Gubitosi v. Buddy Schoellkopf Products, Inc.

• Decision Date: 02 December 1976
• Docket Number: No. 972,972
• Citation: 545 S.W.2d 528
• Parties: Vincent GUBITOSI, Appellant, v. BUDDY SCHOELLKOPF PRODUCTS, INC., et al., Appellees.
• Court: Texas Court of Appeals

Page 528

545 S.W.2d 528

Vincent GUBITOSI, Appellant, v. BUDDY SCHOELLKOPF PRODUCTS, INC., et al., Appellees.

No. 972.

Court of Civil Appeals of Texas Tyler.

Dec. 2, 1976.

Joe N. Boudreaux, Smith, Rachal, Schutze, Sanderson & Boudreaux, Dallas, for appellant.

John H. Martin, Thompson, Knight, Simmons & Bullion, Dallas, for appellees.

DUNAGAN, Chief Justice.

This is a note guaranty case involving the exercise of in personam jurisdiction under Art. 2031b, Tex.Rev.Civ.Stat.Ann., by a Texas court over an individual guarantor, a nonresident of Texas. This appeal is brought from the final judgment of the 101st Judicial District Court of Dallas County, Texas, against appellant Vincent Gubitosi, guarantor, and defendant below (hereafter called 'appellant') and in favor of appellees, Buddy Schoellkopf Products, Inc. and Red Head Brand Corporation, plaintiffs below (hereafter referred to jointly as 'appellees' and individually as 'appellee Schoellkopf' or 'appellee Red Head').

There was complete identity of interest among appellees to warrant their bringing suit as co-plaintiffs, to which appellant took no issue. Appellee Red Head is a subsidiary corporation of appellee Schoellkopf. Appellees sued appellant, as guarantor, for recovery on two promissory notes payable to appellees. The notes were made by Parker Merchandising Corporation (hereafter called 'Parker Corporation') and signed by appellant Vincent Gubitosi in his capacity as president of Parker Corporation. Appellant, also a major stockholder of Parker Corporation, signed two guaranty agreements making himself individually liable for payment of the two notes. Parker Corporation and appellant were both residents of the State of New York.

Appellant pursuant to Rule 120a, T.R.C.P., made a special appearance to object to the court's exercise of in personam jurisdiction over him, alleging that he was not amenable to process issued by a Texas court. In his special appearance appellant alleged that he was not a resident of Texas, that he had never been in Texas nor transacted business in Texas, and that any transactions had with appellees were performed in the State of New York. Appellant urged the trial court to dismiss the suit since there was not minimum contacts to constitutionally support jurisdiction over his person by a Texas court.

The trial court overruled the appellant's special appearance, and all parties proceeded to trial.

After a non-jury trial, the court rendered its judgment awarding to appellee Schoellkopf $15,217.48 and to appellee Red Head $8,491.96, and providing that both appellees were to receive contractual interest and ten percent attorney fees, plus legal interest on the aggregate amounts. The court overruled appellant's motion for new trial and made its findings of fact and conclusions of law. Appellant brings this appeal alleging twenty-four points of error committed by the trial court.

The material facts are as follows. Appellees are incorporated under the laws of the State of Texas and have their principal place of business in Dallas. For several years prior to this lawsuit, appellees had been selling and shipping sports-related goods to Parker Corporation on an open account basis, with terms of payment per invoice being the net amount due within ninety days after shipment. Early in 1973 appellees sold and shipped assorted sporting goods from Texas to Parker Corporation in New York and billed Parker Corporation in the usual invoice form and procedure. Several months thereafter Parker Corporation went into arrears in payment of these invoices and the same became past due. Appellees stopped further shipments on credit to Parker Corporation until the accounts were cleared up, and notified Parker Corporation that they were considering legal action to recover the accounts in arrears.

Over a period of months prior to November 19, 1976, appellees' credit manager, John Schleif, whose job was to approve and periodically review credit for appellees' vendees and monitor collection problems, began efforts to collect the delinquent accounts owed by Parker Corporation. Schleif was contacted by Carmin Grosso, operations manager of Parker Corporation, about the possibility of appellees accepting Parker Corporation's promissory notes to clear up the delinquent accounts. Acting through Schleif, appellees agreed to accept promissory notes and forbear from initiating legal action to collect the delinquent accounts.

Schleif advised Grosso that appellees would not accept any notes without a personal guaranty of payment by appellant herein, who, as mentioned earlier, was president and major stockholder of the Parker Corporation. The note negotiations were made primarily through long distance telephone conversations between Schleif (representing appellees) and Grosso. There is no evidence in the record that Schleif discussed the notes and guaranties personally with appellant .

Schleif, who was the only wintess called in the trial, testified that he mailed Grosso the figures to be encompassed by the notes. Two notes prepared by Grosso were mailed from New York to Texas, but appellees refused those notes because they did not comply with the original agreement between the parties and the notes were not accompanied by guaranties made by appellant. Appellees through Schleif had stressed that they would not accept the notes without the personal guaranties of appellant.

By letter dated November 19, 1973, Schleif notified Mr. Richard Nigro, another employee of Parker Corporation, that the two notes were being refused. Enclosed with the letter were two notes and two guaranty forms prepared by Schleif. These notes and guaranties were executed by appellant and returned to appellees by Ralph Esposito, assistant controller of Parker Corporation, accompanied by Esposito's letter dated December 26, 1973. There is no evidence that appellant ever corresponded through the mails or otherwise with appellees concerning the notes and guaranties.

The note payable to appellee Schoellkopf was in the principal amount of $15,217.48, and the note payable to appellee Red Head was in the principal amount of $8,491.96. Both notes were due on April 1, 1974, with interest at the rate of 12% Per annum. Each note provided that it was payable at the 'Mercantile Nat'l Bank--Dallas, Texas' and additionally provided that in the event of default that ten percent of the principal and interest due on the notes would be added as collection fees. The note was signed by appellant in his capacity as president of Parker Corporation.

The guaranties provided as follows:

'I, Vincent Gubitosi, do guarantee, as an individual, payment for the trade note(s) payable to . . . (appellees) . . ., Dallas, Texas by Parker Distributors, New Rochelle, New York, which . . . (are) . . . due April 1, 1974 in the amount(s) of . . . (giving amount) . . . with 12% Interest per annum.

'It is also especially agreed that the guarantor will pay all costs incurred by . . . (appellees) . . . if it should become necessary to collect funds under . . . (these guaranties) . . . by suit or in probate or bankruptcy proceedings.

X (signature)

Vincent Gubitosi'

(notary acknowledgment dated December 21, 1973)

It is significant that each guaranty did not expressly incorporate or adopt as a whole the place of performance provisions of each note .

Both notes were dated November 19, 1973, whereas the guaranties were dated December 21, 1973. However, the notes and guaranties were actually executed on the same date, December 21, 1973, and mailed together in the same envelope from New York to appellees in Dallas, Texas.

On April 1, 1974, the notes were not paid. Parker Corporation at that time was, or soon thereafter became, insolvent and bankrupt, and accordingly was not joined in this suit. Appellees sued appellant for payment of the notes. After his special appearance to contest jurisdiction was overruled, appellant filed his first amended original answer setting up the following defenses: (1) that he was not amenable to suit within the State of Texas; (2) that the guaranties were without legal consideration and therefore not legally binding; and (3) that he was not obligated to pay appellees' attorney fees because the same were not provided for in the guaranties.

Appellant's twenty-four points of error deal with the court's decisions on the three defenses raised in his answer. We shall first consider appellant's points of error dealing with jurisdictional issues. Points of error 1 through 4 allege that the court erred in overruling appellant's special appearance and motion to dismiss under Rule 120a, T.R.C.P., because appellant (1) was not personally served in Texas; (2) had not engaged in business in Texas; (3) did not have sufficient minimum contacts to support in personam jurisdiction over him or valid service of process made upon him; and (4) was denied due process of law when the Texas trial court assumed jurisdiction over appellant without his having sufficient minimum contacts with Texas. Points of error 5 through 13 allege that the court's findings of fact numbers III, IV and XXI were not supported by any evidence, and, alternatively, insufficient evidence, or that the said findings were against the great weight and preponderance of the evidence presented.

The court found the following facts, among others, dealing with jurisdictional issues:

(1) that appellant was a nonresident natural person who had engaged in business and transacted business in the State of Texas, and who had not maintained a regular place of business in the State of Texas or a designated agent upon whom service may be had (Findings of Fact No. III);

(2) that the appellees' cause of action arose out of appellant's business in the State of Texas (Finding of Fact No. IV);

(3) that the appellant was properly served with citation by serving the Secretary of State of the State of Texas (Findings of Fact No. V); and,

(4) that appellant executed two...