Lowry v. Crimmins
| Decision Date | 09 February 1984 |
| Docket Number | No. 11-83-242-CV,11-83-242-CV |
| Citation | 665 S.W.2d 230 |
| Parties | 38 UCC Rep.Serv. 557 James M. LOWRY, Appellant, v. Carl E. CRIMMINS, Appellee. |
| Court | Texas Court of Appeals |
James M. Lowry, Stephenville, for appellant.
Thomas J. Williams, Robert D. Frye, Bishop, Payne, Lamsens & Brown, Fort Worth, for appellee.
Carl E. Crimmins sued James M. Lowry for the balance due on a promissory note. Lowry denied liability, arguing that the note was a partnership debt 1 and that he was discharged from liability under the terms of Section 36(2) of the Uniform Partnership Act 2 and also by Section 3.606 of the Business and Commerce Code. 3 Following a nonjury trial, the district court rendered judgment for Crimmins in the sum of $6,732.86 for the unpaid balance and pre-judgment interest plus $1,009.93 for attorney fees. Lowry appeals. We reverse and remand.
The trial court made findings of fact which include these findings:
13. At no time with regard to the dissolution of the partnership of McNiel and Lowry was there any agreement between McNiel and Lowry whereby Lowry was discharged from any partnership debts in general, and specifically with regard to the debt to CARL CRIMMINS, on the note in question.
14. Plaintiff, CARL E. CRIMMINS, never consented to the discharge of Defendant, JAMES M. LOWRY, from his liability on the note.
18. Plaintiff, CARL E. CRIMMINS, perfected his security interest on August 26, 1980, by filing a financing statement with the County Clerk of Erath County regarding the furniture, equipment and library materials in which he had a security interest as evidenced by the note.
The findings of fact which have not been challenged by points of error are binding on this court. 4 City of Fort Worth v. Bewley, 612 S.W.2d 257 at 259 (Tex.Civ.App.--Eastland 1981, writ ref'd n.r.e.). Appellant has properly challenged findings of fact 14 and 18, arguing that each of them is against the great weight and preponderance of the evidence. These points invoke this Court's jurisdiction under TEX. CONST. art. V, sec. 6 to review the factual sufficiency of the evidence under the rule stated by In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 at 661 (1951), which requires us:
[T]o consider and weigh all of the evidence in the case and to set aside the verdict and remand the cause for a new trial, if ... the verdict is so against the great weight and preponderance of the evidence as to be manifestly unjust.
This test is applicable to a nonjury trial where findings are challenged as being against the great weight and preponderance of the evidence. Jackson v. McKenney, 602 S.W.2d 124 at 126 (Tex.Civ.App.--Eastland 1980, writ ref'd n.r.e.); 4 McDONALD, TEXAS CIVIL PRACTICE sec. 16.05 (Rev.1971).
The record is clear that Crimmins and Don McNiel were good friends and that the note in question was a "friendship note." McNiel arranged to borrow the money on September 24, 1977, in order to expand and remodel his law offices after Lowry joined him in the practice of law. Lowry practiced with McNiel for a few months and then McNiel decided that the partnership "had to be dissolved if we were going to keep our head above water." McNiel was having some personal financial problems, and at McNiel's request Crimmins did not perfect his security interest in 1977. Crimmins did not attempt to perfect his security interest until August 26, 1980. Lowry contributed no capital to the law firm, and he took no firm assets with him when the firm was dissolved by McNiel, except for one pending file which McNiel permitted Lowry to take. There was no written partnership agreement, and there was no written dissolution agreement. McNiel testified that they entered into their partnership "on a handshake, and we walked out of it on a handshake." McNiel testified that he assumed the firm's debts when he continued as a solo practitioner after telling Lowry that he "couldn't afford him, we were going down the tubes."
McNiel discussed the dissolution of his law firm with Crimmins before he informed Lowry of his decision. While Crimmins did not receive a formal written notice of the firm's dissolution, the record is clear that he had actual notice of the dissolution. McNiel testified that "when we dissolved as far as I was concerned we were back to square one as far as Crimmins and I were concerned." All of the payments on the partnership note after the dissolution were made by McNiel individually. No payments of any kind were ever made by Lowry.
The real problem developed in August of 1980 when McNiel was charged with a felony. He was subsequently sentenced for misapplication of funds and sent to the penitentiary. He surrendered his law license and filed for bankruptcy.
The bankruptcy court held that Crimmins failed to perfect his lien as to McNiel's assets. We agree with that Court that the evidence shows conclusively that the lien on the assets securing the partnership note was not timely perfected. Crimmins is in no position to collaterally attack the bankruptcy court's ruling that his lien was lost because of his delay in filing the security agreement. Crimmins was a party to those bankruptcy proceedings, and that ruling is binding upon him. Section 3.606(a)(2), supra note 3, clearly provides that "any party to the instrument" is discharged to the extent the holder unjustifiably impairs the collateral. We disagree with the statements made in Pan American Bank of Brownsville v. Nowland, 650 S.W.2d 879 at 887 (Tex.App.--San Antonio 1983, no writ), and Hooper v. Ryan, 581 S.W.2d 237 at 238 (Tex.Civ.App.--Waco 1979, no writ), that Section 3.606 applies only to sureties and not to co-makers of the instrument. 5...
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Crimmins v. Lowry
...Lowry appealed, and the court of appeals reversed the trial court judgment and remanded the cause to the trial court for a new trial. 665 S.W.2d 230 (1984). We reverse the judgment of the court of appeals and affirm the judgment of the trial In April 1977, Lowry joined Donald F. McNiel as M......