OPINION
DORSEY, Justice.
This is a suit by the Commercial National Bank of Beeville on the deficiency owed on promissory notes by Kenneth L. Batchelor. By two points of error, the bank challenges the legal and factual sufficiency of the evidence to support the take-nothing judgment rendered against it. We reverse and render judgment for the bank.
The trial court submitted one special question to the jury, which was whether the bank had failed to comply with the agreements (promissory notes) by failing to enforce the notes in good faith. The jury answered in the affirmative, and Batchelor’s recovery is based on the jury’s answer to this issue. Therefore, we review the facts of the case to determine if the evidence is sufficient to support the verdict.
In 1985, Batchelor borrowed $1,450,000 from the bank in order to buy a ear dealership in Beeville, Texas. The purchase included the pre-existing and ongoing business as well as the improved real property where the business was located. The realty property was assigned to the bank as collateral on the loan. Batchelor’s car dealership failed, and Dave Moore bought the business only. The bank approved the sale, and Moore then leased the property from Batchelor. The loan was refinanced, and the lease was added as collateral. Moore’s monthly lease payment was $6,000, while the payment on the refinanced loan was $9,088 per month.
In 1991, Batchelor experienced some personal financial problems. This led to a second refinancing of the loan in early 1992, and the monthly payments were reduced to approximately $8,000. As his financial status remained unsteady in early 1993, Batchelor sought a third restructuring of the loan to lower the payments to $6,000 per month, which Moore paid in rent. The bank refused to restructure the loan a third time. After February 1993, Batchelor began remitting to the bank only the amount of the lease payments. As of April 1993, Batchelor had paid [752]*752a total of $1,600,000 in principal and interest on the loan.
In April, the bank notified Batchelor he was in default because the entire monthly payment was not being remitted. He was given until May 21, 1993 to bring the loan current, otherwise the bank intended to accelerate the payments. The bank also indicated if Batchelor was unable to satisfy the accelerated notes, the collateral would be sold and the money received would be applied to the debt, but that he would remain liable for any deficiency. Batchelor did not bring the loans current by the deadline. He offered to deed the property to the bank in exchange for cancellation of the debt, but the bank refused. However, the bank suggested Batchelor sell the property to the tenant Moore, who eventually paid $440,000 for it. In July 1993, while the sale was pending, Batchelor did not make his loan payment. After the sale was finalized, the money was credited to Batchelor’s debt with the bank, but a deficiency resulted.
In September 1993, the bank sued Batche-lor, alleging he owed it approximately $154,-000. It sought pre- and post-judgment interest, attorney’s fees, and costs. Batchelor responded with an affirmative defense and a counterclaim, each alleging the bank failed to enforce the promissory notes in good faith in accordance with section 1.203 of the Texas Business & Commerce Code. The material facts were stipulated before trial: the bank was entitled to recover under Note 9004 and Note 9005 the combined principal of $154,-286.10, the accrued interest on both notes after default until October 31,1995, was $64,-749.43, with interest accruing at $76.08 per day from that date; the bank’s reasonable attorney’s fees; and the appropriate post-judgment interest rate. However, the jury found that the bank had not enforced the promissory notes in good faith, and, based on that finding, a take-nothing judgment was rendered against it.
By two points of error, the bank challenges the legal and factual sufficiency of the evidence to support the jury verdict that it did not act in good faith. The bank preserved its legal sufficiency challenge by moving to disregard the jury’s answer, for judgment n. o. v., and for new trial. See Tex.R.App. P. 33.1; T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 220 (Tex.1992); Arroyo Shrimp Farm, Inc. v. Hung Shrimp Farm, Inc., 927 S.W.2d 146, 148-49 (TexApp. — Corpus Christi 1996, no writ).
When reviewing a no evidence point we consider only the evidence and inferences which tend to support the finding of the jury and disregard all evidence and inferences to the contrary. Larson v. Cook Consultants, Inc., 690 S.W.2d 567, 568 (Tex.1985); International Armament Corp. v. King, 686 S.W.2d 595, 597 (Tex.1985); In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660, 661-62 (1951). If any evidence of probative force exists to support the jury’s finding we must overrule the point and uphold the finding. In re King’s Estate, 244 S.W.2d at 661-62.
When reviewing a factual sufficiency point we must weigh all of the evidence in the record. Burnett v. Motyka, 610 S.W.2d 735, 736 (Tex.1980). A court may overturn findings only if they are so against the great weight and preponderance of the evidence that they are clearly wrong and unjust. Ortiz, 917 S.W.2d at 772; Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986). In Pool v. Ford Motor Co., 715 S.W.2d 629 (Tex.1986), the court said a court of appeals must also “clearly state why the jury’s finding is factually insufficient or is so against the great weight and preponderance as to be manifestly unjust.” Pool, 715 S.W.2d at 635.
The jury was asked one question and was given the following instructions relative to that question:
QUESTION NO. 1
Did the Commercial National Bank of Bee-ville fail to comply with the agreements?
In addition to the language of the agreements (promissory notes), the law imposes on a party to an agreement an obligation to enforce the agreement in good faith. In that connection, good faith means honesty in fact in the conduct or transaction concerned.
[753]*753
INSTRUCTION
In addition to the language of the agreements (Promissory Notes 9004 and 9005), the law imposes on a party to an agreement an obligation to enforce the agreement in good faith. In that connection, good faith means honesty in fact in the conduct or transaction concerned. Honesty in fact is determined by the actual belief of the party in question, not the reasonableness of that belief.
The jury answered “yes” to the question, and a take nothing judgment against the bank followed over its objections. Now the bank challenges the legal sufficiency of the evidence to support that answer.
Free access — add to your briefcase to read the full text and ask questions with AI
OPINION
DORSEY, Justice.
This is a suit by the Commercial National Bank of Beeville on the deficiency owed on promissory notes by Kenneth L. Batchelor. By two points of error, the bank challenges the legal and factual sufficiency of the evidence to support the take-nothing judgment rendered against it. We reverse and render judgment for the bank.
The trial court submitted one special question to the jury, which was whether the bank had failed to comply with the agreements (promissory notes) by failing to enforce the notes in good faith. The jury answered in the affirmative, and Batchelor’s recovery is based on the jury’s answer to this issue. Therefore, we review the facts of the case to determine if the evidence is sufficient to support the verdict.
In 1985, Batchelor borrowed $1,450,000 from the bank in order to buy a ear dealership in Beeville, Texas. The purchase included the pre-existing and ongoing business as well as the improved real property where the business was located. The realty property was assigned to the bank as collateral on the loan. Batchelor’s car dealership failed, and Dave Moore bought the business only. The bank approved the sale, and Moore then leased the property from Batchelor. The loan was refinanced, and the lease was added as collateral. Moore’s monthly lease payment was $6,000, while the payment on the refinanced loan was $9,088 per month.
In 1991, Batchelor experienced some personal financial problems. This led to a second refinancing of the loan in early 1992, and the monthly payments were reduced to approximately $8,000. As his financial status remained unsteady in early 1993, Batchelor sought a third restructuring of the loan to lower the payments to $6,000 per month, which Moore paid in rent. The bank refused to restructure the loan a third time. After February 1993, Batchelor began remitting to the bank only the amount of the lease payments. As of April 1993, Batchelor had paid [752]*752a total of $1,600,000 in principal and interest on the loan.
In April, the bank notified Batchelor he was in default because the entire monthly payment was not being remitted. He was given until May 21, 1993 to bring the loan current, otherwise the bank intended to accelerate the payments. The bank also indicated if Batchelor was unable to satisfy the accelerated notes, the collateral would be sold and the money received would be applied to the debt, but that he would remain liable for any deficiency. Batchelor did not bring the loans current by the deadline. He offered to deed the property to the bank in exchange for cancellation of the debt, but the bank refused. However, the bank suggested Batchelor sell the property to the tenant Moore, who eventually paid $440,000 for it. In July 1993, while the sale was pending, Batchelor did not make his loan payment. After the sale was finalized, the money was credited to Batchelor’s debt with the bank, but a deficiency resulted.
In September 1993, the bank sued Batche-lor, alleging he owed it approximately $154,-000. It sought pre- and post-judgment interest, attorney’s fees, and costs. Batchelor responded with an affirmative defense and a counterclaim, each alleging the bank failed to enforce the promissory notes in good faith in accordance with section 1.203 of the Texas Business & Commerce Code. The material facts were stipulated before trial: the bank was entitled to recover under Note 9004 and Note 9005 the combined principal of $154,-286.10, the accrued interest on both notes after default until October 31,1995, was $64,-749.43, with interest accruing at $76.08 per day from that date; the bank’s reasonable attorney’s fees; and the appropriate post-judgment interest rate. However, the jury found that the bank had not enforced the promissory notes in good faith, and, based on that finding, a take-nothing judgment was rendered against it.
By two points of error, the bank challenges the legal and factual sufficiency of the evidence to support the jury verdict that it did not act in good faith. The bank preserved its legal sufficiency challenge by moving to disregard the jury’s answer, for judgment n. o. v., and for new trial. See Tex.R.App. P. 33.1; T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 220 (Tex.1992); Arroyo Shrimp Farm, Inc. v. Hung Shrimp Farm, Inc., 927 S.W.2d 146, 148-49 (TexApp. — Corpus Christi 1996, no writ).
When reviewing a no evidence point we consider only the evidence and inferences which tend to support the finding of the jury and disregard all evidence and inferences to the contrary. Larson v. Cook Consultants, Inc., 690 S.W.2d 567, 568 (Tex.1985); International Armament Corp. v. King, 686 S.W.2d 595, 597 (Tex.1985); In re King’s Estate, 150 Tex. 662, 244 S.W.2d 660, 661-62 (1951). If any evidence of probative force exists to support the jury’s finding we must overrule the point and uphold the finding. In re King’s Estate, 244 S.W.2d at 661-62.
When reviewing a factual sufficiency point we must weigh all of the evidence in the record. Burnett v. Motyka, 610 S.W.2d 735, 736 (Tex.1980). A court may overturn findings only if they are so against the great weight and preponderance of the evidence that they are clearly wrong and unjust. Ortiz, 917 S.W.2d at 772; Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986). In Pool v. Ford Motor Co., 715 S.W.2d 629 (Tex.1986), the court said a court of appeals must also “clearly state why the jury’s finding is factually insufficient or is so against the great weight and preponderance as to be manifestly unjust.” Pool, 715 S.W.2d at 635.
The jury was asked one question and was given the following instructions relative to that question:
QUESTION NO. 1
Did the Commercial National Bank of Bee-ville fail to comply with the agreements?
In addition to the language of the agreements (promissory notes), the law imposes on a party to an agreement an obligation to enforce the agreement in good faith. In that connection, good faith means honesty in fact in the conduct or transaction concerned.
[753]*753
INSTRUCTION
In addition to the language of the agreements (Promissory Notes 9004 and 9005), the law imposes on a party to an agreement an obligation to enforce the agreement in good faith. In that connection, good faith means honesty in fact in the conduct or transaction concerned. Honesty in fact is determined by the actual belief of the party in question, not the reasonableness of that belief.
The jury answered “yes” to the question, and a take nothing judgment against the bank followed over its objections. Now the bank challenges the legal sufficiency of the evidence to support that answer.
The basis of Bachelor’s defense is section 1.208 of the Texas Business & Commerce Code, which states the general rule that “[ejvery contract or duty within this title imposes an obligation of good faith in its performance or enforcement.” Tex. Bus. & Com.Code Ann. § 1.203 (Vernon 1994). The commentary to that section states: “this section means that a failure to perform or enforce, in good faith, a specific duty or obligation under the contract, constitutes a breach of that contract or makes unavailable, under the particular circumstances, a remedial right or power.” Therefore, to talk in terms of violating the duty of good faith of the business and commerce code, one must first identify the particular provision of the contract that was not enforced in good faith. “In the absence of a specific duty or obligation to which the good faith standard could be tied, section 1.203 will not support [a] claim for damages.” Northern Natural Gas Co. v. Conoco, Inc., 41 Tex. Sup.Ct. J. 659, 1998 WL 178591, at *3 (Tex. April 14, 1998); Adolph Coors Co. v. Rodriguez, 780 S.W.2d 477, 482 (Tex.App.—Corpus Christi 1989, writ denied).
There is no evidence the bank failed to comply with its obligations under the promissory notes. Appellee argues here, as he did below, that the bank’s dealings in its failure to renew, extend, and lower the payment amounts under the notes somehow violated its obligation to enforce the notes in good faith.
There is nothing in the notes imposing a duty on the bank to renegotiate or renew them on more favorable terms to the debtor. That the bank refused to renegotiate or renew the notes could not be a breach of its duty to perform in good faith. There is no dispute that Batchelor was in default. The bank could look to whatever legal remedies it had, including a foreclosure sale and suit for the deficiency, if any. The bank’s previous acts of lenience with Batchelor do not impose any obligation to continue such extra-contractual lenience in the future based on the U.C.C.’s good-faith provision.
Batchelor complains of the conduct of Greg Woo, his loan officer, in the handling of the sale to Moore as the bank’s failure to act in good faith. Woo was the officer of the bank dealing with both Batchelor and Moore, and he suggested the property be sold to Moore, or it would be foreclosed upon and posted for sale. Although Woo had an appraisal of the property, he did not disclose the property’s indicated value to Batchelor. To effect the sale, Moore borrowed money from the bank and bought the property for exactly the appraised value.
None of these facts support the conclusion that the bank and Woo did not act in good faith.
The contract did not establish any duty for appellant to disclose its private appraisals to appellee, and it did not create any fiduciary duty between appellant’s employees and ap-pellee. Woo was not acting as the agent of either party, Moore or Batchelor, and they negotiated the price between them. Our case is governed by the good-faith definition of section 1.201(19), which is defined as honesty in fact. Tex. Bus. & Com.Code Ann. § 1.201(19) (Vernon 1987). Here, lack of good faith exists when a party has actual knowledge of facts that when acted on constitute a dishonest disregard of the contractual rights of another party. Citizens Bridge Co. v. Guerra, 152 Tex. 361, 258 S.W.2d 64, 69-70 (1953); Wilson v. O’Connor, 555 S.W.2d 776, 780-81 (Tex.Civ.App.—Dallas 1977, writ dism’d). Because disregard of a contractual right is an element of the test, appellee must point to some provision in the contract in [754]*754order to satisfy the test. Appellee relies on no provision in the contract, but instead claims that Woo’s actions as a middle man violated an implied duty established by general standards in the banking industry. There is no authority stating the conduct of other parties engaged in the same line of business has any bearing on the section 1.201(19) definition, as section 1.201(19) defines good faith in purely subjective terms; that is, what Woo knew. Krahmer, 12 Texas Practice § 24.15 (2d ed.). The case law is clear that neither negligence nor a reasonable person standard are the same thing as bad faith. Citizens Bridge, 258 S.W.2d at 69-70; La Sara Grain Co. v. First Nat’l Bank of Mercedes, 673 S.W.2d 558, 563 (Tex.1984).
Appellee points to no specific provision of the notes that the bank is claimed to have not used good faith in enforcing. What some might consider to be cold-heartedness by the bank in not renewing or restructuring debt is not the equivalent of the absence of good faith. Because of the absence of any particular provision of the contract that the bank can be said to have enforced in “bad faith,” the defense does not apply. A jury may not restructure or recast promissory notes or other contracts to satisfy their sense of justice contrary to the written agreement of the parties.
We hold there is no evidence to support the jury’s verdict.
We reverse and render the judgment for the bank in the sums stipulated.
Dissenting opinion by YANEZ, J., joined by HINOJOSA and RODRIGUEZ, JJ.