OPINION
Appellant Aquaduct, L.L.C. challenges the trial court’s finding that it authorized its loan servicing agent to receive full payment of a mortgage note and the trial court’s award of attorney’s fees to appel-lee, North American Mortgage Company. We affirm.
I. Procedural and Factual Background
In November 1996, Travis McElhenie and Linda Christian (“the McElhenies”) 1 executed a promissory note for $28,045.22 in favor of Millennium Interests, Ltd. (“the McElhenie Note”) to purchase a homestead. The McElhenie Note required the McElhenies, as mortgagors, to repay Millennium Interests, as mortgagee, “both principal and interest” at 10% annually in “360 monthly principal and interest installments of $216.12 per month,” and a tax escrow fee of $15 per month. The first installment was due on November 1, 1996, followed by successive installmеnts payable on the first of each month “until the full amount of the consideration of principal and interest is paid.” To secure this mortgage debt, the McElhenies signed a deed of trust (“the Millennium Deed”) that same month, granting Millennium Interests a vendor’s hen and a deed-of-trust lien in the property. Millennium recorded this deed. Neither the McElhenie Note nor the Millennium Deed established any penalty for early payment of the full amount owing on the mortgage debt.
In April 1997, Millennium transferred the McElhenie Note to Aquaduct, L.L.C., together with the hens securing the McEl-henies’ mortgage debt. 2 The transfer of hen instrument instructed the Harris County clerk’s office to return the original transfer to Gibraltar Mortgage Corporation (“Gibraltar”) after filing. Aquaduct appointed Gibraltar as its loan servicing agent and authorized Gibraltar to cohect monthly payments from the McElhenies on the McElhenie Note. As the loan servicing agent, Gibraltar cohected principal and interest payments from the McElhenies, accounted for that money to Aquaduct each month, and forwarded the payments to Aquaduct each month.
In September 1998, the McElhenies refinanced their mortgаge through National Mortgage Link, I Ltd. (“National Mortgage Link”) by renewing and extending the McElhenie Note. To do so, the McEl-henies executed a deed of trust naming National Mortgage Link as the beneficiary and a renewal and extension rider accompanying the deed of trust (“Renewed McElhenie Note”). The deed of trust was recorded. In refinancing their mortgage, the McElhenies agreed to pay National Mortgage $86,850, representing the amount they owed under the Renewed McElhenie Note. To secure the Renewed McElhenie Note, the McElhenies eneum- *441 bered their homestead with a Ken in favor of National Mortgage Link.
Old RepubKc Title Company (“Old Re-pubKc”) represented National Mortgage Link at the closing of this transactiоn. At the closing, in a simultaneous transaction, National Mortgage Link assigned the Renewed McElhenie Note and the accompanying deed of trust Ken to North American Mortgage Company (“North American”). The deed was recorded. Old RepubKc requested and obtained from Gibraltar a statement of the total remaining balance on the McElhenie Note. A title insurance poKcy was also obtained and it revealed in part the Ken MiKennium assigned to Aqua-duct. To take a first Ken position on the McElhenies’ homestead, National Mortgage Link and North American paid to Gibraltar the remaining balance on the McElhenie Note ($28,126.61) in September 1998. Old RepubKc, acting on behalf of National Mortgage Link and North American, sent the chеck to Gibraltar and also asked Gibraltar to execute and return to Old RepubKc for filing a release of Ken or transfer of Ken. Gibraltar ignored this request, and deposited the check in its Aquaduct account. However, Gibraltar never paid these funds over to Aquaduct, and Gibraltar apparently converted the funds to its own use.
In August 2000, Aquaduct filed this suit asking the trial court to declare its Ken superior to North American’s Ken on the McElhenie homestead. Aquaduct argued payment to Gibraltar of the fuK amount owing under the McElhenie Note was improper because Gibraltar only had authority to accept monthly payments of principal and interest. North American counterclaimed for a judgment declaring its Ken superior to Aquaduct’s Ken. Fоüowing a bench trial, the court found Aquaduct authorized its agent, Gibraltar, to accept payment in fuU of outstanding balances on its notes, declared Aquaduct’s Ken satisfied, and ordered Aquaduct to execute a release of Ken.
II. Issues Presented
Aquaduct presents the foKowing issues for review:
(1) Is there evidence to support the trial court’s finding that Aquaduct’s loan-servicing agent, Gibraltar, had authority to coKect final payment on the McElhenie’s mortgage note?
(2) Is circumstantial evidence sufficient to support the trial court’s finding that Gibraltar had authority to collect final payment on the note?
(3) Was North American entitled to attorney’s fees under the Declaratory Judgments Act when its counterclaim was allegedly a suit to clear title?
(4) Was the trial court’s award of attorney’s fees under the Declaratory Judgments Act equitable and just?
III. Analysis and Discussion
A. Did Gibraltar have authority to collect the final payment on the McEl-henie mortgage note?
In its first and second issues, Aquaduct chaUenges the legal sufficiency of the evidence to support the trial court’s finding that Gibraltar had agency authority to coKect payment of the outstanding balance on the McElhenie Nоte. In conducting a no-evidence analysis, we review the evidence in a Kght that tends to support the disputed findings and disregard aK evidence and inferences to the contrary.
Lee Lewis Constr., Inc. v. Harrison,
Aquaduct maintаins the trial court improperly relied on circumstantial evidence to infer, from Gibraltar’s authority to collect monthly payments of principal and interest, that Gibraltar had authority to collect payment in full on behalf of Aquaduct. The question of agency is usually one of fact, and circumstantial evidence may be used to establish the agency relationship and to determine the scope of the agent’s authority.
St. Paul Surplus Lines Ins. Co., Inc. v. Dal-Worth Tank Co., Inc.,
The record shows that Gibraltar had implied actual authority to cоllect full payment of outstanding balances on behalf of Aquaduct. Aquaduct acquired several mortgage notes, including the McElhenie Note, from Millennium Interests, Ltd. Millennium had hired Gibraltar to service its notes, but required debtors to send payments directly to Millennium, rather than sending them to Gibraltar. After acquiring the notes, Aquaduct kept Gibraltar as the loan servicer without making a written agreement that defined the scope of Gibraltar’s authority. Vernon Young, the president of Aquaduct, testified that, although not explicitly discussed, Gibraltar had authority to perform numerous tasks, including authority: (1) to conduct the day-to-day business of handling Aqua-duct’s notes; (2) to collect and remit monthly payments of principal and interest; (3) to identify any delinquencies; (4) to manage escrow pаyments; (5) to issue IRS Form 1098 mortgage interest statements to debtors on which Gibraltar was identified as the “lender/recipient” of payments; and (6) to issue “payoff statements” upon request that stated the remaining balance on a note. There was no indication on the payoff statement that a full payment should be made to Aquaduct.
As the servicing agent, Gibraltar sent the McElhenies, and Aquaduct’s other newly-acquired debtors, a coupon book and letter in May 1997. The letter stated that servicing of the McElhenie Note had been transferred to Gibraltar and directed the McElhenies to send their payments to Gibraltar and not to Millennium. The letter did not indicate that a full payment should be treated any differently from a regular monthly payment, and the record suggests this is the only payment instruction Aqua-duet ever gave its debtors. The letter did not mention Aquaduct or state that Millennium no longer held the mortgage note. Young testified that Aquaduct authorized Gibraltar to send this letter and that Aquaduct never had any communication with the McElhenies or its other debtors.
Young also testified that he never gave Gilbraltar instructions on how to treat the events leading up to full payment on a note and did not tell Gibraltar it could not accept full payments until the summer *443 2000. Gibraltar provided Aquaduct with monthly statements that showed the amounts collected from each debtor. Aquaduct knew Gibraltar accepted full payment of the McElhenie Note because its own records for September 1998 show Gibraltar deposited $28,126.61 in the aсcount it maintained for receivables on the McElhenie Note. A summary of accounts Gibraltar provided Aquaduct shows no balance owing on the McElhenie Note in November 1998. Aquaduct’s records show that Gibraltar collected four full payments, including the McElhenie payment, over a span of two years before Aquaduct told Gibraltar (in summer 2000) that Gibraltar was not to accept full payments. From these facts, we conclude the evidence is legally sufficient to prove Gibraltar had implied actual authority to accept full payment of the McElhenie Note on behalf of Aquaduct.
In the interest of justice, we address Aquaduct’s further argument that, under article three of the Uniform Commercial Code (“UCC”), Gibraltar could not have had аuthority to collect the loan payoff because the McElhenie Note was a negotiable instrument and Gibraltar did not have actual physical possession of the Note at the time of the full payment. See Tex. Bus. & Com.Code Ann. §§ 3.301, 3.602 (Vernon 2002). Aquaduct reasons because a negotiable instrument is paid only to the extent payment is made to a person entitled to enforсe the instrument, and a person entitled to enforce the instrument is normally only a person in possession of the instrument, that the UCC did not allow the McElhenies to make their final payment to Gibraltar. See id. § 3.602 (providing a negotiable instrument is paid to the extent it is paid to a person entitled to enforce the instrument); id. § 3.301 (providing a holder of the instrument or a nonholder in possession of аn instrument are persons entitled to enforce). Under Aquaduct’s construction, the UCC prohibits loan-servicing agreements, even for non-final payments, unless the principal transfers possession of the instrument to the servicing agent. See id. §§ 3.301, 3.602. Aqua-duct’s proposed interpretation of the UCC is untenable.
Unless displaced by the provisions of the UCC, agency law supplements the provisiоns of the UCC. Tex Bus. & Com. Code Ann. § 1.103 (Vernon 1994). Common-law claims and principles complement the UCC to the extent they do not conflict with UCC provisions.
See Bryan v. Citizens Nat'l Bank,
B. Did the trial court abuse its discretion by awarding North American attorney’s fees under the Declaratory Judgments Act?
In its third and fourth issues, Aquaduct argues the trial court’s award of attorney’s fees to North American was an abuse of discretion for two reasons: (1) because the counterclaim on which North American prevailed was a suit to clear title; and (2) because the award of attorney’s fees was not equitable and just.
The Texas Declaratory Judgments Act provides that in any proceeding under the Act, the trial court may award costs as well as reasonable and necessary attorney’s fees that аre equitable and just.
See
Tex. Civ. Pbac. & Rem.Code Ann. § 37.009 (Vernon 1997);
Bocquet v. Herring,
The trial court awarded North American $16,000 in attorney’s fees from Aquaduct because North American prevailed on its request for declaratory judgment. The trial court awarded an additional $5,000 in favor of North American in the event of appeal to the court of appeals and $5,000 for appeal to the Texas Supreme Court, both only payable should North American prevail. In its counterclaim for declaratory judgment, North American asked the trial court to declare that its lien had priority over Aquaduct’s lien on thе Mcll-henies’ property. A person interested under a deed or contract may have the trial court determine any question of validity or construction arising under the instrument and obtain a declaration of rights, status, or other legal relations thereunder. See Tex. Civ. PRác. & Rem.Code Ann. § 37.004(a) (Vernon 1997). The trial court construed and determined the validity of the instruments in this case, and it declared the rights, status, and legal relations thereunder.
Aquaduct essentially argues that North American’s counterclaim is a trespass to try title suit in the guise of a request for declaratory relief. Appellant relies primarily on
Southwest Guaranty Trust Co. v. Hardy Road 13.4 Joint Venture,
in making this argument.
A trespass to try title action is a procedure by which competing claims to title or the right to possession of real property may be adjudicated.
See
Tex. PROP.Code Ann. § 22.001-22.045 (Vernon 2000);
Rogers v. Ricane Enter., Inc.,
In its fоurth issue, Aquaduct maintains the award of attorney’s fees is inequitable and unjust because neither North American nor Aquaduct engaged in culpable conduct. Aquaduct argues Gibraltar and North American’s closing agent and title company, Old Republic, are responsible for this litigation. In Aqua-duct’s view, Gibraltar is culpable for having converted the funds, and Old Republic is blameworthy for its failurе to require the original McElhenie Note or a release bearing the holder’s signature before closing. In light of the trial court’s finding, supported by the record, that the disputed payment was sent to an agent of Aqua-duct — Gibraltar—we cannot say the trial court’s award of attorney’s fees is inequitable and unjust. Nothing in the lending documents Old Republic obtained named an entity other thаn Gibraltar as payee. The Missouri of Court of Appeals addressed the same equitable considerations and held that when payment is made to an authorized agent, the default of an agent is the responsibility of the principal.
United Mo. Bank,
Having overruled all of Aquaduct’s issues, we affirm the trial court’s judgment.