Strasburger Enter. v. Tdgt Ltd. Partner.

• Decision Date: 12 June 2003
• Docket Number: No. 03-02-00292-CV.,03-02-00292-CV.
• Citation: 110 S.W.3d 566
• Parties: STRASBURGER ENTERPRISES, INC. d/b/a Strasburger Farms/TDGT Limited Partnership, Appellants, v. TDGT LIMITED PARTNERSHIP and Mutual Service Casualty Insurance Company/Strasburger Enterprises, Inc. d/b/a Strasburger Farms, Appellees.
• Court: Texas Court of Appeals

110 S.W.3d 566

STRASBURGER ENTERPRISES, INC. d/b/a Strasburger Farms/TDGT Limited Partnership, Appellants, v. TDGT LIMITED PARTNERSHIP and Mutual Service Casualty Insurance Company/Strasburger Enterprises, Inc. d/b/a Strasburger Farms, Appellees.

No. 03-02-00292-CV.

Court of Appeals of Texas, Austin.

June 12, 2003.

COPYRIGHT MATERIAL OMITTED

Douglas W. Alexander, Jane M.N. Webre, Scott, Douglass & McConnico, LLP, Austin, Aubrey R Williams, Montez, Williams & Baird, PC, Waco for Appellants.

Thomas D. Farris, Christopher L. Jensen, Peterson Farris Doores & Jones, PC, Amarillo, Frank Gilstrap, John M Greene, Hill Gilstrap, PC, Arlington, for Appellees.

Before Justices KIDD, B.A. SMITH and YEAKE L.

OPINION

LEE YEAKEL, Justice.

Strasburger Enterprises, Inc., d/b/a Strasburger Farms ("Strasburger") appeals a district-court judgment awarding TDGT Limited Partnership ("TDGT") damages pursuant to a usury finding against Strasburger. Strasburger also seeks a reversal of a take-nothing judgment against TDGT's surety, Mutual Service Casualty Insurance Company ("Mutual"). TDGT appeals the district-court award of breach-of-contract damages in favor of Strasburger and argues that the district court erred in its calculation of the usury damages. We will affirm in part and reverse and remand in part.

BACKGROUND

In August 1998, Strasburger deposited 1,589,700 pounds of milo in a public grain warehouse owned by TDGT, a Texas Department of Agriculture (the "Department") licensed warehouseman. To obtain licensing, TDGT had secured an $80,000 warehouse bond from Mutual. See Act of May 22, 1981, 67th Leg., R.S., ch. 388, § 1, 1981 Tex. Gen. Laws 1044, 1048 (amended 1987 & 2001) (current version at Tex. Agric. Code Ann. § 14.031 (West Supp. 2003)) (requirements for securing bond). TDGT issued Strasburger two warehouse receipts, which Strasburger could exchange for milo at any time. Strasburger endorsed and delivered both warehouse receipts to Bell County Farm Service Agency as security for an agricultural loan. In early 1999, Strasburger agreed to sell TDGT the two warehouse receipts in order that TDGT could satisfy a milo delivery contract with Tyson Foods. In exchange, TDGT agreed to pay Strasburger $57,229.20 or $3.60 per hundred weight. In late February, Strasburger repaid its agricultural loan, obtained possession of the warehouse receipts, and delivered them to TDGT.¹

The Strasburger-TDGT contract stated that the $57,229.20 was "due and payable" on March 15; however, TDGT defaulted. On May 19, Strasburger, by letter, demanded payment for the agreed-upon price plus "interest at 10%"; Strasburger also made a written demand upon the Department for action under the provisions of Mutual's bond. In response to Strasburger's demand, TDGT sent Strasburger notice of violation of the finance code's usury provisions. See Tex. Fin.Code Ann. §§ 302.001, .002, 305.001, .002 (West Supp. 2003) (defining usurious rates and penalties). Strasburger sued TDGT on the contract and TDGT's surety Mutual on the bond. About one and a half months later, TDGT declared bankruptcy.² Following a bench trial, the district court rendered judgment for Strasburger "for the principal sum of $57,229.20, plus prejudgment interest of $9,536.34, plus ... attorney's fees in the amount of $20,000.00, . for a total recovery of $86,765.54...." The district court also rendered judgment for TDGT on its usury counterclaim for $2146.50, plus $3000 in attorney's fees. After offsetting TDGT's award, Strasburger was left with a net recovery of $81,619.04. Finally, the court ordered that Strasburger take nothing against Mutual. Strasburger and TDGT both appeal the district-court judgment.

DISCUSSION

Mutual's Liability

This action was tried before the district court on stipulated facts.³ Under such circumstances, the trial court and the reviewing court generally may not find any facts not conforming to the agreed statement, unless provided otherwise in the agreed statement. State Bar v. Faubion, 821 S.W.2d 203, 205 (Tex.App.-Houston [14th Dist.] 1991, writ denied). Accordingly, we will review only the correctness of the district court's application of law to the stipulated facts, and we will not infer or find any facts not shown by the parties' stipulation. See Rabinowitz v. Cadle Co. II, Inc., 993 S.W.2d 796, 797 (Tex.App.-Dallas 1999, pet. denied); Gibson v. Drew Mortgage Co., 696 S.W.2d 211, 213 (Tex. App.-Houston [14th Dist.] 1985, writ ref'd n.r.e.).

By its first issue, Strasburger argues that the district court's take-nothing judgment against Mutual should be reversed because Mutual, as TDGT's surety, is liable on the bond. Specifically, Strasburger argues: (1) the agriculture code requires Mutual to pay TDGT's contractual obligations, and (2) it is entitled to rescission and may sue on TDGT's original bonded obligation because TDGT "wholly repudiated" its obligation to pay Strasburger. Mutual rejoins that the bond does not cover the contract between Strasburger and TDGT either under the code or because of rescission.

The Agriculture Code

In examining Strasburger's first argument, we construe the provisions of the agriculture code in effect at the time the dispute arose.⁴ Under well-settled principles of statutory construction, we must presume that the legislature intended each word to have a purpose. KB. v. N.B., 811 S.W.2d 634, 637 (Tex.App.-San Antonio 1991, writ denied) (citing Cameron v. Terrell & Garrett, Inc., 618 S.W.2d 535, 540 (Tex.1981)). Every word, sentence, clause, and phrase should be given effect. University of Tex. v. Joki, 735 S.W.2d 505, 508 (Tex.App.-Austin 1987, writ denied) (citing Ex parte Pruitt, 551 S.W.2d 706, 709 (Tex.1977)). Construction of a statute which would make a provision a useless appendage is not favored by law. Carson v. Hudson, 398 S.W.2d 321, 323 (Tex.Civ. App.-Austin 1966, no writ).

If the language of a statute is unambiguous, then the court must seek the legislative intent as found in the plain and common meaning of the words and terms used. Sorokolit v. Rhodes, 889 S.W.2d 239, 241 (Tex.1994). Common words should be interpreted as they are commonly used. Elgin Bank v. Travis County, 906 S.W.2d 120, 121 (Tex.App.-Austin 1995, writ denied). Construction of a statutory provision may not be done in isolation from the rest of the statute; the act must be considered as a whole and not by interpreting a single sentence or phrase. Southwestern Bell Tel. Co. v. Public Util. Comm'n, 888 S.W.2d 921, 926 (Tex.App.-Austin 1994, writ denied) (citing Morrison v. Chan, 699 S.W.2d 205, 208 (Tex.1985)).

As a general rule, a warehouseman's bond is construed in light of the statute which requires it, and the surety's liability is limited to the duties specified by the statute itself. Republic Underwriters v. Tillamook Bay Fish Co., 133 Tex. 141, 126 S.W.2d 641, 642 (1939) (conducting sale not among statutory duties of warehouseman and failure of warehouseman to remit proceeds not covered under bond); Aetna Ins. Co. v. Junction Warehouse Co., 389 F.2d 464, 468 (5th Cir.1968) (warehouseman's default on agreement to sell and deliver grain was statutory duty and covered by bond because scale ticket was issued and issuance of receipts promised).

The agriculture-code provisions are not easily reconciled so that a single interpretation is readily apparent. However, we believe that the critical portion is the code's use of "depositor" in section 14.001. See Act of May 22, 1981, 67th Leg., R.S., ch. 388, § 1, 1981 Tex. Gen. Laws 1044, 1046 (amended 2001) (current version at Tex. Agric. Code Ann. § 14.001(1)). Section 14.001(1) defines "depositor" as "a person who: (A) deposits grain in a warehouse for storing, handling, or shipping; (B) is the owner or legal holder of an outstanding receipt for grain; or (C) is lawfully entitled to possession of the grain."⁵ Id. Section 14.009 requires that each applicant for a license to warehouse grain "shall file or have on file a bond" with the Department. Id. at 1048 (amended 2001) (current version at Tex. Agric. Code Ann. § 14.031). Sections 14.009(c) and 14.010(a) and (b), which refer the warehouseman's bond, specifically use the term "depositor." See id. at 1048, 1049. Section 14.009(c) states:

The bond must be conditioned on faithful performance of:

(1) each obligation of a warehouseman as to receipted grain and open storage grain ...; and

(2) each obligation of a warehouseman under any contract with a depositor ...⁶

Id. (emphasis added). Section 14.010 concerns recovery on the bond and liability of warehousemen, and states in part:

(a) If no action on the bond of a warehouseman is begun before the 31st day after the date of a written demand to the department, a depositor has a right of action on the bond for recovery of damages suffered by the depositor as a result of the failure of the warehouseman to comply with any condition of the bond.

(b) Recovery on a bond shall be prorated if claims exceed liability on a bond, but a depositor suing on a bond is not required to join other depositors in a suit. The burden of establishing proration is on the surety as a matter of defense.

Id. at 1049 (amended 2001) (current version at Tex. Agric. Code Ann. § 14.065 (West Supp.2003)) (emphasis added).

Strasburger relies on Thomas v. Reliance Insurance Co., in which the court interpreted the Texas Grain Warehouse Act, under article 5577b. 617 F.2d 122 (5th Cir.1980) (construing Act of May 29, 1969, 61st Leg., R.S., ch. 811, 1969 Tex. Gen. Laws 2415 (amended 1981) (current version at Tex. Agric. Code Ann. §§ 14.001-.088)). In Thomas, four individuals deposited grain at a warehouse that converted a sizable portion of the deposited grain; the individuals also made contracts for sale of the grain with the warehouse owner, who failed to pay the contracted amount. Id. at 124-25. None of the appellants received warehouse receipts. Id. at 125. The appellants sued the warehouse's surety for the warehouse's...