Turner v. Houston Agr. Credit Corp.
Decision Date | 10 April 1980 |
Docket Number | No. 17571,17571 |
Citation | 601 S.W.2d 61 |
Parties | Keith S. TURNER et al., Appellants, v. HOUSTON AGRICULTURAL CREDIT CORPORATION, Appellee. (1st Dist.) |
Court | Texas Court of Appeals |
Brunson & Erwin, John S. Brunson, Houston, for appellants.
Barnet B. Skelton & Associates, Barnet B. Skelton, Barnet B. Skelton, Jr., Houston, for appellee.
Houston Agricultural Credit Corporation brought this action against the defendants, Keith S. Turner and his parents, Mr. and Mrs. Floyd A. Turner, to recover a personal judgment and to foreclose a mortgage lien under a loan in the original principal amount of $84,250.00, obtained by the Turners to finance a cattle venture. The Turners defended on the basis that Houston Agricultural had fraudulently misrepresented to them that it would loan additional sums to them up to a limit of $125,000.00; that they had been induced to enter into the loan transaction upon such representations; and that by reason of Houston Agricultural's failure to honor its commitment, their cattle operation had failed and they were, therefore, unable to perform their loan obligations. The Turners contended that all unsold cattle and equipment comprising the security for the loan had been sequestered and sold by Houston Agricultural and that they were entitled to have the transaction rescinded.
In response to special issues, the jury found that Houston Agricultural had promised the Turners that it would make additional advances up to a limit of $125,000.00; that the Turners had relied upon such promise in entering into the loan transaction that the promise was material and had been made for the purpose of inducing the Turners to enter into the transaction; and that Houston Agricultural had no intention of fulfilling the promise when made. On the basis of the jury's verdict the Turners filed a motion for judgment which the trial court denied, and Houston Agricultural filed a motion for judgment non obstante veredicto which the court granted. This appeal is by Keith Turner and by the Independent Executor under the wills of Mr. & Mrs. Floyd Turner, both of whom died during the pendency of the suit.
In early August 1975, Mr. and Mrs. Turner and their son Keith had arranged with a cattle owner, Layton Hazelip, for the purchase of 417 head of cattle and equipment for an agreed price of $80,000.00. The Turners approached Houston Agricultural and asked for a loan to finance the purchase price of such cattle and equipment, submitting to Houston Agricultural financial statements showing a net worth for Keith Turner in the amount of $7,700.00 and for Mr. and Mrs. Floyd Turner in the amount of $271,480.00. At that time, Houston Agricultural held a mortgage lien on the cattle and equipment securing a loan to Hazelip, and upon inspecting the collateral, it placed a value of $74,945.00 on the cattle and $8,855.00 on the equipment. A loan of $84,150.00 was then made to the Turners, who executed a promissory note, security agreement and financing statements and, as additional security, a deed of trust covering certain real estate in Houston. Hazelip's account was credited on the books of Houston Agricultural for the $80,000.00 purchase price, and the balance of the loan, $4,250.00, was used to purchase the corporate stock of Houston Agricultural pledged as additional security for the loan.
Several weeks later, Houston Agricultural made an additional advancement of $4,829.71 to the Turners for use as an operating fund, and to evidence that debt, the Turners executed a second promissory note. The following day, Keith Turner sold 6 head of cattle and in accordance with the terms of the original note, he sent the $729.60 proceeds to Houston Agricultural to be applied against the indebtedness. Later, in October 1975, he sold 31 head of cattle for $2,955.00 and contacted Houston Agricultural's loan officer to determine how the proceeds were to be used. This officer, who was new to the loan transaction, advised Turner that Houston Agricultural could not loan any more money on the cattle. Deciding it would be best to liquidate the cattle operation, Keith Turner called another loan officer, who indicated that Houston Agricultural could advance additional funds to get the cattle ready for sale. In November 1975 Keith Turner received a check for $2,480.00 and a third promissory note in the principal amount of $4,434.46, representing the sum of the $2,480.00 check, the balance then due under the $4,829.71 note, and a service and commitment fee of $177.37. Keith Turner changed the face amount of the note to $2,480, signed the note, and sent it back to Houston Agricultural. In early December he sold 110 head of cattle for $9,772.40 and by letter advised Houston Agricultural of the number of cattle sold and how many remained. In his letter Keith Turner stated that the $4,434.46 note was inconsistent with his understanding of the financial arrangement, that the proceeds of the December sale were needed to pay current obligations, and that such funds would not be used except to pay "direct cost, labor and operating expenses." Houston Agricultural responded with a letter stating that the loan documents prohibited the proceeds of sale from being used for any purpose other than payment of the loan debt; that the Turners should sign a note for the amount of $4,434.46, and that their failure to do so and to remit the proceeds from the sale of the 110 head of cattle would result in the matter being turned over to their attorney for collection.
In January 1976 Houston Agricultural filed this action and in March 1976, all remaining cattle and equipment were sequestered and sold pursuant to court order, netting the sum of $33,584.25. Houston Agricultural then proceeded with its action for recovery of the deficiency between the amount of the sale proceeds and the unpaid balance due on the $84,250.00 note, the $4,829.71 note, and the alleged advance of $4,434.46, plus interest and attorneys fees, and for foreclosure of the security interest lien on the proceeds of the sequestration sale and of the deed of trust lien on the Houston real estate.
The Turners first contend that the trial court erred in entering the judgment non obstante veredicto because the jury found in their favor with respect to all elements...
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