South Padre Development Co., Inc. v. Texas Commerce Bank Nat. Ass'n

• Decision Date: 17 June 1976
• Docket Number: Nos. 1067,1068,s. 1067
• Citation: 538 S.W.2d 475
• Parties: SOUTH PADRE DEVELOPMENT COMPANY, INC., et al., Appellants, v. TEXAS COMMERCE BANK NATIONAL ASSOCIATION et al., Appellees. On appeal from the 107th District Court of Cameron County, Texas. TEXAS COMMERCE BANK NATIONAL ASSOCIATION et al., Appellants, v. SOUTH PADRE DEVELOPMENT COMPANY, INC., et al., Appellees.
• Court: Texas Court of Appeals

Page 475

538 S.W.2d 475

SOUTH PADRE DEVELOPMENT COMPANY, INC., et al., Appellants, v. TEXAS COMMERCE BANK NATIONAL ASSOCIATION et al., Appellees.

On appeal from the 107th District Court of Cameron County, Texas.

TEXAS COMMERCE BANK NATIONAL ASSOCIATION et al., Appellants,

v.

SOUTH PADRE DEVELOPMENT COMPANY, INC., et al., Appellees.

Nos. 1067, 1068.

Court of Civil Appeals of Texas,

Corpus Christi.

June 17, 1976.

Rollins M. Koppel, Stiernberg, Skaggs & Koppel, Harlingen, for South Padre Development Co., Inc.

John C. Nabors, Liddell, Sapp, Zivley & Brown, Houston, for Texas Commerce Bank National Ass'n.

OPINION

NYE, Chief Justice.

The two appeals involved in this case come from the denial of a temporary injunction and plea in abatement and from overruling a plea of privilege. The appellant Texas Commerce Bank National Association hereinafter called Bank is appealing from the trial court's order overruling its plea of privilege to be sued in Harris County, Texas, and from the denial of its plea in abatement. South Padre Development Company hereinafter called Development Co. is appealing from the trial court's order denying its application for temporary injunction. Since the two appeals involve the same parties, the same court, and some of the same facts, we are writing this one Opinion covering both appeals.

Most of the facts are undisputed. In June of 1974, the Bank made a real estate loan to Sams-Porter Corporation in the amount of.$2.5 million dollars. This loan to Sams-Porter Corp. was in effect a loan to the Development Co., its parent corporation, for the purchase of Sams-Porter Corp. The principal assets of Sams-Porter Corp. were 1,700 acres of land in Cameron County, the stock in Cameron County Water Improvement District No. 17 and 1,500 acres of Class A water rights in Cameron County, Texas. The loan was secured by various deeds of trust and security agreements covering properties located in Cameron County, Texas, naming Lloyd T. Bolton, Trustee for the benefit of the Bank. In addition, the note to Sams-Porter Corp. was secured by the guarantee of its parent corporation, Development Co. Shortly after the loan was made, Sams-Porter Corp. was merged into Development Co. and Sams-Porter Corp. ceased its corporate existence. The obligation of Development Co. was due and payable to the Bank one year from date.

Development Co. arranged for a take-out commitment from the American General Life Insurance Company whereby the Insurance Co. would satisfy the Development Co.'s obligation to the Bank by converting the same into a long term note (10 years). However, litigation between the Development Co. and the Insurance Co. erupted causing the take-out commitment to go by the wayside leaving the Development Co.'s.$2.5 million debt due on June 25, 1975, unpaid. This suit was brought in the 107th District Court of Cameron County, Texas, by the Development Co. against the Insurance Co. and various other defendants growing out of various business transactions unrelated to the loan made by the Bank to the Development Co.

On August 9, 1975, the Bank posted its notice of foreclosure sale on the property securing the Development Co.'s obligation to the Bank. Thereafter on August 28, 1975, the Bank instituted suit in the 164th District Court of Harris County, Texas, against the Development Co. and Sams-Porter Corp. on its indebtedness of.$2,373,942.70, plus interest and for attorneys' fees in the amount of $250,000.00. The suit also asked for foreclosure of the liens.

After the Bank had filed suit against the Development Co. and Sams-Porter Corp., the Development Co. filed its third amended original petition joining the Bank in the existing litigation in the 107th District Court of Cameron County, Texas. In this suit, the Development Co. alleged that a conspiracy existed between the Bank and Insurance Co. whereby it was alleged that they conspired to cause the Development Co. to default on its obligation. The suit sought injunctive relief against the Bank restraining them from conducting the purported sale of the property involved. The Judge of the 107th Distirct Court, in an ex parte hearing, issued a temporary restraining order restraining the trustee and Bank from foreclosing upon or selling the land and properties in question until a hearing on the temporary injunction could be had. On September 3, 1975, the Bank filed its plea of privilege and subject to such plea, filed its plea in abatement. The Bank in its plea in abatement alleged that its suit filed in Harris County against the Development Co. and Sams-Porter Corp. was filed prior to the Development Co.'s third amended original petition and because its suit involved essentially the same parties and debt as that before the Cameron District Court, the cause of action in the Cameron County District Court should be dismissed as to the Bank, or in the alternative, it should be abated until the prior action in the Harris County District Court was finally disposed of.

The Development Co. and other plaintiffs filed their controverting affidavits alleging that venue was proper in Cameron County because, among other things, their cause of action involves an alleged violation of the usury laws and that such laws provide for venue in Cameron County.

On October 2, 1975, the Judge of the Cameron County District Court denied the plaintiff's application for temporary injunction against the Bank and trustee because the court was without jurisdiction to issue a temporary injunction against a banking association because of the prohibition contained in 12 U.S.C., § 91. The court then held that venue over the action was mandatorily in Cameron County and that the previously filed suit by the Bank in Harris County District Court did not constitute a reason for abating this suit. The trial court overruled the Bank's plea of privilege, denied its plea in abatement and motion to dismiss and refused to issue a temporary injunction.

Following the court's ruling, the Bank held its sale on October 7, 1975, foreclosing its liens on the real property securing its indebtedness. The Development Co. and Bank are each appealing from the above judgment of the Cameron County District Court. The two appeals which were submitted at different times are considered in this Opinion.

With respect to the Development Co.'s appeal, it brings forward one point of error that being that the trial court erred in denying the Development Co. the right to be heard at a meaningful time and in a meaningful manner by finding that there was no jurisdiction to issue a temporary injunction against the Bank because of the prohibition in 12 U.S.C., § 91. ¹

The Bank now asserts here that the question of whether the trial court had jurisdiction vel non to temporarily enjoin the Bank from its foreclosure sale is now moot, since it is undisputed that the Bank has held its foreclosure sale, has foreclosed its liens securing the indebtedness and has taken possession of the property.

Since the sale was not wrongfully conducted, and there was no court order restraining the trustee or the Bank from conducting the sale, the Bank was free to proceed with the sale which now renders the Development Co.'s appeal from that portion of the trial court's order moot. Service Finance Corporation v. Grote, 133 Tex. 606, 131 S.W.2d 93 (Tex.Comm'n App.--1929, opinion adopted); Prince v. North State Bank, 425 S.W.2d 476 (Tex.Civ.App.--Amarillo 1968, no writ); McConnell v Flynn Investment Company, 480 S.W.2d 58 (Tex.Civ.App.--El Paso 1972, no writ); Mayatt v. Northam, 317 S.W.2d 592 (Tex.Civ.App.--Houston 1958, no writ).

A cause becomes moot when the appellate court's judgment cannot have any practical legal effect upon a then existing controversy. Stephenson v. State, 515 S.W.2d 362 (Tex.Civ.App.--Dallas 1974, writ dism'd); McNeill v. Hubert, 119 Tex. 18, 23 S.W.2d 331 (Tex.Comm'n App.--1930, opinion adopted). This Court cannot now prevent that which has already been done.

Courts do not decide cases when no actual controversy between the parties exists at the time of the hearing. As was said in City Of West University Place v. Martin, 132 Tex. 354, 123 S.W.2d 638 (1939):

'. . . This court will not proceed to a determination when its judgment would be wholly ineffectual for want of a subject-matter on which it could operate. An affirmance would ostensibly require something to be done which had already taken place. A reversal would ostensibly avoid an event which had already passed beyond recall. One would be as vain as the other. To adjudicate a cause which no longer exists is a proceeding which this court uniformly has declined to entertain.'

See also Texas Alcoholic Beverage Commission v. Carlin, 468 S.W.2d 521 (Tex.Civ.App.--Beaumont 1971, aff'd 477 S.W.2d 271); McConnell v. Flynn Investment Company, supra; Greene v. Greggs, 520 S.W.2d 924 (Tex.Civ.App.--Tyler 1975, no writ).

We now turn to the appeal of the Bank in regard to the trial court's action in overruling its plea of privilege and denying its plea in abatement. The Bank in its first point of error contends that the trial court erred in overruling its plea of privilege because 12 U.S.C., § 94, prohibits a suit against a national bank outside of the county of its domicile unless that is the only forum available.

Section 94 of Chapter 2 entitled 'Venue of Suits' provides:

'Actions and proceedings against any association under this chapter may be had in any district or Territorial court of the United States held within the district in which such association may be established, or in any State, county, or municipal court in the county or city in which said association is located having jurisdiction in similar cases.'

The issue then is whether the venue provision of the above code is mandatory with respect to this suit.

It has been held that this provision of the code (12 U.S.C. § 94) is mandatory and is not permissive. A national bank can only be sued in the state,...