Texas State Bank, San Angelo, Texas v. Hoolihan Ranch Company, a Partnership And Dwayne Davis, Russell Davis, Scott Davis and Greg Davis, Individually

Opinion

Texas State Bank v. Hoolihan Ranch Co. IN THE COURT OF APPEALS, THIRD DISTRICT OF TEXAS,

AT AUSTIN



NO. 3-93-332-CV

TEXAS STATE BANK, SAN ANGELO, TEXAS,

APPELLANT

vs.

HOOLIHAN RANCH COMPANY, A PARTNERSHIP; DWAYNE DAVIS; RUSSELL DAVIS; SCOTT DAVIS AND GREG DAVIS, INDIVIDUALLY,

APPELLEES

FROM THE DISTRICT COURT OF TOM GREEN COUNTY, 119TH JUDICIAL DISTRICT

NO. CV90-1305-B, HONORABLE DICK ALCALA, JUDGE PRESIDING

This is an appeal from a suit on a note. Appellant, Texas State Bank, San Angelo, Texas ("the Bank"), sued Hoolihan Ranch Company, a partnership, and Charlie Davis, Charlene Davis, Russell Davis, Dwayne Davis, Scott Davis, and Greg Davis, to collect the balance due on a note. The Bank contended the note was a partnership obligation. The cause was tried to a jury, which failed to find that the note was an obligation of the partnership. The Bank appeals the district court's take-nothing judgment, rendered pursuant to the jury's verdict. We will affirm the judgment of the district court.

BACKGROUND

Hoolihan Ranch Company is a Texas general partnership formed in 1980, consisting of Charlie Davis and his four sons, Russell, Dwayne, Scott, and Greg Davis. Although the partnership's principal business was ranching, most of its ranching operations had ceased by 1987.

In 1984, the partnership began funding its operations with money borrowed from Stockmans Credit Corporation, a wholly-owned subsidiary of Wool Growers Central Storage Company (collectively "Stockmans"). The two entities shared a common directorship, of which Charlie Davis was a member.

Stockmans in turn borrowed most of its lending capital from Farm Credit Bank of Texas. When borrowers applied for loans from Stockmans, it would forward the applications to Farm Credit. Farm Credit had the option of loaning money to Stockmans to cover all or part of the loan, or put another way, Farm Credit could "discount" all or part of the amount of the loan. If Farm Credit discounted less than the total amount of the loan, Stockmans would fund the balance, which Stockmans referred to as its "on-hand balance." In either case, Stockmans would receive all payments on the loan and forward to Farm Credit its share of the payment.

For three years, the partnership maintained an ongoing loan balance with Stockmans, represented by successive promissory notes. When a note came due--typically once a year, depending on the length of the specific note--the partnership would renew the note, executing a renewal note in the amount still owed to Stockmans. The partnership executed such a renewal note on October 7, 1987, in the amount of $782,184.79. Stockmans' records indicate that, for this note, Stockmans carried $224,724.25 as its on-hand balance, with the remainder funded by Farm Credit. At trial, the partners claimed to have had no knowledge that Farm Credit had discounted a portion of their note.

In 1988, Stockmans began having financial troubles. In March 1988, Farm Credit sued Stockmans in state court for breach of the lending agreement between the two institutions. Among other relief, Farm Credit sought to protect its interest in the promissory notes Stockmans held through judicial foreclosure and by appointment of a receiver. The court did not appoint a receiver, but instead ordered a manager appointed. One of the manager's duties was to restructure the discounted loans between Stockmans and Farm Credit.

On May 12, 1988, Charlie Davis and Russell Davis signed a note for the amount of $318,777.78. This note was payable on demand, or if no demand was made, payable by July 1, 1988. "Hoolihan Ranch Company" is typed on the top signature line of this note. On the second signature line appears the handwritten signature of Charlie Davis, above the typed words "Charlie Davis, Individually and as Attorney in Fact for my spouse, Charlene Davis." Next is the handwritten signature of Russell Davis, below which is typed "Russell Davis, Individually and as Attorney in Fact for my spouse, Kim Davis." The parties dispute whether this note was an obligation of the partnership or only of the named individuals. The Bank contends that this note was given as a renewal of Stockmans' on-hand balance in the 1987 partnership-renewal note. The partnership contends this note was a personal obligation of Charlie, Charlene, Russell, and Kim Davis.

The note sued on by the Bank was executed on May 25, 1988, for $327,499.73 (hereinafter "the disputed note"). The signature block on the disputed note was similar to the May 12 note, but was signed only by Charlie Davis. "Hoolihan Ranch Company" is also typed on the top signature line of the disputed note. The handwritten signature of Charlie Davis appears on the second signature line, with "Charlie Davis, Individually and as Attorney in Fact for my spouse, Charlene Davis," typed below it. The Bank claims that the disputed note is a partnership obligation, executed as a renewal of the May 12 note. The partnership contends that Charlie Davis executed the disputed note only in his individual capacity, not as a partnership obligation.

On September 20, 1988, Stockmans filed for relief under Chapter 11 of the United States Bankruptcy Code. A bankruptcy plan was approved on January 23, 1990. Pursuant to the plan, the Bank, as a creditor of Stockmans, was assigned several notes, including the May 12 note and the disputed note. The record indicates that Farm Credit retained the $782,184.79 renewal note. ⁽¹⁾

The Bank sued the partnership, as well as Charlie, Charlene, Russell, Dwayne, Scott, and Greg Davis, individually, to collect the balance due on the disputed note. The Bank contended that the disputed note was executed as a renewal note, in the amount of Stockmans' on-hand balance. Appellees contended that the disputed note was an individual obligation of Charlie and Charlene Davis, and not a partnership obligation. The testimony of Charlie Davis as signatory on the disputed note was crucial to this issue. In his deposition testimony, Charlie Davis had confirmed that the note was in fact a partnership obligation, giving testimony that made out a prima facie case for the Bank. At trial, however, Charlie Davis recanted his deposition testimony and testified that the disputed note was not a partnership obligation. ⁽²⁾

The case was tried before a jury, which failed to find that the disputed note was a partnership obligation, or that the partnership owed any money to the Bank. The district court rendered judgment pursuant to the jury verdict. The Bank appeals, challenging the legal and factual sufficiency of the jury's verdict; the appellees bring a cross-point challenging an evidentiary ruling of the district court.

LEGAL AND FACTUAL SUFFICIENCY OF THE EVIDENCE

In points of error one and two, the Bank raises legal and factual sufficiency challenges to the jury's failure to find that the disputed note was a partnership obligation. In point of error three, the Bank contends that the trial court erred by overruling its motion for a directed verdict because the evidence established as a matter of law that the disputed note was a partnership obligation.

A legal sufficiency challenge is designated as a "matter of law point" when the complaining party bore the burden of proof at trial. In deciding a matter of law point, we must consider only the evidence and inferences tending to support the jury's failure to find and disregard all evidence and inferences to the contrary. Alm v. Aluminum Co. of Am., 717 S.W.2d 588, 593 (Tex. 1986), cert. denied, 498 U.S. 847 (1990); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965). See generally William Powers, Jr. & Jack Ratliff, Another Look at "No Evidence" and "Insufficient Evidence", 69 Tex. L. Rev. 515 (1991); Michol O'Connor, Appealing Jury Findings, 12 Hous. L. Rev. 65 (1974). The complaining party must demonstrate that the record conclusively establishes the finding not made by the jury. If more than a scintilla of evidence supports the jury's answer, the point of error will be overruled. Lewelling v. Lewelling, 796 S.W.2d 164, 166 (Tex. 1990).

At trial, Charlie Davis testified that when he signed the disputed note, he did not intend to bind the partnership and considered the debt to be his own. Although this testimony differs from his deposition testimony in which he admits that the disputed note was a renewal note, we cannot say that this amounts to no evidence. ⁽³⁾ Furthermore, under the signature of Charlie Davis on the disputed note are the typewritten words "Charlie Davis, Individually and as Attorney in Fact for my spouse, Charlene Davis." If we ignore all evidence to the contrary, we cannot conclude that there is no evidence in the record supporting the jury's answer. Accordingly, the Bank did not prove as a matter of law that the note was a partnership obligation, and we overrule the Bank's legal sufficiency and directed verdict points of error.

We next turn to the Bank's factual sufficiency points of error. A factual sufficiency challenge is designated as a "great weight and preponderance point" when the complaining party bore the burden of proof at trial. In reviewing a great weight and preponderance point, we must consider and weigh all the evidence and should set aside the judgment only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); In re King's Estate, 244 S.W.2d 660, 661 (Tex. 1951); see also Pool v. Ford Motor Co., 715 S.W.2d 629 (Tex. 1986). In conducting a factual sufficiency review, we do not sit as a thirteenth juror nor are we permitted to substitute our opinion for the verdict of the jury. Herbert v. Herbert, 754 S.W.2d 141, 144 (Tex. 1988).

In this case the Bank relies primarily upon the fact that "Hoolihan Ranch Company" is typed on the disputed note above the signature of Charlie Davis. Under the liberal definition of signature in the Uniform Commercial Code, a typed name of a party can constitute a signature. Tex. Bus. & Com. Code Ann. § 3.401 cmt-2 (West 1968) ("A signature may be handwritten, typed, printed or made in any other manner."). However, the typewritten signature, without more, does not establish the disputed note as a partnership note or as a partnership obligation. The typewritten signature must be accompanied by some type of authorization from one of the members of the partnership. Charlie Davis, the sole signatory on the disputed note, certainly qualifies as a partner who possessed the appropriate authority to bind the partnership. However, there is no direct evidence in this record as to who typed "Hoolihan Ranch Company" on the top signature line or more importantly, when "Hoolihan Ranch Company" was typed on the disputed note. At trial, when Charlie Davis was asked whether he noticed the name of the partnership on the disputed note when he signed it, he responded, "May have, but I just--I don't recall whether I noticed it or not, but I probably did." John Sutton Allison, II, president of Wool Growers and president of Stockmans during its dissolution, testified that as a general matter, when a business name was typewritten above the signature line on a Stockmans note, the signature was being made in a representative capacity. Additionally, "Hoolihan Ranch Co.," or some variant, was also typed on the 1987 note, as well as earlier renewal notes which the parties agree were partnership obligations. However, the jury heard evidence that all of the notes executed prior to and in 1987, which were admittedly partnership obligations, were signed by the partners in a designated representative capacity, such as, "By Charlie Davis, partner" or "By Russell Davis, for the partnership." Such a representative-capacity designation was missing from the disputed note and its counterpart signed in May of 1988.

The Bank relies heavily upon the fact that the two notes executed in May of 1988 represented Stockmans' on-hand balance from the 1987 partnership-note renewal. The record contains evidence that the amount of the May 12 note matches the amount Stockmans reflects on its book for what it designates as its on-hand balance, plus accrued interest, for the 1987 note, and the amount of the disputed note matches the balance due on the May 12 note as of the date the disputed note was executed. Stockmans' bookkeeper, Patty Self, testified that she was instructed to prepare the May 12 note and the disputed note as renewals of Stockmans' on-hand balance in the 1987 renewal note, and calculated the amounts on both the disputed note and the May 12 note by determining the interest that had accrued on Stockmans' on-hand balance on the 1987 note. However, the jury also heard evidence that the partners were unaware that their note was being discounted between Stockmans and Farm Credit. Further, there is evidence in the record that, following the judicial-foreclosure lawsuit between Stockmans and Farm Credit, the partnership was still responsible for the 1987 note Farm Credit held in the total amount of $782,000.00. ⁽⁴⁾ The jury is the sole judge of the credibility of the witnesses and the weight to be given their testimony. Ethicon, Inc. v. Martinez, 835 S.W.2d 826, 834 (Tex. App.--Austin 1992, writ denied). The evidence in this case was conflicting. Even were we to conclude that the evidence favorable to the Bank preponderated, we simply cannot say that the evidence in this record is so overwhelmingly in the Bank's favor as to require overturning a jury verdict. We overrule the Bank's factual sufficiency points of error.

CONCLUSION

Because we conclude that the jury's verdict finds support in the evidence adduced at trial, we need not consider the appellees' cross-point dealing with the admissibility of certain evidence. The judgment of the district court is affirmed.

Mack Kidd, Justice

Before Justices Aboussie, Kidd and B. A. Smith

Affirmed

Filed: October 12, 1994

Do Not Publish

1. ¹  The record also indicates that the partnership reached a settlement agreement with Farm Credit regarding repayment of the 1987 renewal note.

2.

²  The Bank contended that in the interim Charlie Davis had been discharged in a personal bankruptcy adjudication and thus his testimony regarding the disputed note changed because he had "nothing to lose" by accepting personal responsibility for the disputed note.

3. ³  We reject the Bank's argument that the testimony of Charlie Davis does not constitute probative evidence because it is opinion testimony of a party. None of the cases cited by the Bank involve a party's testimony regarding the party's own intent. See Webb v. Reynolds, 207 S.W. 914, 916-17 (Tex. Comm'n App. 1919, judgment adopted); Kimbell, Inc. v. Roberson, 570 S.W.2d 587, 589 (Tex. Civ. App.--Tyler 1978, no writ) (testimony on length of time hazardous condition existed amounted to no evidence when witness had no personal knowledge); Campbell v. LaDue, 273 S.W.2d 450, 453-54 (Tex. Civ. App.--Dallas 1954, no writ).

4.   Although there is testimony in the record that Farm Credit considered that the partnership only owed it a portion of the 1987 note representing its discounted share of the note, no document was introduced which indicated any sort of written agreement to this effect.