Watson v. Sheppard Federal Credit Union

589 S.W.2d 742, 1979 Tex. App. LEXIS 4143

• Court: Court of Appeals of Texas
• Decided: September 27, 1979
• Docket: 18206
• Status: Published

Opinions

OPINION

MASSEY, Chief Justice.

Dan A. Watson, co-maker of an installment promissory note, by writ of error seeks to have the default judgment rendered against him reversed and remanded for new trial. He contends that he is entitled to this relief because no statement of facts is available because no record was made of the proceedings upon the default hearing.

We affirm the judgment insofar as it decrees Watson’s liability upon the note and as to the amount for which he was found liable; we reverse and remand for a new trial the issue of the amount of Sheppard Federal Credit Union’s entitlement as attorney’s fees.

Our holding in this case is made in full awareness of the holding in Burrows v. Bowden, 564 S.W.2d 474 (Tex.Civ.App.—Corpus Christi 1978, no writ). Furthermore, our opinion is written after consideration of the dicta in the dissenting opinion of Chief Justice Calvert in Southwestern Fire & Casualty Company v. Larue, 367 S.W.2d 162, 167 (Tex.1963), a summary judgment case. The opinion of the majority in Southwestern was reaffirmed as to matters discussed in Dallas County State Bank v. Thiess, 575 S.W.2d 20 (Tex.1978), another summary judgment case. Therein was discussed the obligation of a defendant to a suit on a note to affirmatively plead in order to avail himself of payment as a defense.

Here Sheppard Federal Credit Union brought its suit against Dan Watson, alleging that Watson, for value, executed and delivered to it an installment promissory note in the amount of $5,790.00. Sheppard further alleged that it is the present owner of the note and that Watson has defaulted thereon. Sheppard exercised its right to accelerate the installments due and alleged that after all payments and offsets and credits were given Watson, $2,339.12 was due, plus 10% interest thereon. Sheppard also sued for reasonable attorney’s fees.

Watson, although served with process, defaulted. The trial court rendered a default judgment against him for $2,539.64 plus $850.00 attorney’s fees. The difference between $2,539.64 and $2,339.12 represents $200.52 of interest. No record was made of the proceedings at the default judgment hearing and therefore the statement of facts to which Watson is entitled is not available. By writ of error Watson attacks the trial court’s judgment, claiming that he is entitled to reversal because of the unavailability. We agreed that the general rule is that if through no fault or lack of diligence of an appealing party, he cannot secure a statement of facts, the proper action of the appellate court is to reverse and remand for a new trial. Sheppard contends that “Statement of the Evidence” signed by the trial judge and made a part of the transcript can serve as a statement of facts. We do not agree. An appealing party is entitled to a statement of facts in question and answer form. Fisher v. First Security State Bank of Cranfiiis Gap, Texas, 576 S.W.2d 886 (Tex.Civ.App.—Waco 1979, no writ); Morgan Express, Inc. v. Elizabeth-Perkins, Inc., 525 S.W.2d 312 (Tex.Civ.App.—Dallas 1975, err. ref’d.).

As a general rule no evidence is required to support a default judgment because the defendant’s failure to appear or answer is taken as admission of the allegations of the plaintiff’s petition. Proof is required only with respect to damages that are unliquidated or not proved by a written instrument. Gourmet, Inc. v. Hurley, 552 S.W.2d 509 (Tex.Civ.App.—Dallas 1977, no writ). Here we deem the general rule to be applicable. Therefore, if no evidence is required to support the judgment Watson cannot secure reversal because no statement of facts is available on liability for liquidated damages. Of course what is above stated does not relate to the Sheppard award of attorney’s fees. A demand for reasonable and necessary attorney’s fees is for unliquidated damages. The award of such must be upon evidence in support of pleadings.

However, Watson claims that the damages in this case are unliquidated. We do not agree. The amount of the note is $5,790.00. The amount alleged by Sheppard to be due and owing thereon, as of October 18, 1977 is $2,339.12 plus interest as provided by the note on that amount from October 18, 1977. Assuming as existent questions about how the indebtedness alleged was calculated and whether all payments, credits, and offsets were allowed we nevertheless consider such questions immaterial. The Supreme Court in Dallas County State Bank v. Thiess, 575 S.W.2d 20 (Tex.1978) honored its prior opinion in Southwestern Fire & Casualty Company v. Larue, 367 S.W.2d 162 (Tex.1963) that a difference between the amount of indebtedness alleged to be due and the face amount of the note does not create an ambiguity or raise an issue of fact regarding payments credited. We conclude the allegation of indebtedness in the Sheppard pleadings to be upon a liquidated demand and that evidence was not necessary to support the default judgment granted by the trial court for anything other than proper attorney’s fees.

There might be a different approach which, nevertheless, would lead to the same result. Should the plaintiff in such a case be penalized because willing to confess credits as proper to be made upon the face amount of the note? We think not. Here, if Sheppard had said nothing about any Watson entitlement which would reduce the original note amount, and had by its pleadings declared upon the full amount with nothing said to reduce the Watson liability, with Watson having said nothing by an answer filed, there would be no question but that it was entitled to a default judgment on that original amount. Here Sheppard, recognizing that it was not truly entitled to such original amount because Watson should have the benefit of proper credits, set out the fact that Watson should have credit and announced the amount (in that it stated facts which either directly stated the amount of the Watson entitlement or facts by which such entitlement might easily be calculated from its pleading). All of this was to the benefit of Watson and in no manner to his detriment, in effect relieving him of the responsibility to plead affirmatively, as a defense, the payment or entitlement to credit upon the original indebtedness by note.

Upon the proposition of the foregoing paragraph there would be proper application of Tex.R.Civ.P. 434, the Texas “harmless error rule”. Watson could not be heard to complain of a benefit received. If a detriment was involved it would be to Sheppard’s case and not Watson’s defense. Under the circumstances the presumption to be made would be that if Sheppard had not by its pleading given Watson proper credit for payments, etc., the latter would have answered and filed a pleading showing his entitlement as an affirmative defense.

We affirm that portion of the trial court judgment which provides Sheppard’s recovery of and from Watson $2,539.64 (balance alleged as due and owing plus interest). We reverse and remand for a new trial the portion of the judgment which awards attorney’s fees.

SPURLOCK, J., dissents.