*1 him a settlor. The to consider its assets usually accord to the deci- we George
deference Clinton BLANCHARD Ger- in Blanchard, district courts matters of sions of the Plaintiffs-Appellants, trude likely which to be state law about strength than we30 lends informed better BANK, Defendant-Appellee. PEOPLES analysis. to our own No. 87-2928. argues rejection of his Dr. Brooks portends dire exemption claim conse- Appeals, United States Court of quences: Fifth Circuit. or professional equity may owner 1. no May 1988. participant plan a retirement Rehearing Opinion on Denial of the size or regardless nature of June entity employs profes- sional, degree of control exer- professional by the over the
cised plan employing or the
retirement en- professional’s lack
tity, and' in the
involvement creation or
management plan; of the owner, equity any entity,
2. no who professional
provides services for his participant be a
livelihood plan regardless
retirement of the size entity, regardless of
of the the lack
of control the individual has plan the retirement or em- entity, regardless
ploying of the lack of
individual’s involvement in management
the creation
plan. dogma.
We announce no such As this approach court’s in both and the Goff demonstrates,
present spe- case we look to
cific facts. reasons,
For these we conclude that Dr. bankruptcy
Brooks’s estate includes his plan in the ERISA AF- we judgment
FIRM the of the district court. — Co., denied, —, 30. Edwards v. State Farm Ins. cert. F.2d S.Ct. U.S. (5th Cir.1987); Jackson v. Johns-Manville L.Ed.2d 743 (5th Cir.1986), Corp., Sales *2 son the certificate as collateral for business loans repaid. she never The Bank foreclosed the certificate and the Blanchards sued. We affirm grant for the conclud- ing that the Bank had a contracted-for right foreclose on the certificate. early George and Gertrude
Blanchard sold their home in Diego, San California, deposited proceeds and sale in a daughter, California bank. Their Gibsоn, Barbara convinced them would receive a better return on their mon- ey if they bought a certificate of Houston, Peoples Bank in Texas. Following advice, her the Blanchards wired $100,000 Peoples Bank on the Bank issued num- in ber 54767 that amount. who Houston, lived in executed the documents Following at the parents’ Bank. her in- structions, she the Bank make the cеr- Gertrude, payable George, tificate Gibson herself. depositions
In their and affidavits the Blanchards testified that Gibson recalled telling employee a Bank that her name was to be listed on the certificate as a conve- only; money belonged only nience parents to her and not to her. The Blanch- ards also offered the affidаvit of a San Bowers, Jr., Dickerson, William L. Ha- Waterman, Diego attorney, Michael mel, Pennock, Early Houston, Tex., & which he described his conversation with a plaintiffs-appellants. employee former in the Bank’s certificate Houston, Tex., Crawley, C.L. for defend- deposit department. employee, Bes- ant-appellee. Allen, sie told Watеrman that Gibson told money belonged par-
her that the to her ents, and for this reason the interest were to be sent to them Califor- Allen nia. made these statements GARZA, HIGGINBOTHAM, Before leaving job Waterman after her SMITH, Judges. Circuit Bank; she has since died. HIGGINBOTHAM, PATRICK E. The certificate itself made no mention of Judge: purchase the source of the funds it. used to George fact, that, specified Gertrude sued “For Blanchard Peoples Bank alleging that the im- purposes all ... Bank ... properly foreclosed on a certificate of de- deem and treat as the absolute owner here- posit issued in depositor the name of the any Blanchards named on the face of this daughter, and their monthly Barbara inter- Gibson. Gib- сertificate.” The Bank sent forms, checks, est and renewal notices tax should have known that Gibson held the Diego. to the in San The inter- Blanchards parents, trust for her it had payable est made to all checks were three set off the Blanchards’ funds to owners of the debt; third, pay Gibson’s that the Bank negligent to notify the days after the certificate was Five is- when Blanchards Gibson first sued, to the and unbeknownst *3 as certificate collateral. The district court loan to the Bank issued business Gibson granted Bank, summary judgment for the $6,295.30. in the of Gibson agreeing with the Bank’s contention it that guaranteed personally her husband the validly could set off against the certificate loan and the finding possible negli- Gibson’s debt and deposit as collateral. Gibson delivered the gence claim. The court made no possession. explicit certificate to the Bank’s She ruling on the continued borrow from the Bank breach-of-contract claim. months, 23, by July the next fifteen she borrowed over all II deposit. of by
secured the certificate A late Gibson made unautho- law, Under Texas monеy rized from a when a withdrawal market ac- bank’s depositor jointly parents. her owes a count she held debt the bank and debt, possible Concerned other defaults the about unautho- on the bank is entitled withdrawals, rized against the Blanchards tele- set off the amount owed the funds phoned Bank December 2 However, on deposit.1 Supreme the Texas request name removed exception Court established an in National from the and all certificate inter- Indemnity Spring Co. v. Branch State est employee checks. Bank sent to the Bank,2 ruling that a bank not exercise copy Blanchards a of the certificate with right its to set-off if it knows or should stricken, though original Gibson’s name know belong funds not to the сertificate, vault, still the Bank’s re- depositor, Moreover, party.3 but to a third however, did, mained The unaltered. Bank even when a bank has no notice or knowl subsequent only issue all in the edge party’s of a third interests funds names of the Blanchards. deposit, the bank may not set off re tain detrimentally those funds unless has January, late the Bank first changed position its in rеliance on the de notified the Blanchards positor’s ownership of the funds.4 had been to secure Gibson’s loans. After payments efforts to collect on the primary The argument Blanchards’ loan from the Bank cashed the appeal is that the Indemnity National rule applied certificate on March 23 and exercising bars the Bank from be- sеtoff proceeds against entire the debt. cause the Bank had notice that Gibson was diversity Blanchards filed not the owner of this suit true the certificate. The against Bank, Bank National Indemni- alleging several contends that the bases of first, ty liability: because, applied Bank breached its rule cannot be here first, Blanchards; contract of with the the Uniform Commercial Code ren- second, that because Bank inapplicable knew or ders the rule certificates See, Winkler, e.g., First Nat'l drilling expenses prepaid by Bank v. that included drill- (1942). client); ing company’s South Central Livestock Dealers, Bank, Security Inc. v. State 614 F.2d 2. 162 Tex. (5th Cir.1980) (bank prior offset debt company against feedlot account included Indemnity applied 3. The National rule has been proceeds of cattle sales made the feedlot on situations, variety in a wide most of which owners). behalf of cattle savings checking deposits. involved See, account Bank, e.g., Energetics, Inc. v. Allied (5th Cir.1986) (bank prior offset 4. Citibank v. debt of F.2d Interfirst drilling (5th Cir.1986). company company's account second, proved competent be- evidence of a deposit, agree- different detrimentally on dispute that it relied ment yond with the Bank. The Blanchards’ own the face ownership statement shown on testimony daughters’ to their as recollec- hearsay. So, too, tions is inadmissible Waterman’s affidavit statements about arguments not address We need these rеcollections of Bessie Allen.7 We are left we find that a valid the Bank had because with a written between the Bank interest in that was security gave and the Blanchards that Bank Indemnity National by the not limited take of the CD In a Indemnity rule. situation loan. party subject third owner of the funds has made no to setoff governing parties’ inter- relative B contrast, Here, by in thе funds. ests complaint The Blanchards’ posed as in the parties established their interests *4 theory liability an of the alternative through two contracts: the cer- certificate negligent Bank was the to inform deposit, of between tificate an Blanchards that Gibson had the Bank, Gibson; the personal certificate for loans. The Blanch pledge agreement, between a contract ards case on the a principle build their premised the cer- the Bank Gibson party duty to a has a contract to exercise Hence, cashing tificate. the certificate in performing reasonable care its obli deposit, the Bank need not exer- have gations under contract.8 the Blаnch Rather, any right cised to set-off. view, ards’ reasonable care under these rights Bank could assert its contractual required circumstances the Bank at to least pledge certificate and under the contracts.5 notify them when Gibson first turns then This case on whether
had an enforceable claim the certif- ownership the basis of icate оn disputed It is not that the terms of pledge. problem would no dif- be contract, it- as contained the certificate simply ferent if Gibson had cashed the self, no in- requirement; mention notice April pledging 20 it certificate instead of deed, implied in opposite provi- for as collateral a loan. permitting the Bank to sion treat each Tо named as an absolute assuming parol-evidence owner owner. Even it- relationship conclude rule would not bar extrinsic evidence to duty of vary unambiguous certifi- self carried a notification would terms of the cate,6 a presented the Blanchards have no to add a new to the contract.9 Such term 801(d)(2)(D), given party expressly opponent, if the certificate see Fed. R. Evid. 5. Even had not a to as applies only Gibson because the rule to statements owner, payable to absolute fact that it was "during [agency] the existence of the rela- made George Blanchard or Gertrude or Blanchard Marga- tionship." also Jack B. Weinstein & See probably give Gibson to Barbara would suffice n. Berger, Weinstein’s Evidence ret A. 801-222 right. such a Tex.Rev.Civ.Stat.Ann. Cf. cases). (citing (Supp.1987) 16 (Vernon 1973) ("A may pay a art. 342-706 bank present deposit, payable or future or on the Scharrenbeck, Montgomery Ward & Co. v. See any persons one order of ... of two or more ... 508, 153, 204 S.W.2d 510 joint depositors_”). any one of such See Bank, v. Sabine S.W.2d also Leinert 872, 541 Homes, Reed, Inc. v. 711 S.W. 9. See Jim Walter 1976, (Tex. App. writ 874 Civ. —Beaumont 617, (Tex.1986) (finding independent 2d no 618 ref'd, n.r.e.) ("[A] checking account good-workmanship arising tort from breach of party of A B names enables either exercise house); Group it; warrant in construction of a total either A or B draw a control can 870, Services, Daniel, Hospital Inc. v. 704 S.W.2d said if check on account to the same extent as 1985, writ) account.”). separate (Tex.App. Corpus Christi were A’s or B’s — independent duty (finding ... "no owed [tort] Shoes, Stores, Betty 6. See Lee Inc. v. Karl’s Shoe which existed in the contract outside of that 429, Ltd., (5th Cir.1961). parties"). between the two 7. Allen’s statements would not be excluded hearsay agent rule as an admission issuing days Five after the certifiсate the also result be inconsistent would made to first of seven loans were AMS provision Code Banking permitting the Gibson, International, Inc.1 or treat co-owners of a Bank to count ac- owners where as absolute their inter- (1) 20, AMS, princi- 1981—Loan Thus, disjunctively.10 described ests are pal one $6,295.32, 16.25%, amount interest term persuaded we district court did year; rejеcting
not err in
of
the Blanchards’ claim
(2)
Gibson,
June
prin-
1981—Loan
negligence.
$25,088.32,
cipal
17.25%,
amount
interest
days;
AFFIRMED.
term 90
(3)
September
1981—Loan to
GARZA,
Judge, dissenting.
$15,052,
principal
17.50%,
amount
interest
my
respectfully
opinion
dissent.
term days;
ripe
summary judg-
this case was not
ment.
for
(4)
AMS,
November
1981—Loan to
principal
term
$25,000,
17.25%,
amount
interest
is a
contract be
days,
renewal and extensiоn of
depositors.
tween the bank and its
Its
note;
June
provisions determine the manner in which
(5)
AMS,
December
1981—Loan to
the
to
subject
funds
be withdrawn and is
principal
$25,087.11,
the law
contracts. Ames v. Great
17.50%,
days,
term 90
for renewal and ex-
(Tex.
Southern
September 21,
tension of
$15,000;
1981 note for
1984), Salazar v. San Benito
&
Co.,
Trust
23 (Tex.App.
writ).
Corpus Christi 1987 no
Texas Law
(6)
February
AMS,
1982—Loan to
impоses
contracting parties
principal
*5
17.50%,
amount
interest
“care, skill,
discharge the
with
contract
months,
term six
of
for renewal and extension
expedience and faithfulness.” Bernard
November
1981 and December
Constructors,
Johnson v. Continental
630
notes;
(Tex.App.-Austin
S.W.2d
(7)
AMS,
July
to
princi-
1982—Loan
n.r.e.).
contracting
writ ref’d
party gen
pal
19.50%,
term
erally
duty
a
perform
оwes
common law
19, 1983,
due January
for renewal and ex-
ordinary
with
care and skill whether
a
it be
$70,-
tension
February
1982 note for
negligent omission or commission. Hideca 000.
Corp.
Tampimex
Int’l,
Petroleum
Oil
Peoples Bank went about
its business
(Tex.App.-Houston
S.W.2d
routinely extending the notes until the en-
n.w.h.).
[1st Dist.]
$100,000
tire
er
pledged.
certificate was
Nev-
majority applies
The
3.116 of the Texas
§
they notify
did
the Blanchards of their
Business and
Code and the
Commerce
lan- or Gibson’s actions. The certificate was
guage
back of
certificate to
issued
1981 and
automatically
was
a
Peoples
conclude
Bank had contracted for
every
renewed
180 days. Had the Bank
part
to offset the certificate.
with notified the Blanсhards of Gibson’s loans at
majority
recognize
the
the
in their failure to
renewal,
their first
the Blanchards would
Bank’s common law
reasonable
opportunity
have had the
icate
cash
the certif-
care
spite
dealing
when
its customers
de-
$50,000
approximately
and still have
language
code
of the
and the
Instead,
for themselves.
pro-
certainly
certificate. Reasonable care
not mean bank should
does
regard
ceeded without
to the Blanchards’
inquire
every
a
into
interest. This
Bank
despite
was all done
transaction which is
written in the
where a bank has
drawn
an account
knowing
the funds had been transfer-
disjunctive,
but it does mean red from California where the Blanchards
knowledge
оr should lived,
knowledge
a Bank officer’s
of the
knowledge
relationship
have
special
of a
funds,
source
prior
of the
the Bank’s
busi-
depositors
which exists between its
ness dealings with Gibson and their knowl-
the bank
should exercise some care
loan- edge that
the Gibsons
assets to
ing
against
money
deposit.
$100,000
account for a
certificate. Addi-
nothing
Bank had
tionally,
lose and
all interest
were
mailed to
everything
gain
loaning money
by
Blanchards California and when one
check
misplaced
It’s
was
bank
by
certificate.
sent
evidenced
agreement
times and
Blanchards an indemnity
amounts it
which
money.
loaned
10.
supra
See
note 5.
company
AMS is a
which Gibson and her
husband are
personally guar-
offiсers. Gibson
company.
anteed the loans of the
signed, all notices of renewal
only they
PER CURIAM:
only to the Blanch-
were mailed
forms
IRS
ards and
Bank was
petition
rehearing, appellants
In their
for
moved,
Blanchards
th<
when the
suggest
summary judgment
now
improper
of their new
informed Gibson
had binding
because
never
a
2, 1982, th«
Finally on December
address.
According
ap-
with the Bank.
Bank to instrucl
called the
Blanchards
pellants, there was no contract because the
from the
name
to remove Gibson’s
them
provision
Bank never notified them of the
informed them it
The bank
certificate.
permitted
per-
the Bank to treat each
copy
of the certificate
would be done and
on the
son named
face
the certificate—
the Blanchards with Gibson’s
was sent to
including
an
Gibson—as
“absolute owner.”
through
The Bank issued
it.
name marked
evidence, however,
The
check with Gibson’s
the December interest
appel-
indicates that as a matter of law the
it,
marked it out before send-
name on
but
authorized
a certifi-
lants
obtain
January,
ing it to the Blanchards.
deposit naming
cate of
herself as a co-own-
February
March of 1983 interest
Moreover,
appellants.
ap-
er with the
only
Blanchards
reflected
checks
names.
pellants fully acknowledged the existence
arguments
of the contract
district
their
to the
whether the
question
presents
at least
This conduct
court, questioning only
ownership оf the
jury
for the
as to the
adequately discharged
obligations
Bank
under that
its
Pan American Nat’l
See
reasons,
agreement.
For these
Wines, 580
Holiday
Bank v.
DENIED,
petition
rehearing
the
though Judge
is
al-
(Tex.Civ.App.-Houston
1979 writ
[1st Dist.]
grant
peti-
would
Garza
n.r.e.). When
name was
ref’d
tion.
marked off the certificate
created
ambiguity
ownership and when the
as to its
departmеnt
willing to do so without hesi-
Bank was
tation, is conduct which could be construed
par-
as evidence of another
face of
ties had that is not evident
This reflects some notice on
the document.
the Bank that
actually
it was aware
*6
constructively of the trust character of the
STOKES, Plaintiff-Appellant,
Hill
prohibit
deposit which would
v.
offsetting
depositоr’s
debt
depositor in
funds held
trust
BULLINS,
al.,
Willie
et
Loop,
for another. Allied Bank West
N.A.
Defendants-Appellees.
Associates, Inc.,
their customers. I would REVERSE the jury and let the decide who owned the certificate and determine what the true was between the Peoples Bank. Gibson and ON PETITION FOR REHEARING GARZA, HIGGINBOTHAM, Before
SMITH, Judges.