Long v. NCNB-Texas Nat. Bank

• Decision Date: 28 July 1994
• Docket Number: NCNB-TEXAS,No. 13-93-138-CV,13-93-138-CV
• Citation: 882 S.W.2d 861
• Parties: Clarence LONG, Sr., et al., Appellants, v.NATIONAL BANK as Assignee of the Federal Deposit Insurance Corporation as Receiver of the First Republic Bank Victoria, N.A. F/K/A Interfirst Bank Victoria, N.A., Appellees.
• Court: Texas Court of Appeals

Page 861

882 S.W.2d 861

Clarence LONG, Sr., et al., Appellants, v. NCNB-TEXAS NATIONAL BANK as Assignee of the Federal Deposit Insurance Corporation as Receiver of the First Republic Bank Victoria, N.A. F/K/A Interfirst Bank Victoria N.A., Appellees.

No. 13-93-138-CV.

Court of Appeals of Texas,

Corpus Christi.

July 28, 1994.

Bill W. Russell, Victoria, for appellants.

Douglas W. Sanders, Wright & Greenhill, San Antonio, for appellees.

Before SEERDEN, DORSEY and YANEZ, JJ.

OPINION

YANEZ, Justice.

Clarence, Stephen and C.L. Long, guarantors of a promissory note, appeal from a summary judgment awarding NCNB-Texas National Bank the deficiency resulting from a realty foreclosure by NCNB. In six points of error, the Longs claim the trial court should have denied NCNB's motion for summary judgment and instead granted their own motion for summary judgment. We disagree and affirm the trial court's judgment.

In August of 1985, Long Engineering executed a deed of trust over realty in Victoria County to secure a $120,000 loan from InterFirst Bank Victoria, predecessor of NCNB. In their capacity as sole shareholders and directors of the company, the Longs guaranteed the note. Long Engineering defaulted and filed for bankruptcy in December of 1989. NCNB then moved for relief from the automatic stay of foreclosure resulting from the bankruptcy proceedings. The bankruptcy court granted NCNB's motion for relief from the automatic stay in an agreed order signed by Long Engineering's attorney.

In May of 1990, NCNB sent notice of the contemplated foreclosure sale to Long Engineering at the address required for such notices, as specified in the deed of trust. This address was abandoned. Although NCNB sent an additional copy of the notice to the attorney representing Long Engineering in bankruptcy, NCNB did not separately notify the president of Long Engineering. In June of 1990, NCNB bought the property at foreclosure sale for $60,500 and demanded that the Longs pay the deficiency. When the Longs refused, NCNB sued to enforce the guaranties and prevailed on summary judgment.

In summary judgment proceedings, movants must establish their entitlement to judgment as a matter of law by showing that no disputed fact issue prevents them from conclusively proving every element of their cause or defense. Swilley v. Hughes, 488 S.W.2d 64, 67 (Tex.1972); MBank Corpus Christi N.A. v. Shiner, 840 S.W.2d 724, 725 (Tex.App.--Corpus Christi 1992, no writ). When both parties move for summary judgment, each needs to meet this standard and neither may prevail merely because the other failed to discharge its burden of proof. Buccaneer's Cove, Inc. v. Mainland Bank, 831 S.W.2d 582, 583 (Tex.App.--Corpus Christi 1992, no writ); Atrium v. Kenwin Shops of Crockett, Inc., 666 S.W.2d 315, 318 (Tex.App.--Houston [14th Dist.] 1984, writ ref'd n.r.e.). The burden shifts once the movant establishes the right to summary judgment the nonmovant must then present any issue that would avert the summary judgment. City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex.1979); Diehl v. Rocky Mountain Communications, Inc., 818 S.W.2d 183, 184 (Tex.App.--Corpus Christi 1991, writ denied).

Movant's appellate burden demands that we resolve each doubt and indulge every reasonable inference in favor of the nonmovant while accepting the truth of all evidence against the summary disposition. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985); Argonaut Ins. v. Allstate Ins., 869 S.W.2d 537, 537 (Tex.App.--Corpus Christi 1993, writ denied). Reviewing the summary judgment evidence in this light, we must determine whether such proof disposes of every genuine issue of material fact necessary to establish the movant's cause or defense. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970); Valero Energy Corp. v. M.W. Kellogg Constr. Co., 866 S.W.2d 252, 257 (Tex.App.--Corpus Christi 1993, writ denied).

Regarding the Longs' liability under the guaranties, four material elements comprise NCNB's cause of action:

(1) The existence and NCNB's ownership of the guaranties;

(2) Performance under the guaranties by InterFirst Bank Victoria and its successor, NCNB;

(3) Long Engineering's default on the underlying note so as to activate the Longs' liability under the guaranties; and

(4) The Longs' refusal to honor the guaranties.

See FDIC v. Attayi, 745 S.W.2d 939, 948 (Tex.App.--Houston [1st Dist.] 1988, no writ); Barclay v. Waxahachie Bank & Trust Co., 568 S.W.2d 721, 723 (Tex.Civ.App.--Waco 1978, no writ). The parties have agreed to facts establishing all four elements of NCNB's cause, and such stipulations may appropriately evince a summary judgment. Tex.R.Civ.P. 166a(c). Moreover, this suit particularly invites summary judgment in that it requires little more than our interpretation of an unambiguous written agreement. RGS, Cardox Recovery, Inc. v. Dorchester Enhanced Recovery Co., 700 S.W.2d 635, 638 (Tex.App.--Corpus Christi 1985, writ ref'd n.r.e.).

The Longs' first two points of error urge that we recognize a statutory duty to provide notice of a foreclosure sale to guarantors of the underlying note secured by real property. The relevant statute requires notice to "each debtor who, according to the records of the holder of the debt, is obliged to pay the debt." Tex.Prop.Code Ann. § 51.002(b)(3) (Vernon 1989). Specifically, the Longs ask that we read "debtor" to encompass both the maker and the guarantor of the note so that notice serves as an additional element of NCNB's suit to enforce the guaranties.

Construing the notice requirement in a suit for deficiency under a note secured by personal property, we have interpreted the term "debtor" to include guarantors. Hernandez v. Bexar County Nat'l Bank, 710 S.W.2d 684, 687 (Tex.App.--Corpus Christi), writ ref'd n.r.e. per curiam, 716 S.W.2d 938 (Tex.1986) (construing Tex.Bus. & Com.Code Ann. §§ 9.504, 9.505 (Tex.UCC) (Vernon Supp.1986)); see also FDIC v. Moore, 846 S.W.2d 492, 495 (Tex.App.--Corpus Christi 1993, writ denied) (construing Tex.Bus. & Com.Code Ann. § 9.504(c) (Tex.UCC) (Vernon 1991)). A vigorous debate on the effect of disputed notice under the Business and Commerce Code divides the various courts of appeal. The two schools of thought differ over whether notice represents an element of the cause or if lack of notice merely provides an affirmative defense. Compare Smith v. FDIC, 800 S.W.2d 648, 650 (Tex.App.--Houston [1st Dist.] 1990, writ dism'd agr.) with Daniell v. Citizens Bank, 754 S.W.2d 407, 409 (Tex.App.--Corpus Christi 1988, no writ).

Conspicuously, no such debate animates the issue now before us. In Hernandez, we concluded that the Business and Commerce Code notice requirement bars liability for deficiency absent notice of the foreclosure sale to the guarantor. Hernandez, 710 S.W.2d at 687. We explicitly distinguished, however, between guarantors of a loan secured by realty under the Property Code and a loan secured with consumer goods under the Business and Commerce Code. Id. The identical distinction underlies the Attayi court's analysis of a guarantor's right to notice of the foreclosure sale under the two codes. Attayi, 745 S.W.2d at 948. In a secured party's appeal from a summary judgment denying deficiency, the Attayi court addressed the material elements of the secured party's cause of action:

As appellee correctly argues, when a guaranty is made on a promissory note that is secured by personal property, the Texas UCC article 9 applies. (citations omitted). Notice of the forced sale was an element of appellant's cause of action. (citations omitted).

Appellant cites Barclay v. Waxahachie Bank & Trust Co., 568 S.W.2d 721 (Tex.Civ.App.--Waco 1978, no writ), as authority for the elements of a suit on a guaranty [with no mention of notice as an element].

At issue in Barclay were guaranties on promissory notes secured by real property; on the facts of the case the Barclay court's listing of the elements of a guaranty suit was correct. However, as stated above, the guaranty in the instant case was secured by personal property.

Attayi, 745 S.W.2d at 948.

Both Hernandez and Attayi contrast a guarantor's established right to notice if chattel secures the note with the absence of such a right under the guaranty of a note secured by realty. Neither the Business and Commerce Code nor the Property Code explicitly define "debtor" to include guarantors. Yet we discriminate between the two types of guaranty contracts because of the disparate legislative histories of their respective governing codes.

In May of 1965, Texas adopted the Official Text of the Uniform Commercial Code, with minor modifications irrelevant to this case, as chapters 1 through 9 of the Business and Commerce Code. See generally Robinson v. Garcia, 804 S.W.2d 238 (Tex.App.--Corpus Christi 1991), writ denied per curiam, 817 S.W.2d 59 (Tex.1991) (discussing legislative history of Texas UCC). Among the stated purposes of this enactment, chapter 1 particularly lists the goal of making "uniform the law among the various jurisdictions." Tex.Bus. & Com.Code Ann. § 1.102(b)(3) (Tex.UCC). This policy has encouraged Texas courts to look beyond our jurisdictional borders for guidance in construing the provisions of chapter 9. See, e.g., MBank El Paso N.A. v. Sanchez, 836 S.W.2d 151, 153-54 (Tex.1992) (citing § 1.102(b)(3) as grounds for surveying over a dozen jurisdictions before interpreting § 9.503); Peck v. Mack Trucks, Inc., 704 S.W.2d 583, 585 (Tex.App.--Austin 1986, no writ) (noting that majority of jurisdictions include guarantors within term "debtor" under UCC article 9 as one justification for adopting same construction in Texas); Sunjet, Inc. v. Ford Motor Credit Co., 703 S.W.2d 285, 287-88 (Tex.App.--Dallas 1985, no writ) (citing § 1.102(b)(3) as requiring multijurisdictional examination of evidentiary burden on secured party to interpret §§ 9.504, 9.507). The practice of consulting...