Fryer & Willis Drilling Co. v. Oilwell, Div. of U.S. Steel, 5078
| Decision Date | 21 October 1971 |
| Docket Number | No. 5078,5078 |
| Citation | 9 UCCRep.Serv. 1135,472 S.W.2d 857 |
| Parties | 9 UCC Rep.Serv. 1135 FRYER & WILLIS DRILLING COMPANY et al., Appellants, v. OILWELL, DIVISION OF UNITED STATES STEEL CORPORATION, Appellee. |
| Court | Texas Court of Appeals |
Griffith & Lumpkins, Waxahachie, for appellants.
Strasburger, Price, Kelton, Martin & Unis, Dallas, for appellee.
The appellants are R. J. Fryer and Fryer And Willis Drilling Company. Fryer is president of the drilling company. In the early part of 1968, Fryer began negotiating with the appellee, Oilwell, for an extension of credit by Oilwell to the drilling company.
On May 6, 1968, at Oilwell's request, Fryer executed a guaranty in which it is stated that he unconditionally guarantees 'payment at maturity of any and all indebtedness, including judgment,' which the drilling company may owe to Oilwell. The agreement contains this provision: 'This guaranty shall be revolving and continuous to the extent of $------, plus interest, costs, and expenses, all as is hereinafter provided, and in the event the amount of liability is not limited in the space herein provided, then this guaranty shall be unlimited.'
In June, 1968, the drilling company gave its promissory note in the amount of $98,493 to Oilwell as part-payment for a used drilling rig. The note was renewed a few months later. In October, 1968, the drilling company purchased another used rig from Oilwell and gave its promissory note in the amount of.$80,341 as payment. The notes were payable in monthly installments. Oilwell reserved a purchase money security interest in the rigs, and the drilling company executed security agreements in favor of Oilwell.
By March, 1969, the drilling company was suffering financial difficulties and was delinquent on its payments on the notes. At Fryer's suggestion, the rigs were returned to Oilwell's used-equipment lot in Oklahoma City. In time, Oilwell declared the balance due on the notes, foreclosed its security interest, and sold the rigs at public auction. Oilwell purchased the rigs at the sale paying $65,000 for the first rig and $70,000 for the second rig.
Oilwell brought this suit against Fryer and the drilling company to recover deficiency judgments totaling about $34,000 and to recover about $80,000 for merchandise and equipment sold by Oilwell to the drilling company on open account.
Among other defenses set forth in their answers, Fryer and the drilling company alleged that the prices paid for the rigs by Oilwell at the foreclosure sale were not 'fair, adequate and just prices'; that each of the rigs had an actual cash market value in excess of $100,000 at the time of the sale; and that, by reason thereof, the defendants were not indebted to Oilwell for any deficiency balances on the notes. Additionally, Fryer pleaded that the guaranty was not unlimited; that Oilwell's agent represented to him at the time of signing that the guaranty would apply only to the purchase price of the first rig; that he relied upon the representation; that the representation was 'false and fraudulent'; and that but for the representation he would not have executed the guaranty.
Trial was to a jury. Pertinent to the questions on this appeal, the jury, answering special issues numbered as follows, (1) found that Oilwell's agent 'represented as a fact to R. J. Fryer that the guaranty agreement covered only the purchase cost of drilling rig No . 1': (2) failed to find from a preponderance of the evidence that the representation was false; (3) failed to find from a preponderance of the evidence that the representation was made for the purpose of inducing Fryer to sign the guaranty; (4) found that Fryer 'believed and relied upon the representation'; (5) found that 'except for such representation' Fryer would not have signed the guaranty; and (12), (13) found that at the time of the foreclosure sale rig number one had a market value of $80,000 and rig number two had a market value of $70,000.
All of the parties moved for judgment on the verdict. Oilwell's motion was granted.
Appellants present five points of error asserting (1) that they were entitled to credit on the notes for the amounts found by the jury to be the reasonable market values of the rigs at the time of the foreclosure sale; and (2) that the jury findings establish that Fryer's guaranty 'covered only the purchase cost of drilling rig No. 1.'
The security...
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