Farragut Financial, et al. v. Capital One Auto (Tex.App.- Houston [1st Dist.] Sep. 25,
2008)(Bland) (auto financing, no contract formation, no meeting of the minds on terms, missing terms from
alleged agreement by indorsement on check) (lack of information concerning the identity of the intended
title recipient is fatal to Farragut’s contract claim)

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

AFFIRM TC JUDGMENT: Opinion by Justice Bland  
Before Justices Taft, Jennings and Bland
01-07-00497-CV Farragut Financial, et al v. Capital One Auto, et al
Appeal from County Civil Court at Law No 1 of Harris County
Trial Court
Judge: Hon. Jack Cagle  


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


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

In 2005, Daniel refinanced the vehicle loan through Farragut.  In connection with that refinancing,
in November 2005, Capital One received two checks issued by Farragut and made out to Capital
One, one for $24,571 and the other for $1,740.00.  These checks referenced Daniel’s account
number, and satisfied most, but not all, of the balance remaining on Capital One’s loan to Daniel.  
The indorsement side of each check was imprinted with a stamp containing the following

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

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

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

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

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

[X]    Ins./Warranty rebate is forthcoming.

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

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

Thank you for your assistance.
 Wayne S Daniel

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

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


Standard of Review

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

Contract Formation

In its original petition and again on appeal, Farragut asserts that Capital One agreed to enter into
a binding agreement with Farragut when it indorsed and cashed the checks issued in partial
payment of Daniel’s account.  Specifically, Farragut contends, the checks constituted an offer to
pay Daniel’s indebtedness to Capital One in exchange for Capital One’s agreement to release
the vehicle title and forward it directly to Farragut.  In asking for summary judgment, Capital One
urged that the checks lacked information vital to contract formation, and accordingly, in the
absence of any other communication between Farragut and Capital One on the subject, cannot
give rise to an enforceable agreement as a matter of law.  
Parties create a binding agreement when the following elements are present: (1) an offer, (2) an
acceptance in strict compliance with the terms of the officer, (3) a meeting of the minds, (4) each
party’s consent to the terms, and (5) execution and delivery of the contract with the intent that it be
mutual and binding.  See Winchek v. Am. Exp. Travel Related Servs. Co., Inc., 232 S.W.3d 197,
202 (Tex. App.—Houston [1st Dist.] 2007, no pet.); Prime Prods., Inc. v. S.S.I. Plastics, Inc., 97 S.
W.3d 631, 636 (Tex. App.—Houston [1st Dist.] 2002, pet. denied).  “[T]o be legally binding, a
contract must be sufficiently definite in its terms so that a court can understand what the promisor
undertook.”  T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992).  

To determine whether a contract is enforceable as written, we construe it as a matter of law and
focus on ascertaining the intent of the parties as expressed in the instrument.  Chapman v. Abbot,
251 S.W.3d 612, 616 (Tex. App.—Houston [1st Dist.] 2007, no pet.); see also Gilbert v. Pettiette,
838 S.W.2d 890, 893 (Tex. App.—Houston [1st Dist.] 1992, no writ) (observing that whether offer
and acceptance have occurred is usually question of law).  

The movant is entitled to summary judgment if it conclusively establishes that no contract exists.  S
& A Marinas, Inc. v. Leonard Marine Corp., 875 S.W.2d 766, 768 (Tex. App.—Austin 1994, writ
As authority for its assertion that Capital One’s indorsement of the checks formed a contract,
Farragut cites City of Houston v. First City, 827 S.W.2d 462 (Tex. App.—Houston [1st Dist] 1992,
writ denied).  In that case, the taxpayer sent checks in payment of delinquent property taxes and
specified on the check stubs and a letter accompanying them instructing the City to apply the
payments only to tax, interest and certain penalties and withhold payments under categories that
were in dispute.[1]   Id. at 468, 472.  We held that the City tacitly agreed to the conditions stated
on the checks, along with the accompanying transmittal letters, when it accepted the payments,
thereby creating an implied contract.  Id. at 473.  
We find City of Houston inapposite.  In City of Houston, we noted that the checks were tendered in
the context of an existing dispute between the City and First City concerning First City’s tax
obligations, and that the check stubs and transmittal letters contained clear conditions addressing
the application of the payments to certain categories and not others.  Id. at 472.  Here, Farragut
did not send the checks in the context of a transaction between Farragut and Capital One, but
rather, solely for the benefit of its borrower, Daniel, to satisfy Daniel’s obligations arising out of
Daniel’s loan agreement with Capital One.  

We also observe that the indorsement language fails to recite any independent consideration
from Farragut to Capital One which could support the imposition of any obligation on Capital
One.  Nor does it impose any clear condition on Capital One; rather, it states that, on full payment
of Daniel’s loan, Capital One is to forward to a nonexistent and unidentified “undersigned” a motor
vehicle title.[2]  Further, the undisputed facts also show that Farragut’s checks did not constitute
full payment on Daniel’s balance due; thus, they did not satisfy the condition precedent to any duty
that Farragut sought to impose.  We hold that the stamped language on Farragut’s checks is too
incomplete and indefinite to enforce an obligation that Farragut supposedly intended Capital One
to undertake.[3]  See T.O. Stanley Boot Co., 847 S.W.2d at 221.

Sometimes, a single document that does not form a contract can be definite enough to enforce
when read with related documents.  “When two instruments involve the same parties and relate to
the same transaction, we read the documents together in order to ascertain the parties’ intent.”  
Bowers v. Taylor, No. 01-05-00667-CV, 2007 WL 1299440, at *4  (Tex. App.—Houston [1st Dist.]
May 3, 2007, no pet.)  (citing Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831,
840 (Tex. 2000)).  Farragut contends that the indorsement language on the checks should be
read in tandem with the authorization for payment letters accompanying the checks to form a

We disagree.  

Courts consider multiple documents together in ascertaining the parties’ intent only if those
documents involve the same parties and transaction.  See Bowers, 2007 WL 1299440 at *4.  The
letters accompanying Farragut’s checks contain instructions from Daniel that authorize Capital
One to accept the checks as payment in connection with the loan agreement, referenced by its
account number, between Capital One and Daniel.  Farragut contends that we should construe
the letters as involving the same parties, pointing out that the letters were prepared on Farragut
letterhead and state that they are “From: Farragut Financial Corporation.”  The fact that the letters
were prepared on Farragut’s printed letterhead, however, does not compel us to view Farragut as
their author.  If the typewritten provisions of a contract conflict with its printed provisions, the court
interpreting it must give the typewritten provisions effect over the printed provisions.  McCreary v.
Bay Area Bank & Trust, 68 S.W.3d 727, 732 (Tex. App.—Houston [14th Dist.] 2001, pet. dism’d).  
The typewritten language in the letters refers to the author as “I” and closes with a line for Daniel’s
signature.  The bulk of the typewritten provisions indicate that Daniel is the intended author of the
letters.  Daniel possessed the authority to authorize and instruct Capital One concerning his loan
payment and any release of information about his agreement with Capital One.  That additional
reason reasonably dictates that Daniel is the author of the letters.  

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

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


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

Jane Bland


Panel consists of Justices Taft, Jennings and Bland.


[1] City of Houston v. First City, 837 S.W.2d 462 (Tex. App.—Houston [1st Dist.] 1992, writ denied), was
decided under provisions of the Texas Property Tax Code that have been superseded.  See Reinmiller v.
County of Dallas, 212 S.W.3d 835 (Tex. App.—Eastland 2006, pet. denied) (citing Tex. Tax Code Ann. §
31.073 (Vernon 1993).  

[2] We need not decide whether the presence of Daniel’s account number on the front of the checks gives
rise to a fact issue that the language on the back of the checks refers to the same motor vehicle title that
Capital One held as security for Daniel’s loan because the lack of information concerning the identity of
the intended title recipient is fatal to Farragut’s contract claim.  

[3] Farragut also asserts that Fleetwood v. Medical Center Bank, 786 S.W.3d 550 (Tex. App.—Austin
1990, writ denied), supports the conclusion that its tender of payment to Capital One obligated Capital
One to forward the title to Farragut so that Farragut could perfect its security interest.  786 S.W.2d at 553–
54.  In Fleetwood, however, the parties agreed that Fleetwood’s subrogation claim sounded in equity.  Id.
at 554.  Farragut’s live pleading states only a claim for breach of contract, and an equitable right to
subrogation cannot exist where a contract governs the parties’ relationship.  See Fortis Benefits v. Cantu,
234 S.W.3d 642, 650 (Tex. 2007) (holding that equitable subrogation right may arise only in absence of
express agreement).  Also, Farragut’s checks did not fully discharge Daniel’s debt and thus could not have
triggered application of the rule recited in Fleetwood.  See 786 S.W.2d at 554.