Tower Contract. Co., Inc., of Tex. v. Burden Bros., Inc., 17898

• Decision Date: 22 June 1972
• Docket Number: No. 17898,17898
• Citation: 482 S.W.2d 330
• Parties: TOWER CONTRACTING CO., INC. OF TEXAS, Appellant, v. BURDEN BROTHERS, INC., Appellee.
• Court: Texas Court of Appeals

Page 330

482 S.W.2d 330

TOWER CONTRACTING CO., INC. OF TEXAS, Appellant, v. BURDEN BROTHERS, INC., Appellee.

No. 17898.

Court of Civil Appeals of Texas,

Dallas.

June 22, 1972.

Rehearing Denied July 20, 1972.

D. Samuel Coats, Clark, West, Keller, Sanders & Ginsberg, Dallas, for appellant.

Charles H. Storey, Dallas, for appellee.

CLAUDE WILLIAMS, Chief Justice.

This is an appeal from a judgment rendered Non obstante veredicto in favor of appellee in its action against appellant on a promissory note.

Tower Contracting Company, Inc. of Texas (hereinafter referred to as Tower) is engaged in the general construction business. Burden Brothers, Inc. (hereinafter called Burden) is in the mechanical contracting business doing primarily heating, air conditioning and plumbing work. The two Texas corporations had been involved in numerous business transactions, both in Texas and other states, for approximately ten years. Tower would generally be the contractor on the job and Burden the subcontractor.

On and before September 30, 1965 Tower was the general contractor for the erection of a multi-story office building in Dallas, Texas known as the Blanton Tower. Tower was also the owner of the property. On that date Tower was indebted to Burden, which was the mechanical subcontractor for the improvements, such debt being delinquent. Tower was also indebted to several other subcontractors furnishing labor and materials for the building. At that time Tower was also six or eight months in default of its interim loan to Mercantile National Bank of Dallas and such bank was threatening foreclosure. On that date the capital stock of Tower was owned by J . D. Blanton, except for one share owned by J. Raymond Jones and one share owned by Ben Goodwin. On such date there was pending in the district court of Dallas County a suit styled J. Raymond Jones, Plaintiff vs. Ben Goodwin et al and J. D. Blanton, Defendants, in which Jones was attempting to enforce an alleged oral agreement to vest in him fifty per cent of the common stock of Tower. In such action an injunction had been obtained which restrained the officers, directors and shareholders from meeting or taking any action to accept a loan commitment in the sum of $3,800,000 from Teamsters Union Pension Fund which Jones had in his possession since August, 1965 and which loan was sufficient to pay Mercantile Bank as well as the subcontractors and other debtors of Tower. In the light of the internal fight for control of Tower, Burden, on September 30, 1965, perfected its mechanic's and materialman's lien covering the work it had performed on the Blanton Tower project and thereafter, on October 15, 1965, it intervened in the Blanton case in which it prayed for a mandatory injunction to force the officers, directors and stockholders of Tower to accept the outstanding loan commitment, foreclosure of its liens, and the appointment of a receiver. On November 3, 1965, all parties in the Blanton case, including Burden, entered into an agreement whereby the loan commitment would be accepted, Jones would acquire all of the stock of Tower which included its principal asset, Blanton Tower. On November 5 all parties entered a consent order authorizing the meeting of Tower's shareholders and board to elect officers and accept the loan commitment. Pursuant to the agreement Jones acquired all of the Tower stock and obligated himself and Tower to pay to J. D. Blanton or to the Blanton Trust $250,000 in cash, and a note for $240,000. Jones further obligated himself to 'take such action as may be appropriate, including the execution of any necessary documents, to hold the Guardian of the Estate of J. D. Blanton harmless from any claims which may be asserted by any trade crediditors of Tower Contracting Co. Inc. of Texas and J. D. Blanton Construction Company, Inc., existing as of November 1, 1965.' The agreement was approved and ratified in the court's final judgment in the Blanton case entered on January 28, 1966. In these negotiations J. Raymond Jones was represented by William H. Clark III and Burden was represented by Charles H. Storey.

When Burden's lien on the Blanton Tower was perfected on September 30th it secured a debt of $142,062.80. Thereafter, Burden continued to furnish labor and materials to Blanton Tower to the date of closing, at which time its principal debt on the Blanton Tower project was $150,298.30. Burden contended that since payment of its indebtedness on the Blanton Tower project had been delayed it was entitled to interest on such indebtedness in the sum of $17,047.54 and it also contended that it was entitled to indebtedness, as well as interest, on projects previously performed for Tower in Mobile, Alabama, Palo Alto, California, and on the Tower Restaurant in Dallas, amounting to a figure in excess of $40,000. On January 24, 1966, following a conference between attorneys Clark and Storey, attorney Storey, representing Burden, addressed a letter to attorney Clark representing Tower, in which he advised that 'certain questions have been raised by my clients which I thought it best to call to your attention in advance of the Wednesday closing so that, if necessary, this closing may be deferred until these questions are resolved. I trust that a delay will not be necessary, but my clients properly feel that since, as a practical matter, they are being called upon and have been called upon, to finance a major portion of this project they should have a complete disclosure insofar as disbursement of the loan proceeds is concerned.' The letter then proceeds to outline the debts which are being paid from the loan proceeds which included an item of 'Trustees $250,000.00.' While questioning the right to expend the sum of $250,000 of the loan proceeds for the purpose of purchasing the shares of stock by Jones, Storey stated he felt 'that I can get my clients to go along with this payment if all remaining funds are properly accounted for and applied to their debts.' He then outlined Burden's debt as being $150,298.30 plus $17,047.54 as interest, totaling the sum of $167,345.84. This sum represented Burden's claim for work on the Blanton Tower and secured by its lien . The letter then contained the following paragraph:

'In addition to the debt of Burden Brothers, Inc. shown above, there are other outstanding debts owed to it which should be simultaneously resolved. If it is in fact necessary to apportion cash payments to the above debts, then these additional debts hereinafter mentioned would not be included in the apportionment. They should, however, be included in any deferred balances owed to Burden Brothers and the installment payments fixed so as to simultaneously liquidate them. These additional debts are as follows:

                Capital Inn, Mobile, Alabama      $22,170.81
                Palo Alto, California, Cabana      10,655.80
                Tower Restaurant, Dallas            6,941.26
                Tower Contracting, Miscellaneous      940.00
                                                  -----------
                                           Total  $40,707.87"
                

Storey, in the letter, also stated that Burden was claiming reasonable attorney's fees but said: 'I am sure that you and I can agree upon a reasonable fee in event the other matters can be resolved.'

This letter was duly received by attorney Clark. Although it had been planned by the parties to consummate the distribution of the funds from the loan commitment on January 28th the closing was not actually had until the 31st of January, 1966. On this date Jones, his attorney Mr. Bill Clark, and Sam Suri, the accountant for Tower, met at the title company to close the transaction. No official of Burden was present at the closing. On that occasion, and as a part of the closing, Burden accepted the sum of $107,811.64 in cash; a note in the sum of $46,679 (referred to as Note No. 1); and another note (referred to as Note No. 2) in the sum of $48,828.80, totaling the sum of $203,319.44.

It is undisputed that in this final closing on January 31, 1966, Tower, acting through Jones, received the permanent loan of $3,800,000 and disbursed this amount in favor of Mercantile National Bank, as well as other lienholders and creditors, including Burden. It is also without dispute that from this loan Jones paid the sum of $250,000 to the stockholders and thereby became the principal owner of the corporation.

Note No. 1, referred to above, was paid, but Note No. 2 was not paid. Burden brought this action to recover on this note. Tower answered by asserting defense of (1) want of consideration; (2) offsets and credits; and (3) duress.

The case was tried before the court and a jury and at the conclusion of the evidence thirteen special issues were submitted to the jury in the court's charge. Special Issue No. 1 inquired: 'Do you find from a preponderance of the evidence that the Defendant was under duress from the Plaintiff when it executed the note dated January 28, 1966?' To which the jury answered 'We do.' Because of conditional submission, the jury was not required to answer any of the other remaining issues which dealt with the defenses of consideration and offsets. The trial court then sustained Burden's motion for judgment Non obstante veredicto and rendered judgment that it have and recover of and from Tower the amount of the note sued upon, plus interest and attorney's fees.

Tower's appeal is based upon two points of error: (1) that the judgment Non obstante veredicto should be reversed and rendered because there was evidence to support the jury's answer to Special Issue No. 1 that Tower was acting under duress from Burden when it executed the note; and (2) that such action of the trial court in rendering judgment Non obstante veredicto deprived the appellant of the right to have jury findings relating to the issues of lack of consideration and offsets.

In support of its first point of error appellant Tower relies chiefly upon the testimony of its president, J. Raymond Jones, who testified...