Sanders v. Republic Nat. Bank of Dallas

• Citation: 389 S.W.2d 551
• Decision Date: 01 April 1965
• Docket Number: No. 120,120
• Parties: Harold SANDERS, Appellant, v. REPUBLIC NATIONAL BANK OF DALLAS, Trustee, Appellee.
• Court: Court of Appeals of Texas. Court of Civil Appeals of Texas

Page 551

389 S.W.2d 551

Harold SANDERS, Appellant, v. REPUBLIC NATIONAL BANK OF DALLAS, Trustee, Appellee.

No. 120.

Court of Civil Appeals of Texas, Tyler.

April 1, 1965.

Rehearing Denied April 29, 1965.

Troy Smith, Smith & Smith, Tyler, for appellant.

Charles H. Clark, Calhoun & Clark, Tyler, for appellee.

MOORE, Justice.

This suit was brought by Republic National Bank of Dallas, Trustee, against Harold Sanders, defendant, seeking the recovery on a promissory note executed by Harold Sanders on December 14, 1962, in the principal sum and amount of $390.00 with attorney's fees.

The defendant denied liability alleging that the note was obtained under circumstances amounting to economic duress and that the note was without any consideration.

Defendant also filed a cross-action for the sum of $25.00, alleging that he was likewise coerced into paying this amount which represented one-half of the closing costs in connection with the purchase of certain real property which he purchased from the plaintiff.

Upon trial of the case to the court, without the intervention of a jury, the court entered judgment in favor of the bank on the note and denied any recovery on defendant's cross-action.

The record is before us without Findings of Fact or Conclusions of Law.

The evidence reveals that Harold Sanders was president of Southwest Nurseries, Inc. and was also president of Sanders Nursery Company, Inc. On September 15, 1961, Southwest Nurseries leased from Republic National Bank, Trustee, a building and certain grounds situated in the city of Tyler. During the year of 1962, before the expiration of the lease, Harold Sanders incorporated the Harold Sanders Nursery Company, Inc. with he and wife owning a majority of the stock. Sanders Nursery Company, Inc. then commenced using the building and premises hereinabove referred to. Sometime during the month of August, 1962, Sanders began negotiating with the bank to purchase the property. A written contract of purchase and sale was entered into between the bank and Harold Sanders, individually, on November 12, 1962. On December 11, 1962, the bank sent a letter to Sanders advising him that they were ready to close the sale at 10 o'clock on the 14th day of December, and stating that the closing costs would be 'approximately $1415 broken down as follows: $1000 down; $390 rent from 9-14-62 to 12-15-62; $10 pro rata share of preparing papers; $15 mortgage's title policy.' On December 14, 1962, which was the day before the contract of sale was to expire, Mr. Guy Sparkman, representing the bank, came to Tyler for the purpose of closing the transaction. According to Sparkman's testimony, he advised Mr. Sanders that since the lease on the building had expired on September 14, 1962, and since no rent had been paid on the building during the intervening three months, it was necessary that the rent in the amount of $130.00 per month, totaling $390.00, be paid. He testified that Mr. Sanders objected to the payment of the rent but he could not recall that he objected to payment of the $25.00 representing his one-half of the closing costs. He testified that although he did tell Mr. Sanders that the rent 'needed to be taken care of,' he never threatened to cancel the contract of sale if the rent was not paid, because he said the discussion never reached that point. After a lengthy discussion according to him, Mr. Sanders finally agreed to pay the rent by executing his promissory note in the amount of $390.00.

Mr. Sanders, on the other hand, testified that although he protested to the payment of the rent, Sparkman demanded the rent as a condition to compliance with the contract and he was, therefore, compelled to pay the same because the contract was about to expire and since he had already put up $500.00 in earnest money and had spent more than $300.00 improving the building, he would suffer economic loss if he refused. He further testified that the nature of the nursery business at that particular season was such that it was absolutely necessary that he purchase has building and commence construction of cold storage facilities; otherwise his business would be destroyed and he would stand to lose a considerable amount of money. He testified that although he agreed to execute the note, he told Sparkman that he did not intend to pay the same when it came due and that his reason for signing the note was to 'expedite' the closing of the sale so that he could proceed with building a cold storage plant in the building which was necessary in the operation of the business. Although he admitted that someone owed the rent, he refused to pay the same out of the funds of Sanders Nursery Company, Inc. According to his testimony, Southwest Nurseries was no longer in existence. The record does not reveal whether the corporation had been dissolved.

The lease contract executed by Southwest Nurseries provided that a holding over after the expiration of the lease would operate and be construed as a tenancy from month to month at a rental of $260.00.

The contract of sale between appellant and the bank provided as follows:

'7. Rents, interest, ad valorem taxes for the then current year and escrow accounts for taxes and insurance shall be prorated at the Closing effective as of the Closing date. * * *'

Based upon the above and foregoing facts, appellant contends that the note was executed under economic duress and was therefore void. It is well established that there can be no duress unless there is a threat to do some act which the party threatening has no legal right to do. Such threat must be of such character as to destroy the free agency of the party to whom it is directed. It must overcome his will and cause him to do that which he would not otherwise do, and which he was not legally bound to do....