Stone Ft. Nat. Bank v. Elliott Elec. Supply Co., Inc.

• Decision Date: 17 February 1977
• Docket Number: No. 958,958
• Citation: 548 S.W.2d 441
• Parties: STONE FORT NATIONAL BANK, Appellant, v. ELLIOTT ELECTRIC SUPPLY COMPANY, INC., Appellee.
• Court: Texas Court of Appeals

Page 441

548 S.W.2d 441

STONE FORT NATIONAL BANK, Appellant, v. ELLIOTT ELECTRIC SUPPLY COMPANY, INC., Appellee.

No. 958.

Court of Civil Appeals of Texas, Tyler.

Feb. 17, 1977.

Rehearing Denied March 24, 1977.

William D. Guidry, Benchoff & Guidry, Nacogdoches, for appellant.

Thad Floyd, Stripling & Sutton, Nacogdoches, for appellee.

McKAY, Justice.

This case involves a question of priority between a materialman's lien and a security interest under the Texas Business and Commerce Code. The case originally arose as an interpleader suit when the plaintiff, Brentco, Inc. (Brentco), filed its original petition complaining of Jim Porter, individually and doing business as Jim Porter Electric Company (Porter); Elliott Electric Supply Company, Inc. (Elliott), appellee herein; The Stone Fort National Bank (the Bank), appellant herein; and Nacogdoches Abstract and Title Company, Inc. (the Title Co.). In that petition Brentco admitted that it owed $4,078.00 on a subcontract to Porter and that such sum was held by the Title Co. Brentco alleged that it had no interest in the said amount, save that it be paid to the person legally entitled thereto. The Title Co. tendered that amount into the registry of the court to be paid to whomsoever it was due. In its original answer Elliott alleged that by reason of its mechanic's and materialman's lien, it was entitled to the full amount tendered into court and that its rights in and to said funds were superior to those of all other parties. The Bank filed a general denial. Later the Bank also filed a cross-action against Jim Porter and Elliott Electric Supply Company, Inc., whereby the Bank sought to recover on a promissory note executed by Porter to the Bank alleging a superior claim to the funds which had been interpleaded into the registry of the court.

On June 13, 1975, an interlocutory judgment was entered in the cause whereby the sum of $4,078.00 was paid into the registry of the court and Brentco was dismissed from the case. In that judgment the trial court found that Porter had defaulted and was not entitled to any judgment, and thus the cause was continued on the docket of the trial court as between Elliott Electric and the Bank. The case was tried before the court without a jury. After hearing and examining the evidence and arguments of counsel, the court rendered judgment that Elliott be awarded the sum of $4,078.00, which sum had been interpleaded into the registry of the court. It further ordered that the Bank recover judgment of $4,059.75 plus $1,500.00 attorney's fees against Porter and that the Bank's security interest be foreclosed as against all of the right, title and interest of Porter, subject to the superior rights of Elliott Electric in and to the $4,078.00 interpleaded into the trial court. This latter portion of the judgment is not appealed from. Request for findings of fact and conclusions of law was not timely requested and none were filed by the court. From this judgment the Bank has made a limited appeal concerning the $4,078.00 awarded to Elliott.

The record reveals that Brentco, the original contractor, contracted to build and built an apartment complex called Brentwood Manor Apartments located in the City of Nacogdoches. The apartments were built during 1974 for Bill Wilder of Henderson, Texas. During the course of the construction Brentco subcontracted all the electrical work on the job to Porter. One of Porter's suppliers was Elliott who supplied electrical materials to Porter from February, 1974, to late 1974 or January, 1975.

In the early part of August, 1974, during the construction, Porter became unable to pay off his accounts. On August 15, 1974, Porter, upon Elliott's suggestion, secured a loan from the Bank in the amount of $30,000.00. He executed a promissory note in favor of the Bank for the loan amount and also a security agreement, covering certain items of personal property as security, including all contract rights and accounts receivable. After receiving the money from the loan Porter used the funds to pay on his account balance to Elliott who gave him credit for the $30,000.00; however, this did not completely satisfy the debt. Elliott stopped delivering materials to Porter around the end of 1974 or early 1975.

On November 20, 1974, Elliott caused to be filed with the office of the County Clerk of Nacogdoches County, Texas, a mechanic's and materialman's lien affidavit covering the Brentwood Apartment project. In the affidavit Elliott claimed it had furnished electrical materials to Jim Porter doing business as Jim Porter Electric Company for use in the Brentwood job and that it had not been paid for the said materials. In conjunction with the filing of this affidavit Elliott caused two exact copies of the affidavit to be mailed to Wilder, the owner. Prior to this time, on November 7, 1974, Elliott had sent statutory notices of its claim to Brentco and Wilder. Upon receipt of the notice Brentco withheld $4,078.00 or approximately 10% of the contract price from the final payment.

Upon trial of the cause Elliott introduced into evidence the monthly statements he had sent to Porter from June, 1974, to July, 1975. Each statement was dated the 25th of the month. The statements were prepared by a computer billing service (Nacogdoches Computer Service). Elliott would send a batch of invoices to the computer service who prepared the statements from the invoices. No testimony from a representative of the computer service as to the method of preparation of the statements was introduced; however, Mr. Elliott, the owner of Elliott Electric Supply Co., Inc., testified that after the statements were produced his personnel double-checked them against their balances. The statements indicated the invoice numbers of basically all the unpaid invoices. They did not reflect the invoice date or the date of delivery. According to Mr. Elliott the statements reflected invoices for materials delivered to Porter on other jobs that Porter was working on in addition to the Brentwood job. Although Mr. Elliott said the total for a particular job could be figured from the invoices, no attempt was made to separate the amounts in the statements. He also testified that some invoices in a given month were not received in time to send to the computer service. He testified that when credits or payments were received that they were applied against the oldest unpaid invoice.

Most of the dispute was over the balance due as of August 25, 1974. The balance per the statement was $48,392.22. The Bank introduced evidence of several credits made subsequent to the August 25th billing which if applied against the oldest invoices would lower the balance. These included: returned inventory, $10,736.76; equipment given to Elliott (airplane and two trucks), $11,900.00; and payments, $14,990.00, with a total of $37,626.76. This total deducted from the statement balance gave a balance of $10,765.46. The Bank then introduced into evidence a promissory note in the amount of $20,503.90 dated November 12, 1974, made by Carthage Plumbing and Heating, a partnership of Tommy Cox and Harold Wiggins. The note recited that it was "given in consideration of a Release of Claim by Elliott Electric Supply Co., Inc., said claim arising from the furnishing of electrical supplies and materials to Jim Porter . . . ." If this note was a credit against the account then Porter would have a credit balance, assuming the above credits were valid. Mr. Elliott testified that he had sued on the note but it had not been reduced to judgment, nor had he given Porter credit on his books.

Elliott also introduced into evidence ninety-five of its invoices to Porter dated from March 15, 1974, to September 3, 1974, claiming them to be for materials delivered to the Brentco job. Only the last invoice dated September 3, in the amount of $14.65, was dated in the month of September. The last date on an invoice prior to that was August 29, 1974. Mr. Elliott had testified that the invoice is made up "at the exact time of the sale ordinarily, yet there could be an occasion where it would be written one day or delivered the next" apparently meaning that the invoice date was the day of delivery or the day before the delivery.

The Bank brings ten points of error. Points one, four and seven are no evidence points. Points two, three, five, six, eight and nine are insufficient evidence points. Point ten claims that as a matter of law the contract rights held by the Bank were superior to the claims of Elliott. Before passing upon the points presented we must consider the rules we are bound to follow. Where no findings of fact or conclusions of law are filed we must presume on appeal that every fact issue and such implied findings as were necessary to support the judgment were found by the trial court. Morris v. Texas Elks Crippled Children's Hospital, Inc., 525 S.W.2d 874, 881 (Tex.Civ.App. El Paso 1975, writ ref'd n. r. e.). In passing upon whether there is no evidence to support the judgment we must consider only the evidence favorable to the findings of the trial court, but in passing on the insufficiency of the evidence we consider all the evidence in the record. Richardson v. Holmes, 525 S.W.2d 293, 295 (Tex.Civ.App. Beaumont 1975, writ ref'd n. r. e.). In...