Mann v. Fender

al., Appellants, Robert A. MANN et

v. FENDER, Appellee.

Harris R.

No. 5895. Appeals Texas,

Court Civil

Waco.

Sept. 1979.

Rehearing Denied Oct. banking

investment In December business. 1968, Mann, Fender, and Houston South- Southwest, Corporation (now west Banc- shares, Inc.) lengthy into “Control entered they purchased Agreement” under which 9,200 (51V2percent) capital Kilgore Kilgore, stock of Bank of National per share. price Texas at of $125.00 Agreement, Under the terms of the Control 4,450 shares of Houston owned Southwest Mann each owned stock and Fender and P. M. Russell, Johnston and Joe Michael and Mann financed shares. Fender Sleeper, Johnston, Williams, Estes, Helm & $593,- purchases their of the stock with Waco, Vial, Schoonover, Robert G. Paul D. they jointly 750.00 from Bank of borrowed Stephen Baskind, Vial, Hamilton, L. Koch, provided in the Southwest. It was Tubb, Dallas, Knox & Stradley, appel- for Agreement Kilgore Control lants. name; Bank stock Mann’s would be taken agreed after John F. Sheehy J. Sheehy, Robert completed January, the shares Sheehy, Waco, Lovelace & Mayfield, F. Wil- Houston respectively owned Southwest Lasater, bert Knight, Tyler, Lasater & Don- reissued him to Fender would be Thomas, Clark, Thomas, ald S. Winters & agreed them It was requests. Shapiro, Austin, appellee. for Mann would be chairman Board Kilgore and Chief Executive Officer HALL, Justice. any dispute Bank and event in the parties appeal this are defendants- “with reference election of directors to the appellants Robert A. Mann and Walter J. or with some reference to other matter Rusek, Trustee for certain trusts for Mann’s concerning pol- its Kilgore and/or children, plaintiff-appellee Harris R. amicably by icies” could not be resolved Fender. It is uncontradicted that Fender parties, then or issue question “the involved 4,947.74 owns controlling dispute in the . will . . be decided capital shares of stock of National with the decision resolved in accordance Kilgore, Bank of Texas. This lawsuit and direction and the stock of of Mann based on a ownership claim of by Fender of Houston and Fender will be vot- Southwest all of the remaining 14,218.26shares under accordingly.” ed separate theories, two cross action Paragraph Agreement In B Control defendants to set aside sale them to change provided: “Upon any in the owner- Fender of their for money shares and dam- ship any each of shares of Control Stock ages based assertedly on Fender’s malicious grants par- hereto to each other refusal to honor a take-out on a ty preferential right partici- hereto the certain note which allegedly pate Any such shares. purchase of placed defendants under economic duress. change any right, title or trial, After a judgment was rendered beneficial, interest, legal any as well or awarding Fender all of the stock deny- change of the shareholder record of ing any recovery defendants on their cross by any party shares of Control owned Stock action. appealed. Defendants We affirm hereto, change ownership giv- shall be a judgment. undersigned ing right rise to Fender’s Claims To All shares, except following: purchase such Bank Shares (2) any Any transfer Mann and (3) Any Fender have known each other agreement. transfer party many years, for gift, spouse have been in- devise or descent to the or together volved party in several ventures in the lineal descendant of [a traded; and, second, publicly or to a trustee in trust for the benefit it could be ment] any person. such Any ... agreed merger if the was not transfer Robert A. Mann to trust 15, 1972, he would approved by November controlled, corporation or owned or directly purchaser find a either or him, indirectly by or or by any trust or $610,- Houston Southwest’s corporation controlled, directly owned or share). ($65.80 It was stated in per 000.00 him, indirectly by any transfer to Robert understood parties the contract A. by any Mann from or such trust or Kilgore Bank stock was then sub- corporation.” Under other terms of the Agreement; ject of the Control terms Agreement party agreed Control each by Houston South- any stock received disposed before he sold or otherwise in ex- proposed merger west under of his stock “in a transaction other than one would be change Kilgore Bank stock excepted preceding paragraph” under the Agree- Control subject to the terms of the give he would written notice to the other ment, the terms of the and that “under parties of setting his intention to sell forth subject thereto Agreement no stock Control proposed purchaser the name of the agreement to said may by any party be sold sale; proposed terms of the other offered, having been first without the same days would then ten have to exer- parties to pro on rata basis to the other a preferential cise right their a pro- contract then agreement.” said “pro rata share” of the stock offered for agreed “It is that such vided: [Control] sale based the ratio the stock owned that, follow- agreement is to be amended so by him bore shares “then owned exchange Kilgore ing [merger] exercising rights pur- all members stock, the stock for First Southwest [Con- price according chase such stock” at the in its agreement will be terminated trol] sale, to the proposed terms of the before the is entirety. In the event such amendment proposed sale could be Fi- consummated. the consumma- not effected the date of nally provided regardless it was of the merger, reorganization and tion of the sale, method of transfer or the stock would will, immediately reorgani- after subject prefer- remain to the conditions and merger, purchase from South- zation and rights Agree- ential set forth in the Control its of First west Southwest ment and that notice that fact would be agreed is fur- sum of cash. It printed on the shares. agreement ther that should said [Control] Kilgore After a stock dividend 15,1972, still remain in effect on November 1970, Bank January, Houston South- of the sale of Mann will at the time South- 9,270.- west’s was increased to Harris R. west’s stock secure a release from shares, and Fender and Mann each rights of Harris R. Fender or see that the 4,947.742155 owned shares. agreement said Fender under the terms of In 1971 Houston Southwest agrees in this protected. are Mann further banking the federal authorities to divest it and hold protect connection to Southwest Kilgore itself of its Bank or which any claim asserted harmless from Thereafter, August stock. against reason of might be asserted Mann and Houston entered into Southwest any terms noncompliance with any claimed first, following contract: Houston agreement.” of said agreed proposed support Southwest disapproved by proposed merger was merger Bank with First February banking authorities on the federal Bancorporation (a corporation Southwest never consummated. and it was Mann) controlled under which Houston merger- party Fender was not a Southwest would receive First Southwest Houston between Mann and sale Bancorporation for its stock Southwest, of its terms he first learned stock, his best agreed “to use March him dated in a letter from Mann to registration efforts” to of the stock effect 2, 1972, reading: Bancorporation of First so that Southwest Bancshares, Inc., “Dear Harris: Mann and Southwest August 12, copy which is “On December dated 1968 an you was made to which enclosed party, herewith.

along with this writer Houston Sincerely, Corporation. Southwest Beginning on A. s/ Robert Mann page of Agreement paragraph Robert A. Mann” designated page 9, ‘C’ continuing days four la- responded to Mann portions well as in Agree- ter letter. with this ment, you had certain rights regarding “Dear Mr. Mann: purchase of stock from other members of acknowledged your letter “Receipt group. advising me that August 12, 1971, “On this writer en- with South- have executed commitment into Agreement tered with Southwest Bancshares, (successor of Hous- west Inc. Bancshares, regarding Inc. their owner- may Corporation) ton which Southwest ship interest in their Kilgore stock of require you by it purchase that stock held National copy Agree- Bank. A of this ment in the Bank. is enclosed. National I, February you “On that indi- the Board of “This letter will advise Trustee, Governors of System the Federal vidually Reserve desire to exercise of Washington, D.C. pro issued their order my preferential right and statement concerning First South- Bank any Kilgore rata share of National Bancorporation, west application Inc.’s by you either stock offered for sale merge, along others, with Kil- Bancshares, Inc. in accordance Southwest gore National A copy Bank. order dated agreement with the terms of the and statement is enclosed. by and December entered into may “It be that certain you, commitments between the Houston Southwest Agreement August Corporation myself. Bancshares, between Southwest Inc. and availa- “If and when such information is Robert A. will require stock of please ble to the you, advise me as purchased National Bank to be sale, proposed price per terms of Robert A. though not necessari- share of shares I and the number ly- purchase, am and the manner entitled to purpose “The of this letter is advise payment and method in which you actions, of all of agreements, these stock should be made. might statements and possi- orders which wish, remain, every I “With best bly you affect way. some The further very truly, Yours purpose of this letter is to inquire wheth- S/ Harris R. Fender er you or not would want to assume and R. Harris Fender” party your pro potential rata Thereafter, October, until middle interest which I figure roughly to be one- great was a corre- there amount of half should triggered actions be between spondence between Fender and Mann and Bancshares, Southwest Inc. and Robert concerning attorneys respective their A. Mann in Agreement August 12, rights Agreement under Control merger-sale regarding contract I agreement, “As understand our I am South- shares to be sold Houston you giving (10) days ten notice to make west. under position It was Fender’s your decision and shall assume that if I Agreement prefer- he had the Control do hear you by registered mail of the right no ential one-half later than 1972 that $305,000.00 ($65.80 share) per decline and shares for rights waive all and/or re- sponsibilities may sold develop finally as a result when Houston Agreement (without of the other regard between Robert A. Southwest loan, Republic merger-sale terms of for the contract between Southwest) jointly Mann and Houston execute which Mann both Mann and recognized undisputed had in his letter of March also note. It is million dollar correspondence; and in knowledge and that he not have that Fender did 7,1972, (Fender), in his letter of March had Bank until after by Republic proposed loan preferential right exercised his within ten arranged by Mann. it was days accepted and had Mann’s offer. Mann November, or 15th of either the 12th On disputed preference, Fender’s claim of to obtain with Fender Mann met asserted that Houston Southwest’s stock million dollar signature sale to him was “a transfer to another meeting was of that note. The result party” preferential expressly excluded from testi- trial of this case. issue on the pro participation paragraph B(2) rata under at the discussion fied that the immediate Agreement; and he contend- Control own he would meeting whether or not only right partici- ed that Fender’s of Houston Southwest’s one-half pate upon was based the offer in Mann’s note; signed if he 2,1972, which, letter of March Mann assert- di- they would agreed that unequivocally ed, join merger- was to let Fender owning each “fifty-fifty” the shares vide sale assume with Mann the shares”; “4,635 only that it obligations working merger the note. signed registration public trading meeting he ex- at the Mann testified that Bancorporation, stock of First Southwest pur- Fender agree to let refused to pressly having accept failed to shares; 9,270 any portion chase days any rights offer within ten waived he Fender, commit “You didn’t that he told might Agree- have had under the Control commitment, I’m not so take when I had to purchase ment to any of Houston South- event, Fender agree to it.” In going to 9,270 west’s shares of Bank stock. liable thereby became signed the note and dispute remained unresolved. severally with Mann. jointly on it 15, 1972, Facing the deadline November as fol- were disbursed proceeds of the note 21, 1971, for August under the contract of pay off the $391,874.50 used to lows: shares, purchasing Houston Southwest’s the Bank at Mann-Fender indebtedness approached Republic Mann National Bank Southwest; $610,000.00 used as early Novem- of Dallas late October or 9,270 shares. All purchase price of the ber, 1972, arrange financing pur- for the Agree- the Control 19,166 held under shares Repub- Bentley chase. He dealt with Ed at for the collateral pledged were as ment lic It desire that Bank. was also Mann’s note. to Bank loan which he and Fender owed on due note became The million dollar original pur- of The for their Southwest day, Fender On that January 1973. by chase of stock be refinanced Ed Bent- Bank, contacted Republic went to loan, Republic Bank. The balance on that note. there, a renewal ley and executed $391,874.50. interest, excluding Mann for his Later, Bentley his check he sent arranged Republic Bank for a loan from note. share of the accrued $1,001,874.50(denominated by parties as 31, 1973, Bentley was after January On note”) representing “the million dollar only signed note possession of the renewal $610,000.00 purchase of Houston check, Fender, and Fender’s by 9,270 shares, and Southwest’s Bank and Bentley at the Mann contacted refinancing loan. for the Bank of Southwest the interest. his share of paid the note and Republic agreed It was between Mann and said, or at least Mann Bentley testified that stock, Kilgore Bank Bank that all of the believe, and Fender that Mann led him to (including which was name still in Mann’s is evidence note. There 4,947 paying individually by shares owned the renewal about Bentley told Mann Fender), pledged were to be to secure the Fender, Bentley testi- by that, note executed undisputed loan. It is as a condition there share) pur- fied been the asserted problem per have no under $65.80 the renewal Southwest, had Mann do so. desired to elected to Houston chase from note, When paid Mann accepted he remaining shares under purchase stock had pledged been share; per stated letter at $140.00 Mann’s collateral. A part substantial Kil- recovery of instituting suit for that he gore Bank originally stock Mann by owned purchase 4,635 shares and for Agreement under the Control and the letter, remaining under Mann’s shares purchased from Houston Southwest 14,- or, alternatively purchase of all the were then by transferred Mann to various letter. This 219 shares under Mann’s trusts for his children and to First South- by acceptance tender and Fender’s Bancorporation (the west previously men- undisputed in the rec- stated is fashion corporation Mann). tioned by controlled ord. First Bancorporation Southwest not a The Take-out Commitment party appeal to this and has no interest in it 23, 1972, Fender executed On March through other than Mann. agreed commitment in which Fender first learned of payoff the note promissory by Mann when he received the dol- million day Corpo- same Madison by made the First lar note Bentley marked “Paid Mort- payable ration to Great Southwest Robert A. 1-31-73.” He immediate- gage Company, Investment Inc. This & ly wrote February reiter- $600,000.00note was indorsed to certain ated his claim to one-half of through trusts Mann’s Mann as children purchased Southwest, plus from Houston It was a deed of trust Trustee. secured those owned him under the Control lien on acres of land situated in Rains Agreement; tendered Mann draft on Texas. the take-out County, Under com- Republic Bank one-half of the dollar million mitment, agreed note; requested that one-half of the note, if called to do so pledged stock be transferred to him “Robert A. Mann or between his nominee” Mann not later February than 24,1974, 24,1974. February and March For Mann admitted on the trial that he received $30,000.00 agreement, letter, Fender received the the draft on Fender option buy to of the Rains one-half would have good. However, been he did $1,000.00. land for The take-out comply County request, with Fender’s other (maker agreement than to later enabled First Madison to (prior transfer filing suit) note) pur- of this the take-out to obtain funds to origi- shares nally County. owned Fender under chase the land in Rains The chil- the Control Agreement, for which paid by agreed Mann was dren’s to loan First Madison trusts Fender. The dispute over ownership purchase if price, First Mad- 9,270 shares continued. repay ison would or refinance amount years. within The of the take- two effect April 30, 1974, On Mann wrote Fender out the trusts for that he giving days Fender ten notice purchase Mann’s children would fund (as required Agreement) under the Control (for County property First Madi- Rains that Mann and those to whom as- he had March, son) March, 1972, through signed part a allegedly thereafter, by performance owned him had received an offer from agreement, purchase would be Joe (not Pearson and Martin R. S. by Fender. trusts advanced funded Agreement) 14,- the Control purchase all $600,000.00and became holders of the note. per 219 shares at share or $140.00 a total advance, $1,990,660.00 To fund this the trusts had obtain- paid to be cash $600,000.00from and the ed a loan of Continental bearing balance an interest which, due six Bank in Fort Worth ac- months secured a lien on the National evidence, 9, 1974, shares. May cording personally On responded by reiterating (at Further, guaranteed his claim to the take- Mann. assigned again sought out note was Bank to Continental certification from Continental as collateral loan. Mann trusts’ install- quarterly Bank that “all interest date”; paid been to a current ments have provided “proposed and also asked what the given Pender would days be notice of 30 a regard by maker of to the claim prior do obligation to his purchase the take- usurious”; note; interest and stated out note that is among and it four condi- purchase tions for the met he the note not be had been that if all conditions in default at the time purchase by Pend- position “in a to close this matter.” McDow- February 15, 1974, er. On Continental respond, ell did not but Mann sent Pender Bank, nominee, acting through as Mann’s your stating, “Re telegram on March 27th McDowell, gave Prank C. written notice to paid to interest cur- telegram March Pender to the note on or before usury. All condi- rent date. I warrant no March 1974. Pender turned the matter proceed.” Please tions met. over to his business R. manager, Charles as to question shows The record Woolridge, to determine whether the condi- March status the note on the current met, tions of his had been and if whether in- solely upon centered (according met Woolridge’s testimony) payments current. Continental terest were execute the tele- commitment. Several collateral, but the Bank held note as phone Woolridge conversations between payments not made it. and McDowell resulted in a letter to McDow- Rather, according his Mann and witness- (in name) by Woolridge ell Pender’s Rusek, (Walter question a certi- inquiring con- es on the J. whether the satisfied, specifically accountant, ditions had been public is now trustee fied who “(4) requesting, trusts, certificate that the note an officer in for the Mann children’s responded by not in default.” McDowell and the several entities controlled letter on March 18th which he stated keeping primarily charged with person positively that three conditions of Mann accounting financial and records (insurance, than receipts, default tax trusts; Wood, attorney, L. and the L. survey securing note) on the real estate $600,000.00take- guarantor on the personal met, stated, “(4) had been To the then note, in First Madi- and a out. shareholder knowledge, my best of which will the note note; Neely, son, Fred maker assigned respects is current in all par- Madison and former owner First (Emphasis with no conditions of default.” joint- in a ticipant with Mann and others added). There were then other conversa- Properties), venture known as Premier by telephone tions between McDowell and note to the due and received Woolridge request- in which McDowell was (owners note) trusts was treat- by Woolridge unconditionally certify, ed primarily against as an ed offset Bank, on behalf of Continental Properties. by Mann to owed Premier respects note was in all Mean- current. bookkeeping en- offsets handled while, according Woolridge, there had books re- kept by Rusek. Rusek’s tries been him and an a conversation between the note receipt of interest on flected (the officer of First Madison maker did for and the offsets but note) “concerning possible question of payment show the interest usury charging with the note . . . in de- year Rusek testified thereafter. legal more than a of interest.” On rate 1972 have not tail that the entries since 25th, telegram Mann sent to Pend- with problem been made because of a stating, you er “Just been are re- advised income tax filed Premier federal return fusing to honor take-out commitment]. [the Properties question by and a the Internal true, damage If I will as a great suffer in the will result Revenue Service which your you result of breach will look to income tax re- filing of certain amended immediately.” By for same. Advise tele- gram McDowell, day the next turns. only Vaughn’s knowledge

McDowell’s from of that as whether him instead one.” the interest on the had take-out note been largely disputed Mann. testimony was paid (and only knowledge) Reserve In addition to the Federal Mann’s oral statement him it was 1972, of February, Board’s Mann’s denial in paid. McDowell testified that was the rea- Southwest proposed merger between First son give he could not uncondi- Bank, Mann Bancorporation tional statement on behalf of Continental personal and business suffered a series Bank that the interest paid, because thereafter. setbacks in 1973 just “it’s give can’t a certification They included criminal indictment on behalf of the Bank on somebody based June, govern- Mann in the federal else’s oral statement.” alleged ment the federal for an violation of Fender refused to execute laws, widespread banking which received agreement. Continental then called banking (Mann had been publicity in circles upon $600,000.00 loan, Mann to acquitted by time of the trial of our there, by the secured note. It was 1977); case Reserve August, the Federal paid by Mann and the trusts in follow- pro- Board’s of a denial on March ing May, 1974, fashion: In the accrued in- posed merger First International between $50,000.00 terest and principal paid, Bancshares, Inc., (a Dallas, broadly- Texas and the balance was Following renewed. company) based First Na- holding and the payments and an additional Waco, tional would have Bank of $75,000.00 payment of principal, been benefit of substantial financial loan paid November, in full in (First Bancorporation Mann Southwest Eventually, February, Mann and owned National 86% of stock of First bought the trusts the 425 acres in Rains Waco; Bank of and Mann the trusts County at the trustee’s sale under the deed owned 69.7% of stock of First South- $212,500.00. of trust appraisal An ex- west failure to Bancorporation); Fender’s pert $223,000.00 valued the 425 acres at at $600,000.00 take out the First Madison note the time of trial. The evidence shows that March, 1974, resulting and Mann’s re- First (personal Madison and L. L. Wood sponsibility Continental Bank on the guarantor on the note) First Madison are note; knowledge time that Mann’s at that both bankrupt. hearing pretrial faced a indict- Vaughn Michael testified that he is not 1974; liquidation May, ment in the eventual personally Fender; acquainted with that in Bancorporation First Southwest January, 1976, (which present was after the Fall of its sale of the stock of filed) suit was he “desperately needed” an First of Waco at substantial- National Bank extension on a note given he had ly received in less than have been would purchase of a bank from Mann’s First exchange merger First Interna- if the Bancorporation; Southwest that he and approved; tional had been Bancshares agreed upon (and involved) a detailed value of the asserted loss based transaction under which Mann would re- Madison securing the 425 the First acres ceive Vaiighn tempo- on a note. rary land, sale County Rains but state Mann characterized his emotional eventually (and own the land March, when financial affairs in thereby be made whole on the Fender to execute the take-out refused note), take-out Vaughn get and would commitment, “harried chaotic.” and note; extension on his but that the ar- Nevertheless, established testimony Rusek’s rangement “scrapped was for another deal” and that of Mann at financial statements Mann’s insistence because Mann said “he 31, January was children’s trusts dated with a involved lawsuit with Mr. Fend- (which, record, er and he are their financial going put was under the property that on 24, just Mr. Fender and he statements in time to thought best to nearest 1974) make me worth buy piece property another Mann’s net showed that $8,708,445.00, $600,000.00 $288,375.00 placed Mann and the which included in- son note bind”; deposit great financial vested in certificates of can be children’s in “a “that trusts anytime”; would result if he turned to cash at the trusts that Fender knew that that commitment; $5,470,423.00, had a combined net worth did not the take-out honor $149,425.00 including deliberately, maliciously and certificates of de- that Fender posit; willfully take-out and that the financial statements breached the were him their Kil- lending exhibited to banks and institu- coerce to sell defendants stock; tions as also gore reliable. Rusek testified in that as result Bank very general fashion that there were com- malicious inten- Fender’s and and “willful cash, mitments on the and (1) that tax liabili- were forced to off they tional acts” ties were payments coming up, and note thereby and suffered note too. they for which damages certain on the note sued; (2) enter forced to into Verdict, Pleadings, Judgment and 30, 1974, to sell their April pleaded Fender for relief on these theo- stock, sought set they which ries: (1) alleged He that he was entitled aside; (3) to sell their control were forced purchase 4,635 (one-half 9,270 shares Waco, National Bank of stock The First originally by held Houston South- Texas, conditions “rath- poor under market west) per (a) share reason of $65.80 stock, keep than said being er able to “preferential right” exercise of his market,” a seller’s sell said stock in more of participate in the contract between $4,000,- causing damages in excess them August Houston Southwest dated sued; (4) they 000.00 for suf- which 1971; (b) by reason of oral personal harass- fered “untold financial November, ment between him and Mann in damage ment and embarrassment” 9,270 they purchase that would good reputation their for which financial shares on a executing “50-50 basis” $1,500,000.00 they exemplary should recover Bank; Republic million dollar note at damages from Fender. (c) that, alternatively, by reason of the use set allegations Fender forth denied the (the joint note) funds million dollar action, pleaded that cross defendants’ 9,270 purchase shares, a trust were not caused damages by them suffered resulted in his favor under Fender; that his refusal and asserted 4,635 held price shares for at the proper honor the commitment paid. alleged He that was entitled to (a) not furnished evi- because Fender was purchase 9,584 remaining shares held payment on the dence that Fender, not claimed for $140.00 on March was current note per April share under Mann's offer dated 1974; (b) on the note some interest accepted by which was Fender. time; (c) delinquent was in at that fact And, (3) alleged, alternatively, 24,1974, “put Fender was prior to March if purchase he was not entitled to notice” the maker assigned shares for under the $65.80 reasons usurious, and claiming the note was by him, then he was entitled under Mann’s have ordinarily person prudent offer April acceptance, and his those circum- purchased under the note disputed shares at stances; note was (d) that the take-out per Proper pay- $140.00 share. tender of time. in fact usurious at that ment under theories made Fend- er. August jury to a case was tried following an- 1977. The made

Responding, Mann and the other defend- special swers to issues: ants disputed claims used to one-half of the “the purchased Found that Southwest; from pleaded Houston the 9270 shares they alleged cross action in which National [Houston by the use Fender’s failure to take out Madi- was obtained the First Southwest] joint 10,11, issues, of 12. credit” Fender and These conditioned s.” Mann “in signing the one million answer “duress” upon an affirmative note.” dollar They 7, were not answered. to issue November, 2. that Found in damages defendants’ inquired about agreement” Mann “made an oral having caused their “proximately with Fender that if Fender would Bank,” Kilgore in the to sell the stock sign the million of dollar note “each the sale of as a result of and “incurred (½) them would own one-half Waco, of Bank First National Kilgore 9270 shares of National Texa being purchased Bank from [Hous- 13. Failed to that find the Mann defend- ton Southwest].” ants were exemplary entitled to (3) prior 4. Found that to March damages. given The jury on put Fender “was notice following instruction in connection usury by claim maker of with this issue: “Before can as- $600,000.00 First Madison [take-out] note”; and found re- “upon exemplary sess damages, you must such . ceiving usury notice . . believe and find preponder- from a person prudence of ordinary ance of the evidence act of not ordinary care would exercise failing Fender in the take- honor $600,000.00 taken out have such out commitment was malicious and note.” intentional or was actuated some 5. Failed find immediately pri- “that evil gross intent negligence or in 1974,” $600,- or March disregard rights 000.00 take-out was not de- Defendants which would be the fault. equivalent such evil intent.” issue, 6. upon This conditioned an af- firmative answer to issue not 14. This issue about the amount asked inquired answered. It about defend- damages. exemplary Conditioned ants’ monetary direct loss on upon an affirmative answer to issue $600,000.00take-out note. 13, it was answered. 7. Failed find “the act of Fend- er failing to honor his take-out stated, prior filing As we have agreement constituted duress.” The this suit Mann had transferred “duress,” issue, term as used in the payment had received was defined “any to mean unlawful originally owned Fender under or unconscionable coercion of anoth- Agreement. upon Control Based er, mental, either physical, economic recited verdict the conclusion otherwise, or causing him to act con- judgment undisputed “the evidence trary to his own will free or to sub- April 30, letter dated [established] mit to a situation or condition 1974, Defendants made an to sell to offer against his own volition interest.” Plaintiff all of owned the shares of stock 8. Failed find that the Mann defend- the Defendants in the First Nation- required ants were to sell their Kil- Bank, al accepted offer was Plain- gore obliga- Bank stock their judgment tiff” was rendered which its tion to Bank Continental on effect disputed awarded Fender the $600,000.00note. price the total Failed find that Fender knew ($65.80 per share), and him the awarded or about March if he remaining price shares for the total failed honor his take-out $1,341,760.00($140.00 per share). judg- ment the Mann defendants provided ment also that Mann and to sell the satisfy

stock to nothing obli- take cross ac- defendants gation at Bank. Continental tion.

Although Mann states in his brief under lion dollar dated November note] point added). of error related to 100 of the (Emphasis 1972.” (discussed herein) stock later that “does Later, paragraph petition, in IX not accepted concede that Fender Mann’s alleged following the facts: April offer” dated to sell all of his “Further, would show that he Plaintiff stock, assign Mann does not error to the joint- did and Defendant Robert A. Mann holding court’s judgment set forth in the ly the agree money from Re- borrow acceptance offer and were estab- public jointly Bank of Dallas to National lished under evidence as a matter of the stock owned [Houston law. the funds of Harris and that Southwest] Complaints Rulings And purchase one-half R. Fender were used to R. Fender said stock and that Harris Defendants assert the in ren- court erred of the stock so became owner of one-half dering judgment jury’s finding acquired from [Houston Southwest] November, 1972, agreement oral Further, Defendant Robert A. Mann. Mann and Fender would each own one-half money use Defendant Mann of 9,270 shares, Special in answer to joint obligation of Plaintiff and from the (1) Issue No. because Fender did not Defendant Mann to the stock plead agreement, the oral and the oral owned resulted Southwest] [Houston agreement V.T.C.A., was in violation holding one-half of Defendant Mann 8.319, Bus. C. § the statute of § frauds purchased stock from [Houston governing a contract for the sale of securi- Plaintiff. in trust Southwest] ties. We overrule those contentions. Thus, express both under the stated, As we previously pleaded between Plaintiff and Defendant Robert agreement. paragraph peti- In V of his A. Mann as well as trust under the pleaded tion Fender Mann’s contract of Au- use of resulted from Defendant Mann’s gust, 1971, with pur- Houston Southwest funds, the Plaintiff is the Plaintiff’s 9,270 shares, chase Houston Southwest’s (Em- owner of of such stock.” one-half Mann’s offer to participate let Fender phasis added). contract, accept- Fender’s asserted pleadings clearly up Those set March, 1972, ance in and then continued question. ment in follows: provisions Rule Under “The disagreed about the form of Civ.Proc., Vernon’s the defense Tex.Rules Harris R. Fender’s to purchase must be affirma statute frauds stock, one-half of said but on or about tively pleaded, it is waived. First Na else November the Defendant Rob- Zimmerman, (Tex. v. tional Bank In Dallas A. ert Mann came to Harris R. Fender 1969) 442 S.W.2d 676. The statute represented to him that the two of it was pleaded by frauds was not them jointly purchase should the [Hous- do Accordingly we therefore waived. stock; ton they should Southwest] application decide its in this case. purchase price borrow the of said stock Republic National Dal- Bank of instruction requested an Defendants las, Texas; refi- should also defining agree term “oral nance original with Re- stock Special No. 2 to ment” as Issue used Texas; public Dallas, Bank National meeting expression of the mean “a verbal being purchased stock of the minds R. Fender of both Harris joint taken held under Control respect to their Robert A. Mann with Agreement along original obligations connection being stock purchased held Robert A. Mann un- stock with the Agreement. requested der the Control Pursuant to from Southwest].” [Houston court, said agreement, R. Harris Fender and definition was refused ruling. The jointly signed assign Robert A. mil- error to that defendants [the complaint only persons present and Special is overruled. Issue No. 2 Fender were the inquired, you preponder- negoti- “Do agreement allegedly find from was when the made; ance of the evidence in that November Mann it was ated. Fender testified 1972, agreement made an oral with Additionally, Bent- [Mann] Ed testified it was not. join sign- that if would [Fender] [Fender] arranged ley that when Mann testified note, ing one the million dollar each of them million dollar Republic him Bank for the at (½) own would one-half of the 9270 shares note, and Mann Told him that Fender Mann being purchased National Bank and “jointly the would own testimo- The. [Houston Southwest].” ques- testimony raised the equally.” The ny on this issue from Mann Fend- both and credibility the of the witnesses tion of er, although wholly contradictory, was di- jury against by the which was resolved rectly stated them. Fender said their not finding is jury’s Mann. hold the We meeting minutes, lasted about they 10 that weight preponder- against great the only signing discussed the of the note and on the issue. ance of of the evidence ownership 9,270 shares, the the that the several errors related assign Defendants meeting agreement ended with the oral issue no. special to the submission that sign Fender would note the That submitted Fender’s claim issue “50-50,” would own the shares and that one-half they “shook hands” on it and further trust theory resulting the of a upon based agreed “to bygones bygones.” let Mann of his credit in his because of the use favor meeting hours, said that the lasted several note, in the of the million dollar execution that prob- their many discussions covered ground for recov- an alternative differences, lems and and that he steadfast- ery upon agreement. ly to based the oral agree refused to proposal to Fender’s “to buy stock,” finding of the oral jury’s half that Inasmuch as the and that he told Fend- “No, er, you any buy agreement can’t the de- going supports judgment, not to —I’m agree buy resulting this stock at this late are fects issue trust date. You didn’t when commit I had to Tex- and need not be discussed. immaterial commitment, take going agree so I’m not Beck, Tex. Jersey Corporation v. 157 Oil question it.” The for resolution 162, 541, (1957). 165 305 S.W.2d jury was whether the disputed was made by parties. erred term “oral contend the court Defendants agreement” special was not used rendering jury’s judgment on the answer sense; issue in peculiar legal but it special 5 the evidence issue no. because simply disputed agreement referred the First Madi conclusively establishes that which, pleadings under the proof, when son was not in default take-out note made meeting with “the it on Fender was called the minds” or was not made at all. Its 24, 1974; and, alternatively, defend definition reasonably necessary was not issue, ants in which assert answer jurors aid the in their deliberation. Griffin the note was not jury failed to find Cawthon, v. (Tex.Civ. 77 S.W.2d 701 default, against great weight is App. ref.); Worth Pullen writ — Fort preponderance the evidence. Defend Russ, v. (Tex.Civ.App. 226 S.W.2d conclusively proof position ants’ n.r.e.); —Fort Worth writ ref’d due the note was shows McDonald, (1970 Texas Civil Practice 323 due on Mann’s against offset ed.), 12.14.3(c) Jury Charge trial: § —Defi regard without Properties, Premier requested nitions. The prop definition was entered fact that offset erly refused. during books Rusek in Mann’s financial testimony of mainly upon jury’s finding Defendants assert the based Rusek, Wood, Neely. Mann, Fred the oral L. L. was made is against of the three great weight Neely Wood were two preponder ance disagree. the note evidence. We owners First Madison when when he executed, personal find that knew refused guaran- and Wood was commitment Neely tor honor on the note. and Wood thereby be re- defendants partners Prop- with others in Premier Kilgore Bank Stock in quired to sell (There erties. was other evidence of close Bank), at Continental order to the note dealings Mann and Michael Neely: between weight prepon- against great are Vaughn Neely initially testified was who agree cannot We derance the evidence. January, told Vaughn him in with those contentions. get could probably the much-needed exten- sion on his note with First Southwest Ban- is lengthy The this case evidence in corporation if he would arrange only small set forth detailed. We have $500,000.00). personally Mann Rusek disputes show the part of it order to in employee. Mann’s The de- testimony posi- of and their between and Fender Mann regarding payment fendants’ witnesses of on discussion of tions the trial. Further the purpose. the Under by readily offset could not be could serve no useful in untrue, justified believ- jurors evidence the were by contradicted if other than the to honor the take- ing that refusal entries Fender’s evidence of the book of the offsets place the Mann de- not out did offsets which showed that the were record- duress, and that fendants under economic ed not by for 1972 Rusek but recorded for were good faith. Fender acted 1973 Testimony nor thereafter. na- of this financial also entitled to believe ture, coming from witnesses who in- were and the trusts stress suffered Mann matter, raises only questions terested in the Fender’s actions but stemmed not v. fact and is not conclusive. Gevinson the au- federal from Mann’s indictment Manhattan Construction Co. of Oklahoma (which, according to ended thorities (Tex.1969) light 449 467. In the S.W.2d discharge acquittal of the in his and the record, of the whole we also hold brought charge prosecutor federal who jury’s special answer to issue no. 5 is not actions of the against him), from the against great weight preponder- partially Federal Board after Reserve ance of the evidence. indictment. Ad- based the fact of the assign Defendants also error to the sub- Mann and ditionally, credibility of special (based upon mission of issues 3 and 4 witnesses was and other Fender and Rusek justi- pleaded usury” Fender’s “notice of on the trial. As placed sharply in issue purchasing fication for not the take-out prerogative it was the triers the facts note) ground those issues did weigh all of the duty jurors of the ultimate, submit an tenable defense. In evidence, they believed to what ferret out light jury’s special of the answer issue parts, and answer be its most credible judgment supports no. 5 which based on proof, all accordingly. issues Under failure to issue either affirm- jury’s we believe the answers note, First complaint ques- Madison ques- to the issues atively negatively tion is immaterial for the reasons discussed upon factually based tion would have been special with no. 1. above in connection issue Therefore, we cannot sufficient evidence. Beck, Tex-Jersey Corporation supra. v. Oil great against say their are answers weight evidence. preponderance jury’s contend an Defendants special (failing swers issue no. 7 to find May on Fender This suit filed that Fender’s failure to take-out the First 17,1974, thereafter, May on 1974. Soon constituted economic duress Madison note agreement, written into a entered against defendants), special case, and to issue no. under which papers filed (failing 8 to find that the Mann defendants sold Fender defendants Mann the other their Bank Stock for to sell shares of the obligation per share which satisfy Stock to to Conti of $140.00 the consideration $600,000.00 note, contained paid. nental Bank on their Fender pertinent provisions: there), special (failing issue no. these and to 9

201 agree- fact points that the 2. his offer sale of ment was executed after “Defendants will transfer to [Fender] April all of his stock to Fender Bank], shares of stock in [Kilgore offer acceptance of the and Fender’s being the stock held Defendants 1974; agree- May 9, asserts in said Bank the exception April 30th sale as to superseded ment shares which Plaintiff asserts a shares, ownership in vested their claim ownership being and 100 shares him, 100 shares from and “removed the retained Robert A. Mann. support In consideration in this suit.” par- that contention as the intention of ties, argues after the trial pleadings ment were no was executed there temporary “The restraining here- order for the 100 shares. and no claims tofore issued this Cause [enjoining argument. agree We with that cannot selling any Mann from of the stock to alleged his claim anyone other than shall con- Fender] 4,635 30, April pleaded the shares and the tinued until final determination of this 1974, acceptance and and reasserted offer cause, subsequent or until order of this 9,584 right purchase his the thereunder “to Court. does not shares such stock to which he of ownership” assert claim in his First any of 6. 10, Original June Amended Petition filed “Defendants acknowledge agree 1974, Original his Amended and in Second that the remaining 4635shares of stock in 27, (his August pleading) Petition trial filed [Kilgore paragraph mentioned Bank] [in 1976; expressly prayed and in each he represent of one-half the 9270 shares 2] judgment Declaring to be the “1. Plaintiff of acquired by stock in said Bank Robert 4,635 owner of the and “2. of shares stock” A. Mann from on or [Houston Southwest] right Declaring has that Plaintiff the 15, about November 1972. remaining of the the 100 shares stock still held Defendants.” Addition- verdict, ally, judg- after Fender moved for (on April ment verdict and under the the agreement “This and the transfer of 30, 1974, contract) defendants to requiring the 9484shares of in [Kilgore stock Bank] remaining shares deliver to him the Plaintiff, Defendants to as herein held by and “100 shares” still Mann. On provided, shall be without prejudice to hand, although and the the rights the any of party to suit this the trusts claim to disputed Fender’s prejudice without rights, any, if of sought offer-accept- shares and to avoid any parties of said to the 4635 shares.” April ground ance of on the Mann contends that under the terms of amended duress in their first and second agreement, awarding court erred in both answers and cross actions which were “100 being shares retained agreement filed after the of the execution Robert agree- A. Mann” referred to in the question, trusts in neither Mann nor the ment. ownership The of those shares is regardless pleadings asserted in those very important parties. they to the If are they duress the merit of their defense owned by under Control then shares under the trial owned the 100 Agreement he will continue as Chairman only specific ment. mention the 100 the Board and Chief Executive Officer prayer shares was in the of defendants’ the Kilgore Bank and will also determine and cross action second amended answer (their vote of all prayed the control stock on all pleading) trial in which disputes concerning the election Defend- of directors “and that it be found that further policies management and the obligation ants sell to Fender have no Bank. Nation- of stock in the shares 202 alleged Fender, complains

al 8 Appellant’s point Bank as nor of error no. the 100 shares, or, alternatively, in rendering judg- the event that it erred in that the trial court right found that Fender does have the 100 shares awarding ment to Fender stock, any of said that Fender be by Mann” Kilgore Bank stock “retained per share.” This $140.00 17,1974, stipulation by pursuant May prayer up independent does set claim discussion, parties. convenience For stipulation under the trial Fend- appropriate I will refer to Mr. where the 100 shares. “Fender,” to Mr. er and his interests as “Mann.” Mann and his interests

Mann says that resolution of question fact agreement under the as to the “stipulation” is denominat- so-called parties relating intention of the 100 “Agreement,” is dated heading, ed by was waived Fender when Fender 1974, signed by counsel is May request failed an issue is not This Fender and Mann. question. There argu is no merit to that disposition of ambiguous, as the insofar ment. parties The intention of concerned, opinion, and my stipulation trial is for the determination subsequent Mann’s letter executed language court from used (Pl.Ex.No. April to Fender dated entire light “in the of the sur May 11) reply dated and Fender’s to Mann circumstances, rounding including the state (Pl.Ex.No. 12). pleadings, therein, allegations respect the attitude paragraphs pertaining The three Indemnity issues.” Texas Ins. v. Co. read are 100shares numbers Dunn, 922, (Tex.Civ.App.— 221 924 S.W.2d as follows: 1949, writ). Waco stipulation no If the is “2. ambiguous terms, and uncertain in its R. to Harris “Defendants will transfer disregarded by should be the court. Ser Fender, Individually and as Trustee geant Co., Dry v. Goldsmith 110 Goods Tex. Fender, Fender, M. Harris R. Jr. and David 482, 259, (1920). 221 261 S.W. Na- Kilgore First 9484 shares of stock Plainly, the court construed the Kilgore, being all of the Bank tional of stipulation expedient parties to be an of the (Mann) said stock held Defendants pending of disputes determination exception 4635 shares Bank shares, over ownership of all and not an (Fender) asserts a claim to which Plaintiff relinquishment by intended Fender of his being ownership 100 shares retained claim to the 100 shares. We believe that by Robert A. Mann. construction A correct. trial will not be so as a right construed to waive $ $ ‡ ‡ n not plainly agreed relinquished. in it to be “6. 21, Lewis, (Tex. Jackson v. 554 S.W.2d 24 acknowledge agree “Defendants Civ.App. writ). no — Amarillo Kil- of stock in remaining 4635 shares remaining points The of error are also Kilgore men- gore First National Bank record, without merit under the paragraph represent preceding tioned are overruled. said of stock in one-half of the 9270 shares judgment The is affirmed. from A. Mann acquired by Robert Bancshares, No- or Inc. on about Southwest JAMES, Justice, dissenting. vember 1972. I respectfully dissent. I would affirm a “7. portion judgment, of the trial court’s re- agreement and the transfer “This thereof, verse part and render a and reverse Na- Kilgore First stock part 9484 shares of specifi- remand a More thereof. Defendants cally, Bank of from points I would tional Appellant’s sustain Plaintiff, provided, shall be with- numbers and 15. as herein

203 prejudice rights out any party Appellee any nor made has effort modi- this suit prejudice and without fy, explain, Stipula- or otherwise attack rights, any, if said to the at all contrary, Appellee tion. has To 4635 shares.” upon Stipu- times and confirmed the stood Appellee Plaintiff had lation. Fender as At the May time the Agreement right to establish his of owner- burden executed, shares of stock; however, ship to these 100 shares of issue, Bank stock were in with different support such he neither offered evidence to questions with respect involved to different requested spe- claim nor submission portions. stipulation provided that supporting cial claim. After issues such shares, Mann would transfer to Fender 9484 verdict, the 100 of stock still jury being all the stock held by Mann in said stood name possession. in Mann’s Bank except (1) the 4635 shares which Stipulation prejudice” part “without claiming Fender was 100 shares by express wording only related to the 9484 being retained Mann. shares, shares and 4635 neces- It is significant that the paragraph final sary implication did not to or include refer (7) provides that this transfer of the 9484 shares, the 100 cannot therefore shares and the 4635 shares would be with- by Appellee relied as a basis avoid- prejudice out party, to any but say does not ing the effect of Mann’s retention of the anything about Mann’s retention of the 100 Appellee present same. Fender’s failure to being prejudice. without findings entitling evidence or secure It is to be remembered that all this him in a shares resulted waiver name, stock was in Mann’s and that Fender of his such claim shares. as Plaintiff had establishing the burden of ground recovery An independent or de- his entitlement thereto before he would be conclusively fense established allowed to By divest Mann of same. given evidence is waived if no issue clear and unambiguous provisions requested. Rule Rules of Civil Texas Agreement, the 100 shares retained Procedure; Glens Falls Co. v. Insurance Mann were removed consideration Peters, (Tex.1965) and the S.W.2d this suit. Fender sued Mann to establish page cases cited therein on right his to the shares of reasons, I foregoing For the would hold by stock held Mann and in Mann’s judg- portion that that of the trial court’s name. Appellee Fender upon relies Mann’s ment wherein Mann was divested 100 letter 30, to him April 1974, of as offer an question shares in and that Fender was to sell him shares, these which $14,- payment of awarded such shares for a (Appellee Fender) accepted by asserts he his 10, 1974, to plus May interest from the reply letter May 9, to Mann of 1974. The date of judgment of the amount $3282.37 trial judgment court’s recites that Mann’s rendered, be reversed and and that said letter April 30,1974, of constituted an offer judgment adjudge Mann to the owner of by shares, to sell these which corresponding such reduc- 100 shares with a accepted findings Fender. These money receive the tion in the Mann is to judgment the trial court’s are in direct con- $14,000.00 plus amount of $3282.37 flict 17, with the provisions May clear judgment. to of the date 1974,agreement. 30, Mann’s letter April 1974, 9, and reply May letter Appellants’ point of error 9 contends the preliminary negotiations are leading judgment rendering erred in to trial court up to Agreement May written the Mann defendants take effect 1974, wherein expressly against it was Fend- provided nothing their counterclaim that Mann contract, would retain these jury’s 100 shares. er for breach because Appellee $600,000.00 Fender neither evi- offered failure that the note was to find dence nor requested any against great weight issues would which not in default so shares, cause him to be entitled to these 100 to be preponderance and of the evidence as $600,000.00 agreed manifestly purchase promissory to a wrong unjust; and because the jury findings Corpora- Pender had notice First Madison note made 3), usury of a Issue (Special claim of No. Mort- payable tion Great Southwest to notice, upon $600,- and that such a reasonable Co., Inc. This gage and Investment $600,- man not have out the would taken chil- Mann’s 000.00 note endorsed 4) (Special 000.00 are note Issue No. imma- Trus- trusts, at time with Mann dren’s no a terial constitute as matter defense 425 acre secured tee. The note was I of law. would these contentions. sustain Tex- County, in Rains tract of land located agreed agreement, as. said By points Under of error numbers 14 and upon purchase note if called Appellants the take-out jury’s assert that the answers to (relative Special February Issues Numbers 3 and between do so (cid:127) usury) prejudicial effect 24,1974. had such For this March permeated charge entire right Mann’s $30,000.00 plus cash received prejudice, thereby increasing bur- Mann’s land County the Rains one-half of constituting den on all as the issues well as time was at that $1,000.00, which land weight comment incurable $956,800.00. take-out appraised at evidence. I would these sustain contentions Corpora- agreement enabled First Madison jury’s would hold that answers to note) obtain (maker of the take-out tion Special concerning and 4 Issues Numbers 3 land. County purchase the Rains funds to usury permeate charge did the entire loan First agreed to The Mann Defendants prejudice thereby Mann’s increased $600,000.00 purchase Corp. Madison proof, Mann’s particularly burden insofar or refi- repay price if First Madison against as Mann’s cross-action Pender years. two There- within nance the amount damages for breach contract his fore, take-out commitment the effect of the cause of action based duress con- are would fund Defendants was that cerned. County land of the Rains Special No. 5 Issue submitted there- through March March 1972 read follows: Fender, after, performance of by the pur- agreement, would fund

“Do preponderance find from a immediately prior the evidence that chase. exe- $600,- advanced The Mann Defendants cuted Corp. First Madison was not in and became holders 000.00 default? Defend- the Mann To fund the note note. ‘It was “Answer: not in default’ or ‘It Conti- loan from ants obtained ” was in default.’ Worth, Fort nental National Bank by Mann. guaranteed personally loan was jury’s

To which the was: answer “It to Moreover, assigned note the take-out was in default.” as collateral Continental Bank jury’s I believe this failure to find that Defendants’ loan. Mann against this note not in is so default great weight preponderance and agreement provided The take-out manifestly wrong evidence as to be and by given days 30 notice would be Fender unjust, King’s In re under the doctrine of obli- prior to Fender’s or his nominee Mann (Tex.1951) 662, Estate Tex. S.W.2d note, and gation take-out 660, and my should be set aside. To show default at not that said note weighed reasons for this I have conclusion Febru- On purchase by Fender. time of issue, all the evidence on both sides this 1974, nominee 15, Bank as ary Continental Court, by Supreme as mandated our Mann, notice letter gave written will now such review evidence: de- Continental providing Fender obliga- his take-out 23, 1972, Fender to exercise On a sired March Fender executed 24, March agreement by written which he tion on or before “Take-Out” responded Fender inquiring perform letter that because of Fender’s refusal to precedent whether all conditions were satis- he placed the take-out Bank, fied. Continental by letter of great Frank pressure under financial from several McDowell, C. Bank, officer of said sources which was tantamount to duress 18, 1974, letter of March notified Fender sought for he actu- caused closing met; that all requirements had been damages. al exemplary concerning whether the note was cur- great weight my opinion that It is not, rent or the letter read follows: preponderance of evidence over- “4. my To best of knowledge, the whelmingly established that the take-out assigned which will be you is cur- prior immediately note was not in default rent respects all with no conditions 24,1974. narrows itself March issue default.” actually down to whether the interest at time. current the take-out note said

Replying this, Fender on March telegram sent a to McDowell at Rusek, Conti- public Walter J. certified ac- nental copy Bank with a saying countant, pertinent was at times “_ pertinent its parts: Please advise issue Trustee of the trusts for Mann’s 24, 1974, whether March installment has children, responsible three primarily paid been quarter- whether all interest accounting Mann’s financial and matters. ly installments paid have been to a current Rusek testified that Mann and the makers date. We also wish to know what of the take-out note into an ar- entered propose to do regard to the claim rangement whereby the interest due under maker of note that interest is If usurious. against take-out note was to be offset all conditions of our commitment have been payments certain interest owed Mann. met, position we will be in to close this The the Mann interest offset involved matter.” (who trusts owners the take-out note), individually, Mann First Madison response In telegram, to Fender’s Corporation (the maker the take-out day next a telegram sent to Fender note), investors, including group stating: your “Re telegram March Mann and First shareholders of Madison. paid interest to current date I STOP war- Rusek testified that the interest due on rant usury no STOP all conditions met against take-out note was offset please STOP proceed.” spite In of the fore- entity (to wit, Proper- due another Premier going, Fender, although recognizing that all ties) by primar- Mann. Rusek was man met, conditions had been claimed that ily handling responsible keeping he was not satisfied that the note was not the financial records of Mann and default, and therefore refused to honor Trusts, and testified how those books his agreement. kept. and records were Rusek testified Mann filed a against counterclaim actually that the interest offsets were made for breach of contract because of Fender’s and therefore take-out note perform refusal the take-out current. defended, ment. Fender contending: (1) concerning A. Robert Mann testified prior did receive evidence be- to offset which was March that the take-out note was current; ing implemented at the time critical to the interest on the note agreement, wit, was not in fact current as of March 1974; Mann, L. involved L. (Fender) put that he was on Wood, Neely notice that the Fred N. and others interested maker the take-out note claiming was Corporation. in First fur- that the note Madison Mann was usurious. Upon grounds, prece- these ther all asserted Fender testified that the conditions claimed he obligation was released from had his dent to Fender’s take-out perform to the agreement. satisfied, take-out been and that he had informed pleaded and offered evidence to effect Continental National Bank that 18, 1974, (McDowell’s) letter March respects

note current with no was all Moreover, require- stating in default. when after that all the conditions stated, met, on “To the best of telegraphed Fender Continental Bank ments had been Mann, copy inquir- March with to as- my knowledge, the note which will be current, ing respects as to whether the note was with signed you is current in all telegram day Mann on the next sent a testi- McDowell no conditions default.” stating, your telegram Fender “Re he had with fied conversations to several paid all date I em- Woolridge, interest current STOP was Fender’s who Charlie usury warrant no all conditions met ployee designated STOP Fender determine by please proceed.” was STOP take-out note whether the Fender regard testified McDowell in this current. Wood, personal L. L. attorney, was the as follows: guarantor of the take-out note was a Corpora- shareholder in the Madison we look- Woolridge First that were “I told Mr. tion, note. ing personally, the maker Wood primarily to Mr. concerning arrangements testified with and that the note loan repayment our respect offsets, explaining us, interest we were not receiv- assigned that payments that certain interest owed due ing that were payments interest paid on a had were Mann’s behalf but that I directly note under that group of investors with whom Mann was and he had told with Mr. Mann conferred note payments associated and such interest and the me note was current that the against were offset due also interest on Mann Trusts was that we had with the per- Wood Woolridge note. testified that.” I told Mr. current. sonally offsetting pay- made interest the take- “Q. If came forward ments on behalf Mann considered you to transfer position out were in payments against such to be offset not, current, sir?” being note were Corporation due First Madison Yes, sir.” “A. take-out note. spe- clearly showed that The evidence Neely, Fred owner First N. former upon were arrangements agreed cific Corporation, Madison off- corroborated the out; say, that the carried arrangement, set testifying: satisfied due under the take-out note was up, “The was set Mr. Mann was a deal by Mann against interest owed offsets joint participant in a that we re- venture regard unrelated transactions. to other Properties, ferred to as the Premier testimony was to effect Fender’s venture; joint offset the inter- we all perform- to his precedent condition only est, up initially or was set for the interest wheth- agreement was ance of the take-out to be offset. We him so much inter- owed current. due the note was er the interest est, and he owed interest testimony to the effect gave no Fender payments on our deal.” default, had apparently was in note vice-president Frank C. McDowell was to whether personal knowledge as no of Continental National Bank and the offi- or not. note was in default cer at National responsible Continental Woolridge, Fender’s Likewise, Charles R. loan to Mann’s by Fender requested who was employee trusts, generally and was familiar children’s ful- whether conditions determine February with the take-out note. On only condition filled, testified that wrote a letter McDowell in de- the note was dispute was whether nominee, as Mann’s Continental Bank Woolridge was unable likewise fault. to exercise his take- requesting Fender effect that testify to facts obligation. replied out his letter note in default. inquir- to McDowell dated March the take-out only evidence that ing whether the note was default. evi- circumstantial might letter his be in default answered McDowell dence growing out of the lack of written now to a discussion of the trial We move records reflecting the interest offsets after jury Special court’s submission words, In other the interest was jury’s 3 and 4 and the Issues Numbers posted on the note through year answers thereto: posted but was not thereafter. Rusek ex- No. find from a “Special you Issue 3: Do plained gap negotia- to due prior preponderance of evidence tions with the Internal Revenue Service put March Harris R. Fender was relating to the amendment of in- Mann’s usury by come tax on notice of a claim of the maker returns and Rusek’s election not to record the offsets as Corp. income to Mann First Madison problems until the with Internal Revenue answered, “He jury note?” To which the Service were opinion, resolved. my In this was.” absence of postings interest factually is in- upon an affirmative an- Then conditioned sufficient to support jury’s failure Special swer to No. the court sub- Issue find that the take-out note was not in de- mitted this issue: fault. a “Special

Continental No. 4: find from National Bank was Issue Do the hold- er note, of the take-out said note since had preponderance evidence assigned been by the Trustee the Mann’s receiving usury, if you such notice of have children’s trusts to said Bank as collateral. found, ordinary prudence so person However, Continental designated Bank had ordinary the exercise care would Mann to receive the interest on the take-out To have taken out such note?” note, and had in effect made Mann its this issue the answered: “He would agent for purposes of determining whether not have.” the note Thus, was or was not current. Mann and his agent are Special Rusek were Neither Issues Nos. 3 or 4 more than mere “interested parties,” testimony whose controlling opinion and in my issues discounted; is to be contrary, jury. error for them be submitted to the position were in the actual as the holder that he prior Fender testified was told the note insofar as having power 24,1974, maker take- determine discharge and satisfaction of the might out guarantors note or its claim obligation of the take-out note. usurious, this was one of note was Moreover, the interest arrangement offset refusing perform his asserted reasons testified to by the maker of the However, agreement. his take-out take-out note having corroborated others alleged proved that neither nor note knowledge same, does not or conflict usurious, showing that and there is no violate the Texas Business & Commerce possible after Fender heard of such claim Code. 3.603(b) Section provides: usury, any investigation that he made “Payment may or satisfaction be made determine was in fact whether note with the consent by any holder per- is rec- usurious. There no evidence in the including son stranger to the instrument.” fact ord whatever was in 3.601(b) provides: Section usurious. “Any party discharged is also from his obligated contractually liability on an instrument party to another hearing His take-out note. by any agreement other act or with such possibility usury about of a claim which party discharge simple his con- might tract de- payment be made does money.” not constitute fense to his his take-out failure to honor Under provisions these the maker’s obli- agreement. only provision in the take- gation the take-out note touching usury out can be and was here satisfied and dis- charged possibility paragraph thereof 9 which between the maker and Mann. reads as follows:

208 “usury.” The trial court refused no I be the term

“9. In event shall entitled same; receive, of be of therefore nor shall the maker said note a definition to furnish obligated in speculate amount about jury highest permitted by excess of rate of and whether notice usury what meant laws If I ever State of Texas. should usury to Mann’s claim was a defense would receive amount which exceed increased I believe these issues duress. rate, highest lawful the amount de concerning his duress Mann’s burden applied would be shall excessive interest be jury Once fense and counterclaims. principal loan the reduction of man, re a after reasonable concluded The payment and not to the of interest. usury, would ceiving of a claim of notice provisions of paragraph shall control obligation, contractual refuse to honor his provisions every over the other show that Fender’s then Mann’s burden By foregoing ment between us.” lan- failure to honor the guage, specifically increased, greatly amounted to duress provided possibility for take- my opinion. in might out note be usurious. reasons, I would: foregoing For the 4,No. jury’s Special answer to Issue portion of (1) and render Reverse a jury wherein the found that reasonable wherein Mann judgment court’s trial man would obli- perform not a contractual 100 shares to sell and transfer ordered gation, no is defense Fender’s breach for stock reasonably who breach- contract. man judg- to date of said plus $3282.37 es for his contract is nevertheless liable I would hold this connection ment. In damages resulting therefrom. In other such the owner of adjudged to be Mann is words, justification care no reasonable money stock, that the total amount breaching City for of Dal- a contract. See judgment be in to receive said Mann is (Tex.1938) las 114 v. Shortall 131 Tex. of said stock by the value reduced stated 536; Engineering S.W.2d v. F. & C. State wit, $17,282.37; interest, plus (Houston 1969) Co. CA 438 S.W.2d 14th (where perform failure NRE contractor’s re- for and remand (2) I reverse perform- was not the fact that excused out set of the matters trial on the merits all expensive ance would more than contrac upon Fender’s based in Mann’s crossaction Eagle tor expected); Radio News Assn. v. duress; alleged contract and breach of Broadcasting (San Antonio Tex.Civ. Co. words, embraced matters those App.1940) writ S.W.2d dismissed through inclu- Special Numbers Issues (where performance of a contract was sive; hardship); work a excused because would trial (3) I would assess the costs (Waco McCoy Dolph v. Construction Co. against Mann appeal equally court and on Tex.Civ.App.1947) writ. no S.W.2d Fender; and Thus, re jury findings that Fender usury ceived notice of and that reasonable I would affirm respects In all other person take would not have exercised the judgment. the trial court’s provide out agreement are immaterial and

no basis for defense to breach that,

contract. More than submission usury concerning two special these issues atmosphere against prejudicial

created a charge in permeated entire damages as all Mann’s

sofar claims Usury

are concerned. has been condemned as man-made law. the Bible as well deliberations,

During jury sent asking a definition court

Case Details

Case Name: Mann v. Fender

Court Name: Court of Appeals of Texas

Date Published: Sep 6, 1979

Citation: 587 S.W.2d 188

Docket Number: 5895

Court Abbreviation: Tex. App.