated herein by reference are true and correct copies of the (i) Federal Home Loan Bank Board Resolution # 72-1072 authorizing the acquisition by Oak Cliff Savings of Corpus Christi Savings; (ii) Order and Amended Order by the Savings and Loan Commissioner of the State of Texas approving the name change from Oak Cliff Savings to First Texas Savings Association.

The Love affidavit states that First Gibraltar's title and ownership of the note were derived by and through Oak Cliff Savings and Loan Association as successor to the Corpus Christi Savings and Loan. Attached as exhibit G to the Love affidavit is a copy of the Federal Home Loan Bank Board document dated September 12, 1972, which recites an acquisition of "Corpus Christi Savings & Loan Association's" stock by the 8.8 Corporation, a subsidiary of Oak Cliff Savings and Loan Association. According to Tanquist and Farley title to the note stopped in the Corpus Christi Savings and Loan Association. They say the acquisition of that association's stock by the 8.8 Corporation could not have transferred the association's title to the note, deed of trust and guaranty to Oak Cliff Savings and Loan Association. First Gibraltar did not respond to Farley and Tanquist's motion for summary judgment and thus did not attempt to explain this apparent gap in the title.

As previously noted, First Gibraltar's failure to file a response does not preclude it from arguing that the evidence was insufficient as a matter of law to support the summary judgment. See City of Houston v. Clear Creek Basin Auth., 589 S.W.2d at 678. First Gibraltar directs our attention to the portion of the Love affidavit which states that "First Madison (f/k/a First Gibraltar) is the current owner and holder of the Notes and Deeds of Trust...." This is an unequivocal statement of ownership of the note. Furthermore, a true and correct photocopy of the note was attached to the affidavit as an exhibit.

Testimony in an affidavit that a particular person or entity owns a note is sufficient to conclusively establish ownership even in the absence of supporting documentation if there is no controverting summary judgment evidence. Christian v. University Federal Savings, 792 S.W.2d 533, 534 (Tex.App.--Houston [1st Dist.] 1990, no writ). A photocopy of a note attached to the affidavit of the holder, who swears that it is a true and correct copy of the note, is sufficient as a matter of law to prove the status of owner and holder of a note absent controverting summary judgment evidence. Zarges v. Bevan, 652 S.W.2d 368, 369 (Tex.1983). It is also true that an issue of material...