Walter E. Heller & Co. v. Allen, 221

• Decision Date: 09 February 1967
• Docket Number: No. 221,221
• Citation: 412 S.W.2d 712
• Parties: WALTER E. HELLER & COMPANY, Inc., Appellant, v. W. M. ALLEN and M. H. Allen, Jr., Appellees. . Corpus Christi
• Court: Texas Court of Appeals

Page 712

412 S.W.2d 712

WALTER E. HELLER & COMPANY, Inc., Appellant, v. W. M. ALLEN and M. H. Allen, Jr., Appellees.

No. 221.

Court of Civil Appeals of Texas.

Corpus Christi.

Feb. 9, 1967.

Rehearing Denied March 9, 1967.

Fischer, Wood, Burney & Nesbitt, Frank W. Nesbitt, Corpus Christi, for appellant.

Boone, Davis, Cox & Hale, G. Cole Thomson, Corpus Christi, for appellees.

OPINION

GREEN, Chief Justice.

Appeal is from a take-nothing judgment for defendant-appellees rendered after the court sustained their motion for an instructed jury verdict.

This lawsuit involves a lease-purchase contract dated September 19, 1960, between National Leasing Company, an Illinois corporation, as lessor-owner, and Marine Services of Corpus Christi, Inc., as lessee, covering a tug boat, and an agreement whereby appellees agreed to guarantee performance of the lease-purchase contract with certain limitations on their individual financial responsibility.

In the late Summer or early Fall of 1960, Marine Services of Corpus Christi, Inc., was incorporated under the laws of Texas for the purpose of furnishing towing and ship fueling services in the Corpus Christi area. Appellees M. H. Allen, Jr. and W. A. Allen and attorney Keith Merrick were the sole stockholders and officials of said company, with M. H. Allen, Jr., being the majority stockholder and president, and actual manager of its affairs. For the purpose of acquiring a tug boat necessary in the business of the company, M. H. Allen, Jr., went to New Orleans in September, 1960, and located the tug M/V Ray which was for sale. He made an agreement with the owner West Bank Towing Company for the purchase by Marine Services of the boat for $65,000.00, paying down $7,500.00, with the remainder to be paid in thirty days.

Allen, in order to finance the deal, entered into negotiations with a lease broker that resulted in the purchase by National Leasing Company of the M/V Ray from its owners for the sum of $65,000.00, which included credit for the $7,500.00 cash payment. Thereupon, National Leasing Company, as owner and lessor of the tug, and Marine Services of Corpus Christi, Inc., as lessee, signed and entered into the lease purchase contract, hereafter called the lease .

National Leasing was not satisfied that Marine Services of Corpus Christi, Inc. had a sufficiently sound financial structure, and before it would enter into this agreement it required that the two Allens sign a personal guarantee of performance by their company, and that W. A. Allen agree not to dispose of certain of his assets during the term of the lease agreement. Accordingly, appellees did sign and deliver to National Leasing the instrument upon which appellant relies in this suit to fix appellees' liability, and which reads as follows:

'We, M. H. Allen, Jr. and W. M. Allen, do hereby, in consideration of the foregoing charter party, individually, jointly, and in solido, guarantee performance of the foregoing charter party by MARINE SERVICES OF CORPUS CHRISTI, INC., except however, financial liability incurred under this guarantee is not to exceed the difference, if any, between face value of the charter party, less total paid and less amount recovered from disposal or salvage of assets covered by this agreement, and less amount recovered from any other source.

/s/ M. H. Allen, jr.

M. H. Allen, jr.

/s/ W. M. Allen

W. M. Allen'

The term 'charter party' was shown to be synonymous with and mean the same as the lease contract.

W. M. Allen also signed and delivered to National Leasing a letter promising not to dispose of his assets during the five-year term of the lease.

The lease between National Leasing and Marine Services was executed September 19, 1960. It provided that the term of the lease of the tug began on said date, and unless sooner terminated would expire sixty months later. Monthly rental charges of $1,489.80 each were to be paid in advance to lessor by lessee, with the provision that either party had the right to cancel the agreement on the anniversary date by giving the other party at least thirty days written notice, and in the event of cancellation, lessee agreed to purchase the tug boat at the original value of $65,000.00, less a cancellation credit of 10% At the end of the first year, 30% At the end of the second year, 50% At the end of the third year, 70% The fourth year, or 90% The fifth year. Thus, if the lessee paid his twelve monthly installments of $1,489.80, and the lease was cancelled by either party on the first anniversary date, i.e., at the end of one year, lessee contracted to buy the tug, receiving 10% Credit on the purchase price of $65,000.00 so that the sum to be paid in addition to the twelve monthly rental payments of $1,489.80 each would be $58,500.00, less the $7,500.00 down payment designated in the lease as a deposit as security for prompt and full payment of rent and faithful and timely performance of the lease. If the lessee continued to pay monthly rental for sixty months, which payments would have totalled $89,388.00, it would be entitled to a credit of 90% On the original purchase price of $65,000.00 toward the purchase of the tug.

The lease further provided that it was understood between the parties that lessor contemplated assigning the lease and all its rights thereunder. By written instrument dated September 27, 1960, lessor National Leasing assigned without recourse the lease agreement and written guarantee and all its rights thereunder to Walter E. Heller & Company, Inc., the plaintiff in the trial court and appellant here. Lessee Marine Services paid only two monthly rentals, one to National Leasing before the assignment, and one on November 17, 1960, to appellant. No further payments have been made . In January or February, 1961, when lessee was unable to meet its payments, appellant by telephone contacted appellee M. H. Allen, Jr., president of lessee company with reference to selling the M/V Ray and applying the proceeds to the balance due under the terms of the lease agreement. Allen advised appellant that his company was no longer able to keep up with the payments, or otherwise acquire the tug, and agreed that the tug should be sold and the proceeds applied to the amounts due under the charter party (lease contract) in an effort to reduce the amount of losses as much as possible. Thereafter, on February 24, 1961, the M/V Ray was sold by appellant for $50,000.00 which sum, and also the amount of the two rental payments and $7,500.00 deposit were credited to lessee's account.

It was appellant's contention in the trial court, and is also on appeal, that when lessee defaulted on its rent payments, appellant was entitled to declare the entire amount of rent provided for under the lease agreement, i.e., sixty monthly rentals of $1,489.80 each, being a total sum of $89,388.00, less the rentals paid by lessee, to be due and payable. It sought judgment for $28,958.40 unpaid rentals, being the total sum just mentioned less the two monthly rentals paid, the $7,500.00 deposit, and the $50,000.00 received from the sale of the boat, and also interest and attorney fees. Appellant contends that appellees had guaranteed performance of the lease contract by lessee, and hence were individually liable for such unpaid rents, interest and attorney fees.

In the trial court, appellees assigned as reasons for granting their motion for an instructed verdict three grounds as follows: (1) That the term 'face value of the charter party' purporting to limit the liability of the defendants on their written guarantee renders said instrument so ambiguous and uncertain of meaning that as a matter of law it is not a binding agreement of any kind as to the defendants; (2) that the sale of the tug boat on February 27, 1961, terminated the lease agreement as a matter of law, and plaintiff is not entitled to recover the unearned rentals sued for; (3) that the lease agreement provides for the enforcement of a penalty, and that as a matter of law plaintiff is not entitled to enforce said penalty against these defendants. It is upon these grounds, and each of them, with some variations that appellees rely to uphold the judgment.

The decree of the trial court does not specify the reason or reasons upon which the instructed verdict was granted other than that the court sustained appellees' motion. We are mindful of the rule that the question presented on appeal is whether the prevailing party was entitled to judgment as a matter of law, and not whether he was entitled to judgment on the specific grounds alleged. If there are no material fact issues raised by the evidence to be submitted to the jury, the court is authorized to instruct a verdict on its own volition regardless of the sufficiency or not of a motion. In re Price's Estate, Tex.Sup.Ct., 675 S.W.2d 900, 904; Harvey v. Elder, Tex.Civ.App., 191 S.W.2d 686, writ ref.; Rockett v. Texas State Board of Medical Examiners, Tex.Civ.App., 287 S.W.2d 190, writ ref., n.r.e.; Anderson Furniture Co. v. Roden, Tex.Civ.App., 255 S.W.2d 345, writ ref., n.r.e.

We shall also be guided by the rule that on an appeal from a judgment based on an instructed verdict, the evidence supporting the appellant's position must be accepted as true, and all conflicts and inconsistencies must be resolved in appellant's favor. Adams v. Slattery, 156 Tex. 433, 295 S.W.2d 859, 865; Triangle Motors of Dallas v. Richmond, 152 Tex. 354, 258 S.W.2d 60.

The first ground in support of the court's judgment as here presented is that the term 'face value of the charter party' causes the guaranty contract to be ambiguous so that without further pleading and proof by appellant its meaning is so uncertain that it does not constitute a valid agreement binding on appellees.

It is the theory of appellant that the guaranty agreement is not rendered ambiguous by the use of the term 'face value' in the second clause thereof; that said term as used has a definite, certain...