Hoxie Implement Co., Inc. v. Baker

• Citation: 65 S.W.3d 140
• Decision Date: 14 June 2001
• Docket Number: No. 07-00-0175-CV.,07-00-0175-CV.
• Parties: HOXIE IMPLEMENT CO., INC., Appellant, v. Jim BAKER, individually and d/b/a Baker Harvesting, Appellee.
• Court: Court of Appeals of Texas

65 S.W.3d 140

HOXIE IMPLEMENT CO., INC., Appellant, v. Jim BAKER, individually and d/b/a Baker Harvesting, Appellee.

No. 07-00-0175-CV.

Court of Appeals of Texas, Amarillo.

June 14, 2001.

Opinion Granting Rehearing in Part September 21, 2001.

Opinion Overruling Second Motion for Rehearing October 23, 2001.

S. Tom Morris, Gibson, Ochsner & Adkins, LLP, Amarillo, for appellant.

Jody G. Sheets, Amarillo, Hicks Thomas and Lilienstern, LLP, Karen L. Chisholm, Natasha A. Elmore, Houston, for appellee.

Before BOYD, C.J., QUINN and REAVIS, JJ.

QUINN, Justice.

Hoxie Implement Co., Inc. (Hoxie) appeals from a final judgment entered in favor of Jim Baker, individually and d/b/a Baker Harvesting (Baker). Through that judgment, the court awarded Baker, among other sums, $251,884.95 against Hoxie. The latter now presents three issues for review. The first concerns whether the trial court erred in granting Baker a directed verdict upon his claim of usury. Through the second, Hoxie argues that it established, as a matter of law, its right to recover $3,137.70 from Baker on an open account and that the trial court erred in denying such recovery. The third point involves the propriety of the attorney's fees awarded Baker. We affirm in part, reverse in part, render in part, and remand in part.

Background

Hoxie sued Baker to recover damages for breach of contract. The claims were founded upon Baker's alleged failure to purchase six combines from, and pay an open account of $3,137.71 due, Hoxie. According to Hoxie's live pleading, the failure to purchase the six combines resulted in it suffering damage in the form of "$90,000.00 anticipated profit ... plus actual economic interest losses and costs of $59,183.28 [which losses continue] to accrue at the rate of $252.92 per day until the combines [are] sold ... plus $47,252.70 dealer's rebate ... plus prejudgment interest at the highest rate allowed by current Texas law...."

Baker answered the petition and generally denied the allegations. It also counterclaimed for usury. According to Baker, the "Plaintiff's demand letters, pleadings and disclosure statement contain[ed] demands for payment ... of damages in the amount of $468,990.56. This sum include[d] alleged interest charges in the amount of $91,135." Baker continued by averring that "Plaintiff states this is for pre-judgment interest and actual damages suffered, at the actual rate at which they are accruing and costing the Plaintiff on the purchase price of the combines from Case IH." Furthermore, because the "parties... never agreed upon an interest rate" the maximum allowable interest was six percent. Yet, the rate levied by "Plaintiff greatly exceed[ed] the maximum lawful rate...."

At trial, a demand letter written by counsel for Hoxie and dated January 15, 1998 was admitted into evidence. Attached to it was a "petition" which Hoxie said it "may" file if Baker did "not make adequate arrangements for the payment in full of all sums due and owing to Hoxie." The letter also admonished Baker to "read the allegations contained in the petition carefully." So too did the company inform him (in the letter) that his "failure to pay the agreed upon sum when due and owing results in damages ... in the form of interest costs of 18% per annum from September 1, 1997 until paid." Next, via the petition which Baker was directed to "read... carefully," Hoxie twice averred that Baker was indebted to it not only in the amount of $1,025,636.00 but also for "interest thereon at the rate of 18% per annum from September 1, 1997, until paid in full."¹

Also admitted into evidence was testimony that Hoxie claimed an amount of interest equal to $91,135.49. This sum was sought as damages and purportedly equaled the interest it was being charged once it acquired the combines. Yet, while undergoing cross-examination, the representative for Hoxie admitted that the company had incurred no such interest charges but, nonetheless, sought the $91,000 amount from its opponent.

Once Hoxie completed its presentation of evidence, Baker moved for an instructed verdict on the questions of breached contract and usury. As to the latter, it was undisputed that 1) there existed no agreement wherein Baker consented to pay any interest to Hoxie for any purpose and 2) the interest which Hoxie attempted to capture from Baker (irrespective of its characterization) equaled or exceeded 12% per annum. Furthermore, Baker argued that he established usury via "two different approaches." The first concerned the averments in the January 15th demand letter as well as the claim for $91,000 as interest costs when no such costs were actually incurred. The second involved the levy of pre-judgment interest prior to the time authorized by statute. Finally, both the debt represented by the contract to purchase combines and the debt reflected in the $3137.71 open account were encompassed within the motion for instructed verdict.

Upon hearing argument from all involved, the trial court refused to direct a verdict on the claim of breached contract. Regarding the allegations of usury, however, it stated:

... the court has viewed those letters— I think counsel is right, those letters are a demand. And I think that is what triggers the troublesome problem here. The court has always had trouble personally with that. I don't like that application of law. I think it's harsh. I think it's very, very harsh. But I feel like at this point, based on the record as it is at this point, that the Court has at this time no choice but to grant, as a matter of law, the motion for instructed verdict on usury under both positions which the defendant has pointed out. And the court at this time will do so. (Emphasis added).

Thereafter, the trial court submitted the issue of breached contract to the jury. The latter found that no breach had occurred. Consequently, judgment was entered declaring that Hoxie recover nothing against Baker but that Baker recover $251,884.95 and attorney's fees from Hoxie.

Issue One

Hoxie initially contends that the trial court erred by instructing a verdict on the claim of usury. This is allegedly so because 1) no debt was owed by Baker, "and in absence of an absolute obligation to pay a definite principal amount, there cannot be a charge of usurious interest," 2) Hoxie did not charge a usurious interest, but if "it did, that charge was [subsequently] corrected..." and 3) any interest levied on the account receivable was never communicated to Baker. (Emphasis added). We sustain and overrule the point in part.

a. Contingent Obligation and Correction

The contentions regarding the contingent nature of the debt and the subsequent correction (if usury was actually sought) were not urged at the time the trial court debated whether to grant an instructed verdict.² Hoxie did not broach these arguments until it filed its motion to vacate the judgment or, alternatively, for new trial. And, therein lies the problem, for authority requires that objections to a trial court's proposed conduct be urged in a timely manner. Tex.R.App. P. 33.1(a); St. Paul Surplus Lines, Co. v. Dal-Worth Tank Co., 974 S.W.2d 51, 53 (Tex.1998). The requirement to act timely encompasses not only the objection itself but also all the grounds allegedly supporting it. In other words, both the objection and all legal basis for it must be timely asserted. Credille v. State, 925 S.W.2d 112, 115-16 (Tex.App.-Houston [14th Dist.] 1996, pet. ref'd.). Furthermore, an objection is considered timely urged when asserted at the earliest opportunity, Russell v. State, 904 S.W.2d 191, 196 (Tex.App.-Amarillo 1995, pet. ref'd.), or when the potential error becomes apparent. Perry v. State, 957 S.W.2d 894, 896 (Tex.App.-Texarkana 1997, pet. ref'd.). Finally, including the objection and grounds in a motion for new trial does not satisfy the contemporaneous objection rule if the complaint could have been urged earlier. St. Paul Surplus Lines, Co. v. Dal-Worth Tank Co., 974 S.W.2d at 53.

Here, the parties debated the propriety of the motion for instructed verdict before the motion was granted. At no time during that debate did anyone posit that the motion should be denied because the debt which Hoxie attempted to collect from Baker was a contingent debt or that the demand for interest contained in the January 15th missive was a mistake which was subsequently corrected. So, the contentions were not urged at the earliest possible opportunity or at a time which afforded the trial court a chance to avoid the supposed error. Thus, Hoxie waived them, and its motion for new trial did not cure the situation.

b. Demanding Usurious Interest

Next, in reference to the argument that Hoxie never demanded usurious interest, the implement dealer propounds several arguments. They concern both the debt represented by the supposedly breached purchase agreement and that represented by the account receivable. We address each in turn.

1. Breached Purchase Agreement

As to whether Hoxie sought usurious interest while attempting to collect damages due to the allegedly breached sales agreement, we need address only one ground of Baker. It concerns the January 15th letter and its substance. Again, Baker contended at trial that it was a vehicle through which usurious interest was demanded. According to Hoxie, however, the letter did not constitute a "charge" of interest for purposes of the usury statutes. Rather, it merely informed its opponent 1) that the petition "may" be filed and 2) of interest costs Hoxie incurred in acquiring and holding the combines for Baker. We disagree with Hoxie.

Section 305.001 of the Texas Finance Code penalizes one for contracting for, charging, or receiving interest that is greater than the amount authorized by law. Tex. Fin.Code Ann. § 305.001(a) (Vernon 1998). Furthermore, the solicitation, through a demand letter, of interest exceeding that allowed by law may constitute a "charge" for purposes of § 305.001....