Frost Nat. Bank v. Nicholas and Barrera

• Decision Date: 26 February 1976
• Docket Number: No. 909,909
• Citation: 534 S.W.2d 927
• Parties: The FROST NATIONAL BANK, a corporation, Appellant, v. NICHOLAS AND BARRERA, a Professional Corporation, Appellee.
• Court: Texas Court of Appeals

Page 927

534 S.W.2d 927

The FROST NATIONAL BANK, a corporation, Appellant, v. NICHOLAS AND BARRERA, a Professional Corporation, Appellee.

No. 909.

Court of Civil Appeals of Texas,

Tyler.

Feb. 26, 1976.

Rehearing Denied April 1, 1976.

John R. Locke, Jr., Groce, Locke & Hebdon, San Antonio, for appellant.

Fred Clark, San Antonio, for appellee.

McKAY, Justice.

This suit was brought by appellee, Nicholas and Barrera, a Professional Corporation, to recover a sum of money embezzled by a public accountant employed by appellee through use of a checking account at The Frost National Bank of San Antonio, appellant.

Appellee sought recovery both on a contractual theory and on a negligence theory: (1) that appellant breached the depository contract between it and appellee by failing to pay the amounts of checks drawn by appellee only to the named payee of such checks, and that as a matter of law a bank must pay a check only to the payee named therein or to his order; and (2) that appellant was negligent in failing to ascertain the identity and existence of Depository Account No. 607, the designated payee on the checks in question, and in failing to obtain a proper endorsement on the checks. Appellant's pleading on which it went to trial consists of a general denial and a plea that any loss or damage which may have been sustained by appellee was caused by the negligence of appellee.

This case has a previous appellate history, and in the first trial both parties filed motions for summary judgment. The trial court denied appellant's motion for summary judgment, granted appellee's motion, and decreed that appellee recover from appellant the sum of $22,288.93, the aggregate sum of six checks identified as Exhibits 2, 3, 4, 5, 6 and 7.

Upon appeal the San Antonio Court of Civil Appeals affirmed the trial court's judgment as to the check identified as Exhibit No. 2, which was in the amount of $2,141.20, and reversed and remanded the trial court's judgment for a new trial as to the checks identified as Exhibits 3, 4, 5, 6 and 7, which totaled $20,147.73. That opinion is found in 500 S.W.2d 906 (1973, ref'd, n.r.e.).

Upon remand the case was tried before a jury and the trial court charged the jury on the negligence of the appellant as well as appellee. The jury answered ¹ that (1) appellee failed to sustain its burden of proving appellant negligent in crediting the subject checks to depository account without obtaining endorsements on said checks; (3) that appellant was negligent in not determining the existence or nonexistence of Depository Account No. 607 with regard to the checks; (4) that such negligence was a proximate cause of appellee's loss; (5) that appellee's officers were negligent in signing checks payable to 'Depository Account Number 607' without investigating and ascertaining the nature of the account and who had control of it; (6) that such negligence was a proximate cause of appellee's loss; (7) that appellant failed to sustain its burden of proving that appellee's employee, Mary Louise Magnon, was negligent in depositing the five checks in question to 'Depository Account' without first ascertaining the identity of the party in whose name said account was listed; (9) that Mary Louise Magnon was negligent in failing to call the attention of the officers of appellee to changes made by Patrick M. Penker in the procedure for paying Federal withholding taxes and F.I.C.A. taxes; and (10) that such negligence was a proximate cause of appellee's loss.

Appellee moved for judgment requesting the court to disregard the jury's answers to issues 5, 6, 9 and 10 on the ground that as a matter of law such findings do not constitute a defense to appellee's cause of action and that such findings have been rendered immaterial because of the jury's answer to issues 3 and 4. Appellant filed a motion for judgment on the verdict and also a motion for judgment non obstante veredicto on the ground that appellee's loss was the proximate cause of its own negligence; that appellee, under the undisputed evidence was contributorily negligent as a matter of law; that the checks were so deposited at the express request of appellee and it should be barred from asserting that appellant was negligent in so doing; and that appellee, under the undisputed evidence, assumed the risk that a loss would occur by reason of the wrongful act of its agent.

The trial court granted appellee's motion for judgment, disregarded issue 10 and found that issues 5 and 6 did not bar recovery by appellee. Appellant's motion for judgment on the verdict and for non obstante veredicto was denied, and judgment was rendered for appellee for $20,147.73 plus interest of $4,661.13, a total of $24,808.86.

Although the facts were fully set out in the opinion of the court in the previous appeal we deem it necessary to restate them here. Appellee is a professional corporation engaged in the practice of law. Around February, 1971, appellee employed a public accountant by the name of Patrick M. Penker. Penker was employed originally to computerize the accounts receivable, but soon assumed the general accounting responsibilities of the firm. It was a part of his duties to calculate the monthly payments of withholding taxes, which were to be paid to the Internal Revenue Service, and generally to handle the accounting work in regard thereto.

Prior to Penker's employment, the withholding taxes had been handled by Mrs. Mary Louise Magnon, a long-time employee of appellee . It was her practice, after computing the amounts which should be withheld, to prepare a check drawn on the firm's bank account at the Frost National Bank in that amount, and to make the check payable to the order of the Frost National Bank. She would then take this check, along with a Federal Tax Deposit Card furnished by the Internal Revenue Service, to a special window in the back part of the Frost Bank. The check and card would be deliverted to the teller at the special window, who would stamp a validation on the detachable small part of the card and then return it to Mrs. Magnon as her receipt for the payment of the withholding taxes. The Frost Bank, as are all national banks, is a designated depository for funds due the Internal Revenue Service. The bank routinely receives from its customers deposits made for the payment of withholding taxes, and they are customarily handled just as Mrs. Magnon handled these before Penker's employment.

Penker changed this system. Shortly after his employment by appellee, Penker went to the Frost National Bank and opened a personal checking account under the name of 'Depository Account'. The signature card on this account indicates that it was opened on March 30, 1971, with an initial deposit of $10. The account bears the customer account number of 038--342, and the only person authorized to draw checks on such account was Patrick M. Penker. Penker thereafter wrote and delivered to Mrs. Magnon a letter setting forth the procedure she was to follow thereafter in making payment of withholding taxes. Attached to the letter was a prototype which she was to use as a form in preparing the monthly checks for withholding taxes. These checks were to be made payable to the order of 'Depository Account No. 607'. He also delivered to her the preprinted deposit slips for his depository account which he had opened at the Frost National Bank, which showed the account number of 038--342 and had printed on them 'Depository Account', but the number 607 does not appear thereon. Mrs. magnon was instructed that instead of making the checks payable to the Frost National Bank as Mrs. Magnon had done in the past, she was to make them payable to Depository Account No. 607. After having the checks signed by Mr. Nicholas or Mr. Barrera she was to take them to a regular teller at the bank, rather than to the special teller at the back part of the bank, and was to deposit them to the depository account, using the preprinted deposit slips. At Penker's request, Mrs. Magnon gave him all of the federal tax deposit cards which had been furnished by the Internal Revenue Service, Penker having told her that he would take care of them. These cards were never sent to the Internal Revenue Service, and Penker actually destroyed them.

Exhibits Nos. 3 through 7 were all deposited to the depository account, and thereafter Penker withdrew these funds, thereby misappropriating them to his own use. The fraud was discovered in early September, 1971, and no further checks were deposited after the check of July 30, 1971. All five checks involved here were payable to the order of 'Depository Account No. 607,' and each deposit slip bore the printed customer account number '038--342'.

Appellant's points complain that the trial court erred (1) in failing to sustain appellant's motion for judgment non obstante because the evidence was insufficient to sustain a finding that appellee's loss was a proximate result of any negligence on the part of appellant, and (2) because under the undisputed evidence appellant breached no contractual duty to appellee; (3) in failing to disregard the jury findings to issues 3 and 4 because there was no evidence to support such findings; (4) in failing to enter judgment for appellant on the verdict because the only negligence found by the jury against appellant was not, as a matter of law, the proximate cause of appellee's loss; (5) in failing to render judgment for appellant on the verdict because the contributory negligence of appellee is a bar to its recovery; and (6) in disregarding the jury's findings on issue 10 because such finding is supported by the evidence.

Rule 301, ² T.R.C.P., provides that a trial court may render judgment non obstante veredicto if a directed verdict would have been proper, and such court may disregard any special issue jury finding that has no support in the evidence. The judgment rendered by the trial court can be upheld if the issues disregarded...