TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-93-00679-CV
Gary Derrick and Trouba Derrick, Appellants
v.
AmWest Savings Association, Appellee
FROM THE DISTRICT COURT OF COMAL COUNTY, 22ND JUDICIAL DISTRICT
NO. C92-347A, HONORABLE RALPH W. CATON, JUDGE PRESIDING
PER CURIAM
AmWest Savings Association sued appellants on a $250,000.00 promissory note originally payable to Heart O'Texas Savings Association (HOT) but subsequently assigned and transferred to AmWest by the Federal Savings and Loan Insurance Corporation (FSLIC) as receiver for HOT. Appellants asserted, both as affirmative defenses to collection on the note and as counterclaims, failure of consideration, violation of the "Bank Tying Act," 12 U.S.C. §§ 1971-78 (1988), and violations of Texas Business and Commerce Code § 27.01. The trial court granted summary judgment for AmWest. In two points of error, appellants complain of the trial court's grant of AmWest's motion for summary judgment and of the award of attorney's fees. We will affirm the trial court's judgment.
Summary Judgment
After establishing its prima facie case to collect on the note, AmWest moved for summary judgment on several grounds, among them, that the D'Oench Duhme doctrine (1) barred all of appellants' affirmative defenses to collection on the note. (2) The court granted summary judgment. If no ground is specified, we affirm the summary judgment if any ground relied on by AmWest in the trial court is valid. See Rogers v. Ricane Enters., Inc., 772 S.W.2d 76, 79 (Tex. 1989); Sutherland v. Caballero, 759 S.W.2d 945, 946 (Tex. 1988). We agree that AmWest established its right to summary judgment on the note and that the D'Oench Duhme doctrine barred the affirmative defenses that appellants sought to raise.
AmWest's Entitlement to Summary Judgment
As the movant for summary judgment, AmWest had the burden to establish that no genuine issue of material fact existed and that it was entitled to summary judgment as a matter of law. Tex. R. Civ. P. 166a(c); Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548 (Tex. 1985); City of Houston v. Clear Creek Basin Auth., 589 S.W.2d 671, 678 (Tex. 1979). To establish its entitlement to summary judgment on the note, AmWest was required to establish: (1) the note in question; (2) that appellants signed the note; (3) that Amwest is the legal owner and holder of the note; and (4) that a certain balance was due and owing on the note. Rea v. Sunbelt Sav., FSB, Dallas, 822 S.W.2d 370, 372 (Tex. App.--Dallas 1992, no writ); Clark v. Dedina, 658 S.W.2d 293, 295 (Tex. App.--Houston [1st Dist.] 1983, writ dism'd).
AmWest established the note in question as a matter of law by affidavit in which Marvin Henkes (3) swore that the photocopy of the note was true and correct. Life Ins. Co. of Va. v. Gar-Dal, Inc., 570 S.W.2d 378, 380 (Tex. 1978). Appellants did not file a verified pleading denying execution of the instrument, meaning that the court received the instrument into evidence as fully proved. Tex. R. Civ. P. 93(7); Cockrell v. Republic Mortgage Ins. Co., 817 S.W.2d 106, 111 (Tex. App.--Dallas 1991, no writ).
AmWest established that it was the owner and holder of the note by way of affidavit testimony that it had acquired HOT's assets, including causes of action pertaining to this note and that the FSLIC, as receiver for HOT, had assigned the note to AmWest. See Rea, 822 S.W.2d at 372 (affidavit of commercial loan officer of acquiring institution established ownership of note where evidence was presented that acquiring institution acquired note from FSLIC as receiver for insolvent institution pursuant to an acquisition agreement after declaration of insolvency). AmWest proved the amount of principal and interest owed on the note as of the date of default and the per diem interest accruing from that date. Thompson v. Chrysler First Business Credit Corp., 840 S.W.2d 25, 28-29 (Tex. App.--Dallas 1992, no writ).
Once Amwest established the elements of its prima facie case to recover the amounts owed on the note, appellants had to establish the existence of a material fact issue on each element of an affirmative defense. Brownlee v. Brownlee, 665 S.W.2d 111, 112 (Tex. 1984). Appellants alleged that: (1) HOT representatives misrepresented the value of the stock which appellants claim was purchased with part of a $50,000.00 loan (4) which eventually became part of the $250,000.00 note in question and (2) appellants were induced to borrow the $50,000.00 from HOT and, as a condition to that loan, required to buy stock in HOT. Based on these allegations, appellants raised as affirmative defenses that (1) all or a portion of the consideration of the note failed; (2) that HOT violated the Bank Tying Act (5) by requiring the purchase of the HOT stock with a portion of the $50,000.00 loan proceeds; and (3) that appellants were entitled to offsets on the note because of HOT's violation of the Bank Tying Act and of section 27.01 of the Business and Commerce Code. See Tex. Bus. & Com. Code Ann. § 27.01 (West 1989). They contend these offsets created a fact issue as to the amount actually owed on the $250,000.00 note.
Appellees contend that all of appellants' alleged affirmative defenses are barred by the doctrine enunciated in D'Oench Duhme. We agree.
D'Oench Duhme
The D'Oench Duhme doctrine prevents an obligor from asserting as a defense to a collection suit an unrecorded side agreement that alters the terms of a facially unqualified note. 315 U.S. at 458-59. D'Oench Duhme is a sweeping rule. Bowen v. Federal Deposit Ins. Corp., 915 F.2d 1013, 1015 (5th Cir. 1990). The doctrine covers arrangements in which the borrower was innocent of any intent to deceive banking authorities if the borrower lent himself to an arrangement likely to do so. Campbell Leasing, Inc. v. Federal Deposit Ins. Corp., 901 F.2d 1244, 1248 (5th Cir. 1990). Merely entering into side agreements during a lending transaction is "lending oneself to a scheme." Chatham Ventures, Inc. v. Federal Deposit Ins. Corp., 651 F.2d 355, 361-62 (5th Cir. 1981), cert. denied, 456 U.S. 972 (1982). "Representations" as well as "agreements" per se are covered. Federal Sav. & Loan Ins. Corp. v. Murray, 853 F.2d 1251, 1255 (5th Cir. 1988).
Appellants contend that D'Oench Duhme does not apply because the notes themselves were in the files, and the faces of the notes revealed the defense to collection; specifically, that HOT obtained the $50,000.00 note in violation of the Bank Tying Act because appellants had to buy stock in HOT as a condition to the loan and the stock later proved to be worth less than represented. The only documentation in the record concerning the transactions is the notes themselves. However, the $250,000.00 note, the subject of this collection suit, contains no reference on its face to the $50,000.00 note; i.e., it does not state that it is a renewal or extension of a previous loan. The $250,000.00 note does not reflect that it is secured by stock or is given to purchase stock. The $50,000.00 note refers to a stock purchase and to the bank's security interest in one thousand shares of stock. Even assuming that the entire proceeds of the $50,000.00 note were used to purchase the one thousand shares of stock, i.e., that the bank represented that the shares were worth $50.00 each, the face of the note provides no evidence that each share was not worth $50.00 at the time of purchase. That a stock later declines in value does not mean that its value at the time of purchase was misrepresented.
Appellants rely on First Heights Bank, FSB, v. Gutierrez, 852 S.W.2d 596 (Tex. App.--Corpus Christi 1993, writ denied). The transaction in Gutierrez involved a wire transfer of funds from one entity, First Savings Association of Orange, to another entity, Rio Grande Savings and Loan, and the same-day return transfer of funds to Orange. (6) Id. at 602-03. The court did not apply D'Oench Duhme to defeat Rio Grande's defense that the loan in question had been paid. Id. at 607. The court noted that the jury found that the entire loan transaction was documented in the loan files. Id. The court stated:
[t]he circular flow of the funds was self-evident in the record; the money Orange lent to Rio Grande was immediately returned and repaid to it. No outside agreement was necessary to show this repayment defense; accordingly, D'Oench does not bar it.
Id. (emphasis added). Appellants do not show any such self-evident relationship between the two notes or show any impropriety involving the $50,000.00 note discernible from the faces of the notes themselves.
In Fair v. NCNB Texas National Bank, 733 F. Supp. 1099, 1105 (N.D. Tex. 1990), the borrowers pleaded as a defense to collection on a note that the bank defrauded them into participating in a worthless development loan transaction by using a false appraisal report and false construction specifications. Because the appraisal and construction specifications were in the bank's files along with the loan, the borrowers contended that D'Oench did not apply. Id. The court, however, held that D'Oench applied because the mere presence of the appraisal and construction specifications in the files would not, as a matter of law, lead a reasonably prudent bank examiner to conclude that the bank defrauded the borrower:
[T]he mere presence in a loan file of an appraisal and construction specifications would not lead a reasonably prudent bank examiner to conclude that the bank had warranted that the project was valued as appraised or constructed in accordance with the specifications, or that the bank had agreed to bear the risk that the project did not meet the construction specifications.
Id. at 1105. This case illustrates that the agreement or representation that is relied on as a defense to collection must itself be clearly evidenced in the bank's files. The mere presence of documentation other than the notes themselves can still leave secret the agreement relied on as a defense to collection on the note.
Unlike Fair, appellants do not contend that there is any documentation other than the notes themselves in the files. The notes, themselves, however, do not show any agreement or representation that would serve as a defense to collection on the note. First, the note at issue in this cause is the $250,000.00 note, which on its face, contains nothing to tie it to the $50,000.00 note, which was the note allegedly given in return for stock worth less than represented and illegally tied to a loan transaction. Nothing on the face of the $50,000.00 note, even assuming a representation that the stock was worth $50.00 a share, shows that representation was false.
Appellants' claims are precisely those that D'Oench Duhme was intended to prevent--an attempted defense to collection on a note based on an unrecorded agreement. Appellants present no evidence that the files revealed the purported illegal agreement or misrepresentation.
Because AmWest established its right to collect on the note, and appellants' affirmative defenses are barred, we overrule point of error one.
Attorney's Fees
Appellants list as point of error two a complaint about the trial court's award of attorney's fees. Appellants, however, do not restate this point, do not provide any record references, do not argue the point and do not provide any authority. Accordingly, appellants have waived this point of error. (7) Superior Packing, Inc. v. Worldwide Leasing & Fin., Inc., 880 S.W.2d 67, 69 (Tex. App.--Houston [14th Dist.] 1994, writ denied); Smith v. Valdez, 764 S.W.2d 26, 27 (Tex. App.--San Antonio 1989, writ denied). We overrule point of error two.
We affirm the trial court's summary judgment.
Before Justices Powers, Aboussie and B. A. Smith
Affirmed
Filed: March 8, 1995
Do Not Publish
1. 1 D'Oench, Duhme & Co. v. Federal Deposit Ins. Corp., 315 U.S. 447, 458-59 (1942). The doctrine enunciated in this case prevents an obligor from asserting as a defense to a collection suit an oral side agreement that alters the terms of a facially unqualified note.
2. 2 Appellants also raised the same defenses as counterclaims. Our discussion applies to the counterclaims as well as the affirmative defenses. See Beighley v. Federal Deposit Ins. Corp., 868 S.W.2d 776, 783-84 (5th Cir. 1989). By showing that D'Oench Duhme bars the claims the claims as a matter of law as affirmative defenses, AmWest has also discharged its summary judgment burden to negate at least one element of each counterclaim in order to prevail as a plaintiff-movant on the counterclaims (i.e., the equivalent of being a defendant-movant on a claim). For simplicity, we will simply refer to affirmative defenses or defenses.
3. 3 Marvin Henkes, an assistant vice president of AmWest, swore that he was familiar with the records pertaining to this note.
4. 4 The record shows a $50,000.00 promissory note dated November 16, 1984.
5. 5 The Bank Tying Act prohibits a bank from conditioning the extension of credit on the customer obtaining from, or providing to, the bank additional credit, goods or services. 12 U.S.C. § 1972 (1988). Appellants' basic argument seems to be that the $50,000.00 note was tied to the stock purchase and the $250,000.00 note dated December 31, 1987, was a renewal, extension or in some other way linked to the $50,000.00 note.
6. 6 The overall series of transactions was more complex.
7. 7 We note that AmWest's brief pointed out this problem, which appellants never attempted to correct.