First Nat. Bank of Bellaire v. Hubbs, 17117
| Decision Date | 18 May 1978 |
| Docket Number | No. 17117,17117 |
| Citation | 566 S.W.2d 375 |
| Court | Texas Court of Appeals |
| Parties | FIRST NATIONAL BANK OF BELLAIRE, Appellant, v. Hal M. HUBBS, Appellee. (1st Dist.) |
Vickery & Brown, Charles R. Vickery, Jr., David W. Showalter, Houston, for appellant.
Werner & Rusk, Ray Hensarling, Houston, for appellee.
The plaintiff, Hal M. Hubbs, brought this action against the defendant, First National Bank of Bellaire, alleging that the sum of $3587.51 had been removed from his checking account without his authority and that the bank had wrongfully dishonored for "insufficient funds" his check to the Internal Revenue Service in the amount of $4800.00. The bank filed its answer and also filed a counterclaim for the balance allegedly due under three installment notes given by the plaintiff to finance the purchase of certain automobiles. The plaintiff thereafter filed a first amended original petition, alleging actual and punitive damages for the wrongful dishonor of his check, and pleading, in the alternative, that the bank had converted his money in the amount of $3587.51.
The cause was evidently tried and submitted to the jury on the theory of conversion. In response to the first two special issues the jury found that the bank had wrongfully exercised dominion, ownership or control over the plaintiff's property which resulted in damage to the plaintiff. In response to the third special issue the jury found that the sum of $10,000.00 would reasonably compensate the plaintiff for his damages. No other issues were requested by either side.
The trial court entered judgment on the jury's verdict that the plaintiff recover from the bank the sum of $3587.00 with interest at the legal rate from September 4, 1971 and its judgment further provided: "This recovery shall be offset by the claim of First National Bank of Bellaire against Hal M. Hubbs in the amount of $982.77, plus 15% attorney fees, plus 10% interest from September 4, 1971."
It is the bank's position that it was justified in removing the sum of $3587.51 from the plaintiff's account in order to safeguard the money after it had received notice of a claim being asserted by a third party. It also contends that it had the right to set off against the plaintiff's action for recovery of the money removed, an equal amount of indebtedness owed by the plaintiff to the bank on the three car installment notes.
In 1971 the plaintiff owned a general insurance agency, Houston National Agency, and his checking account was carried in the First National Bank of Bellaire as "Houston National Agency and Hal M. Hubbs." The plaintiff's agency was the sole representative of Northeast Insurance Company in the State of Texas, and it collected the insurance company's premiums and handled their claims. Bradford Associates was an insurance premium finance company located in the State of Maine, and the plaintiff testified that he had been authorized by Northeast to sign its name to checks from Bradford Associates and that during the time he had his account with Bellaire bank, he had signed checks in that manner for deposit to his account. There is dispute in the testimony as to whether the bank's officers were aware of the plaintiff's authority to endorse checks in this manner.
On September 3, 1971, an officer of the Bellaire bank received a telephone communication from an officer of Casco Bank & Trust Company in Maine, advising that Casco was handling the Bradford Associates account and that Bradford was claiming that checks made payable to Northeast Insurance Company, drawn on the Casco bank, and endorsed "Northeast Insurance Company by Houston National Agency," had been endorsed without authority. This communication was followed by a letter from the Casco bank to the Bellaire bank dated September 7, 1971, which advised that Bradford was asking relief from Casco and that Casco, in turn, was notifying the Bellaire bank that it would look to it under the warranty provisions of the Uniform Commercial Code. Upon receiving this communication, the Bellaire bank caused the sum of $3587.51 to be removed from the Houston National Agency's checking account and placed the money in the form of a cashier's check made payable to Houston National Agency with the notation "Funds held pending outcome of dispute." It is not clear why the exact amount of $3587.51 was withheld.
On September 23, 1971, the plaintiff made a written demand on the Bellaire bank for the return of the withheld funds, and the bank filed an interpleader action on September 27, 1971,...
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