English v. Fischer

649 S.W.2d 83
Court of Appeals of Texas·Decided December 30, 1982·No. 2201cv·Published·Cited by 16 cases

Opinion

OPINION

GONZALEZ, Justice.

This is a suit for damages that arose from a dispute between a mortgagor and a mortgagee over the proceeds of a fire insurance policy. Jerry and Alice Fischer, appellees, purchased a home from appellant, Sara Jane English (Rylee). Appellant was the mortgagee and appellees were mortgagors. Appellees signed a promissory note secured by a deed of trust which stipulated that they provide for fire insurance and name appellant as beneficiary of that policy. A fire severely damaged the home and the insurance company issued a check payable to both parties. Appellees wanted to rebuild the house with the money but appellant refused to endorse the check. She demanded payment for the unpaid balance on the note.

The insurance company tendered the money into the registry of the court. The money was released to appellees after they posted a bond.

Appellees filed a cross-action for damages against appellant alleging a breach of contract, breach of warranty and a cause of action under the Deceptive Trade Practices Act (DTPA). 1 Appellant denied that she had a duty to endorse the check and asserted that she had a right to accelerate the note because the house was not fully insured.

The ease was tried before a jury and the jury answered all issues in appellees’ favor. The trial court gave appellant an offset for the unpaid balance of the note, awarded damages and attorney’s fees to appellees but denied treble damages and prejudgment interest. Both sides appealed. We affirm in part and reverse and render in part.

The circumstances which gave rise to this suit are as follows:

In August, 1967, Robert T. Rylee, II, and his wife, Sara Jane E. Rylee, while their divorce was pending, sold their home to appellees. The purchase price was $67,-500.00 and the terms were as follows: $5,000.00 in cash with the sellers (Rylee) agreeing to finance the balance at 5¼% interest to be paid in $300.00 monthly installments with the further condition that “purchaser agrees to carry fire and extended coverage insurance on said property in the amount of $62,500.00 in favor of the lien holder with any company of his choice .... ” Appellees purchased a home owner’s policy, with “inflation guard” from the Standard Fire Insurance Company. 2

Though Robert Rylee had quitclaimed the property to appellant at the time the warranty deed was signed, he was still married to her so he and his wife signed the warranty deed. This deed stipulated that the property was appellant’s separate property and estate.

The deed of trust provided in pertinent part:

*86 “It is agreed and stipulated that the parties of the first part herein (appellees) shall and will at their own proper cost and expense, keep the property and premises herein described ... in good repair and condition, ... and shall keep, said property fully insured in some company or companies approved by the holder of said indebtedness, to whom the loss, if any, shall be payable and by whom the policies shall be kept.”

During the next twelve years, the appel-lees timely made their monthly mortgage payments. On July 21,1979, a fire severely damaged the house. At that time, $57,-187.26 was owed on the house. However, the burnt house and the lot were worth more than the unpaid balance. The fire was a covered peril under the policy and appellees contacted the insurance company and the original builder. Shortly thereafter, since the damage to the house exceeded the policy limits, appellees received a check made payable to appellant and appellees for the policy limits which were at that time $110,000.00.

On August 1,1979, appellees called appellant and told her that they had contacted the original builder and that he was able and ready to rebuild the house. They told her about the check. Appellees offered to put the money in an escrow account and pay the builder out of the account, but appellant replied that this was not necessary and that if they would mail her the cheek, she would “be happy to sign it” and return it to them. 3

Approximately two weeks passed and ap-pellees did not hear from appellant. During this time, appellant contacted her ex-husband for advice. Because of the dramatic increase in interest rates and the wording of the deed of trust, he advised her not to sign the check and to insist that the unpaid balance on the note be paid off in full.

On August 16, 1981, appellees received a copy of the letter which appellant wrote the insurance company in which she refused to endorse the check and demanded that she be sent a check for the outstanding balance on her note. Appellees called appellant and asked her about the matter. Appellant advised appellees to talk to her ex-husband who was authorized to speak for her. Ap-pellees called Rylee and told him that the builder had started reconstruction but that they could not continue without the insurance money. They also told him that conventional financing was not available and that they needed the money for the repairs. Rylee said that he was sorry about the house, but that when they bought the house it was a good deal for them and that now it was a good deal for appellant. He also said that appellant had a right to full payment based on his interpretation of the deed of trust.

Because of the dispute, on January, 1980, the insurance company paid the funds into the registry of the court and filed an inter-pleader suit, joining appellant and appellees as defendants. In September, 1980, the money was released to appellees after they posted a bond. This suit followed and the parties were realigned for trial with the appellees as plaintiffs and appellant as defendant.

The jury found: 1) that appellant refused to endorse the check after first having agreed to sign it; 2) that appellant breached an implied warranty of good faith and fair dealing; 3) that appellant was not entitled under the deed of trust to accelerate the debt; 4) that appellant represented to appellees that the deed of trust, promissory note and/or the insurance policy conferred or involved rights or obligations which she did not have or which were prohibited by law; 5) that appellant’s promise to endorse the check was supported by consideration.

For each of these issues, the jury found that they were a proximate cause of dam *87 ages to appellees in the amount of $127,-616.00.

Following the trial, appellees received a $71,359.36 judgment over and above the $110,000.00 previously released to them. This amount is part of the $127,616.00 in damages found by the jury less a $56,256.44 credit for the unpaid balance of the note. Regarding this unpaid balance, the trial court entered a judgment in this amount in appellant’s favor against the principal and sureties on the bond. The trial court also awarded the appellees attorney’s fees but denied their claims for treble damages under the DTPA and for pre-judgment interest. Both sides have appealed.

Appellant, in no evidence and insufficient evidence points of error argue that there is no liability to appellees because:

1. Appellant had no duty to sign the check;

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English v. Fischer, 649 S.W.2d 83 (Tex. Ct. App. 1982).

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