MortgageAmerica Corp. v. American Nat. Bank of Austin
| Decision Date | 06 April 1983 |
| Docket Number | No. 13555,13555 |
| Citation | 651 S.W.2d 851 |
| Parties | 36 UCC Rep.Serv. 1710 MORTGAGEAMERICA CORPORATION, Appellant, v. The AMERICAN NATIONAL BANK OF AUSTIN, Appellee. |
| Court | Texas Court of Appeals |
Joseph H. Hart, Robinson, Felts, Starnes & Latting, Austin, for appellant.
Douglass D. Hearne, Richard L. Crozier, Hearne, Knolle, Lewallen, Livingston & Holcomb, Austin, for appellee.
Before PHILLIPS, C.J., and POWERS and GAMMAGE, JJ.
MortgageAmerica Corporation appeals from the trial court's judgment awarding appellee American National Bank of Austin damages suffered by appellant's breach of its contract with appellee to provide appellee, acting as appellant's agent, two $500,000 Government National Mortgage Association (GNMA) certificates, which appellee had contracted to sell to the investment banking firm of Salomon Brothers on appellant's behalf.
We affirm the judgment.
In January of 1980, Joe Long, the sole owner of appellant MortgageAmerica Corporation, contacted John Tolleson, the president of appellee American National Bank of Austin, and asked Tolleson if appellee would be willing to serve as appellant's agent in the purchase and sale of GNMA certificates. 1 Such a relationship would allow appellant to make use of appellee's substantial credit standing and, in turn, allow appellant to obtain better prices from established securities brokers in the trade of these certificates. Appellee would receive the customary 2/32 of one percent of the trade price of the securities in return for its efforts. Appellee subsequently agreed.
During the first two months of 1980, appellee, acting as appellant's agent, purchased two GNMA certificates worth more than $2,500,000 for appellant. Both transactions were successfully completed.
In early March of 1980, George Aubin, appellant MortgageAmerica's president, contacted Bill Raymond, a vice-president of the investment banking firm of Salomon Brothers, and asked if Salomon Brothers would be interested in purchasing two $500,000 GNMA certificates; one to be delivered in mid-June, the other in mid-July. Raymond told Aubin that Salomon Brothers was interested in purchasing the securities, but that he could not deal directly with appellant because appellant did not have sufficient capitalization to meet Salomon Brothers trading partner requirements. Raymond suggested that Aubin use a bank with sufficient capital resources as an agent for the sale.
Later that same day, Aubin contacted James Jackson, a senior vice-president in charge of investment at appellee American National Bank of Austin, and asked him if appellee bank would be willing to serve as appellant's agent in the sale to Salomon Brothers of the two GNMA certificates. Aubin explained that the details of the trade had already been negotiated and that appellee would serve merely as the conduit of the trade. Jackson told Aubin that he would have to check into the matter before he could commit appellee. Upon calling Raymond at Salomon Brothers, Jackson confirmed the details Aubin had previously explained. Jackson then called Aubin's office and left a message with a "female voice" that appellee would serve as appellant's agent in the sale of the two GNMA certificates to Salomon Brothers.
Approximately four months later, on June 4, 1980, Jackson called Aubin for details on the GNMA certificates appellee had contracted to deliver to Salomon Brothers in mid-June and mid-July. Aubin not being in his office, Jackson's call was transferred to Raymond Peyre-Ferry, an assistant secretary of appellant MortgageAmerica Corporation. Peyre-Ferry was responsible, among other things, for keeping the records of appellant's trading of GNMA certificates. Peyre-Ferry told Jackson that he was unfamiliar with the trade, but that he would check his records for the desired information. Upon examining appellant's records, he discovered two mortgage pools which had been already assigned a GNMA certificate number and upon which two certificates were soon to be issued. After being unable to contact Aubin, Peyre-Ferry decided that this was the information Jackson sought. He returned Jackson's call and gave the information on the two mortgage pools to one of Jackson's assistants. Peyre-Ferry was discharged from appellant's employment shortly thereafter.
On June 9, 1980, Jackson called Aubin for further details on the upcoming sale. Aubin told Jackson that no agreement had ever been reached in March of 1980 between the parties, and that appellant was not responsible for any contractual duties assumed by appellee to Salomon Brothers, and further, that appellant would not deliver the two GNMA certificates to appellee. Aubin immediately called Raymond at Salomon Brothers and explained the mistake. Raymond assured Aubin that Salomon Brothers was looking to appellee as "principal" in the sale and that Salomon Brothers and appellant had no contractual relationship.
The next day, June 10, 1980, Long and Aubin, representing appellant MortgageAmerica Corporation, met with Tolleson and Jackson, representing appellee American National Bank of Austin. At this meeting, Jackson presented Long and Aubin written confirmations sent by Salomon Brothers to appellee confirming the sale of two $500,000 GNMA certificates. Long, both at the meeting and later that day by letter, denied all responsibility for the trade on appellant's behalf. Two days later on June 12, 1980, appellee responded to Long's letter by sending appellant a demand letter directing appellant to deliver to appellee the GNMA certificates so that appellee could fulfill its contractual duties with Salomon Brothers--which duties it had assumed as appellant's agent. Appellant responded by telegram ordering appellee to refrain from selling Salomon Brothers any GNMA certificates. In essence, appellant ordered appellee to breach its contract with Salomon Brothers.
Appellee, in order to meet its contractual duty to Salomon Brothers, was forced to go into the open market and purchase two GNMA certificates, which had greatly increased in value since the March contract price. Accordingly, appellee lost considerable sums of money in selling the certificates to Salomon Brothers at the lower March contract price. Appellant then sold its two $500,000 GNMA certificates, the same certificates that it had refused to deliver to appellee, for the inflated June and July market prices.
Appellee brought suit against appellant for its resulting damages and attorneys fees. Throughout the trial below, appellant claimed that appellee was not appellant's agent since there had never been a "meeting of the minds" that appellee would serve as appellant's agent in the sale of the certificates to Salomon Brothers. In answering the special issues, the jury found otherwise. Based upon the jury verdict, the trial court awarded appellee $146,282.90 as damages, and $46,271.50 as attorneys fees, as well as interest and costs.
Appellant MortgageAmerica Corporation, by its first two points of error, challenges the trial court's judgment because any alleged contract to sell the GNMA certificates was unenforceable, as a matter of law, since it was never reduced to writing in compliance with Tex.Bus. & Com.Code Ann. § 8.319 (1968); and, in any event, appellee American National Bank of Austin is not entitled to any reimbursement, as a matter of law, since it breached its fiduciary duty owed appellant. Because of their logical interrelation, we shall address the two points together.
At the outset, we must point out that the transaction which forms the heart of this lawsuit is actually two separate contracts. The first embodies the relationship between appellant and appellee. This contract was for the sale of appellant's GNMA certificates by appellee acting as appellant's agent. This contract, in essence, is one of agency; as such, it does not have to be in writing to be enforced. Such a contract is without the provisions of the statute of frauds embodied in Tex.Bus. & Com.Code Ann. § 8.319 (1968). E.F. Hutton v. Zaferson, 509 S.W.2d 950 (Tex.Civ.App.1974, writ ref'd n.r.e.). See U.C.C. § 8-319 Comment 4 (1978).
The second contract is between appellee, acting as appellant's agent, and Salomon Brothers for the sale of two $500,000 GNMA certificates. Appellant contends that this contract was unenforceable because the parties failed to comply with Tex.Bus. & Com.Code Ann. § 8.319 (1968). Accordingly, appellant contends that appellee was not bound to sell Salomon Brothers any GNMA certificates, and therefore, any resulting damages were incurred by appellee acting against the express orders of appellant and for its own motives and not as a result of its acting as appellant's agent.
Texas Bus. & Com.Code Ann. § 8.319 (1968) states:
A contract for the sale of securities is not enforceable by way of action or defense unless
(1) there is some writing signed by the party against whom enforcement is sought or by his authorized agent or broker sufficient to indicate that a contract
has been made for sale of a stated quantity of described securities at a defined or stated price; or
(2) delivery of the security has been accepted or payment has been made but the contract is enforceable under this provision only to the extent of such delivery or payment; or
(3) within a reasonable time a writing in confirmation of the sale or purchase and sufficient against the sender under Subdivision (1) has been received by the party against whom enforcement is sought and he has failed to send written objection to its contents within ten days after its receipt; or
(4) the party against whom enforcement is sought admits in his pleading, testimony or otherwise in court that a contract was made for sale of a stated quantity of described securities at a defined or stated price.
Initially, we note that GNMA certificates are securities as defined by Tex.Bus. & Com.Code Ann. § 8.102 (1968), and...
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