Mexico's Industries, Inc. v. Banco Mexico Somex, S.N.C.

• Decision Date: 07 July 1993
• Docket Number: No. 08-92-00375-CV,08-92-00375-CV
• Citation: 858 S.W.2d 577
• Parties: MEXICO'S INDUSTRIES, INC., Appellant, v. BANCO MEXICO SOMEX, S.N.C., Appellee.
• Court: Texas Court of Appeals

Page 577

858 S.W.2d 577

MEXICO'S INDUSTRIES, INC., Appellant, v. BANCO MEXICO SOMEX, S.N.C., Appellee.

No. 08-92-00375-CV.

Court of Appeals of Texas El Paso.

July 7, 1993.

Rehearing Overruled Aug. 18, 1993.

Steven C. James, Beck & James, P.C., El Paso, for appellant.

Juan Carlos Garay, Guevara, Rebe, Baumann & Coldwell, El Paso, for appellee.

Before KOEHLER, BARAJAS and LARSEN, JJ.

OPINION

BARAJAS, Justice.

This is an appeal from a suit on twelve drafts. Banco Mexico Somex, S.N.C., the Appellee, sued to collect on the drafts after Mexico's Industries, Appellant, refused payment. The jury found in favor of Banco Mexico Somex and awarded the sum of $2,448,198.12, including pre-judgment interest. In seventeen points of error, Appellant challenges the trial court's judgment. We affirm the judgment of the trial court.

I. SUMMARY OF THE EVIDENCE

The record shows that Banco Mexico Somex, S.N.C. ("the Bank") filed suit seeking to collect over $2 million from Mexico's Industries, Inc. ("Mexico's Industries") on twelve "Letras De Cambio" ("Letras"). ¹ These Letras purport to evidence an agreement between Mexico's Industries and Sombreros Azteca, S.A. de C.V. (Sombreros), whereby Mexico's Industries agreed to pay certain debts owed by Sombreros to the Bank. ²

The evidence establishes that Sergio Herrera ("Herrera"), a Mexican businessman, is significantly involved with both Mexico's Industries and Sombreros. He is "Administrador Unico" (the highest title a person can hold in a Mexican corporation) and President of Sombreros. He is also the sole director and President of Mexico's Industries. He and his wife are the sole shareholders of Mexico's Industries, and he, along with his wife and mother, own nearly all the outstanding corporate stock of Sombreros.

The relationships and dealings between the Bank, Mexico's Industries and Sombreros, each transacting business either directly or indirectly in the United States and the Republic of Mexico, have led to the underlying suit. Specifically, the Bank (in Mexico) made loans to Sombreros, based on invoices, export requests, and shipper's export declarations representing goods shipped by Sombreros (in Mexico) to Mexico's Industries (in El Paso, Texas). From the above documents, a summary of the total loan amount was determined and payment requested in United States dollars. ³ Promissory notes called "pagares" evidenced the above loans, and were "to be used for payment." However, the Letras were additionally issued.

Sergio Herrera testified that the purpose of the Letras, which were not to be used for collections, was to provide the Bank with an internal record of the transaction. Herrera testified that the Letras were pre-printed forms and were presented to him in blank. He further testified that he was told by the Bank to sign both on the front and back of the blank document. ⁴ The first signature appears in the front lower right-hand corner where the drawer or maker would sign under "normal" circumstances. The second and third signatures are found on the reverse side of the Letras with one signature appearing in a box that bears the heading "Data and Signatures of Endorsements." The third and final signature appears under the typed endorsement of Sombreros. Herrera noted that at the time he executed the Letras, they were otherwise blank and that there was no typewritten information anywhere on the Letras.

The evidence before this Court shows that the Letras, as they presently exist, contain the following information on their face: (1) a sum certain; (2) the date they are payable; (3) that they are payable to the order of Sombreros Azteca, S.A. De C.V.; (4) that Sombreros and Sergio Herrera are the drawers; and (5) that Mexico's Industries is the drawee. On the reverse side of the Letras appears the signature, i.e. endorsement, of Sergio Herrera along with an endorsement to pay to the Bank followed by the further endorsement of Sombreros and Sergio Herrera. The testimony of Herrera that the documents were otherwise blank at the time of execution was corroborated by Alan Keown, an expert documents examiner, who stated that the endorsement of Sombreros on certain Letras was indeed added after Mr. Herrera had originally signed the Letras. Finally, the evidence shows that the Bank took the Letras to Mexico's Industries, and Normando Garcia, an employee of Mexico's, signed the drafts on the blank marked "acepto(amos)" ⁵

On review, the Bank contends that the Letras are drafts that ordered Mexico's Industries, via the endorsement by Sombreros, to pay the amount of the draft at maturity to the Bank. Thus, according to the Bank, they were the holder in due course of a draft of which Sombreros was the drawer, and Mexico's Industries the drawee. In addition, the Bank contends that the signature of Normando Garcia constitutes acceptance of the draft by Mexico's Industries resulting in Mexico's Industries being primarily liable for payment.

The jury in the instant case found the Letras lacked the requirements of negotiability when they were originally delivered to the Bank, but nonetheless found in favor of the Bank and awarded it the sum of $2,149,872.44. The trial court found the jury's answers to be "possibly conflicting" and thereafter conditionally reconciled the conflict and entered judgment for the Bank. ⁶

II. DISCUSSION

In the instant case, the jury found the following: (1) the Letras De Cambio lacked all the essential elements of negotiability when "signed and delivered" to the Bank; (2) Sombreros endorsed the back of the instruments; (3) Normando Garcia had actual or apparent authority to accept the drafts; (4) the drafts were not materially altered without the authorization of Mexico's Industries after they were signed by Sergio Herrera; (5) the Bank was a holder in due course of the drafts; (6) Mexico's Industries was estopped from denying the drafts were accepted for payment; and (7) Mexico's Industries ratified the accepted-for-payment signature of Normando Garcia on each of the drafts.

Mexico's Industries assigns seventeen points of error to the judgment of the trial court. Insofar as most points of error complain of either the factual or legal sufficiency of the evidence, we will address the points in their order of significance as they relate to the validity of the underlying transaction.

In considering a "no evidence" legal insufficiency point, we consider only the evidence that tends to support the jury's findings and disregard all evidence and inferences to the contrary. Garza v. Alviar, 395 S.W.2d 821 (Tex.1965). If there is more than a scintilla of evidence to support the questioned finding, the "no evidence" point fails. Worsham Steel Co. v. Arias 831 S.W.2d 81 (Tex.App.--El Paso 1992, no writ); Fuentes v. McFadden, 825 S.W.2d 772 (Tex.App.--El Paso 1992, no writ).

A factual insufficiency point requires us to examine all of the evidence in determining whether the finding in question is so against the great weight and preponderance of the evidence as to be manifestly unjust. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1951); Oechsner v. Ameritrust Texas, N.A., 840 S.W.2d 131, 136 (Tex.App.--El Paso 1992, writ denied); Chandler v. Chandler, 842 S.W.2d 829, 832-33 (Tex.App.--El Paso 1992, writ denied). The reviewing court cannot substitute its conclusions for those of the jury. If there is sufficient competent evidence of probative force to support the finding, it must be sustained. Oechsner v. Ameritrust Texas, N.A., 840 S.W.2d at 136; Chandler v. Chandler, 842 S.W.2d at 833. It is not within the province of the court to interfere with the jury's resolution of conflicts in the evidence or to pass on the weight or credibility of the witnesses' testimony. Benoit v. Wilson, 150 Tex. 273, 239 S.W.2d 792 (1951). Where there is conflicting evidence, the jury's verdict on such matters is generally regarded as conclusive. Montgomery Ward & Co. v. Scharrenbeck, 146 Tex. 153, 204 S.W.2d 508 (1947); Oechsner v. Ameritrust Texas, N.A., 840 S.W.2d at 136; Chandler v. Chandler, 842 S.W.2d at 833.

In Points of Error Nos. Nine and Ten, Mexico's Industries asserts there was legally and factually insufficient evidence to support the jury's finding of estoppel. The jury specifically found "Mexico's Industries [was] estopped from denying that it accepted the drafts (the Letras De Cambo's [sic] ) for payment." On review, the Bank argues that it relied on the drafts being accepted for payment and that the drafts were negotiable. However, in light of the jury's finding as to the issue of estoppel, we address only whether the Bank presented evidence on the elements of estoppel as it relates to acceptance.

In actions on negotiable instruments, estoppel may operate to preclude a party from setting up an otherwise available defense. Brand v. Korth, 128 Tex. 488, 99 S.W.2d 285 (Tex.Com.App.1936). To establish estoppel, it was incumbent upon the Bank to prove; (1) there existed a false representation or concealment of material facts, (2) made with knowledge, actual or constructive, of the facts, (3) the party to whom it was made must have been without knowledge or the means of knowledge of the real facts; (4) it was made with the intention that it be acted on; (5) and the party to whom it was made must have relied or acted on it to his prejudice. Schroeder v. Texas Iron Works, Inc., 813 S.W.2d 483, 489 (Tex.1991); Gulbenkian v. Penn, 151 Tex. 412, 252 S.W.2d 929, 932 (1952); Riley v. Meriwether, 780 S.W.2d 919, 926-27 (Tex.App.--El Paso 1989, writ denied). ⁷

While the Bank argues that it relied on Mexico's Industries false acceptance of the drafts, a careful review of the record fails to reveal any evidence that would establish when Mexico's Industries purportedly accepted the Letras, such acceptance was done falsely. The question of whether Normando Garcia accepted the drafts is one of authority, not estoppel. Moreover, we find no evidence in the record that...