Texas Judiciary Online - HTML Opinion

Issued = September 25,=20 2008

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In The

Court=20 of Appeals

For = The

First=20 District of Texas

NO. =20 01-07-00497-CV

FARRAGUT FINANCIAL = CORPORATION,=20 Appellant/Cross-Appellee

CAPITAL ONE AUTO = FINANCE, INC.,=20 Appellee/Cross-Appellant

On = Appeal=20 from the County Civil Court at Law No.=20 1

Harris = County,=20 Texas

Trial Court Cause No. = 875198

MEMORANDUM=20 OPINION

This case involves a = dispute=20 between two lenders, concerning whether the lender who first = provided the=20 borrower with motor vehicle financing, Capital One Auto Finance = (Capital=20 One), later agreed to forward the borrower=92s car title directly = to another=20 lender, Farragut Financial Corporation (Farragut), who refinanced = the=20 loan. The trial court ruled that the lenders never formed = such an=20 agreement about forwarding title, and accordingly, it entered = judgment=20 granting Capital One=92s motion for summary judgment and denying = Farragut=92s=20 cross-motion for summary judgment. Farragut appeals that=20 ruling. Capital One conditionally cross-appeals, complaining = of=20 Farragut=92s failure to name the borrower as a party. We = conclude that=20 Farragut has failed to raise a fact issue as to the existence of = an=20 agreement and therefore affirm.

Background

=20 Capital One agreed to loan Wayne S. Daniel money for the purchase = of a=20 2003 Ford Expedition. In connection with that loan, Daniel = granted=20 Capital One a first position lien and a security interest in the=20 Expedition.

In 2005, Daniel = refinanced the=20 vehicle loan through Farragut. In connection with that = refinancing,=20 in November 2005, Capital One received two checks issued by = Farragut and=20 made out to Capital One, one for $24,571 and the other for=20 $1,740.00. These checks referenced Daniel=92s account = number, and=20 satisfied most, but not all, of the balance remaining on Capital = One=92s=20 loan to Daniel.

=20 The indorsement side of each check was imprinted with a stamp = containing=20 the following language:

The payee(s) by endorsement of this = check=20 acknowledge(s) payment or partial payment of indebtedness secured = by=20 collateral described below and hereby agree, upon receipt of = payment=20 thereof in full, to terminate, release, and deliver to the = undersigned,=20 the motor vehicle certificate of title on = ______________________. =20

A letter to Capital = One=20 accompanying each check, prepared on Farragut letterhead and = entitled=20 =93Authorization for Payment,=94 stated that it was from Farragut = and=20 identified Daniel, his account number, and the vehicle = description. =20 The letter further declared

I (we) hereby authorize you to accept = the attached=20 check from [Farragut] as payment on the above referenced account=20 number. I also authorize the release of information about = the above=20 account to [Farragut].

PAYMENT INSTRUCTIONS: Please apply = this=20 payment toward the next three (3) scheduled payments and the = remaining=20 balance to the principal.

. . . [Y]ou can expect additional funds = from=20 canceled products to be sent to you from the selling dealer. . .=20 .

[X] Ins./Warranty rebate is = forthcoming.

When this account is paid in full, = please release=20 the title securing this loan and return it to [Farragut] . . .=20 .

I understand that if Capital One Auto = Finance=20 mails the vehicle=92s title to me in error, it is my = responsibility to=20 promptly forward my title to [Farragut] . . . .

Thank you for your = assistance.

=20 ________________________

=20 Wayne S Daniel

Capital One indorsed = and=20 deposited these checks on receipt.

=20 In mid-December 2005, Capital One received a check written to = Daniel=92s=20 account from Lou Sobh Ford in the amount of $299. The check=20 satisfied the outstanding balance on Daniel=92s account. = Capital One=20 released its lien on the vehicle and sent the certificate of title = to=20 Daniel. Evidently, Daniel did not forward the certificate of = title=20 to Farragut.

Without the vehicle = title,=20 Farragut could not perfect any security interest. Farragut = presented=20 a claim for payment to Capital One, demanding return of the amount = Farragut paid into Daniel=92s account. When Capital One = refused to pay=20 the demand, Farragut sued Capital One for breach of contract, = asserting=20 that Capital One failed to comply with a contractual obligation to = send=20 the vehicle title directly to Farragut instead of to Daniel. = The=20 parties filed cross-motions for summary judgment, and the trial = court=20 granted Capital One=92s motion. After the trial court denied = Farragut=92s motion for new trial, Farragut timely = appealed.

Discussion

Standard of=20 Review

We review the trial = court=92s=20 grant of summary judgment de novo. Provident Life & = Accid.=20 Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex. 2003). Under the = standard=20 for summary judgment applicable here, the movant has the burden to = show=20 that no genuine issue of material fact exists and that judgment = should be=20 granted as a matter of law. Tex.=20 R. Civ. P. 166a(c); KPMG Peat Marwick v. Harrison County = Hous.=20 Fin. Corp., 988 S.W.2d 746, 748 (Tex. 1999). We view all = evidence in a light favorable to the nonmovant and indulge every=20 reasonable inference in its favor. Provident Life, = 128 S.W.3d=20 at 215. When both sides move for summary judgment and the = trial=20 court grants one motion and denies the other, we consider both = motions,=20 their evidence, and their issues, and we may render the judgment = that the=20 trial court should have rendered. See CU Lloyd=92s = of Tex.=20 v. Feldman, 977 S.W.2d 568, 569 (Tex. 1998).

Contract=20 Formation

=20 In its original petition and again on appeal, Farragut asserts = that=20 Capital One agreed to enter into a binding agreement with Farragut = when it=20 indorsed and cashed the checks issued in partial payment of = Daniel=92s=20 account. Specifically, Farragut contends, the checks = constituted an=20 offer to pay Daniel=92s indebtedness to Capital One in exchange = for Capital=20 One=92s agreement to release the vehicle title and forward it = directly to=20 Farragut. In asking for summary judgment, Capital One urged = that the=20 checks lacked information vital to contract formation, and = accordingly, in=20 the absence of any other communication between Farragut and = Capital One on=20 the subject, cannot give rise to an enforceable agreement as a = matter of=20 law.

=20 Parties create a binding agreement when the following elements are = present: (1) an offer, (2) an acceptance in strict compliance with = the=20 terms of the officer, (3) a meeting of the minds, (4) each = party=92s consent=20 to the terms, and (5) execution and delivery of the contract with = the=20 intent that it be mutual and binding. See Winchek v. Am. = Exp.=20 Travel Related Servs. Co., Inc., 232 S.W.3d 197, 202 (Tex.=20 App.=97Houston [1st Dist.] 2007, no pet.); Prime Prods., Inc. = v. S.S.I.=20 Plastics, Inc., 97 S.W.3d 631, 636 (Tex. App.=97Houston [1st = Dist.]=20 2002, pet. denied). =93[T]o be legally binding, a contract = must be=20 sufficiently definite in its terms so that a court can understand = what the=20 promisor undertook.=94 T.O. Stanley Boot Co. v. Bank of = El=20 Paso, 847 S.W.2d 218, 221 (Tex. 1992).

To determine whether = a contract=20 is enforceable as written, we construe it as a matter of law and = focus on=20 ascertaining the intent of the parties as expressed in the=20 instrument. Chapman v. Abbot, 251 S.W.3d 612, 616 = (Tex.=20 App.=97Houston [1st Dist.] 2007, no pet.); see also Gilbert v.=20 Pettiette, 838 S.W.2d 890, 893 (Tex. App.=97Houston [1st = Dist.] 1992, no=20 writ) (observing that whether offer and acceptance have occurred = is=20 usually question of law). The movant is entitled to summary = judgment=20 if it conclusively establishes that no contract exists. S = & A=20 Marinas, Inc. v. Leonard Marine Corp., 875 S.W.2d 766, 768 = (Tex.=20 App.=97Austin 1994, writ denied).

=20 As authority for its assertion that Capital One=92s indorsement of = the=20 checks formed a contract, Farragut cites City of Houston v. = First=20 City, 827 S.W.2d 462 (Tex. App.=97Houston [1st Dist] 1992, = writ=20 denied). In that case, the taxpayer sent checks in payment = of=20 delinquent property taxes and specified on the check stubs and a = letter=20 accompanying them instructing the City to apply the payments only = to tax,=20 interest and certain penalties and withhold payments under = categories that=20 were in dispute.[1] =20 Id. at 468, 472. We held that the City tacitly agreed = to the=20 conditions stated on the checks, along with the accompanying = transmittal=20 letters, when it accepted the payments, thereby creating an = implied=20 contract. Id. at 473.

=20 We find City of Houston inapposite. In City of=20 Houston, we noted that the checks were tendered in the = context=20 of an existing dispute between the City and First City concerning = First=20 City=92s tax obligations, and that the check stubs and transmittal = letters=20 contained clear conditions addressing the application of the = payments to=20 certain categories and not others. Id. at 472. = Here,=20 Farragut did not send the checks in the context of a transaction = between=20 Farragut and Capital One, but rather, solely for the benefit of = its=20 borrower, Daniel, to satisfy Daniel=92s obligations arising out of = Daniel=92s=20 loan agreement with Capital One. We also observe that the=20 indorsement language fails to recite any independent consideration = from=20 Farragut to Capital One which could support the imposition of any=20 obligation on Capital One. Nor does it impose any clear = condition on=20 Capital One; rather, it states that, on full payment of Daniel=92s = loan,=20 Capital One is to forward to a nonexistent and unidentified = =93undersigned=94=20 a motor vehicle title.[2] =20 Further, the undisputed facts also show that Farragut=92s checks = did not=20 constitute full payment on Daniel=92s balance due; thus, they did = not=20 satisfy the condition precedent to any duty that Farragut sought = to=20 impose. We hold that the stamped language on Farragut=92s = checks is=20 too incomplete and indefinite to enforce an obligation that = Farragut=20 supposedly intended Capital One to undertake.[3] =20 See T.O. Stanley Boot Co., 847 S.W.2d at 221.

Sometimes, a single = document=20 that does not form a contract can be definite enough to enforce = when read=20 with related documents. =93When two instruments involve the = same=20 parties and relate to the same transaction, we read the documents = together=20 in order to ascertain the parties=92 intent.=94 Bowers v. = Taylor,=20 No. 01-05-00667-CV, 2007 WL 1299440, at *4 (Tex. = App.=97Houston [1st=20 Dist.] May 3, 2007, no pet.) (citing Fort Worth = Indep.=20 Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 840 (Tex.=20 2000)). Farragut contends that the indorsement language on = the=20 checks should be read in tandem with the authorization for payment = letters=20 accompanying the checks to form a contract. We = disagree. =20 Courts consider multiple documents together in ascertaining the = parties=92=20 intent only if those documents involve the same parties and=20 transaction. See Bowers, 2007 WL 1299440 at *4. = The=20 letters accompanying Farragut=92s checks contain instructions from = Daniel=20 that authorize Capital One to accept the checks as payment in = connection=20 with the loan agreement, referenced by its account number, between = Capital=20 One and Daniel. Farragut contends that we should construe = the=20 letters as involving the same parties, pointing out that the = letters were=20 prepared on Farragut letterhead and state that they are =93From: = Farragut=20 Financial Corporation.=94 The fact that the letters were = prepared on=20 Farragut=92s printed letterhead, however, does not compel us to = view=20 Farragut as their author. If the typewritten provisions of a = contract conflict with its printed provisions, the court = interpreting it=20 must give the typewritten provisions effect over the printed = provisions.=20 McCreary v. Bay Area Bank & Trust, 68 S.W.3d 727, = 732=20 (Tex. App.=97Houston [14th Dist.] 2001, pet. dism=92d). The = typewritten=20 language in the letters refers to the author as =93I=94 and closes = with a line=20 for Daniel=92s signature. The bulk of the typewritten = provisions=20 indicate that Daniel is the intended author of the letters. = Daniel=20 possessed the authority to authorize and instruct Capital One = concerning=20 his loan payment and any release of information about his = agreement with=20 Capital One. That additional reason reasonably dictates that = Daniel=20 is the author of the letters.

Furthermore, the = letters do not=20 involve the same transaction as the agreement alleged by = Farragut. =20 Farragut=92s allegation that Capital One failed to comply with a = duty to=20 forward the motor vehicle title directly to Farragut contemplates = a=20 different transaction, one that involves different parties and = obligations=20 than the loan agreement between Daniel and Capital One or between = Daniel=20 and Farragut. Consequently, the authorization for payment = letters do=20 not supply any missing terms for an agreement between Farragut and = Capital=20 One.

Because the language = on the=20 checks omits terms material to contract formation and fails to = state any=20 definite obligation, Farragut and Capital One could not have = reached a=20 meeting of the minds as a matter of law. Accordingly, = because=20 the evidence conclusively negates the existence of any contract = between=20 Farragut and Capital One involving delivery of the motor vehicle = title at=20 issue, we hold that the trial court properly granted summary = judgment in=20 favor of Capital One.

Conclusion

The trial court = properly=20 granted summary judgment dismissing Farragut=92s contract claims = against=20 Capital One. We therefore affirm the judgment of the trial=20 court. All pending motions are dismissed as moot.

Jane Bland

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Panel consists of = Justices=20 Taft, Jennings and Bland.