Riverside Nat. Bank v. Lewis

• Decision Date: 03 August 1978
• Docket Number: No. 17113,17113
• Citation: 572 S.W.2d 553
• Court: Texas Court of Appeals
• Parties: RIVERSIDE NATIONAL BANK et al., Appellants, v. James LEWIS, Appellee. (1st Dist.)

Page 553

572 S.W.2d 553

RIVERSIDE NATIONAL BANK et al., Appellants, v. James LEWIS, Appellee.

No. 17113.

Court of Civil Appeals of Texas, Houston (1st Dist.).

Aug. 3, 1978.

Rehearing Denied Oct. 12, 1978.

Barrow, Bland & Rehmet, Charles J. Wilson, Kenneth C. Raney, Jr., Houston (On appeal only), for appellants.

Haynes & Fullenweider, Robert B. Wallis, Jan Woodward Fox, Houston, for appellee.

PEDEN, Justice.

Riverside National Bank and its former employee, Arthur Carroll, appeal from an adverse judgment in a suit filed by James Lewis based on the bank's refusal to honor its loan commitment. The jury found that the bank's refusal was malicious, amounted to wrongful dishonor of a draft, constituted fraud on the plaintiff, and violated the Texas Deceptive Trade Practices Act. The jury determined actual and punitive damages and fixed reasonable attorneys' fees. Although the jury found that Lewis gave false information in his loan application, it declined to find that such information was material or that the bank was justified in refusing to make the loan. The trial judge granted part of the defendants' motion for judgment n.o.v. in that he disregarded the jury's findings based on the Deceptive Trade Practices Act and those fixing attorneys' fees.

Appellants contend that the evidence was legally and factually insufficient to support the jury's failure to find that the false information on the loan application was material and say they proved conclusively that the bank's action was justified. Appellants also assert that there were no pleadings and no evidence or insufficient evidence to support the findings of wrongful dishonor, fraud, actual damages, punitive damages, the defendants' knowledge that damage would result, and malice. The appellee presents five cross-points, asserting error in the court's failure to enter judgment for treble damages and attorneys' fees on the jury's finding of a violation of the Deceptive Trade Practices Act. We reform the judgment and affirm.

In February, 1975, Lewis purchased a new Cadillac El Dorado. Allied Bank provided almost $10,500 in financing and accepted a security interest in the car and a $6,000 certificate of deposit of security. Lewis did not make the first payment, due on April 10, and a check he gave a few days later was returned for insufficient funds, so Mr. Little, Lewis' loan officer at Allied Bank, asked him to move the loan to another bank. Lewis was unsuccessful in attempts to obtain refinancing at two other lending institutions, then on May 2 he went to Riverside Bank, where Arthur Carroll helped him complete a loan application. Carroll told Little the bank was investigating the application. Some ten days later, Carroll called Lewis and told him the loan had been approved. Lewis signed the note on May 15, 1975. It is not clear why he did not execute security agreements at that time. He admitted that there are some incorrect entries on the application he filed with Riverside Bank. His average monthly income of $2,800 was not net income, as stated, but gross income, and his payment to Allied Bank was not due on May 10, as stated, but had been due since April 10. Lewis testified that he had told Carroll the figure given was gross income and that a payment had been due on April 10 but that Carroll had told him to answer it as he did. Lewis testified that the first notice he had that the loan had not been funded was when Little at Allied Bank called him several days later. No one from Riverside ever did. Allied Bank repossessed the car on May 16 or 17 and it was sold at auction on June 3.

We review the testimony of Little. Carroll told him around the 1st or 2nd of May that Lewis had applied. On May 6 Carroll called, said the senior officer had a question on it but that the loan had been approved, and gave Little instructions on drafting the funds and forwarding car title and the C. D. After Little had followed those instructions, he called Carroll on May 14 to see why the draft had not been paid, and was told that it would be. When Little called again the next day and told Carroll he either wanted the draft paid or returned, Carroll said the loan had been approved and that a cashier's check was in the mail. Little called again on May 16, and this time was told that Riverside had declined the loan. Allied repossessed Lewis' car on May 16th or 17th and received the returned draft and documents from Riverside on May 21. When he reports to another bank about one of his loans, as he did to Riverside in this case, Little gives the due date of the first payment.

James Means, executive vice president at Riverside Bank, testified that he called Allied Bank on May 14 to determine the status of the note, then decided not to make the loan when he discovered it was delinquent and that he could not confirm Lewis' income. He said the loan had not been "formally denied" when Carroll had Lewis sign the note on the next day.

In addition to the usual definitions of proximate cause and ordinary care, the trial court submitted the following instructions:

"You are instructed that:

A representation of present or past fact is 'fraudulent' if it is false, the person making the representation knows it to be false and he intends another to rely upon it. A representation of future intent is 'fraudulent if the person making the representation has no present intent to do what he says he will do and he intends another to rely upon his representation.

"You are instructed that:

A 'Deceptive Trade Practice' is any false, misleading, or deceptive act or practice in any trade or commerce, including, but not limited to, the following acts:

1. causing confusion or misunderstanding as to the source, sponsorship, approval, or certification of goods or services;

2. representing that goods or services have sponsorship, approval, characteristics, ingredients, uses, benefits, or quantities which they do not have;

3. advertising goods or services with intent not to sell them as advertised.

"You are instructed that:

An act is done with 'malice' if it involves ill will, evil motive, or reckless disregard for the rights of others. In a legal sense an unlawful act done willfully and purposely is, as against that person, malicious."

In response to special issues the jury found from a preponderance of the evidence:

1. That Riverside National Bank or its employee, Arthur Carroll, after agreeing to refinance the automobile of Plaintiff, James Lewis, knew or should have known that "such refusal" would result in the a) repossession of plaintiff's car, b) loss of his certificate of deposit and c) damage to his credit rating.

2. (predicated on affirmative answer to 1. a, b, or c) That such refusal was a proximate cause of any damage to James Lewis.

3. (predicated on affirmative answer to 1. a, b, or c) That such refusal was done with malice by either Riverside National Bank or Arthur Carroll.

4. That the refusal of Riverside National Bank to honor the draft of Allied Bank was a wrongful dishonor of it.

5. (predicated on affirmative answer to 4.) That such refusal was a proximate cause of some damage to James Lewis.

6. (predicated on affirmative answer to 4.) That such refusal was done with malice.

7. (predicated on affirmative answer to 1. a, b, or c or 4.) That such action constituted a fraud on James Lewis.

8. (predicated on affirmative answer to 1. a, b, c . or 4.) That such action was a violation of the "Deceptive Trade Practices Act."

9. (predicated on affirmative answer to 8.) That a reasonable attorney fee for James Lewis was

a. for prosecution of this suit $4,700.

b. appeal to Court of Civil Appeals 1,500.

c. appeal to Texas Supreme Court 500.

10. That James Lewis gave false information on his application to Riverside National Bank.

11. (predicated on affirmative answer to 10.) The jury declined to find from a preponderance of the evidence that such false information was a material fact in Riverside Bank's agreeing to finance the car for James Lewis.

12. (predicated on affirmative answer to 11, so not answered.) This issue asked whether Riverside Bank relied on such false information in originally agreeing to make the loan.

13. The jury declined to find from a preponderance of the evidence that Riverside Bank was justified in refusing to make a loan and refusing to honor Allied Bank's draft.

14. The reasonable cash compensation for James Lewis would be:

a. for loss of certificate of deposit $3,177.50

b. for loss of use of car 0

c. for injury to his credit rating 100.00

15. James Lewis should be awarded $10,000 against Riverside Bank as exemplary damages. "Exemplary damages" means an amount which you may in your discretion award as an example to others and as a penalty or by way of punishment, in addition to any amount which may have been found by you as actual damages.

16. James Lewis should not be awarded any exemplary damages against Arthur Carroll.

"Exemplary damages" means an amount which you may in your discretion award as an example to others and as a penalty or by way of punishment, in addition to any amount which may have been found by you as actual damages.

The parties stipulated that any and all acts of Arthur Carroll which are the subject of this suit, whether indeed (sic) or by conversations, were made in the course and scope of his employment as a loan officer for the defendant, Riverside National Bank.

The defendants' (appellants') only objections to the trial court's charge were directed to the first nine special issues and were: 1) no pleadings to support submission, 2) no evidence, 3) insufficient evidence, and 4) an affirmative answer would be against the great weight of the evidence. They submitted no proposed definitions or instructions and no issues that were refused.

Appellants' Points of Error

Appellants' first two points of error assert that the jury's answer to Special Issue 11 established the defense of illegality because 18 U.S.C. § 1014 (1970) prohibits knowingly...