Texas Nat. Bank v. Karnes

• Decision Date: 22 May 1986
• Docket Number: No. 09,09
• Citation: 711 S.W.2d 389
• Parties: TEXAS NATIONAL BANK, Appellant, v. Dewey J. KARNES, et ux., Appellees. 85 077 CV.
• Court: Texas Court of Appeals

Page 389

711 S.W.2d 389

TEXAS NATIONAL BANK, Appellant, v. Dewey J. KARNES, et ux., Appellees.

No. 09 85 077 CV.

Court of Appeals of Texas,

Beaumont.

May 22, 1986.

Rehearing Denied June 11, 1986.

Dewey J. Gonsoulin, Mehaffy, Weber, Keith & Gonsoulin, Beaumont, for appellant.

Joe L. Register, Lufkin, for appellees.

OPINION

BROOKSHIRE, Justice.

David Karnes was 19 years old in April, 1977. He was the son of Dewey and Alice E. Karnes. David wanted to buy a 1974 Ford Van. He had located one on a used car lot in Lufkin. He could not pay cash for the 1974 Ford and arranged financing with the Texas National Bank. The note was co-signed by his mother, Alice. The bank impressed a lien upon the certificate of title. The validity of the lien is not challenged.

David paid the monthly installments timely. But, in 1978, he defaulted. This default of payments continued until July of 1979. The bank, acting through agents, in May of 1979, repossessed the van. The van was parked near the home of Mrs. Karnes. It was unprotected from the weather.

Dewey and Alice Karnes, husband and wife, had a joint savings account in the Appellant bank of about $10,000. The balance due on David Karnes' note (and Alice's) was $3,474.41, which was charged against the savings account of the parents. No notification of charging the said $3,474.41 against the savings account was given by the bank to the parents of David. Apparently, Mrs. Karnes initially found out about this transaction while in the bank during December, 1979.

The petition was filed to recover damages for the "conversion" of the sum taken from the savings account. The Karneses also sought exemplary damages for alleged fraudulent, tortious acts of Appellant bank. The jury awarded Alice and Dewey $50,000 as exemplary damages. David recovered nothing. Mr. and Mrs. Karnes were awarded a judgment for the amount taken from their savings account, being $3,474.41, plus the $50,000 exemplary damages. The jury had, also, fixed the amount of the attorney's fees for Appellees' attorney.

The jury, in answering Special Issues, failed to find the bank had made a commercially reasonable disposition of the 1974 Ford Van after repossessing the same in May of 1979; that on July 3, 1979, the bank fraudulently obtained possession of monies of Dewey and Alice. The jury, in Special Issue No. 3, found that $50,000 was the correct amount of punitive damages that the Appellees should recover against the bank.

The jury also found that, subsequent to July 3, 1979, the bank intentionally concealed from Mr. and Mrs. Karnes the fact that their account had been debited. The jury declined to find that the Appellees either knew or should have known that the bank had debited their savings account before the date of December 22, 1979.

The judgment recited that, through a stipulation of the bank's trial attorney, the amount of actual damages was $3,474.41, with interest thereon from and after July 3, 1979, at the rate of 6% per annum. Post judgment interest was set at the rate of 10% per annum.

The bank attacks Special Issue No. 2, which found, in effect, that the Appellant bank "fraudently obtained possession of monies of Dewey Karnes and Alice Karnes", contending that the evidence is legally insufficient to support the same and that the evidence is also factually insufficient to support the jury's answer to this special issue. In an able brief, the Appellant groups together points of error one through six.

With admirable candor, the Appellant, at the outset of its statement and argument, writes in its brief:

"At the outset, we candidly admit that the procedure adopted by appellant in handling the repossession of the van is not recommended as standard operating procedures for use by secured creditors. Under this record, appellant did not comply with either of the alternative provisions of Chapter 9 of the Business and Commerce Code. See Secs. 9.504(c) and 9.507(a), TEX.CODES ANN.BUS. & COM. CODE [Sic] (1985 Supp.)."

The bank further concedes, in its brief:

"... The amount of the debt stands undisputed in our record. It was the precise sum which was deducted from her account: $3,474.41."

Alice Karnes was a co-maker. The bank had taken possession of the 1974 Ford Van and had not disposed of it at the time of trial. The bank's acts of taking the security; that is, the van, and keeping possession thereof for the long duration of time, being May of 1979--repossessed by Larry E. Risinger, an Officer of the Bank--to July 9, 1984, the date of trial, defeated the banks's right to offset. By the bank choosing this legal election, it brought about a complete satisfaction of the balance of the debt. We find the actions of the Bank resulted in more than a breach of contract. We find the amount of compensatory damages was $3,474.41. We find $3,474.41 as a matter of law as well as by stipulation. After reviewing the record, and applying the well-established standards of appellate review, we overrule Points of Error One through Six. Garza v. Alviar, 395 S.W.2d 821 (Tex.1965); In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1951); Potter v. Garner, 407 S.W.2d 537 (Tex.Civ.App.--Tyler, 1966, writ ref'd n.r.e.); Calvert, " 'No Evidence' and 'Insufficient Evidence' Points of Error", 38 TEXAS L.REV. 361 (1960); Garwood, "The Question of Insufficient Evidence on Appeal", 30 TEXAS L. REV. 803 (1952).

The eighth point of error contends that the trial court erred in overruling the Appellant's motion for mistrial because of certain prejudicial remarks made by a prospective juror during the voir dire examination. The juror did make statements that he, in the past, had dealings with the bank, or its officers, and that would influence his decision. He did, also, state that he could be fair. He expressed an opinion that he knew what had happened. Later on, however, in answer to a subsequent question, the juror agreed that the facts of the case on trial might be totally different.

The thrust of error eight is that the remarks were so prejudicial and inflammatory as to contaminate the whole jury panel and the whole panel should have been quashed. We do not agree. We do not perceive error, when we review the entire voir dire questions and responses concerning this one venireman.

On this point of error, the Appellant cites A.J. Miller Trucking Company v. Wood, 474 S.W.2d 763 (Tex.Civ.App.--Tyler 1971, writ ref'd n.r.e.). In that case, the jury panel was asked by plaintiff's counsel if any jurors had been employed in adjusting claims or had written insurance or had been connected with the insurance industry. We sanguinely hold that Wood, supra, is distinguishable and different. It is not controlling of this case.

Concerning point of error eight, the Appellant's attorney did not timely object to the panel members' answers when they were made. Nor was there a request made to the trial court to instruct the entire panel to disregard the veniremen's answers. Because of the failure to object timely and because of the failure to request an instruction from the court to the panel to totally disregard the venireman's answers, this issue was waived. Moreover, there is no showing that the statements of the venireman influenced the other members of the panel to such a degree that an improper verdict resulted.

The bank failed to give the Karneses credit for the value of the van and the bank continued to retain possession of the van as well as the $3,474.41. We hold that the bank waived its right of offset by failing to reasonably dispose of the van in a manner that was a reasonably commercial one. This was required by TEX. BUS. & COM. CODE ANN. Sec. 9.505 (Vernon Supp.1986).

If the bank, or any secured creditor, retains collateral for the length of time, as was done in this case, such secured creditor is not entitled to recover deficiencies. Since the bank retained the collateral, it, by operation of law, elected to take the collateral in full satisfaction of the debt. See Tanenbaum v. Economics Laboratory, Inc., 628 S.W.2d 769 (Tex.1982). TEX. BUS. & COM. CODE ANN. Sec. 9.504 (Vernon Supp.1986) provides, in substance, that a secured creditor may dispose of the collateral after default. However, every aspect of this disposition must be commercially reasonable. This includes--within the concept of being commercially reasonable--the method, manner, time, place and terms of such disposition. We find the bank failed to make the proper efforts, under Sec. 9.504(c).

After the $3,474.41 was debited, there is some evidence to the effect that this debit was concealed from the Karneses. The evidence tends to show that after the debit was made, there was a conversation between the bank officer and Mr. Karnes. Yet, there was no mention made that the balance of David's and Alice's promissory note had been taken out of the savings account. Even after the money was taken from the savings account, none of the Karneses received a certificate of title to the van.

Later on, the Appellees employed one John M. Cely, an attorney at law, of Lufkin. He had practiced law 15 years. He went to the bank to investigate the matters involved in this litigation and had a conversation with the bank's officer. He especially wanted to inquire if the van had been sold and what credits had been given, if any. Apparently, there were two conversations between Cely and the officer. Cely maintained that the Karneses had not received the original title. The record fails to show that the Appellant bank ever made a good faith effort to give to either the Appellees, or their son, David, an accounting of its actions involving the savings account, or its actions, or inactions, concerning the van in question. There is some evidence of probative force that tends to show conscious fraud and intentional concealment. At least these were jury issues.

The bank relies heavily on A.L. Carter Lumber v. Saide, 140 Tex. 523, 168 S.W.2d 629 (1943). The Appellant quotes from A.L. Carter...