Neeley v. Southwestern Inv. Co.

• Decision Date: 12 June 1968
• Docket Number: No. B--257,B--257
• Citation: 430 S.W.2d 465
• Parties: Claude D. NEELEY et ux., Petitioners, v. SOUTHWESTERN INVESTMENT COMPANY, Respondent.
• Court: Texas Supreme Court

Page 465

430 S.W.2d 465

Claude D. NEELEY et ux., Petitioners, v. SOUTHWESTERN INVESTMENT COMPANY, Respondent.

No. B--257.

Supreme Court of Texas.

June 12, 1968.

Johnson & Browning, William V. Browning and Kenneth Johnson, Wichita Falls, for petitioners.

Clayton, Kolander, Moser & Templeton, Cleo G. Clayton, Jr., Amarillo, for respondent.

WALKER, Justice.

Our former opinion in this cause is withdrawn and the following is substituted therefor:

We are concerned here with questions of accord and satisfaction and conversion. The suit is for conversion of household furniture and was brought by Claude D. Neeley and wife, Beverly June Neeley, petitioners, against Elbert Brumbelow and Southwestern Investment Company. The trial court granted Brumbelow's motion for an instructed verdict and rendered judgment on the jury verdict in favor of petitioners and against Southwestern Investment Company, respondent, for $700.00 actual damages and $30,000.00 exemplary damages. The Court of Civil Appeals reversed and rendered judgment that petitioners take nothing. 412 S.W.2d 925. We modify the judgment of the Court of Civil Appeals so as to remand the case to the district court for a new trial.

On April 26, 1962, petitioners borrowed $1,200.00 from respondent through its office in Wichita Falls. As evidence of the indebtedness they executed to respondent their note in the principal amount of $1,490.16, bearing interest from maturity and payable in 24 monthly installments of $62.09 each, beginning June 10, 1962. The note was secured by a chattel mortgage on the furniture involved in this suit. About a month later petitioners borrowed an additional $300.00 from respondent, evidencing such indebtedness by their note for $337.80, payable in 12 monthly installments of $28.15 each, beginning July 10, 1962, and secured by a chattel mortgage on an automobile.

All amounts accruing on both notes up to and including the installments due March 10, 1963, were paid. Shortly after that date a friend agreed to loan petitioners the money to consolidate some of their debts. Mrs. Neeley telephoned a number of creditors, including respondent, to ascertain the amounts that would be required to pay the several loans. The records in respondent's office then showed a balance of $807.17 unpaid on the furniture note and a balance of $103.45 unpaid on the automobile note. It later developed that the $807.17 figure was incorrect, but this was not known at the time by either petitioners or by the responsible employees in respondent's Wichita Falls office. The mistake was due to the fact that when petitioners made one of the $62.09 payments on the furniture note, $124.18 was deduced from the previous balance in computing the new balance unpaid as entered on respondent's ledger sheet for the loan. Petitioners had nothing to do with the making of this computation or the entry on the ledger sheet.

When Mrs. Neeley's call was received, the inquiry was referred to Jim Delaney, one of respondent's employees, who was authorized to calculate the amount of rebate to be allowed when a loan was paid before maturity. He determined that the furniture note should be rebated $71.75 and the automobile note $1.86. When these amounts were deducted from the last unpaid balances shown on the two ledger sheets, the aggregate remainder was $837.01. Mrs. Neeley was then advised that $837.01 would be required to liquidate the two loans. This was more than she had estimated, and that night she made certain calculations and concluded that the amount should be less than $837.01. The following day, March 26, 1963, she went to respondent's office and discussed the matter with the employee to whom she had previously talked on the telephone. Mrs. Neeley testified that on this occasion:

'I said, 'well, according to my figures, it should be a little less than that. Either enough wasn't taken off for interest or something, but we get a less figure,' and she had it written out on a piece of paper and showed it to me and said, 'This is the figure that Mister--,' she called his name--and obvious the fellow who had figured it, and I thought a minute and I said, 'Well, I'll go ahead and pay you that amount then.' The understanding was that it was in full.'

Mrs. Neeley thereupon gave respondent a check for $837.01 marked 'In full of account.' The same was accepted and endorsed by respondent for deposit and was honored and paid. Several days later the Neeleys received the certificate of title to their automobile free and clear of all liens, but respondent did not give them the furniture note or a release thereof. Eventually the auditing department in respondent's home office discovered the mistake in the ledger sheet covering the furniture loan and advised the Wichita Falls office. The latter then called on petitioners several times to pay an additional $62.09. On each occasion respondent was advised that petitioners had the cancelled check showing the account paid in full and that no further amount was owing.

Early in 1964 the Neeleys moved the furniture into a house in Wichita Falls which they had rented from one Lambert. In about June or July they went to live with Mr. Neeley's parents in Strawn but left the furniture in the Lambert house. When respondent learned the location of the furniture, one of its field men, Bill Gordon, communicated with Brumbelow. The latter was in the used furniture business. He and his brother were used by respondent regularly in its repossessions. Gordon and Brumbelow went to the house where the furniture was located. Gordon, who had the chattel mortgage or a copy of it in his hand at the time, told Lambert that he wanted to repossess the furniture and wanted Brumbelow to look at it. Lambert informed respondent that he would not release the furniture unless the accrued rent owing by petitioners was paid.

About two weeks later Brumbelow was called by respondent's credit manager, Scott Allred. Allred and Brumbelow went to the county clerk's office where Allred checked the chattel mortgage records for other liens and made a list of the furniture covered by respondent's mortgage. They then returned to respondent's office, and Allred gave the list to Brumbelow. According to Brumbelow's testimony, he was told that he could have the furniture if he would pay $62.09 to respondent and the rent owing to Lambert. Brumbelow further testified that he paid the $62.09 to respondent at that time, and that Allred telephoned Lambert and arranged for Brumbelow to pick up the furniture. On the same day, November 17, 1964, Brumbelow went to the house, paid Lambert $315.00, and removed the furniture, which was later sold by Brumbelow through his auction.

In response to the special issues that are relevant here, the jury found: (1) that petitioners' account with respondent evidenced by the two notes and chattel mortgages was settled and discharged by the $837.01 payment on March 26, 1963; (2) that there was a dispute between petitioners and respondent over the amount owing when such payment was made; (3) that on or about November 17, 1964, respondent represented to Brumbelow that it had a valid mortgage on the furniture; (4) that respondent authorized Brumbelow to repossess the furniture; (4--A) that Brumbelow was relying on respondent's mortgage when he took possession of the furniture; (5) that respondent ratified Brumbelow's action in taking the furniture; (7) that respondent converted petitioner's furniture; (8) that the conversion was done with malice; (10) that the market...