Jensen v. First City Nat. Bank
| Decision Date | 06 May 1981 |
| Docket Number | No. A2436,A2436 |
| Citation | 616 S.W.2d 452 |
| Parties | Kenneth JENSEN d/b/a Jensen Welding, Appellant, v. FIRST CITY NATIONAL BANK, Appellee. (14th Dist.) |
| Court | Texas Court of Appeals |
Lee J. Keller, Heath & Knippa, Houston, for appellant.
D. Bobbitt Noel, Jr., Vinson & Elkins, Houston, for appellee.
Before BROWN, C. J., and PRESSLER and JUNELL, JJ.
This is an appeal from a take nothing judgment rendered against Jensen, a partially-unpaid subcontractor, in a suit brought by him against First City National Bank ("the bank") to recover monies retained by the bank in repayment of loans made by it to the contractor on the project. Three Worlds Equipment Co. ("Three Worlds"). Jensen contends that by reason of the application of Tex.Rev.Civ.Stat.Ann. art. 5472e (Vernon Supp.1980) the bank converted funds belonging to Jensen by retaining the proceeds from two checks which were issued in payment for the work the subject of the subcontract between Jensen and Three Worlds. We affirm.
Three Worlds entered into a contract with Marathon Marco Co. ("Marco") to dismantle a storage tank located near Emory, Texas, and re-erect it on Marco's property in Dickinson, Texas. Three Worlds was to be paid $30,000 for this service in three equal payments, one to be paid upon issuance of the purchase order, one upon delivery of the tank to the plant site and the third upon completion of the work. Three Worlds then contracted with Jensen for Jensen to dismantle, move, sandblast and re-erect the tank for $18,000, $10,000 of which was to be paid upon delivery of the tank to Marco's plant and the balance when the work was completed and accepted.
Marco issued its first payment for $10,000 to Three Worlds on September 29, 1976, and on October 25, 1976, Three Worlds invoiced Marco for the second payment. On October 28, 1976, Three Worlds borrowed $5000 from the bank, subject to the bank's previously-filed security interest in the accounts receivable of Three Worlds. As a condition to the loan, the bank required and Three Worlds and Marco agreed that the next payment from Marco under the subject contract would be made payable jointly to Three Worlds and the bank. On November 8, 1976, Marco issued its check payable to Three Worlds and the bank covering the second installment. After endorsement by Three Worlds, the bank used the proceeds to retire the Three Worlds note of October 28, 1976, and credited the remainder to the Three Worlds account with the bank.
On November 12, 1976, Three Worlds borrowed an additional $5000 from the bank on the same terms as the first $5000 loan. On December 10, 1976, Marco issued its check in the amount of $10,000 payable to Three Worlds and the bank in payment of the last installment under the contract. This check was endorsed, delivered to the bank, and the proceeds used and deposited on December 13, 1976, in the same fashion as the first.
Jensen completed the work under his contract with Three Worlds on December 10, 1976, and was paid under his contract a total of $8000 in three installments: one for $1000 on October 31, 1976; the second for $3000 on November 11, 1976; and the third for $4000 on November 15, 1976.
Tex.Rev.Civ.Stat.Ann. art. 5472e creates a trust fund for contractors, subcontractors, mechanics, materialmen and others who supply labor and/or materials incident to the erection of improvements upon real property within the state. The statute provides:
Section 1. All moneys or funds paid to a contractor or subcontractor or any officer, director or agent thereof, under a construction contract for the improvement of specific real property in this state, and all funds borrowed by a contractor, subcontractor, owner, or any officer, director or agent thereof, for the purpose of improving such real...
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