State Bank of Omaha v. Means
This text of 746 S.W.2d 269 (State Bank of Omaha v. Means) 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.
Opinion
The State Bank of Omaha sued the City of Mount Pleasant for damages resulting from the city’s demolition of two portable buildings on which the bank had a lien. A jury found that the buildings constituted a nuisance, and that their value was $14,000.00. The trial court refused to allow the bank a recovery and entered a take-nothing judgment. The bank appeals, arguing that it should have recovered the $14,000.00, which the jury found to be the market value of the buildings, and that the city’s ordinance which authorized the demolition of the buildings is unconstitutional because it does not provide for notice to those holding liens on the property to be destroyed. We agree that the ordinance is unconstitutional as applied to the bank in this case, but we affirm the take-nothing judgment because the bank failed to request and obtain jury issues necessary to establish a proper recovery.
The city’s ordinance authorizes the removal of structures which constitute nuisances. 1 It provides for notice and an op *271 portunity for hearing to the property owners, but does not provide for any notice to lienholders.
W.L. Means, Jr. owned three portable buildings in Mount Pleasant. The bank held a properly perfected and recorded security interest in the buildings. City officials, acting on complaints from citizens living near the buildings, determined that the buildings were dilapidated and constituted a nuisance as defined by the ordinance. Means was notified that he should bring the buildings to a condition which complied with the ordinance. When nothing was done about them, the city notified Means that it intended to declare the property a nuisance, and gave him an opportunity to attend a hearing to determine the issue. Means did not respond or attend the hearing. Means was given a final notice that the buildings would be demolished unless he responded. Again there was no response. The city then contracted with a Mr. Pruitt to demolish and remove the buildings. The demolition contract provided that Pruitt was to pay the city $50.00, and he could keep the materials. Before the demolition, Means’ father requested the city’s permission to purchase and remove one of the buildings. Permission was granted and that building was removed. The other two buildings were torn down and removed by Mr. Pruitt. Since Pruitt was not allowed to complete the full contract, he did not pay the city the $50.00, but took the salvageable materials as his compensation.
It is conceded that the city did not conduct a lien search, and neither it nor Means notified the bank of any proceedings pertaining to the buildings or of their proposed demolition.
The bank brought suit against Means on his note and against the city for damaging the collateral. After Means failed to respond to requests for admissions and to interrogatories, the court granted an interlocutory summary judgment against him and for the bank on the note. The bank’s case against the city proceeded to a jury trial. Two issues were submitted: Did the buildings constitute a nuisance, and what was their value before their demolition? The jury answered yes to the nuisance issue and $14,000.00 to the value issue. No other issue was requested, and there was no objection to the charge.
The trial court properly refused to award the bank the $14,000.00 found by the *272 jury as the property s value. The proper recovery by the owner of property demolished after it has been judicially determined to be a nuisance is the reasonable value of the material therefrom less the cost of abating the nuisance. City of Texarkana v. Reagan, 112 Tex. 317, 247 S.W. 816 (1923); City of Dallas v. Wilson, 602 S.W.2d 113 (Tex.Civ.App.—Dallas 1980, no writ); Joseph v. City of Austin, 101 S.W.2d 881 (Tex.Civ.App.—Austin 1986, writ ref’d). The jury having found that the property was a nuisance, and it being undisputed that the cost of abatement and removal of the nuisance equaled or exceeded the value of the materials therefrom, there was no basis in the jury findings for a recovery. The bank argues that since the city failed to object to the value issue, judgment should have been entered for the $14,-000.00. We disagree. There was no need to object to the value issue, as it was not improper. The issue became immaterial, however, when the jury found that the property was a nuisance, and the undisputed evidence showed the cost of abatement equaled or exceeded the value.
We agree that the ordinance as applied in this situation violated the bank’s right to due process as guaranteed by the United States and Texas Constitutions, 2 but we find that the bank was not entitled to a recovery because it did not request or obtain jury findings on the proper element of damages.
At a minimum, procedural due process or due course of law requires that a party be given reasonable notice and an opportunity to be heard with regard to any proceeding which may directly or adversely affect his legally protected interests. Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 656 (1972); Armstrong v. Manzo, 880 U.S. 545, 85 S.Ct. 1187, 14 L.Ed.2d 62 (1965); City of Waco v. Roddey, 613 S.W.2d 360 (Tex.Civ.App.—Waco 1981, writ dism’d); 16C C.J.S. Constitutional Law § 982, at 317-18 (1986). A mortgage is a substantial property interest that is entitled to the constitutional protection of due process. Mennonite Board of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983). In Texas a security interest is an interest in personal property or fixtures which secures the payment or performance of an obligation, and is the equivalent of a chattel mortgage. Tex.Bus. & Com.Code Ann. § 1.201(37) (Vernon Supp.1988). The destruction of all or a part of collateral securing a debt will defeat or severely impair the value of the mortgage.
If the bank had been afforded the notice required by due process, it would have had the opportunity to have the buildings repaired to cure their deficiencies so that they complied with the ordinance and no longer constituted a nuisance. City of Tex-arkana v. Reagan, supra; City of Dallas v. Wilson, supra. Thus, even though the buildings were found to be a nuisance, the bank's lack of notice and opportunity to bring them into compliance could have damaged it if the buildings’ value exceeded the cost of repairing them. City of Dallas v. Wilson, supra. To recover those damages, however, the bank had the burden to secure a finding on the amount necessary to bring the buildings into compliance. Having failed to request an issue on that ground of recovery, the bank waived it and there is no basis on which to award it damages. Tex.R.Civ.P. 279.
For the reasons stated, the judgment is affirmed.
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746 S.W.2d 269, 1988 WL 3368, Counsel Stack Legal Research, https://law.counselstack.com/opinion/state-bank-of-omaha-v-means-texapp-1988.