Guaranty Bk. (So. Oak Cliff Bk.) v. National Sur. Corp.
Decision Date | 21 March 1974 |
Docket Number | No. 18245,18245 |
Citation | 508 S.W.2d 928 |
Parties | GUARANTY BANK (SOUTH OAK CLIFF BANK), Appellant, v. NATIONAL SURETY CORPORATION, Appellee. |
Court | Texas Court of Appeals |
Royal H. Brin, Jr., Strasburger, Price, Kelton, Martin & Unis, Dallas, for appellant.
James K. Allen, Allen, Bowles & Davis, Dallas, for appellee.
In this suit for interference with business relations the trial court rendered summary judgment for defendant. We affirm on the ground that plaintiff had no legally protected interest because the transaction with which defendant is alleged to have interfered would have involved a misappropriation of trust funds.
The controversy arose out of difficulties in construction of a low-income housing project for a non-profit organization known as Calvary Arms Charitable Trust. The named beneficiary of the Trust was Mount Calvary Baptist Church, and its pastor, Reverend R. N. Bell, was chairman of the board of trustees. Prudential Insurance Company had advanced funds to the Trust on a preliminary loan for construction costs and had also committed itself for a permanent loan on completion of the project. The Federal Housing Administration agreed to insure the full amount of this loan. At the insistence of Reverend Bell, the general contractor sublet the carpentry work to Lee Rabon. When Rabon experienced financial difficulty, Reverend Bell assisted him in obtaining loans from plaintiff bank, and for that purpose personally signed Rabon's notes . Even with this help, Rabon was unable to perform, and he assigned his subcontract to the bank, which undertook to complete it. The bank found that the subcontract had been substantially underbid, and it ultimately lost $93,501.42, including $42,140.52 which it had advanced to the insolvent Rabon on notes jointly signed by Rabon and Reverend Bell. It failed, however, to complete the subcontract, and the general contractor had to take over the carpentry work. The general contractor completed the entire project at a loss of more than two hundred thousand dollars with assistance from defendant National Surety Corporation, the surety on its performance and payment bonds, and assigned to National Surety all payments remaining on the general contract.
Meanwhile, Reverend Bell, purporting to act for the Trust, applied to Prudential and FHA for a supplemental loan to be used for reimbursing the bank for its loss and paying other obligations Bell had incurred in his efforts to assist Rabon. The bank's representatives had proposed such a loan to Reverend Bell, and they assisted him with the application and supplied information to FHA concerning costs and expenditures. FHA agreed to insure this supplemental loan, and Prudential issued a commitment to lend the Trust an additional $117,700 to be secured, like the main loan, by a mortgage on the property of the Trust. The necessary papers were prepared, and representatives of the Trust, the general contractor, National Surety, and Prudential met in the FHA office for the purpose of closing both loans. The attorney for Prudential brought with him several checks. One check represented the balance due on the original contract, most of which was due to National Surety as assignee of the general contractor. Two other checks aggregated $117,700 the amount of the supplemental loan.
At this meeting James Knox, who was attorney for National Surety and acted also as counsel for the general contractor, raised questions concerning the supplemental loan and would not permit anyone to sign any documents on behalf of the contractor. After some discussion, the meeting broke up without any documents being signed and without any checks being delivered. National Surety's objections continued until FHA withdrew its commitment to insure the supplemental loan and Prudential cancelled its commitment for the supplemental loan. National Surety then withdrew its objections to closing the original loan, which was soon closed with cooperation of National Surety and the general contractor. The supplemental loan was never closed and the bank never received its expected reimbursement. In a separate suit the bank recovered judgment against Reverend Bell for the amount of his liability on Rabon's notes, but apparently that judgment has never been satisfied. In the present suit the bank seeks damages in tort as assignees of the Trust for the amount of the supplemental loan, and, alternatively, for damages in the amount of its own loss of $93,501.42 on the carpentry subcontract. On defendant's motion the trial court rendered summary judgment denying any recovery, and the bank appeals .
One of the grounds of National Surety's motion for summary judgment was that the supplemental loan would have been illegal because it would have involved a misappropriation of trust funds and a conflict of interests on the part of Reverend Bell in view of the provision in the trust instrument that 'no part of the income or assets of the TRUST shall be distributed to or inure to the benefit of any individual.' The bank contends that although the Trust might have had no legal obligation to reimburse the bank or to relieve Reverend Bell from his personal liability, it would not have acted unlawfully in doing so because the purpose of the Trust was to further minority interests and Rabon, whom Bell had recommended to the general contractor, was a black subcontractor. The bank argues that when Rabon ran into financial difficulty as a result of underbidding the carpentry subcontract, Reverend Bell obtained no personal benefit from signing Rabon's notes but did so in the interest of the Trust so that the project could be moved toward completion and that this assistance and the further sums advanced by the bank resulted in benefits to the trust property, which the trustees could properly recognize as imposing a moral obligation to prevent loss to the bank and others who had advanced funds to the subcontractor.
In support of this argument the bank relies on authorities holding that a moral obligation arising from a past legal obligation may be sufficient consideration for a subsequent promise to pay a debt barred by limitation or bankruptcy. See Hoya v. Self, 245 S.W. 424 (Tex.Com.App.1922, jdgmt. adopted); Flex v. Houston Bank & Trust Co., 489 S.W.2d 126 (Tex.Civ.App.--Houston (14th Dist.) 1972, no writ); Miller v. Aaron, 413 S.W.2d 426 (Tex.Civ.App.--Dallas 1967, writ ref'd n.r.e.); Simpson v. Williams Rural High School Dist., 153 S.W.2d 852 (Tex.Civ.App.--Amarillo 1941, writ ref'd), and Armstrong v . City Nat. Bank, 16 S.W.2d 954 (Tex.Civ.App.--Galveston 1929) cert. denied, 281 U.S. 737, 50 S.Ct. 333, 74 L.Ed. 1152. No such past legal obligation existed in the present case as a basis for the alleged moral obligation. According to some authorities, a past legal obligation is not essential if the promisor has previously received from the promisee a material...
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