Island Recreational Development Corp. v. Republic of Texas Savings Ass'n

710 S.W.2d 551, 29 Tex. Sup. Ct. J. 351, 1986 Tex. LEXIS 531

• Court: Texas Supreme Court
• Decided: May 7, 1986
• Docket: C-3762
• Status: Published

Opinions

ON MOTION FOR REHEARING

WALLACE, Justice.

We grant the motion for rehearing, withdraw the opinion and judgment of July 3, 1985, and substitute this opinion.

Island Recreational Development Corporation and Sea Cabins, Inc. (Island) sued Republic Bank of Texas Savings Association and Bankers Capital Corporation (Republic) for breach of contract in failing to comply with its obligations under a loan commitment letter. The trial court rendered judgment for Island for $667,882.87 in actual damages and $52,500 in attorneys’ fees. The court of appeals reversed the judgment of the trial court and rendered judgment for Republic. 680 S.W.2d 588. We reverse the judgment of the court of appeals and affirm the judgment of the trial court.

Island paid $40,000 for a loan commitment letter under which Republic was to fund mortgages to qualified purchasers of Sea Cabins Condominiums at 13⅜ percent interest. The commitment letter was to expire on March 15, 1981. In August, Island paid an additional $20,000 to have the expiration date extended until September 15, 1981. The interest rate was also raised to 13⅞ percent. The commitment letter provided in part:

Bankers Capital Corporation shall agree to make first mortgage loans under this commitment based on the following terms and conditions:

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15. Transfer of Commitment This commitment is nontransferable or assignable to any other individual, corporation or entity unless specifically approved in writing by Bankers Capital Corporation.

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17. Commitment Term This commitment shall remain in effect until March 15, 1981. Applications for loans must be received at least 30 days prior to this date and closings and fundings of the loans must be completed prior to March 15, 1981.

On September 14, 1981, Michael J. Ryan, President of Island, wrote Richard S. Waring, Senior Vice-President of Republic, that the provisions of the commitment contract had been met. Ryan demanded that Republic honor its mortgage commitment. Waring responded that the terms and conditions were not satisfied and denied any obligation to fund the loans. Waring alleged that the construction was not completed by the deadline. He also asserted, “paragraph 17 requires that loan applications were to have been received at least 30 days prior to September 15, 1981. This requirement was not met.”

Island contends Republic waived its right to demand strict compliance with the condition, or was estopped to deny its obligation to perform. The trial record reflects that both parties, the court and the jury were aware that waiver was an important element in the trial.

Both Island and Republic requested the trial court to submit issues that included waiver. The trial court rejected the requested issues of both parties and submitted a broad issue which asked:

Do you find from a preponderance of the evidence that plaintiffs performed their obligations under the commitment letter in question?

ANSWER: “We do.”

The trial court submitted no instructions with the above issue and neither party objected to the charge on this ground. However, when the totality of the trial proceedings are considered it is apparent that waiver of Paragraph 17 of the letter of commitment was considered by the jury and found adversely to Republic.

We recognize that waiver is an independent ground of recovery or defense and must be pleaded and proved as such. That is not the question before us. Our question is whether it is reversible error for a trial judge to submit a single broad issue encompassing more than one independent ground of recovery.

Rule 277 of the Texas Rules of Civil Procedure specifically states that:

It shall be discretionary with the court whether to submit separate questions with respect to each element of a case or to submit issues broadly. It shall not be objectionable that a question is general or includes a combination of elements or issues. Inferential rebuttal issues shall not be submitted, (emphasis added).

In Lemos v. Montez, 680 S.W.2d 798, 801 (Tex.1984), we reemphasized our approval of broad issue submission. We stated:

In 1978, after sixty years, it became apparent that Texas courts ... had substituted in the place of instructions, a jury system that was overloaded with granulated issues to the point that jury trials were again ineffective. The Supreme Court in 1973 amended Rule 277, Tex.R.Civ.P., by abolishing the requirement that issues be submitted distinctly and separately. Since that time, broad issues have been repeatedly approved by this court as the correct method for jury submission.

This court’s approval and adoption of the broad issue submission was not a signal to devise new or different instructions and definitions. We have learned from history that the growth and proliferation of both instructions and issues come one sentence at a time. For every thrust by the plaintiff for an instruction or an issue, there comes a parry by the defendant. Once begun, the instructive aids and balancing issues multiply. Judicial history teaches that broad issues and accepted definitions suffice and that a workable jury system demands strict adherence to simplicity in jury charges, (emphasis added)

The Lemos case, while our latest pronouncement upon this subject, was founded upon a long and distinguished line of authority beginning with Haas Drilling Co. v. First National Bank in Dallas, 456 S.W.2d 886 (Tex.1970) where we stated:

[I]t is quite clear that there will be no reversal in non-negligence cases simply because the issue is too broad or too small. The trial court has almost complete discretion, so long as the issue in question is unambiguous and confines the jury to the pleading and the evidence. 456 S.W.2d at 889 (quoting G. Hodges, Special Issue Submission in Texas [Supp. 1969]).

In Scott v. Ingle Brothers Pacific, Inc., 489 S.W.2d 554 (Tex.1972) we upheld an issue which inquired “[d]o you find ... that H.L. Scott was discharged by the Defendant without good cause?” against an objection that the issue was too broad. We re-urged our holding in Haas that the trial court has wide discretion to submit broad issues. Id. at 557. In Mobil Chemical Co. v. Bell, 517 S.W.2d 245 (Tex.1974), decided only three months after we adopted the amended version of Rule 277, we recommended that a single broad negligence issue be given rather than giving issues on each of the many various elements of a negligence cause of action. In Siebenlist v. Harville, 596 S.W.2d 113 (Tex.1980), we again approved this form of submission when we upheld the single issue submission of gross negligence. In Burk Royalty Co. v. Walls, 616 S.W.2d 911, 924 (Tex.1981), we stated:

It is understandable that a rule requiring issues to be submitted ‘distinctly and separately’ which prevailed from 1913 until 1973 would slowly relinquish its hold upon trial practice, but after 1973, Rule 277, as amended, permits the submission of issues broadly even though they include a combination of elements or issues. This court, in addition to the times it has written in the opinions already cited, has on a number of other occasions, approved broad submissions. [Citing dozens of cases both by this court and by courts of appeals.]

Our exasperation at the bench and the bar for failing to embrace wholeheartedly broad issue submission is thinly veiled in the above quote. See also, Maples v. Nimitz, 615 S.W.2d 690 (Tex.1981) and Brown v. American Transfer & Storage Co., 601 S.W.2d 931 (Tex.1980). This court has clearly mandated that Rule 277 means precisely what it says and that trial courts are permitted, and even urged, to submit the controlling issues of a case in broad terms so as to simplify the jury’s chore.

In the instant case the controlling issue, the only issue which would authorize a recovery by Island, was whether Island had performed all of the things required by Republic as conditions precedent so as to entitle Island to enforce the commitment. This was precisely the single issue the trial court chose to submit to the jury.

We hold that in the instant case the trial judge was following the policy this court has enunciated concerning broad issue submissions. We further hold that, when requested, the trial court should submit appropriate accompanying instructions. However, we decline to say that the failure to do so is reversible error per se. To determine whether an alleged error in the jury charge is reversible, the reviewing court must consider the pleadings of the parties, the evidence presented at trial, and the charge in its entirety. Alleged error will be deemed reversible only if, when viewed in the light of the totality of these circumstances, it amounted to such a denial of the rights of the complaining party as was reasonably calculated and probably did cause the rendition of an improper judgment. Tex.R.Civ.P. 434.

In the instant case, if the absence of an instruction on waiver was detrimental to either party, it was Island. Nonetheless, Island received a favorable jury verdict. Republic, as the complaining party, has failed to demonstrate harm from an alleged error from which it benefited. When the totality of this case is considered, we find no reversible error on the part of the trial court in broadly submitting the case to the jury.

The court of appeals held there was no evidence of waiver by Republic. In deciding a no evidence point, the appellate court must consider only the evidence and inferences tending to support the finding and disregard all evidence and inferences to the contrary. Garza v. Alviar, 395 S.W.2d 821, 823 (Tex.1965).

The record shows that Island’s principal officer, Mike Ryan, met several times with officers and employees of Republic concerning the applications. Ryan first contacted Republic’s officer in charge of the loan commitment, Senior Vice-President Richard Waring. Waring had Pat Green call Ryan in June of 1981. Green was in charge of Republic’s loan department in Houston. Ryan requested the materials that were necessary to prepare the loan applications. Green sent the materials necessary to prepare the loan applications to the Beaumont office of Republic, which was in the process of being closed. When he did not receive the materials, Ryan contacted a former officer of Republic and secured F.N.M.A. forms. Waring told Ryan in August of 1981 that Republic wanted to handle the applications in Houston.

Ryan then began preparing the forms with Green at Republic’s Houston office on August 18, or August 25, 1981. At that time Ryan delivered the unfinished loan applications to Green, who accepted them. Green agreed to help finish the forms but stated that it would be difficult to finish the forms by September 15, 1981. Green testified that federal law required her merely to accept the applications, not continue processing them. Ryan traveled almost daily to Houston, to aid Green in processing the applications. The day after accepting them, Green met with Waring concerning the applications. They spoke about the time it would take to process the applications. Green put aside her regular work and began working full time on Island’s loan applications. Three days after accepting them Green learned of the provision requiring the forms to have been filed by August 15, 1981, however, she continued working full time on the forms until September 15, 1981. She learned of the deadline only because Ryan provided her with a copy of the commitment letter when her own bank and attorneys could, or would, not.

There was also evidence that the very top officers at Republic discussed the Island commitment daily between August 15, and September 15,1981, knowing the applications had not been filed before the deadline, and yet took no action to inform Ryan that the commitment would not be honored. Republic’s officers knew that Ryan had crews working 24 hours a day and was thereby incurring excessive expense, to complete the units by the September 15, 1981 completion deadline. On September 14, 1981, Republic sent an inspector out to the project and on September 15, 1981, hired an independent appraiser to determine if the project was complete. Republic’s highest officers were cognizant of the Island commitment and its deadlines, they did not want to have to fund the commitment, and yet they never gave Island any indication that the forms would not be accepted or acted upon, or that the loan would not be funded for that reason.

This evidence constitutes some evidence that Republic knowingly waived the application deadline. The court of appeals thus erred in finding there was no evidence of waiver.

The court of appeals found as a matter of law that Island breached paragraph 15 of the commitment letter and thus had no interest in the letter as of the date of trial. The record shows that prior to commencing construction and in order to arrange interim construction financing Island executed an assignment of the letter of commitment to Allied Merchants Bank. The assignment stated:

Borrower [I.R.D.C.] hereby assigns to lender [Allied] (i) all of the right, title and interest of Borrower to and under the commitments of the long-term lenders described in Exhibit “B” and (ii) the agreement between Borrower and the general contractor which is described in Exhibit “B”.

Island contends that the assignment was merely a collateral assignment and the record shows that Republic’s attorney conceded such at trial. Island produced evidence that Republic was fully aw“are at the time the commitment letter was issued that Island would necessarily acquire interim construction financing. Further, it was customary in this type of transaction that the commitment of the long term financer would be collaterally assigned to the lender of the construction financing.

An assignment, though absolute in form, can be shown by parol evidence to be intended only as collateral security. Kaufman v. Blackman, 239 S.W.2d 422, 427 (Tex.Civ.App.—Dallas 1951, writ ref’d n.r. e.). See Wilbanks v. Wilbanks, 160 Tex. 317, 330 S.W.2d 607 (1960).

This question was argued to the jury which by its answer to the liability issue found for Island. Further, by the terms of the paragraph in question the letter of commitment was not assignable without Republic’s consent. Thus, any attempted assignment, whether absolute or collateral, would be of no force and effect. The letter contained no penalty provision for an attempted assignment. We hold that the court of appeals erred in finding that Island had no interest in the commitment letter.

All of Republic’s other cross-points were correctly determined by the court of appeals.

The judgment of the court of appeals is reversed and the judgment of the trial court is affirmed.

SPEARS, J., files a dissenting opinion in which McGEE and CAMPBELL, JJ., join. GONZALEZ, J., files a dissenting opinion.