Texas Bank & Trust Co. of Dallas v. Custom Leasing, Inc., 563

• Decision Date: 22 July 1971
• Docket Number: No. 563,563
• Citation: 470 S.W.2d 123
• Parties: TEXAS BANK & TRUST COMPANY OF DALLAS, Appellant, v. CUSTOM LEASING, INC., Appellee.
• Court: Texas Court of Appeals

Page 123

470 S.W.2d 123

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

No. 563.

Court of Civil Appeals of Texas Tyler.

July 22, 1971.

Rehearing Denied Sept. 2, 1971.

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

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

DUNAGAN, Chief Justice.

This appeal involves but one aspect of a suit filed by Custom Leasing, Inc., to recover losses arising out of a series of forged instruments. As a result of a default judgment, severances, and pleas of privilege, only that portion of the suit in which Texas Bank & Trust Company of Dallas is defendant is before us for review. An interlocutory default judgment, and, after severance, a final judgment were entered against James E. Lyles in favor of appellee Custom Leasing. Suit is still pending in Midland Against defendants George W. Gentry, Alma Gentry and Gentry Construction Company.

Briefly, the facts are these: Some time in April, 1963, James E. Lyles sought a loan of some $20,000.00 from the Texas Bank & Trust Company. He represented himself to be vice-president of Gentry Construction Company and that it was the company that desired the loan. Lyles supplied the Bank with a financial statement of the company, a list of the equipment to be mortgaged, credit references for the company, and a power of attorney purportedly signed by Mr. Gentry authorizing him to act on behalf of the company. He also, before the loan was closed, presented a corporate resolution bearing the corporate seal of Gentry Construction Company authorizing him to act on behalf of the company. The Bank checked the references, including Dun and Bradstreet, and approved a loan of $18,900.00. The note was executed by Lyles and purportedly by Mr. Gentry, individually and as president of the company. Mr. Gentry was president and Mrs. Gentry was secretary of Gentry Construction, and Lyles is the son of Mrs. Gentry. The equipment owned by the company was placed as security for the note, and Lyles executed the chattel mortgage as vicepresident of the company.

The note was not paid after two extensions, and in an effort to collect the default note, Warren Sudduth, a vicepresident of the Bank, who originally handled the note, went to Midland to see Mr. Gentry and Lyles. Failing to contact Gentry, Lyles was located and payment was demanded. Lyles at this point told Sudduth in private that the Gentrys' signatures to all of the papers, the note, chattel mortgage, corporate resolution, etc. had been forged. He asked Sudduth not to contact Gentry in return for prompt payment of the note. Sudduth agreed. The Gentrys testified by deposition that at the time Lyles was dealing with the Bank, and later with Custom Leasing, he was in no way connected with Gentry Construction and had no actual authority to act for the company. He had at one time been an officer and director of the company. This connection had ceased in 1960, but he continued to work for the company until some time in 1962.

Lyles then approached Custom Leasing with the proposal that they purchase the earth moving equipment and trucks owned by Gentry Construction and lease the equipment back to Gentry Construction. Lyles told Custom Leasing that the Bank held a chattel mortgage on the heavy equipment. A telephone call was made from the office of Custom Leasing by Lyles to the Bank in Dallas. Representatives of the Bank and Custom Leasing discussed the mortgage and the equipment covered. A statement was made by the representative of the Bank that it did own the mortgage to secure the note of Gentry Construction and that it would release the mortgage for $19,089.00. The bill of sale and two lease contracts were executed between Custom and Lyles, individually and as vice-president of Gentry Construction, and purportedly by the Gentrys, individually and as officers of the company. Lyles delivered the original titles to the trucks, a financial statement, a tax return, and credit references for the company. Credit checks were made.

Custom thereupon issued two checks, one to Gentry Construction (which was cashed by Lyles), and one in the amount of $19,089.00 to cover a draft drawn on it by Texas Bank for the release of the mortgage.

After several months, the payments on the leases became past due. Suit was filed by Custom against Lyles, the Gentrys and Gentry Construction, to collect all monies due under the leases, a total of some $33,942.95. Lyles failed to answer, and an interlocutory default judgment was taken against him for the entire amount. In taking depositions of the Gentrys, Custom learned for the first time that the Gentrys were claiming that they did not sign any of the instruments involved in either the Bank loan and mortgage or the sale and lease-back transaction. Custom thereupon asked that the suit against Lyles on the leases be severed and final judgment be entered against him. This was done. Custom then joined the Bank as a defendant. The Bank's plea of privilege was granted, and the action against the Bank was severed and transferred to Dallas County . Trial on that portion was to a jury, and judgment was entered in favor of Custom for $11,000.00. Both the Bank and Custom perfected their appeals to this court.

We sustain appellant's first point of error which urges what is called an 'election of remedies' by Custom. Accordingly, judgment of the trial court is reversed and a take-nothing judgment as against appellant Texas Bank & Trust Company of Dallas is rendered.

In Norris v. Wilkens, 3 S.W.2d 126 (Tex.Civ.App., Dallas, 1928, n.w.h.), the Court said:

'The doctrine seems to be well established that, where a litigant chooses between two or more different and coexisting modes of procedure allowed by law on the same state of facts, an election of a remedy results (9 R.C.L. p. 956, § 1), and when, as the result of action taken, an advantage is gained or a detriment occasioned, the litigant is estopped to pursue any other coexisting mode of procedure.' (Citing cases.)

In Seamans Oil Co. v. Guy, 115 Tex. 93, 276 S.W. 424, 426 (1925), the rule is stated thusly:

"If one having a right to pursue one of several inconsistent remedies makes his election, institutes suit, and prosecutes it to final judgment or receives anything of value under the claim thus asserted, or if the other party has been affected adversely, such election constitutes an estoppel thereafter to pursue another and inconsistent remedy. * * *"

In 28 C.J.S. Election of Remedies § 8, p. 1073, it is stated:

'* * * Where a party has grounds to bring separate actions against different persons, and the maintenance of one necessitates the...