Farias v. Laredo National Bank

985 S.W.2d 465, 1997 WL 1089611
CourtCourt of Appeals of Texas
DecidedOctober 15, 1998
Docket04-96-00475-CV
StatusPublished
Cited by16 cases

This text of 985 S.W.2d 465 (Farias v. Laredo National Bank) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Farias v. Laredo National Bank, 985 S.W.2d 465, 1997 WL 1089611 (Tex. Ct. App. 1998).

Opinion

OPINION

HARDBERGER, Chief Justice.

INTRODUCTION

This is a statute of limitations case. The Laredo National Bank, acting as trustee, sold a farm in Laredo, Texas in November 1968. It sold the seventy acres involved for $1,610 per acre, for a total sales price of $113,795.25. Subsequent events proved this was too cheap. The buyer, B.P. Newman, divided the land into smaller parcels and, within twenty-eight months, had sold the parcels for $4,500 an acre, making about a 300% profit. Twenty-two years later, in December 1990, the bank was sued. The question is whether that was too late.

FACTUAL BACKGROUND

Mattie C. Johnson created an inter vivos trust in 1957. She conveyed all of her property in trust to the Laredo National Bank (LNB) and Lucile Johnson Weymer, her daughter, as co-trustees. She named herself as lifetime beneficiary. Upon her death, the trust provided for distribution of the assets into three separate trusts for the benefit of her three children. Their names were Lucile Johnson Weymer, Joe Johnson, and Ross Johnson. LNB was directed to pay the income from each trust to the respective beneficiary, along with so much of the corpus as was necessary for the support of the beneficiary. Upon the death of any beneficiary, the residue of that beneficiary’s trust was to be equally divided among the trusts of the remaining beneficiaries. The three chil *467 dren’s trusts were to terminate upon the death of the last surviving beneficiary, and any remaining assets were to be distributed to any descendants of Mrs. Johnson’s three children.

In due time, Mrs. Johnson died. All of her children were still living and were entitled to the fruits of the trust. The trust, however, was not large and income was modest. The two boys, now men in their sixties, were hard up. Both were retired, and both had health problems. Joe was living on social security, and was stone deaf. It was not clear what Ross lived on, as he had a very spotted work record and now was also suffering from cancer. Times were hard enough for Joe and Ross that they had to send their medical bills, and sometimes even the grocery bills, directly to the bank to be paid. Lucile, an educated, retired schoolteacher of seventy-two, was holding her own. Neither Lucile nor Ross had children, but Joe did. One of these children, Linda Johnson Farias, is the plaintiff in this lawsuit. Her siblings assigned their interest to her.

One of the primary assets of the trust was an undeveloped tract of land in Laredo known then as the Johnson Farm. It originally had eighty acres, but by the time of the 1968 sale, ten acres had been sold off to fund the demands on the trust. The farm was undeveloped, not producing any income, and was costing the trust money in property taxes. But it did have one great asset: a railroad track running right through it. This made it an ideal location for warehouses. Although warehouses were not in demand at the time, the property was well-suited when the need came.

In 1967, a potential buyer named James Cazamias approached LNB and said he was willing to buy the entire farm for $1,600 an acre. The bank and Lucile consulted and hired an appraiser, who came back with a figure of $8,600 an acre for eighteen acres on the railroad track, but a disappointing $100 an acre for the rest. Lucile and LNB made a counter-offer to Cazamias of $1,650 an acre for the entire tract and a ninety-day option to purchase. The option was never exercised, however, and the sale fell through.

There were no further developments on the sale of the land until November 1968. However, a warehouse was then being built on one of the small parcels that had been sold earlier. This new construction would have a favorable influence on the value of the remaining land, making it worth more than it was appraised at a year before. In November 1968, LNB arranged to sell the last seventy acres to a newly-formed corporation called B.P. Newman Investment Company. This company was wholly owned by a Laredo businessman named B.P. Newman. Newman paid $1,650 an acre for the remaining seventy acres. LNB recommended the sale, and the beneficiaries agreed. Newman made a good buy, and turned a tidy profit. Over the next twenty-eight months, he resold the seventy acres in eight transactions for prices that averaged $4,500 an acre, about three times what he paid for it.

There is no evidence that any of the three beneficiaries, or the plaintiff for that matter (although her interests were not to vest for many years), were dissatisfied at the time. The trust was funded, the beneficiaries’ lives were eased, and the current of time flowed past. A generation passed away. Ross died in 1983, Joe in 1987, and Lucile in 1988.

In October 1986, eighteen years after the sale of the property and one year before her father died, Linda Farias was told something disturbing. She and her husband talked to Ed Dryden, a friend of Farias’s husband, who told them that the Newman sale was not properly done and suggested that there was “something fishy” about the whole transaction. Dryden, who was in the title business, was in a position to know. Farias contacted LNB and requested a copy of the trust agreement, a list of the assets at the inception of her grandmother’s trust, and a list of current assets. Within a month, LNB provided her with these documents. For the next four years and two months, Farias pursued the matter, sometimes in a desultory fashion and other times with vigor. LNB was sometimes quickly cooperative, and other times obstructive. In December 1990, Farias filed suit against LNB, claiming, in effect, that the sale was an insider’s deal that resulted in the land being sold to a friend of *468 the bank at a greatly inadequate price, causing the trust to be cheated out of most of its money. In November 1995, a Laredo jury agreed wholeheartedly with Farias, and awarded $2,264,000 in damages. The trial court, however, entered a judgment notwithstanding the verdict on statute-of-limitation grounds, resulting in a take-nothing judgment. This appeal ensued.

Farias brings forth nine points of error in her appeal to this court. In her first seven points of eiTor, Farias claims that the trial court erred in rendering judgment notwithstanding the verdict because: (1) LNB failed to properly challenge the jury’s fraudulent concealment finding; (2 & 3) Farias’s claims are not barred even if the claims of her predecessors in interest are barred; (4 & 5) the discovery rule is applicable in this ease; (6)Farias had no notice of her claims more than four years before suit was filed because LNB fraudulently concealed material information; and (7) LNB was estopped from asserting the limitations defense in this suit. In her eighth point of error, Farias contends that the claims her siblings assigned to her are not barred by limitations. In her ninth point of error, Farias argues that the trial court should have rendered judgment awarding damages over and above those found by the jury.

DISCUSSION

Farias’s claim is larger than LNB not getting enough for the property. She asserted, and the jury obviously agreed, that LNB was more interested in taking care of Newman than it was in fulfilling its duties to the trust. Farias points out the following deficiencies in LNB’s conduct:

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Cite This Page — Counsel Stack

Bluebook (online)
985 S.W.2d 465, 1997 WL 1089611, Counsel Stack Legal Research, https://law.counselstack.com/opinion/farias-v-laredo-national-bank-texapp-1998.