Hennigan v. Heights Sav. Ass'n

• Decision Date: 21 December 1978
• Docket Number: No. 17256,17256
• Citation: 576 S.W.2d 126
• Parties: Daniel H. HENNIGAN, Appellant, v. HEIGHTS SAVINGS ASSOCIATION, Appellee. (1st Dist.)
• Court: Texas Court of Appeals

Page 126

576 S.W.2d 126

Daniel H. HENNIGAN, Appellant, v. HEIGHTS SAVINGS ASSOCIATION, Appellee.

No. 17256.

Court of Civil Appeals of Texas, Houston (1st Dist.).

Dec. 21, 1978.

Rehearing Denied Jan. 18, 1979.

Fred L. Fraser, Houston, for appellant.

Bracewell & Patterson, Michael A. Pohl, Houston, for appellee.

COLEMAN, Chief Justice.

This is an appeal from a summary judgment in favor of Heights Savings Association in a suit to recover the balance due on a promissory note after allowing as a credit on the note the amount realized at a Deed of Trust sale. Daniel H. Hennigan, who assumed the note secured by the Deed of Trust, appeals from the judgment asserting that he was entitled to an offset for damages under the Texas Deceptive Trade Practices Act-Consumer Protection Act and the Federal Truth In Lending Act. The judgment will be affirmed.

Daniel H. Hennigan, an attorney, purchased a house on September 26, 1972. As part of the purchase transaction, Mr. Hennigan assumed a preexisting promissory note executed by Jeffery O. McCollum, which was secured by a Deed of Trust. The Deed of Trust provided for an acceleration of the indebtedness in the case of an assumption sale unless Heights Savings Association should give its written approval of such sale. This approval was forthcoming and Hennigan began making the payments due under the note. He subsequently defaulted, and by letter dated January 12, 1976, Heights accelerated the note and declared all unpaid principal and interest to be due and payable. Thereafter the property securing the note was sold under the McCollum Deed of Trust and the proceeds of the sale were credited to the note. This suit for the balance due was then instituted.

The appellant first asserts that the trial court erred in rendering a summary judgment since the judgment denied him relief by way of setoff damages authorized by Section 17.50(b) of the Texas Deceptive Trade Practices Act (TDTPA). The TDTPA became effective on May 21, 1973. The Hennigan loan was consummated on September 26, 1972, eight months prior to the effective date of the TDTPA. Appellant contends, however, that his cause of action accrued on August 30, 1974, the date on which Heights for the first time demanded that Hennigan procure extended coverage insurance on the premises in addition to fire insurance previously required. Appellants rely on the holding of the Supreme Court of Texas in Woods v. Littleton, 554 S.W.2d 662 (Tex.1977), that the date of the acts which give rise to a cause of action under the Consumer Protection Act, rather than the date of the sale, determines the applicability of the Act.

Section 17.50(a)(1) and (3), provide that a consumer may maintain an action if he has been adversely affected by the use or employment by any person of an act or practice declared to be unlawful by Section 17.46 of this chapter or by any unconscionable action or course of action by any person. Section 17.46, supra, provides that false, misleading, or deceptive acts or practices in the conduct of any trade or commerce are declared unlawful. A number of acts which would constitute false, misleading, or deceptive acts or practices are listed in Section 17.46, none of which are similar to the actions complained of in this case.

Hennigan acquired the property in question from McCollum by a Warranty Deed containing a clause by which he specifically assumed the indebtedness of McCollum to Heights. By this transfer, Hennigan occupies the same relation to the mortgaged property as McCollum, and is bound by all the terms and conditions of the instruments executed by McCollum in connection with the purchase. City of Houston v. State, 171 S.W.2d 200 (Tex.Civ.App. Dallas 1943, writ ref'd w. o. m.). The note which Mr. Hennigan assumed provided that the failure to place and keep fire and windstorm insurance upon the improvements in their full insurable value, or in the amount of the indebtedness, in some insurance company satisfactory to the holder of the note, loss payable to the holder of the note, shall cause the note to immediately become due and payable. In the Deed of Trust securing the note the grantor agreed to insure and keep insured all improvements upon said property against loss or damage by fire and windstorm, "and any other hazards as may be reasonably required from time to time by the beneficiary during the term of the indebtedness secured". In the event the mortgagor failed or refused to furnish Heights the insurance required, the Deed of Trust authorized Heights to purchase the insurance and charge the cost thereof to the mortgagor. Some months after Hennigan acquired the property, Heights informed him that they would require extended coverage and offered to assist him in securing such coverage.

On the refusal of Mr. Hennigan to purchase extended coverage insurance, which includes windstorm, hurricane, hail, explosion, riot, civil commotions, smoke, aircraft, and land vehicles coverage, Heights procured such insurance and charged the premium for same to Mr. Hennigan. An exhibit in evidence reflects that the cost for the year 1974-1975 for the extended coverage was the sum of $68.00. Heights' demand that Hennigan furnish insurance as authorized by the Deed of Trust did not constitute a false, misleading, or deceptive act nor did it constitute an unconscionable action or course of action.

In determining what constitutes a false, misleading, or deceptive act or practice in the conduct of trade or commerce we are referred to the interpretations given by the Federal Trade Commission and the Federal Courts to Section 5(a)(1) of The Federal Trade Commission Act (15 U.S.C.A. 45(a)(1)). See Section 17.46(c), supra. Based on this provision of the Act, Hennigan contends that any violation of the Federal Truth in Lending Act could constitute a violation of the Deceptive Trade Practices Act by being "bootstrapped" through the Federal Trade Commission Act. The Federal Truth in Lending Act requires that all "charges or premiums for insurance, written in connection with any consumer credit transaction, against loss of or damage to property . . ....