Lee v. Howard Broadcasting Corp.

• Citation: 305 S.W.2d 629
• Decision Date: 12 September 1957
• Docket Number: No. 13145,13145
• Parties: Mrs. Hollie LEE et al., Appellants, v. HOWARD BROADCASTING CORPORATION, Appellee.
• Court: Court of Appeals of Texas. Court of Civil Appeals of Texas

Page 629

305 S.W.2d 629

Mrs. Hollie LEE et al., Appellants, v. HOWARD BROADCASTING CORPORATION, Appellee.

No. 13145.

Court of Civil Appeals of Texas, Houston.

Sept. 12, 1957.

Rehearing Denied Oct. 10, 1957.

Liddell, Austin, Dawson & Huggins; W. O. Huggins, Jr., Charles R. Vickery, Jr., and Alexander T. Sidman, Houston, for appellants.

Fulbright, Crooker, Freeman, Bates & Jaworski and Austin C. Wilson, Houston, for appellee.

GANNON, Chief Justice.

Mrs. Hollie Lee, the owner of two certain promissory notes made by Howard Broadcasting Corporation and secured by a deed of trust to John C. Dawson, Trustee, covering lands in Harris County, Texas, as well as by a separate chattel mortgage covering certain personal property, appeals from a temporary injunction granted, after notice and hearing, to Howard Broadcasting Corporation, the maker of the notes. John C. Dawson, the trustee, joins in the appeal. Mary Alice Rosenberg and husband, Lester E. Rosenberg, were made parties-defendant, but they disclaimed and are no longer interested.

By the order appealed from the appellants are restrained, pendente lite, from exercising the powers of sale conferred by the deed of trust as well as those granted by the chattel mortgage based on any default relating to the prompt payment of the notes, or either of them. The order expressly excepts from its operation judicial proceedings to collect the notes. It required a $6,000 injunction bond.

Prior to the allowance of the temporary injunction, there was a hearing at which some testimonial and documentary evidence was introduced. However it is evident to us that the order was granted largely, if not entirely, on facts appearing from the sworn pleadings of the parties. These consisted of an original and a supplemental petition of plaintiff Howard Broadcasting Corporation, both verified on personal knowledge, and a sworn answer of the defendants Mrs. Hollie Lee and John C. Dawson, the trustee, denying the material allegations of the original petition.

Certain undisputed facts appear from the sworn pleadings. Those deemed material are:

On or about January 15, 1954, Howard Broadcasting Corporation executed and delivered to the respective payees thereof two certain promissory notes, one in the principal sum of $100,000 payable to the order of Mrs. Hollie Lee, the other in the principal sum of $85,000 payable to the order of Mary Alice Rosenberg and Lester E. Rosenberg. The notes provide for interest on principal from date until maturity at the rate of 4% per annum, payable semiannually as it accrues, in the case of Mrs. Lee's note on March 1 and September 1 of each year, and in the case of the Rosenberg note on the 15th of July and the 15th of January of each year. The principal of each of the notes is payable in annual installments, the installments on the Lee note being due March 1 of each year commencing in 1954, and the installments on the Rosenberg note being due January 15 of each year commencing in 1955. The installments on the Lee note, in the order in which they accrue, are as follows: $15,000, $15,000, $15,000, $17,500, $17,500, $20,000. The installments on the Rosenberg note, in the order in which they accrue, are: $15,000, $15,000 $15,000, $17,500, $17,500, $5,000. Each of the notes provides for interest at 10% per annum on all past due principal and interest. The parties refer to this as 'penalty' interest. Each of the notes provides if any installment either of principal or interest on either of the notes be not paid at maturity, that upon continuance of any such default for sixty days all unpaid principal and interest of both notes shall immediately mature and become payable. Each of the notes provides for the payment of 10% additional on the amount then due if placed with an attorney for collection or if suit is brought on same. Each of the notes is secured by the vendor's lien on 42.40 acres of land in the E. E. Reed Subdivision, W. C. R. R. Company Survey, Harris County, as well as by a deed of trust dated January 15, 1954, to John C. Dawson, Trustee, covering said land, and also by a chattel mortgage dated January 15, 1954, covering certain personal property located in Harris County. The deed of trust and chattel mortgage each contain provisions for extra-judicial sale. Each of the notes carries the usual clause stipulating waiver of demand, etc. The notes were given by Howard Broadcasting Corporation in connection with its purchase of Radio Station K L B S. The station's broadcasting tower is located on the land covered by the deed of trust, and the chattel mortgage covers personal property necessary and useful in the operation of said radio station.

A provision in each of the notes for automatic acceleration is, when viewed alone, clear and unambiguous. That contained in the Lee note reads as follows:

'If any installment of this note, either of principal of interest, is not paid at its maturity, or if any such installment falling due on that certain promissory note bearing even date herewith, executed by the Maker hereof to Mary Alice Rosenberg and Lester E. Rosenberg in the principal sum of Eighty-Five Thousand Dollars ($85,000.00), is not paid when due, and if any such default continues for as long as sixty (60) days, then the entire balance remaining unpaid hereon, and all accrued but unpaid interest, if any, shall immediately mature and become due and payable.'

That contained in the Rosenberg note is precisely similar except that where in the Lee note the Rosenberg note is referred to, in the Rosenberg note the Lee note is referred to. However, despite the unambiguous provision for automatic acceleration and maturity appearing in each of the notes, the contemporaneously executed security instruments each and both provide for acceleration of maturity upon default in payment of the debt, whether of principal or interest, at the option of the holder. The deed of trust provides:

'Now, should the said indebtedness, both principal and interest, be promptly paid as the same shall become due and payable * * *, then this conveyance shall become null and of no further force and effect, and shall be released at the cost and expense of the Mortgagors. But if default is made in the punctual payment of said indebtedness, or any part thereof, principal or interest, as the same shall become due and payable * * *, then * * * the whole amount of any such indebtedness remaining unpaid, shall, at the option of any holder or holders thereof (or any part thereof) immediately mature and become payable; * * *.' (Emphasis supplied.)

The chattel mortgage provides:

'If default is made in the payment, when due, of the above described indebtedness or any extension, renewal or rearrangement of the same, * * *, then and upon the happening of any such event, Mortagees may at their election declare and thereby cause the full principal amount of the indebtedness remaining unpaid and all accrued but unpaid interest thereon to be immediately due and payable; * * *.' (Emphasis supplied.)

In view of the conflicting and contradictory provisions respecting acceleration appearing in the contemporaneously executed instruments constituting a single integral transaction, a patent ambiguity emerges with respect to the intent of the parties in regard to acceleration of maturity of the debt, i. e., whether automatic or optional at the election of the holder of the notes.

Apparently, prior to January 15, 1956, all principal and interest due on the Rosenberg note had been paid. On that date there matured a $1,400 interest payment and a principal installment of $15,000. In respect to the installment of principal and interest on the Rosenberg note, falling due January 15, 1956, it is undisputed that only the following payments were made: March 2, 1956, $5,000; March 9, 1956, $1,400; March 14, 1956, $5,000. Apparently, as of March 1, 1956, all matured principal and interest on the Lee note had been paid, however subsequent to that date only the following payments were made in respect to the principal and interest on the Lee note: April 30, 1956, $1,000; May 30, 1956, $1,000; June 20, 1956, $1,000; June 28, 1956, $1,000; July 12, 1956, $2,000.

Mrs. Lee acquired the Rosenberg note in late 1956. The petition, however, alleges that when the 1956 accruals on the notes came due the ownership thereof was in Mrs. Lee and Mrs. Rosenberg, respectively, and that each and both waived prompt payment of the notes and agreed to accept payments from time to time as Howard Broadcasting Corporation was able to make them, agreeing that late payment should not be made a basis for acceleration of maturity of the unpaid installments of principal or interest thereon. However, we find it unnecessary to determine the sufficiency of these allegations which we consider to be vague and indefinite. They are obviously insufficient to establish a rearrangement of the contract, and we think are insufficient to show estoppel or waiver beyond the times hereinafter indicated in any event.

On August 21, 1956, Mrs. Lee notified Howard Broadcasting Corporation that her note had been declared to be in default and the entire balance had been matured and declared due 'because of default and failure to pay the installment of $15,000.00 due on said note on March 1, 1956.' (Emphasis supplied.) Having in mind the patent ambiguity in respect to the provisions for acceleration appearing on the face of the loan papers, we note that as of February 11, 1957, the date of the filing of her sworn answer, in and by that instrument Mrs. Lee claimed that there was due on the Lee note the sum of $68,030.11 'together with interest thereon at the rate of 10% per annum from August 22, 1956, until paid.' August 22, 1956, was the day following Mrs. Lee's written notice to Howard Broadcasting Corporation that the maturity of the unpaid principal and interest on her note had been declared accelerated. Also in her answer Mrs. Lee, having at that time...