Texas Bank & Trust Co. of Dallas v. Custom Leasing, Inc.

• Decision Date: 26 July 1973
• Docket Number: No. 563,563
• Citation: 498 S.W.2d 243
• Parties: TEXAS BANK & TRUST COMPANY OF DALLAS, Appellant, v. CUSTOM LEASING, INC., Appellee.
• Court: Texas Court of Appeals

Page 243

498 S.W.2d 243

TEXAS BANK & TRUST COMPANY OF DALLAS, Appellant, v. CUSTOM LEASING, INC., Appellee.

No. 563.

Court of Civil Appeals of Texas Tyler.

July 26, 1973.

Rehearing Denied Aug. 30, 1973.

John F. Maxfield, Stigall, Maxfield & Collier, Dallas, for appellant.

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

DUNAGAN, Chief Justice.

This suit was brought by Custom Leasing, Inc., against Texas Bank & Trust Company of Dallas for recovery of monies alleged to have been paid by reason of either mutual mistake or through false representation for release of a chattel mortgage. On a jury verdict judgment was entered by the trial court in favor of plaintiff. Defendant Texas Bank appealed the case to this court, and on that appeal the cause was reversed and rendered in favor of the defendant-appellant. Tex.Civ.App., 470 S.W.2d 123. The appellee sought writ of error in the Supreme Court of the State of Texas, and after granting the writ, that court reversed the decision of this court and remanded the case for further consideration. Tex., 491 S.W.2d 869.

Sometime prior to April 3, 1963, James E. Lyles of Midland, Texas, appeared at the Texas Bank & Trust Company of Dallas requesting a loan on behalf of Gentry Construction Company, Inc., in the amount of $20,000.00. He contacted Mr. Warren Sudduth, an officer of the Bank, and represented himself as the vice-president of Gentry Construction Company, Inc. Mr. Sudduth promised to make the loan to Gentry Construction Company, Inc., provided Lyles would obtain a corporate resolution authorizing the loan and providing both Lyles and George W. Gentry, the president of the construction company, would co-sign the note and become personally liable thereon. A note in the amount of $18,900.00 was prepared showing Gentry Construction Company, Inc., as the principal obligor and Lyles and Gentry as cosigners. A chattel mortgage was also prepared showing Gentry Construction Company, Inc., as the mortgagor. The note and chattel mortgage were handed to Mr. Lyles who was to execute the same as vice-president and also obtain the signature of George Gentry as a co-signer thereon. He took the note and chattel mortgage and returned to the Bank within a few days with the corporate resolution of the construction company showing that the corporation had authorized the making of the loan. He also returned the note to Mr. Sudduth showing that the corporation had executed the same through Lyles as its vice-president and the note also contained the signature of Lyles and George W. Gentry personally. Lyles also returned to Sudduth the chattel mortgage which showed to have been executed by the corporation under the corporate seal and which was executed by Lyles as vice-president of Gentry Construction Company, Inc. The loan was completed and the money was advanced to Gentry Construction Company, Inc. When the note became due, the company failed to pay the note and thereupon Mr . Sudduth went to Midland and contacted James E. Lyles. Mr. Lyles asked for more time and during the conversation told Mr. Sudduth that George W. Gentry did not sign the note.

Before the 28th day of April, 1964, while the note was still delinquent, Mr. Sudduth received a call from Mr. Lyles who was in the offices of Custom Leasing in Lubbock. Mr. Lyles told Mr. Sudduth that Custom Leasing was contemplating purchasing the equipment of Gentry Construction Company, Inc., which was secured by the mortgage to the Bank. Upon being told that the Bank had the mortgage and note, Mr. Pogue, a representative of Custom Leasing, took the phone and asked Mr. Sudduth how much it would take to get a release of the chattel mortgage. Mr. Sudduth replied that the Bank would release the chattel mortgage for the sum of $19,089.00. Thereupon Mr. Pogue advised Sudduth to execute the release and then mail the same, with a draft attached, to Custom Leasing's Bank in Lubbock, Texas, and Custom Leasing would pay the same. This was done and the Bank received payment. The conversation appears to have been very brief and related to the release of the Bank's chattel mortgage. Mr. Pogue did not seek to purchase the note nor did he request an assignment thereof. The record shows that the note remained in the hands of Texas Bank & Trust Company of Dallas and that there is presently a balance due and owing on the note in the approximate amount of $2,000.00. There is no evidence in the record showing that at the time of the telephone conversation Mr. Sudduth had any information that James E. Lyles was not the duly authorized vice-president of Gentry Construction Company or that there was any question in regard to his authority to execute the note on behalf of Gentry Construction Company; and, in fact, the jury found that Lyles had apparent authority to act for Gentry Construction Company. The only information that Sudduth had casting any doubt upon the transaction was the statement by James E. Lyles that George W. Gentry did not sign the note. The record shows Sudduth had no information which would indicate the note and chattel mortgage were invalid. Mr. Pogue did not ask Mr. Sudduth if he had any information with regard to whether Mr. Lyles had authority to act for Gentry Construction Company or whether he had any opinion as to the validity of the chattel mortgage which the Bank held. At the time of the conversation Mr. Sudduth had no knowledge that George W. Gentry as president of the Gentry Construction Company would deny that Lyles had authority to represent the corporation. Sudduth testified that, although he knew Lyles had said Mr. Gentry did not sign the note, he felt that Gentry for some reason or another was planning to escape personal liability on the note.

After Custom Leasing had received the release of the Bank's chattel mortgage, it proceeded to purchase the equipment of Gentry Construction Company, Inc., by a bill of sale executed by Lyles as vice-president of Gentry Construction Company, Inc. In a simultaneous transaction, Custom Leasing then leased the equipment back to Gentry Construction Company upon a monthly rental. When Gentry Construction Company failed to pay the monthly rental, Custom Leasing commenced an investigation and found that Mr. Gentry, the president of the company, denied that Lyles was a vice-president or had any authority to sign for the company. He also denied that he signed the note at the Texas Bank & Trust Company in Dallas. When it appeared to Custom Leasing that the entire transaction appeared to be fictitious, Custom Leasing filed suit against Gentry Construction Company, Inc., George W. Gentry, and James E. Lyles in the District Court of Midland County. Subsequently Custom Leasing joined Texas Bank & Trust Company as a party to the suit. The Bank's plea of privilege was subsequently sustained and the cause was transferred to the District Court of Dallas County.

The facts of this case are fully discussed in both the opinion of the Supreme Court and in our prior opinion, so we will defer further recitation of facts other than to point out a factual error made in both prior discussions of this case. In referring to the note and chattel mortgage involved in this case it is important to be aware of the precise nature of the signatures on both documents. The chattel mortgage was signed by 'Gentry Construction Company, Inc. by James E. Lyles V.P.' No other signature appears on that instrument other than that of a notary. The note involved was signed by 'Gentry Construction Company, Inc. James E. Lyles Vice Pres.,' by George W. Gentry personally and by James E. Lyles personally. There was no signature on the note by George Gentry in any other capacity than as an individual. Indications in both prior opinions to the contrary notwithstanding, there is no signature purporting to be that of Gentry anywhere on the chattel mortgage, nor is there any signature of Gentry on either instrument made in his capacity as an officer of Gentry Construction Company. On both instruments the construction company appears as the primary obligor.

In the first of appellant's points of error not ruled on in the prior opinions in this case, appellant complains of the failure of the trial court to grant its motion for 'judgment notwithstanding the verdict,' which motion included as partial grounds therefore the allegation that appellant's motion for judgment on the verdict should have been granted. In order to determine whether such an allegation can be entertained, we must first determine the correctness of the trial court's entering judgment for appellee on the basis of the verdict, for the findings of the jury in the verdict will conclusively establish the basis of the judgment unless and until a successful and direct attack is made on such findings based on the insufficiency of the evidence supporting them. Rules 300 and 301, Texas Rules of Civil Procedure; Ardoin v. Walker, 466 S .W.2d 595 (Tex.Civ.App., Houston (14th) 1971, n.w.h.); Fidelity & Casualty Company of New York v. Maryland Casualty Company, 151 S.W.2d 230 (Tex.Civ.App., San Antonio, 1941, n .w.h.). Because appellant's points of error all relate to a determination of the correctness of the trial court's action in granting appellee's motion for judgment on the verdict, they will be answered in the discussion of the relationship between the verdict and the judgment rendered in the court below.

Since the judgment rests on the jury's answers to special issues, and the submission and construction of those issues is part of the basis of this appeal, we feel it appropriate to detail the findings of the jury. The Special Issues submitted and answered were:

'SPECIAL ISSUE NO. 1

Do you find from a preponderance of the evidence that when he executed and delivered the Promissory Note and Chattel Mortgage dated April 3, 1963, to Texas Bank & Trust Company, James Lyles did not have authority to act on behalf of Gentry Construction Company?

ANSWER: He did...