Neubaum v. Buck Glove Co.

• Court: Texas Court of Appeals
• Writing for the Court: Charles Kreger
• Citation: Neubaum v. Buck Glove Co., 302 S.W.3d 912 (Tex. App. 2009)
• Decision Date: 31 December 2009
• Docket Number: No. 09-08-00491-CV.,09-08-00491-CV.
• Parties: Jon T. NEUBAUM and Barbara Neubaum, Appellants, v. BUCK GLOVE COMPANY, E.L. "Buck" Hord and Kathie Hord, Appellees.

302 S.W.3d 912

Jon T. NEUBAUM and Barbara Neubaum, Appellants, v. BUCK GLOVE COMPANY, E.L. "Buck" Hord and Kathie Hord, Appellees.

No. 09-08-00491-CV.

Court of Appeals of Texas, Beaumont.

Submitted September 17, 2009.

Decided December 31, 2009.

David M. Gunn, Erin H. Huber, Beck, Redden & Secrest, LLP, Christopher J. Lowman, The Law Office of Christopher J. Lowman, Houston, Brenton M. Stanfield, Stone & Associates, LLP, The Woodlands, for appellants.

Terry B. Joseph, The Woodlands, for appellees.

Before McKEITHEN, C.J., GAULTNEY and KREGER, JJ.

OPINION

CHARLES KREGER, Justice.

In this usury case, Jon T. Neubaum and Barbara Neubaum appeal a $3,985,804 judgment awarded to Buck Glove Company. In four issues, the Neubaums contend (1) the evidence does not support the finding of usury liability, (2) their cure letter defeated liability, (3) the damages awarded in the judgment are not supported by the evidence, and (4) the award of attorney's fees is not supported by the evidence. We hold that the jury's finding that the Neubaums loaned money to Buck Glove Company through their agent, Marvin "Buddy" March, is not supported by legally sufficient evidence. Accordingly, we reverse the judgment in favor of Buck Glove Company and render judgment that Buck Glove Company take nothing of its suit against the Neubaums. No party challenged that part of the judgment that awarded $150,578.78 to the Neubaums for money had and received by Buck Glove Company. Accordingly, we affirm that part of the judgment.

The Neubaums own a shopping center. Their office was located in Suite 105. Buddy March purchased an embroidery machine through the Neubaums' son and established a business called Logo Pros in the Neubaums' shopping center in December 2003. In April 2004, March told the Neubaums that he had an order from Disney World for 96,000 screened t-shirts but that he lacked the money to purchase the raw materials to produce the order. The Neubaums advanced March $34,000 in return for a split of March's profits. March came to the Neubaums with orders from more customers and asked the Neubaums to advance money to purchase goods that March would embellish and sell to the customer. The Neubaums purchased a screen printing machine that March used to prepare the products. Barbara Neubaum established an assumed business name called Logo Pros 105 and operated their merchandise transactions with March through a bank account for Logo Pros 105. March and the Neubaums established a course of business in which March would bring a work order from a customer of Logo Pros, Barbara Neubaum would write Logo Pros a check in the amount requested by March for the cost of the goods (customarily 60% of the amount of the customer's order) and March would deposit the check. March would give Neubaum updates on the status of the order, then eventually tell Neubaum that the order had been filled and was ready to invoice. Neubaum would prepare the invoice. The customer would pay March, and March would bring the money to Neubaum.

In January 2005, Buck Hord leased Suite 108 in the Neubaums' shopping center for his business, Buck Glove Company. In April 2005, March began bringing Barbara Neubaum orders from Buck Glove Company. Neubaum would write a check to March's company, Logo Pros, for an amount that was 60% of the purchase order. When March informed Neubaum that all or part of the purchase order had been filled, Neubaum prepared a Logo Pros 105 invoice for the stated amount of the purchase order for the product that March claimed had been delivered to Buck Glove. Hord testified that he saw only one of these invoices, when Barbara Neubaum asked him to give it to March. According to Hord, March supplied Hord information on another report.

In one instance, March brought the Neubaums a communication from Hord's supplier, Seattle Glove, and obtained checks based upon the payment schedule in the communication. That communication was addressed to Logo Pros, not to Buck Glove. The Neubaums gave March the money to purchase the gloves according to the payment schedule. For most of the other transactions at issue in this case, Buck Glove was listed as the purchaser on a purchase order. Usually, the customer would pay March and March would bring the payment to the Neubaums. Buck Glove's checks were written to Logo Pros 105. March and the Neubams would split the difference between the payment and the previously determined "cost of goods."

Not long after Hord moved into Suite 108, March moved from Suite 104 to Suite 107. The spaces were connected by interior doors or by walkways. Hord opened a bank account under the name Logo Pros 108. Either Hord or March would deposit the Logo Pros checks into that account. March had a stamp with Hord's signature that March used to negotiate instruments through Hord's bank account. Hord testified that March "lost" his account and Hord allowed March to use Hord's account. Hord allowed March to operate Hord's finances, apprise Hord of how much money was in Hord's bank account, and inform Hord how much he had to pay. According to Hord, Hord ran the "operations side" and March would "quite often" sign Hord's payroll checks. Hord and March "shared" employees at their shops. According to Hord, March applied logos to gloves using Hord's employees at March's shop.

In mid-2006, March and Hord persuaded a high-school student employed by Logo Pros to open a series of bank accounts in her name, doing business as Olympic Distributors, Buck Glove Distributors, Logo Pros, and Logo Pros 107. The address printed on the checks for the Logo Pros was Suite 108. The accounts were actually for Hord. According to the employee, March controlled all of the bank accounts.

An employee at another shop in the Neubaum's strip center testified that she also engaged in business transactions with March during the same period of time as the Neubaums' transactions. She testified that the investment "was to purchase materials like T-shirts or gloves or something like that for Buddy to—for Logo Pros to— they purchased it with our investment. He then brought in these products and did screen printing or embroidery or something on each of the products and then resold them." March agreed to "repay our investment plus a percentage of the profit."

Another employee of a shop at the Neubaums' strip center testified that she, too, invested more than $70,000 with March between November 2005 and May 2006. According to this witness, she was told that "the money was being used to purchase merchandise for cash discount." March "would purchase the shirts and then they would do like embroidery or screen—silk screens, something like that[.]" In return, "he was to split the profit with us from when he sold the merchandise[.]"

A third witness testified that for a time period of seven or eight months beginning in October 2005, he invested about $250,000 with March. According to this witness, March "would buy T-shirts, one of them like for the Astros, that he was the license to do that with the Astro T-shirts and then he would sell them to like academy or whoever it was. Once he got his money, we would get a portion of the profits back." March never indicated that he was going to loan the money to someone else. March told the witness that March owned Buck Glove, but the witness was not aware at the time that his checks were going into an account for Buck Hord Interest.

Hord was aware that March was not obtaining funds exclusively from the Neubaums. Hord testified, as follows:

Q. Did you become aware at some point that Mr. March was borrowing money from these other people that we just listed?

A. Yes, sir.

Q. Did you discuss that with Mr. March?

A. Yes.

Q. Why was he borrowing money from other people like that? What was those for?

A. Those were to go into the pot so I could continue to pay the Neubaums.

Q. Did you ever repay [them]?

A. Yes. Yes, I did.

Hord's rent check for September 2006 was returned for insufficient funds. On September 14, 2006, Hord, March, and the Neubaums had a contentious meeting. Earlier that morning, March had drafted a promissory note. March also drafted a memorandum addressed from Hord to the Neubaums. Hord signed the memorandum and the promissory note and had the Neubaums sign the promissory note as "lenders." The promissory note is in an original principal amount of $800,000 and bears simple interest at 5% per annum. The note recites that "These loans are for the financing of certain orders received by Buck Glove Company/Logo Pros."

On September 28, 2006, Buck Glove Company sued the Neubaums for usury.¹ The Neubaums sued the Hords for fraud and named March as a responsible third party. The Neubaums also asserted a claim for money had and received.

The case was tried to a jury. The jury found that the Neubaums loaned money to Buck Glove Company for business purposes through their agent, Marvin "Buddy" March. The jury also found that March committed fraud against the Neubaums, but failed to find that either of the Hords or Buck Glove Company committed fraud against the Neubaums.

On appeal, the Neubaums contend there is no evidence that Buddy March had the authority, either actual or apparent, to loan money to Buck Glove Company on behalf of the Neubaums. In determining the legal sufficiency of the evidence supporting the jury's finding, we view the evidence in the light most favorable to the verdict, crediting favorable evidence if a reasonable factfinder could, and disregarding contrary evidence unless a reasonable factfinder could not. City of Keller v. Wilson, 168 S.W.3d 802, 807 (Tex.2005). We must "consider [the] evidence in the light most favorable to the verdict, and indulge every reasonable inference that would support it. But if the evidence allows of only one inference, neither jurors nor the reviewing court may disregard it." Id. at 822. "The final test for legal sufficiency must always be whether the evidence at trial would enable...