Thrift v. Hubbard

974 S.W.2d 70, 1998 WL 76190
CourtCourt of Appeals of Texas
DecidedMay 6, 1998
Docket04-96-01013-CV
StatusPublished
Cited by60 cases

This text of 974 S.W.2d 70 (Thrift v. Hubbard) 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
Thrift v. Hubbard, 974 S.W.2d 70, 1998 WL 76190 (Tex. Ct. App. 1998).

Opinions

OPINION

ANGELINI, Justice.

This is an appeal from a jury verdict in favor of Sandra Hubbard in her suit against Terry Thrift for malicious prosecution. In four points of error, Thrift contends that the evidence is both legally and factually insufficient to support the jury’s findings of malicious prosecution, damaged reputation, emotional distress, and lost earning capacity. In an additional point of error, Thrift contends that the jury charge contained an erroneous theory of law. We affirm the judgment of the trial court.

Factual and Procedural Background

This complex set of facts began in 1985 when Victor1 and Sandra Hubbard were seeking investors for a new software company they were starting. The Hubbards had been employees in the software division of Peerless Equipment Company (“PECO”) when they developed a software program that attracted a tremendous amount of attention. PECO and the Hubbards agreed that the Hubbards would spin PECO’s software division into an independent company, Peerless Technologies Corporation (“Peerless”), in order to develop and market the new program (“EMIS”). PECO retained the rights to inventory, equipment, and the software at its current level. The Hubbards were majority stock holders, officers, and employees of Peerless.

When Peerless spun off from PECO, the Hubbards needed capital to get the company off the ground. The Hubbards were introduced to Terry Thrift, who agreed to invest in Peerless after receiving assurances that the Hubbards’s stock was not pledged and that the Hubbards’s salaries were capped. He continued to invest in the company over the course of several months. In February of 1986, Thrift issued to Peerless a $100,000 line of credit. The loan was secured by (1) Peerless’s accounts receivable less than 75 days old, unless otherwise approved by Thrift, and (2) all of Peerless’s other assets. There was also a stock pledge agreement effective February 19, 1986, whereby the Hubbards pledged half of their stock to Thrift in further satisfaction of the loan.

In October of 1986, Thrift notified the Hubbards in writing that Peerless was insolvent because of unpaid debts, back employment taxes, and failure to pay interest on the line of credit. Thrift demanded payment in full on the line of credit and laid claim to all of Peerless’s assets pursuant to the security agreement. He instructed the Hubbards that they could not sell or buy any permanent asset of the company, nor could they pay corporate officers without his consent. He demanded accurate and up to date operating statements, financial statements, and an estimate of sales and cash needs.

Sandra Hubbard testified that Thrift also demanded that half of the Hubbards’s stock be transferred to his name on the company books pursuant to the stock pledge agreement. Peerless’s stock transfer records indicate that 600,000 shares of Peerless stock were transferred from the Hubbards to Thrift on January 16, 1987, making him the majority shareholder of Peerless. Thrift testified that he requested possession of the pledged stock, which he received, but that the Hubbards transferred the stock to him in the company books on their own volition.

Sandra testified that Peerless was in dire financial straits, but that it had promising prospects. Peerless was behind in payment of rent, employment taxes, and employee wages. Sandra testified that, from the point of the stock transfer, she and her husband considered Thrift to be the majority shareholder in Peerless. Therefore, she claims that Peerless’s financial condition was fully disclosed to Thrift. She claims that, per Thrift’s request, she prepared status reports of Peerless’s progress almost weekly for Thrift’s review. Thrift acknowledges requesting but denies receiving these status [73]*73reports. He testified that he requested them so that he could determine whether he wanted to extend the line of credit he had given Peerless.

In December of 1986, Sandra Hubbard testified that Thrift and Peerless engaged in a “check swap” loan, whereby Thrift gave a $13,000 cheek to Peerless for use in a hardware purchase and Peerless gave Thrift a post-dated $13,000 check in repayment. There was not enough money in the account to cover Peerless’s cheek, but, because Peerless had overdraft coverage protection, the bank paid the check anyway.

Also in December of 1986, it became necessary for Peerless to obtain the rights to the EMIS software that PECO had retained when Peerless was formed. The evidence is disputed regarding the impetus of this transaction. Thrift contends that Victor Hubbard beseeched him to purchase PECO’s interest in the EMIS software because Peerless could not afford the lease payments. Conversely, Sandra Hubbard testified that Thrift approached the Hubbards about him personally obtaining rights to the software through Peerless so that he would not be identifiable as the purchaser. Sandra Hubbard further testified that the company attorney advised Thrift to purchase the software rights on his own, but that Thrift insisted on doing it through Peerless.

In any event, Thrift gave Peerless the $100,000 asking price to purchase the EMIS software rights from PECO. However, there was an $87,122.85 IRS levy on Peerless’s account when Thrift’s check was deposited, so $87,122.55 of the $100,000 intended to be used to purchase the EMIS rights was taken by the IRS as soon as the check was deposited. Sandra Hubbard testified that she was not aware of the IRS levy when the check was deposited. The evidence reflects that, in order to repay Thrift his $100,000, Peerless issued Thrift a note in the amount of $87,-122.55 and paid him the $12,877.15 difference by cheek. Thrift eventually purchased the EMIS rights on his own for $75,000.

As the result of a sale to Wrigley Company, Peerless was due to collect $49,484 in the spring of 1987. Sandra Hubbard testified that in January of 1987, Peerless’s landlord was threatening to lock the doors because of unpaid rent. She claims that, in a meeting with Thrift, he instructed the Hubbards to reduce office space. The Hubbards, knowing Peerless needed to be current on its lease before it could move its offices, agreed to assign $21,227.64 of the Wrigley account receivable to the landlord in satisfaction of Peerless’s obligations under the lease. This assignment was made in January of 1987. Sandra Hubbard testified that Thrift was aware of this assignment.

On February 19, 1987, Thrift and Peerless executed another line of credit in the amount of $109,776.10. This line of credit extended the original 1986 line of credit and included unpaid interest on the 1986 note. The second note was collateralized with Peerless’s accounts receivable. However, neither party disputes that no credit was made for assets already appropriated and stock already taken when Thrift foreclosed on the 1986 note.

Thrift contends that the Hubbards listed the value of the accounts receivable at $140,-000 in order to induce Thrift to extend the loan. It is undisputed that, except for the Wrigley account and another $10,000 of the accounts receivable, the remaining accounts listed were older than 75 days at the time the security agreement was signed. The security agreement on the second note indicates that the collateral does not include accounts receivable older than 75 days absent Thrift’s consent. Sandra Hubbard testified that she gave Thrift a list of the accounts receivable on a regular basis. Thrift acknowledges receiving at least one of these lists showing accounts receivable up to January 22, 1987. This list included the age of each account.

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Bluebook (online)
974 S.W.2d 70, 1998 WL 76190, Counsel Stack Legal Research, https://law.counselstack.com/opinion/thrift-v-hubbard-texapp-1998.