Industrial Finance Service Co. v. Riley, 15143

• Decision Date: 05 October 1956
• Docket Number: No. 15143,15143
• Citation: 295 S.W.2d 498
• Parties: INDUSTRIAL FINANCE SERVICE CO. et al., Appellants, v. Allen V. RILEY et ux., Appellees.
• Court: Texas Court of Appeals

Page 498

295 S.W.2d 498

INDUSTRIAL FINANCE SERVICE CO. et al., Appellants, v. Allen V. RILEY et ux., Appellees.

No. 15143.

Court of Civil Appeals of Texas, Dallas.

Oct. 5, 1956.

Second Motion for Rehearing Denied Oct. 26, 1956.

Jackson C. Burroughs, Dallas, for appellants.

Edward C. Fritz, Dallas, for appellees.

DIXON, Chief Justice.

Our opinion heretofore delivered July 20, 1956 is withdrawn and in lieu thereof the following opinion is substituted.

This is an appeal from a judgment rendered October 12, 1955 after a jury verdict in favor of appellees Allen V. Riley and his wife Mayme R. Riley against appellants Industrial Finance Service Company, Louis K. Cassett, J. H. Pollak and Joseph H. Pollak for the sum of $5,494.14 plus interest and court costs. The recovery was for usury and also for damages alleged to have been brought about by appellants' unreasonable, harsh collection efforts, which caused appellees to suffer mental and emotional pain and physical illness.

The case was tried on appellees' fourth amended petition, but in order to understand the issues presented on this appeal it is necessary to review the history of the litigation as reflected in the record before us, including some of the superseded pleadings.

I History of the Case

The litigation began January 8, 1951 when appellees filed suit against seventeen loan companies and three credit insurance companies. Sixteen of the loan companies were either individually owned or were partnerships. One of the loan companies and the three credit insurance companies were corporations.

Appellees' original petition alleged a joint and several cause of action against the twenty defendants, including the present appellants. It was asserted that over a considerable period of time and on different occasions appellees had borrowed money from each of the loan companies, and in connection with each loan had been fraudulently required to pay for credit insurance and purported service charges. It was further asserted that each defendant and each possible combination of them had entered into an agreement, plan, and joint venture to evade and circumvent the usury laws of the State of Texas, and to effect and enforce collections from appellees, and that in both separate and concerted actions they hounded appellees by harsh and wrongful collection efforts. The alleged harsh and wrongful collection efforts are described in some detail, and it was asserted that they were committed intentionally, willfully and maliciously. The prayer was for double recovery for usury and for actual and exemplary damages for personal injury.

On January 29, 1951 appellant Industrial Finance Service Company filed its motion to dismiss, or in the alternative to sever the cause of action as to said Industrial Finance Service Company. It was alleged in the motion that there was a misjoinder of causes of action, as the transactions alleged by appellees were separate and set up separate and severable causes of action against the defendants. This motion was never acted on by the trial court, so far as the record discloses. Neither was it ever withdrawn or dismissed by appellant.

Sometime prior to February 25, 1953 the trial court entered an order dividing the defendants into four groups and providing for a separate trial as to each group. This order is not shown in the transcript so we cannot describe its contents in detail. But it is referred to in appellees' third amended petition and also in a later order of the court.

On February 25, 1953 appellees filed their third amended petition. We quote from this pleading:

'Come now Allen V. Riley and wife, Mayme R. Riley, plaintiffs, and pursuant to the order of the Court to file separate pleadings herein, as to four different groups of defendants, and without waiving their rights to a single trial of all the defendants, and incorporating herein at the outset all the allegations of plaintiffs' second amended original petition, file this their third amended original petition, showing as follows:

'Plaintiffs' cause of action for damages for libel and slander, and wrongful harassment and collection efforts are indivisible among the various defendants, because it is impossible for plaintiffs to divide the causation of their injuries among the defendants. The wrongful collection efforts of the defendants occurred over a period of years in varying intensities having varying effects upon plaintiffs, some of which were not immediately demonstrated before another defendant or other defendants would contribute thereto, and all the defendants' wrongful collection acts are thus mingled inextricably into one total cause.

'Only because the Court has ordered separate pleadings do plaintiffs, maintaining their exception to such order, file the separate pleadings hereinafter filed.

'Plaintiffs withdraw their first trial amendment to their second amended original petition, having filed same only pursuant to an order of the Court that they segregate the damage among the defendants by ownership groups.' (Emphasis supplied.)

On May 28, 1953 the trial court on its own motion entered an order of severance. We quote a part of this order:

'* * * the Court considered the pleadings of all parties as they now stand, plaintiffs' third amended original petition, divided into Parts I, II, III and IV pursuant to previous orders of the Court, as therein alleged, for separate trial without severance of the causes against the defendants named in the several parts, and the answers of the defendants to the said third amended original petition, and being now of the opinion that there should be an actual severance so that each of the severed parts may proceed to final judgment as a separate cause and that all previous orders for separate trial without severance should be set aside, it is so ordered.

'It is, therefore, hereby ordered by the Court of its own motion * * * that the suit of the plaintiffs, Allen V. Riley and Mayme R. Riley, against the defendants named in Part IV of plaintiffs' third amended original petition, Industrial Finance Service Company and others, and Southern Life Insurance Company, be, and it is hereby severed from the suits against all other defendants and separately numbered on the docket as cause No. 50526-G-4.

'It is further ordered that the pleading heretofore filed in this cause shall be pleadings in each of the four causes herein created by severance, but that the third amended original petition of plaintiffs and the answers thereto entitled Part I, shall be filed only in No. 50526-G-1 and Part II, only in 50526-G-2, and Part III only in 50526-G-3, and Part IV only in 50526-G-4; * * *

'To all of which orders of severance the plaintiffs duly except.'

On April 12, 1955 appellees filed in this severed cause of action their fourth amended original petition, the pleading on which they went to trial. In it they name as defendants only Industrial Finance Service Company, a partnership composed of Louis K. Cassett, J. H. Pollak and Joseph H. Pollak, and Southern Life Insurance Company, a corporation. Only one of the other defendants originally charged in appellees' original petition is mentioned by name in the fourth amended petition, though the wording of the pleading seems to include the other defendants. So far as the record indicates, appellees' joint and several cause of action against numerous defendants had by this time, over the protest of appellees, been broken into separate suits, pursuant to the court's order of severance of May 28, 1953.

Appellant Industrial Finance Service Company replied to appellees' fourth amended petition in a fifth amended answer. They name the other loan companies originally sued by appellees and allege among other defenses that the acts of these loan companies, and each of them, constituted the sole proximate cause of appellees' injuries and damages, if any.

Following the jury verdict judgment was rendered in favor of the defendant Southern Life Insurance Company, but against appellant Industrial Finance Service Company and its owners, Louis K. Cassett, J. H. Pollak and Joseph H. Pollak, for usury and actual damages. The court rendered judgment non obstante veredicto in favor of said appellants as to exemplary damages.

II Facts

There is evidence in the record showing a series of loan transactions between appellants and appellees extending from February 1948 to October 1950. These transaction involve loans, renewals, service charges, insurance charges, and 'other charges.' Appellants have not presented points on appeal contesting that usury was proved, so we shall not go into a detailed discussion of the evidence on that score.

Upon failure of appellees to keep up their payments, appellants began a bombardment of collection letters, telegrams, and telephone calls, in daytime and nighttime, at appellees' home and at their places of employment. In addition the company's collectors called in person at appellees' home and places of business. There is testimony that the methods employed by appellants were 'nasty, harsh and loud,' and sometimes contained implied threats. The evidence in our opinion amply supports the jury finding that appellants' collection efforts were unreasonable and were made with malice and with reckless disregard of appellees' health and welfare.

There is ample evidence to show that these harsh, unreasonable and malicious collection efforts caused both appellees physical injury as well as mental and emotional pain and suffering. Their effect was to upset Mrs. Riley so that she lost sleep and vomited and suffered from nervous headaches. On one occasion she went to work but became so ill that she had to return home in an hour. On another occasion appellants' collector came to her place of employment at Wyatt's Grocery Store and talked so loud to her that her manager intervened and told him to stop; she became so nauseated that she vomited 'all over the store' on her way back to the rest room,...