San Felipe Nat. Bank v. Caton
| Decision Date | 23 February 1984 |
| Docket Number | No. A14-83-025CV,A14-83-025CV |
| Citation | 668 S.W.2d 804 |
| Parties | SAN FELIPE NATIONAL BANK, Appellant, v. J.W. CATON, et al., Appellant. (14th Dist.) |
| Court | Texas Court of Appeals |
Susan Steinfink Soussan, Jane Cooper-Hills, Richie & Greenberg, Houston, for appellant.
John Farra, Rolston & Hausler, Houston, for appellee.
Before J. CURTISS BROWN, C.J., and DRAUGHN and ELLIS, JJ.
San Felipe National Bank (Bank or appellant) appeals from a summary judgment of $18,708.31 and $5,600.00 attorney fees in favor of J.W. Caton (Caton or appellee). Caton sought enforcement of a post judgment writ of garnishment against funds of Energy Barrier Systems Inc. (Energy) on deposit with the Bank.
At the time when the writ of garnishment was served Energy had two checking accounts with the Bank. The Bank also held three promissory notes executed by Energy. Two of the notes were secured by certificates of deposit, and were ultimately redeemed. The third note, in the amount of $40,000, was secured by accounts receivable, proceeds, and any funds found on deposit with the Bank. Upon service of the writ of garnishment the Bank accelerated the $40,000 debt and offset Energy's deposits against it. After presenting affidavits and argument, both sides moved for summary judgment. The court granted judgment for Caton.
In five points of error appellant asserts that it had a legal and equitable right to offset Energy's deposits, that there were issues of fact precluding summary judgment, and that the award of attorney fees was improper. In support of its right to offset, the Bank argues its security interest in Energy's account was a prior and superior claim to the garnishment.
The Bank has claimed a security interest in a general deposit account, and does not argue it was used exclusively for proceeds from the accounts receivable. Consequently, TEX.BUS. & COM.CODE ANN. § 9.104(12) (Vernon Supp.1982-1983) applies. This security interest claimed by the Bank is excluded from Chapter Nine, and we must look to common law.
In a very similar case the Corpus Christi Court of Appeals has held that a garnisher was subrogated to the rights of its debtor which made it subject to a common law security interest. Bullock v. Foster Cathead Co., 631 S.W.2d 208, 211 (Tex.App.--Corpus Christi 1982, no writ).
The note of indebtedness in this case gave the Bank a security interest in "any money found on deposit" with the Bank, and stated this interest was in addition to any other interests given. With respect to these deposit accounts, the Bank's common law lien was an equitable remedy, based on a contract relationship. Williams v. Greer, ...
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