Shaver v. Schuster

• Citation: 815 S.W.2d 818
• Decision Date: 26 August 1991
• Docket Number: No. 07-90-0023-V,07-90-0023-V
• Parties: Lester SHAVER, Appellant, v. Robert Glen SCHUSTER, Appellee.
• Court: Court of Appeals of Texas

Page 818

815 S.W.2d 818

Lester SHAVER, Appellant, v. Robert Glen SCHUSTER, Appellee.

No. 07-90-0023-V.

Court of Appeals of Texas,

Amarillo.

Aug. 26, 1991.

Rehearing Overruled Oct. 1, 1991.

Crenshaw, Dupree & Milam, Cecil Kuhne, Elata Ely, Lubbock, for appellant.

Carr, Evans, Fouts & Hunt, Donald M. Hunt, Lubbock, for appellee.

Before REYNOLDS, C.J., and DODSON and BOYD, JJ.

REYNOLDS, Chief Justice.

Lester Shaver perfected this appeal from a judgment, rendered on a jury's verdict, awarding Robert Glen Schuster damages and prejudgment interest for Shaver's failure to consummate an agreement to purchase stock of a bank holding company. With sixteen points of error, Shaver attacks, in brief, the trial court's denying his motion for judgment non obstante veredicto, permitting Schuster to file a trial amendment after trial, and requiring him to protect Schuster from a contingent liability; the submission of issues; and the evidential support for the jury's findings. On the rationale expressed, we will overrule the points of error and affirm.

To purchase the shares of stock of Whisperwood National Bank, Independent Financial, Inc., a one-bank holding company, borrowed funds from First State Bank, Abilene, evidenced by its note guaranteed by its shareholders, including Schuster. Also, two trustees, Mabry Brock and Lonnie Hollingsworth, held, as "trust" stock for certain shareholders, shares of the holding company's stock purchased from former shareholders with funds borrowed from the Abilene bank, an indebtedness for which Schuster was also liable.

In 1985, the deteriorating condition of Whisperwood produced irreconcilable differences among members of the board of directors concerning operations. It was deemed necessary for one group to purchase the interests of the other in order to implement a solution.

Director Lonnie Hollingsworth made the initial proposal to purchase the stock of the opposing directors. Shaver, a shareholder and member of the board, was interested in purchasing a controlling interest. Schuster asked that his shares in the holding company be purchased so he could retire from the company.

Shaver and Schuster, both of whom possessed wide business experience, reached a private arrangement. Shaver would "purchase" Schuster's 37,500 shares for $7.28 per share, a total of $273,000, the initial offering price to Hollingsworth. Schuster would also convey his beneficial interest in 8,122 shares of the "trust" stock in consideration for Shaver's assumption of Schuster's liability on the trust shares and on the guaranty of the holding company's debt. If the sale to Hollingsworth were completed at a higher price, Shaver would reap the profit; if completed at a lower price, Schuster would bear the loss. If the sale to Hollingsworth were stymied, Shaver would purchase Hollingsworth's shares of stock and that of the other offerors.

Schuster and directors Irvin Skibell, Monte Hasie, and Ronnie Paulger, offered their shares of stock to Hollingsworth. Accepting and providing a $100,000 deposit, Hollingsworth later requested to be released from his obligation and to be refunded his deposit. Schuster opposed the release and refund, but Shaver persuaded him to relent, assuring him that if he would cooperate on the release and refund, he, Shaver, would buy his stock.

Schuster wanted to complete his sale before the end of the year for tax reasons. Shaver proposed giving Schuster a promissory note dated 1985 as consideration for Shaver's acquisition of a controlling interest involved the purchase of stock from Hollingsworth, Schuster, and at least one other shareholder, Mabry Brock. Shaver decided that if he could not purchase Hollingsworth's stock before that of the others, he would not complete the proposed transactions. Schuster agreed to Hollingsworth's stock being purchased first. The purchase increased Shaver's stock ownership to a percentage which triggered the requirement of regulatory review by the Federal Reserve Bank of subsequent purchases.

the sale, repeatedly assuring Schuster he should consider his stock sold.

Schuster's accountant informed him that tax considerations mandated documentation showing the sale in December. He submitted a written agreement to Shaver who refused to sign it, saying he wanted to think about it and draw up the note himself. In the early part of 1986, ¹ Shaver presented to Schuster, who accepted, a signed promissory note dated December 31, 1985, reading as follows:

PROMISSORY NOTE

December 31, 1985

I, LESTER SHAVER, promise to pay to ROBERT GLEN SCHUSTER the sum of TWO HUNDRED SEVENTY-THREE THOUSAND AND NO/100 DOLLARS ($273,000.00) plus accrued interest from date at the rate of nine percent (9%) per annum. The entire principal balance plus accrued interest is due and payable in full on or before April 1, 1986.

However, this note is given contingent upon the following:

1) The presentation of 37,500 unencumbered shares of stock in Independent Financial, Inc.;

2) The approval of this transaction by [various members of the control group of shareholders];

3) If applicable, the approval of the federal regulatory authorities having jurisdiction.

It is further understood that this note will be paid in full at the earliest date that all the above contingencies are met. If said contingencies cannot be met, this note shall become null and void, and the parties hereto shall renegotiate.

/s/ Lester Shaver

Lester Shaver

On January 27, Shaver and Mabry Brock executed a stock purchase agreement containing a May 1 deadline for regulatory approval. ²

Shaver, elected as chairman of the board of directors in January, submitted his notice of change in control of the holding company to the Federal Reserve Bank on February 20. In response to the FRB's requests for further information on March 6 and March 31, Shaver supplemented the information in his application on March 20, April 25, and May 2. Throughout this process and continuing after April 1, Shaver sent Schuster copies of correspondence with the FRB to inform him of any progress.

By his April 3 letter, Shaver, enclosing a copy of the FRB's March 31 letter, informed Schuster that he would send the information requested as soon as possible and would keep him posted on the status of the application. Acting on Schuster's suggestion that he hire a named firm of lawyers to expedite the application, Shaver did so shortly after April 1. He readily agreed that he was still pursuing the application, wanted to get the FRB's approval, and thought he "had a deal" with Schuster and Brock.

By a letter dated May 6, the FRB notified Shaver that his application was substantially complete. He was also advised that he could complete his proposal on or after June 27 unless the FRB's analysis of the information resulted in notification that the acquisition has been disapproved, the period for disapproval has been extended, or that the transaction may be accomplished at an earlier date.

On May 23, Shaver wrote, but upon advice of his attorney did not mail, a letter to the FRB informing it of the resignation of Whisperwood's president, his own decision not to consummate a purchase agreement with Mabry Brock, and his uncertainty concerning his obligations under the promissory note to Schuster. Instead, on June 3rd, Shaver's attorney mailed a letter to the FRB reassuring it of Shaver's commitment to service and terminate Financial Independent's debt.

Later, Shaver decided he had paid too much for the stock and he needed to "kill the deal." By letter dated June 11th, Shaver informed the FRB of the resignation of Whisperwood's president and his own dispute with Brock over the value of the stock covered by their purchase agreement. No mention was made of his transaction with Schuster. By letter dated June 27, the FRB notified Shaver it had ceased to process his notice of change in control of the holding company and that the proposal may not be completed.

Throughout the period before and after the April 1st due date of the promissory note, Schuster and Shaver saw each other at directors' meetings and at the bank on occasions when they were conducting their separate business there. On none of these occasions did Shaver remind Schuster that if regulatory review was not completed by April 1 their agreement would expire, nor did he inform Schuster that after April 1 "we don't have a deal."

Sometime after June 11, Schuster was given a copy of Shaver's letter of that date to the FRB. Also in early or middle June, following another disagreement during a directors' meeting, Shaver was asked by a director whether he was going to complete the stock purchase and replied he would not. Schuster approached Shaver afterwards and asked if there was some way they could "work this thing out." Shaver replied he would not buy Schuster's stock at any price and left.

Alleging the continuing force of their agreement until Shaver breached it in mid-June, Schuster sought to hold Shaver liable for breach of contract by failing to pay the promissory note. After the close of evidence, Schuster secured permission to file a dictated trial amendment, later reduced to writing, to allege the note was ambiguous with respect to any time limitation for the fulfillment of the contingencies set forth therein.

As the cause was positioned, Schuster persuaded the jury to return a favorable verdict composed of the summarized findings, corresponding to the numbered questions submitted, that:

(1) Shaver would have received approval by the FRB if he had pursued it with reasonable diligence until either approved or disapproved;

(2) the parties intended the agreement would remain in effect until the approval of the FRB was either obtained or refused;

(3) Shaver waived his right, if any, to require that the approval of the federal regulatory authorities be obtained by April 1;

(4) Shaver breached the agreement between the parties on June 15;

(5) The fair market value of the...