Sylvester v. Watkins

• Decision Date: 28 June 1976
• Docket Number: No. 8678,8678
• Citation: 19 UCCRep.Serv. 792,538 S.W.2d 827
• Parties: 19 UCC Rep.Serv. 792 Billy SYLVESTER, Appellant, v. Walter C. WATKINS, Appellee.
• Court: Texas Court of Appeals

Page 827

538 S.W.2d 827

19 UCC Rep.Serv. 792

Billy SYLVESTER, Appellant, v. Walter C. WATKINS, Appellee.

No. 8678.

Court of Civil Appeals of Texas,

Amarillo.

June 28, 1976.

Rehearing Denied July 26, 1976.

LaFont, Tunnell, Formby, La Font & Hamilton, Bill La Font, Plainview, for appellant.

Morehead, Sharp, Tisdel & White, Charles G. White, Plainview, for appellee.

REYNOLDS, Justice.

Declaring the balance owed by the maker of, and his default on, a promissory installment note, the trial court rendered no money judgment in favor of the holder, decreeing that the holder is not entitled to accelerate the maturity of the note until proper presentment and steps for acceleration have been made after the judgment becomes final. Because the maker expressly waived presentment, demand for payment and notice of intention to accelerate the maturity, the holder is entitled to judgment for the balance owed on the note. Reformed and affirmed.

By written contract, Billy Sylvester, a feed lot operator in Hale County, Texas, purchased from Walter C. Watkins, M.D., an Amarillo surgeon, two-thirds, or 186 head, of Watkins' herd of registered Angus cattle. The cattle were raised pursuant to a contract with Pioneer Hi-Bred Corn Company, now Pioneer Cattle Co., a division of Pioneer Hi-Bred International, Inc., to scientifically develop a genetically superior herd of pedigree Angus cattle, some calves of which Pioneer agreed to purchase at premium prices. The sale was made subject to the Pioneer contract and Pioneer's approval, and Sylvester contractually succeeded to all of Watkins' rights under the Pioneer contract. Two of the cows contracted for were not delivered.

The consideration was $158,100, subject to adjustments for death loss, disease and other excusable reasons by Watkins. Payment of the consideration was deferred as evidenced by Sylvester's combined promissory note and security agreement dated 31 August 1973. The $158,100 principal of the note was payable, together with accrued interest at a rate computable from data stated in the note, in seven equal annual installments due on the first day of December of each year, beginning in 1974, although Sylvester was given an option to prepay.

A provision of the note is that any default in punctual payment of the principal or interest as the same shall become due and payable, or default in the performance of any of the terms, covenants, or conditions contained in the security agreement, shall mature the entire indebtedness 'at the option of the holder.' The note has the further provision whereby Sylvester.

. . . expressly waives all notices, demands for payment, presentations for payment, notices of intention to accelerate the maturity, protest and notice of protest, as to this note and as to each, every and all installments hereof.

By the terms of the security agreement, Sylvester agreed, among other matters, to use acceptable husbandry practices in caring for all of the cattle, to apply all proceeds from the sale of calves to the scheduled interest and principal payments of the note, and to acquire and assign to Watkins life insurance in the sum of $100,000 as additional security for the payment of the note. Sylvester's failure to comply in these respects, as well as in any other listed condition, constituted a default under the security agreement. Upon the occurrence of Sylvester's default, Watkins could elect to declare the entire indebtedness immediately due and payable, Sylvester 'expressly waiving notice, demand and presentment.' It was provided, however, that if the proceeds from the sale of the offspring in any year shall be insufficient to make the scheduled principal and interest payments which shall be due, and if Sylvester shall otherwise be unable to make the scheduled payments on the note, then Watkins, prior to exercising his rights of foreclosure, shall first exercise the option to buy the heifer calves in the herd on the terms and at the prices set out in the Pioneer contract.

Neither the first principal installment nor the accrued interest due on 1 December 1974 was paid. On 8 January 1975, Watkins, presumably without presenting the note to or making demand of Sylvester for payment of the delinquent amounts or giving notice of intention to accelerate the maturity of the note, instituted this suit. His original petition alleged a default in the payment of the first principal and interest installments and default in performance under the security agreement. Default under the security agreement was said to be Sylvester's failure to remit the proceeds from the 1974 sales of calves for credit on the note, to use acceptable husbandry practices in caring for the cattle, and to assign a $100,000 life insurance policy to Watkins as security for payment of the note. For these alleged defaults, Watkins elected to accelerate the maturity of the note. His prayer was for judgment for the principal of the note, accrued interest, attorney's fees and for foreclosure of his security interest lien.

Sylvester answered on 22 January 1975 with a general denial and asked for affirmative relief canceling the contract and its collateral instruments. By his pleadings, Sylvester tendered the cattle to Watkins and served notice that he would care for the cattle only for a reasonable time after which, if Watkins had not taken possession of them, they would be sold to the highest bidder. The right to cancellation was predicated on Sylvester's allegations that a number of the cows were not bred as represented to him, that some cows had been cross-bred which would render their calves unacceptable to Pioneer, that two cows were not delivered for which Watkins had made no adjustment, and that Watkins failed to purchase the heifer calves prior to initiating foreclosure proceedings.

Afterwards, the parties entered into a stipulation that the sale of the cattle during the pendency of the suit or Sylvester's payment to Watkins of the proceeds from the sale or any other payment would not constitute a waiver of any defense or cause of action which had been or may thereafter be pleaded. The cattle were sold, apparently by mutual agreement of the parties, to Alan Witcher in consideration of his $85,663.50 note to be held by Watkins.

The trial pleadings were Watkins' second amended original petition and Sylvester's second amended answer and cross-action. To a large extent, the pleadings were elaborations on the original pleadings. More specifically, Watkins eliminated his request for foreclosure of his security interest lien, and enlarged his pleadings to request that pursuant to the Uniform Declaratory Judgments Act, Vernon's Ann.Civ.St. art. 2524--1, the court determine the amount of adjustment, if any, to which Sylvester is entitled, the balance owed on the note and whether Watkins is entitled to accelerate maturity of the note. Sylvester, in turn, enlarged his pleadings to allege an expenditure totaling, and to pray for the recovery of, $30,000 for the care of the cattle.

The trial court submitted the disputed facts to and received from the jury a verdict thereon. Corresponding to the numbered special issues, the jury found that Sylvester failed to (1) care for the cattle using good and acceptable husbandry practices, (2) acquire and assign to Watkins the life insurance policy required by their agreement, and to (3) timely remit the proceeds from the sale of offspring as the agreement required. The jury failed to find that (4) Watkins or his agent misrepresented the cattle and that Sylvester relied on the misrepresentation, if any, or that (6) Sylvester notified Watkins of his revocation of the acceptance of the herd within a reasonable time. The jury also found that (5) Sylvester was entitled to an adjustment of $11,812.50 for an excessive number of 'open' and cross-bred cows, which (7) substantially impaired the value of the herd to Sylvester.

Determining the undisputed facts of the transaction as a matter of law and accepting the jury's verdict, the trial court found that the balance of principal and interest due on the note--after adjustments for the purchase price of the two undelivered cows and the sum found by the jury and credits for proceeds from the sales of calves and the Witcher note which Watkins received-- is $65,492.30, that Sylvester is in default on the note and that Watkins is entitled to accelerate the maturity of the note provided a proper presentment and notice of acceleration is given. The material decretal portion of the judgment then reads:

IT IS THEREFORE ORDERED, ADJUDGED, DECREED AND DECLARED BY THE COURT that the balance of the promissory note plus interest accrued thereon, owed to Plaintiff, Walter C. Watkins, by Defendant, Billy Sylvester, as of September 8, 1975, is $65,492.30.

IT IS FURTHER ORDERED, ADJUDGED, DECREED, AND DECLARED BY THE COURT that the maturity of the note has not been accelerated and that the balance of the note is not past due, and accordingly, that no judgment for money is rendered against Defendant by this judgment.

IT IS FURTHER ORDERED, ADJUDGED AND DECREED BY THE COURT that Defendant, Billy Sylvester, is in default on the note and security agreement, but that Plaintiff shall not be entitled to accelerate the maturity of the note until proper presentment of the note for payment has been made and until the proper steps for the acceleration of the maturity of the note have been made after this judgment has become final.

IT IS FURTHER ORDERED, ADJUDGED...