Opinion
14-22-00519-CV
08-31-2023
TOM BENSON D/B/A ACT FAST BAIL BONDS, Appellant v. CHARLES FORGIE, Appellee
On Appeal from the County Court at Law No. 3 Tarrant County, Texas Trial Court Cause No. 2020-005133-3.
Panel consists of Justices Wise, Bourliot, and Spain.
MEMORANDUM OPINION
Charles A. Spain, Justice
Appellant Tom Benson d/b/a Act Fast Bail Bonds appeals from a take-nothing judgment on his breach-of-contract claims against appellee Charles Forgie following a bench trial. In a single point of error, Benson argues that the trial court's judgment was not supported by legally- or factually-sufficient evidence. Concluding that Forgie did not meet his burden to establish his affirmative defenses of lack of consideration and mutual mistake, we reverse the judgment of the trial court and render judgment in favor of Benson. Because Benson also requested attorney's fees and costs, we remand this case for consideration of attorney's fees and costs.
I. Background
Saul Alanis was in jail awaiting trial on two charged offenses. His longtime employer, Chris Van Wyk, tried to help him. She hired a lawyer for Alanis and arranged for the lawyer to post bond. The lawyer contacted Benson's company, Act Fast Bail Bonds. Alanis's lawyer was directly billed for the bail bondsmen's fee, but the lawyer told Benson's employee that Van Wyk and her husband would not "co-sign" or guarantee Alanis's bond. Benson's employee advised the lawyer that Alanis would need to have a "co-signer" for the bond. Because Alanis's lawyer agreed that Alanis would bring a co-signer to sign the paperwork after Alanis's release, Benson posted the bond for Alanis and secured his release. Alanis was instructed to appear at the bail-bond office after his release to sign paperwork.
Forgie is Van Wyk's brother. In 2017, Forgie was working for Van Wyk. He had known Alanis for many years as his sister's handyman. He also hired Alanis to work in his contracting business for more than decade before he retired from construction in 2015. Although he was aware that Alanis was in jail and that Van Wyk had hired an investigator and lawyer, Forgie was not involved in the initial process of posting bond for the two offenses.
After Alanis's release, Forgie drove Alanis to the bail bondsman's office at Van Wyk's request to sign paperwork. Also at his sister's request, Forgie agreed to let Alanis stay with him during the pendency of his criminal cases. At the bondsman's office, Alanis spoke with Benson's employee in Spanish to fill out the forms. Forgie was asked to fill out a form of personal references for Alanis and signed an indemnification agreement. Forgie did not read the agreement and maintains that he was unaware that Alanis needed a co-signer or that he was co-signing as a guarantor.
Alanis later disappeared and failed to show up for court appearances. After the trial court rendered two judgments nisi in April 2020 for a total of $55,000, Benson had to pay the State the value of the forfeited bonds and sought to recover his losses from Forgie, who refused to pay.
For a discussion of a judgment nisi, see State v. Sellers, 790 S.W.2d 616, 320-21 (Tex. Crim. App. 1990). The two judgments nisi were signed in the 372nd District Court of Tarrant County. The record in this appeal does not show how the district court made the judgments nisi final in the underlying criminal cases, but it is not contested in this subsequent civil proceeding that the judgments nisi were made final. See Tex. Code Crim. Proc. Ann. arts. 22.01 (when bail forfeited), 22.02 (manner of making forfeiture), 22.14 (judgment final), 22.15 (judgment final by default).
Benson filed suit against Forgie in the Tarrant County court at law in August 2020 asserting a breach-of-contract cause of action. After a bench trial in March 2022, the trial court rendered a final judgment that Benson take nothing on his claims and that Forgie recover court costs from Benson.
Benson sought findings of fact and conclusions of law, which were ultimately filed by the trial court. Benson now appeals the final judgment.
The Supreme Court of Texas ordered the Court of Appeals for the Second District of Texas to transfer this appeal (No. 02-22-00220-CV) to this court. Misc. Docket No. 22-9050 (Tex. June 30, 2022); see Tex. Gov't Code Ann. §§ 73.001, .002. Because of the transfer, we decide the case in accordance with the precedent of the transferor court under principles of stare decisis if our decision otherwise would have been inconsistent with the transferor court's precedent. See Tex. R. App. 41.3.
II. Analysis
Benson raises a single point of error in this appeal arguing that the trial court erred in rendering judgment for Forgie. Specifically, Benson supports his claim of error by arguing that he met his burden on his breach-of contract-action, Forgie did not meet his burden on his affirmative defenses, and the trial court should have rendered judgment in his favor.
Benson's appellate brief is internally inconsistent as to the number and description of issues raised. However, Benson clarified in his reply brief that he intended to raise a single point of error described in his table of contents as follows: "The trial court committed reversible error in failure to render judgment for Benson on his claims against Forgie."
A. Standard of review
This case comes to us following a bench trial. "In any case tried in the district or county court without a jury, any party may request the court to state in writing its findings of fact and conclusions of law." Tex.R.Civ.P. 296. A trial court's findings of fact "have the same force and dignity as a jury's verdict upon questions." Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991). Those findings of fact may be reviewed for legal and factual sufficiency under the same standards that are applied in reviewing evidence to support a jury's answer. See Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996); BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). However, we review de novo conclusions of law. See id.
When a party challenges the legal sufficiency of the evidence supporting an adverse finding on which the party did not have the burden of proof at trial, the party must demonstrate no evidence exists to support the adverse finding. See City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005); Croucher v. Croucher, 660 S.W.2d 55, 58 (Tex. 1983). Under a legal-sufficiency review, we consider all of the evidence in the light most favorable to the prevailing party, make every reasonable inference in that party's favor, and disregard contrary evidence unless a reasonable factfinder could not. City of Keller, 168 S.W.3d at 807, 822, 827. We cannot substitute our judgment for that of the factfinder if the evidence falls within this zone of reasonable disagreement. Id. at 822.
B. Benson's breach-of-contract cause of action
The contract underlying Benson's claims for both forfeited bonds was titled "Indemnitor's Contract to Indemnify" ("the contract"). To recover on his breach-of-contract claim, Benson had to prove: (1) the existence of a valid contract; (2) Benson performed or tendered performance as the contract required; (3) Forgie breached the contract by failing to perform or tender performance as the contract required; and (4) Benson sustained damages as a result of the breach. USAA Tex. Lloyds Co. v. Menchaca, 545 S.W.3d 479, 502 n.21 (Tex. 2018).
Forgie did not challenge any element of Benson's cause of action in the trial court and admitted that he signed the contract without reading it. Instead, Forgie asserted defenses to the contract's enforcement based on lack of consideration and mutual mistake.
The trial court's findings of fact and conclusions of law discuss only Forgie's defenses to the contract concluding (1) "the contract at issue in this case was without consideration and voidable" and (2) "that there was mutual mistake of fact that rendered the contract subject of this suit voidable." Therefore, this court will confine its review to Forgie's defenses and the evidence supporting them.
C. Mutual mistake
Forgie argued in the trial court that the contract was unenforceable due to mutual mistake. The trial court concluded that both parties had a misconception or were mistaken about whether Charles Forgie would be the guarantor on Alanis's two bonds. In response, Benson argued there was no mutual mistake. Benson's position was that Forgie signed a contract without reading it and his failure to exercise diligence and read the agreement did not form the basis of a mutual mistake.
Under the doctrine of mutual mistake, when parties to an agreement have contracted under a misconception or ignorance of a material fact, the agreement will be avoided. Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990). The elements of mutual mistake are: (1) a mistake of fact; (2) held mutually by the parties; (3) which materially affects the agreed-on exchange. See Wyrick v. Bus. Bank of Tex., N.A., 577 S.W.3d 336, 350 (Tex. App.-Houston [14th Dist.] 2019, no pet. h.); City of The Colony v. N. Tex. Mun. Water Dist., 272 S.W.3d 699, 735 (Tex. App.-Fort Worth 2008, pet. dism'd); see also Restatement (Second) of Contracts § 152 (Am. L. Inst. 1981) (cited by Williams, 789 S.W.2d at 263-64).
"A mutual mistake of fact occurs when the parties to an agreement have a common intention, but the written agreement does not accurately reflect that intention due to a mutual mistake." N.Y. Party Shuttle, LLC v. Bilello, 414 S.W.3d 206, 212 (Tex. App.-Houston [1st Dist.] 2013, pet. denied); see City of The Colony, 272 S.W.3d at 735. To prove a mutual mistake, the evidence must show that both parties were acting under the same misunderstanding of the same material fact. Walden v. Affiliated Computer Services, Inc., 97 S.W.3d 303, 326 (Tex. App.-Houston [14th Dist.] 2003, pet. denied). A unilateral mistake by one party, combined with knowledge of that mistake by the other party, is equivalent to mutual mistake. Davis v. Grammer, 750 S.W.2d 766, 768 (Tex. 1988). But, "[a] mistake by only one party to an agreement, not known to or induced by acts of the other party[,] will not constitute grounds for relief." Johnson v. Snell, 504 S.W.2d 397, 399 (Tex. 1974). Mutual mistake should not be available to avoid the results of an unhappy bargain. Williams, 789 S.W.2d at 265.
Here, there is no evidence in the record supporting the finding of a mutual mistake. There was evidence in the record that Forgie was unaware that he was expected to be a guarantor or "co-signer" for Alanis. There was also evidence that Forgie had not arranged for the two bail bonds, was not aware Alanis was required to have a guarantor for his bail bonds and believed that he was just there to provide or confirm the address at which Alanis would be staying. However, there was no evidence in the record supporting that Benson or his employee shared that same misunderstanding. Benson's employee was unaware of the identity of the guarantor before Forgie arrived and was not aware that Forgie did not intend to the sign the contract. There is no evidence in the record that Forgie made Benson's employee aware that he would not agree to be a guarantor, but they nonetheless induced him to sign. In sum, Forgie did not establish the existence of a mutual mistake.
Although evidence reflects a mistake or misconception on Forgie's part, the trial court made no finding on the defense of unilateral mistake. We conclude there is not legally-sufficient evidence supporting the trial court's finding on mutual mistake.
We now consider whether the trial court's judgment in favor of Forgie can be supported based on Forgie's affirmative defense of lack of consideration.
D. Lack of consideration
Forgie argued in the trial court that the contract was unenforceable because it lacked consideration. Because Benson's employees had already submitted the two bonds to the State and secured Alanis's release from jail before Forgie was asked to sign the contract, Forgie argued there was no consideration supporting the contract.
Although titled as an indemnitor's contract to indemnify, the parties agree that the contract was a guaranty. Like any contract, a guaranty must be supported by consideration. Material P'ships, Inc. v. Ventura, 102 S.W.3d 252, 262 (Tex. App.-Houston [14th Dist.] 2003, pet. denied).
A guaranty is "an undertaking by one person to be answerable for the payment of some debt or the performance of some contract or duty by another person, who himself remains liable." Wood v. Canfield Paper Co., 5 S.W.2d 748, 749 (Tex. 1928). The essential terms of a guaranty are (1) the parties involved, (2) a manifestation of intent to guaranty the obligation, and (3) a description of the obligation being guaranteed. Material P'ships, Inc. v. Ventura, 102 S.W.3d 252, 261 (Tex. App.-Houston [14th Dist.] 2003, pet. denied). There is evidence in the record that the contract satisfies these required elements.
1. Consideration generally
Consideration is essential to a contract. Unthank v. Rippstein, 386 S.W.2d 134, 137 (Tex. 1964). Consideration requires an element of exchange sufficient to satisfy the legal requirement for enforceability. See Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 496 (Tex. 1991) ("Consideration is a present exchange bargained for in return for a promise."); Restatement (Second) of Contracts §§ 71, 72 (Am. L. Inst. 1981). Consideration includes a performance or return promise that are bargained for-meaning the performance or return promise is sought by the promisor in exchange for the promise. Restatement (Second) of Contracts § 71(1), (3). Put another way, consideration may take form of either a benefit to the promisor or a detriment to the promisee. Roark, 813 S.W.2d at 496.
The supreme court regularly cites to the Restatement and relies on the Restatement for contractual concepts. See e.g., In re Tex. Ass'n of Sch. Boards, Inc., 169 S.W.3d 653, 658 (Tex. 2005) (citing Restatement (Second) of Contracts § 71); Mustang Pipeline Co., Inc. v. Driver Pipeline Co., Inc., 134 S.W.3d 195, 199 (Tex. 2004) (citing Restatement (Second) of Contracts § 281 (Am. L. Inst. 1981)).
A written instrument reciting that consideration exists creates a prima facie presumption of consideration; a party seeking to assert a lack of consideration must present evidence to defeat that presumption. See Short v. Price, 17 Tex. 397, 403 (1856) (when consideration is recited "its existence would be prima facie presumed"); Petroleum Workers Union of the Rep. of Mex. v. Gomez, 503 S.W.3d 9, 31 (Tex. App.-Houston [14th Dist.] 2016, no pet.); Miers & Rose v. Trevino, 213 S.W. 715, 717 (Tex. Civ. App.-San Antonio 1919, writ ref'd); see also Tex. R. Civ. P. 94 (lack of consideration is affirmative defense to contract). The contract here expressly provided that the consideration for Forgie's promise to guaranty was Benson's performance in "securing the release from jail" of Alanis. Therefore, it was Forgie's burden to produce evidence defeating the recital of consideration. See Roark, 813 S.W.2d at 495.
2. Contract was supported by consideration
The trial court made the following conclusion of law:
1. By the time Charles Forgie signed the indemnity agreement, all of the acts required to be performed by [Benson], as specifically stated in the indemnity agreement, had been performed. Further, Forgie was not a party to the original agreement and had no knowledge of the terms of the agreement. Charles Forgie received no benefit whatsoever for signing the indemnity agreement. Therefore, the Court concludes that contract at issue in this case was without consideration and voidable.
One of Forgie's primary arguments, here and in the trial court, was that Alanis's release from jail could not be consideration because it was not bargained for by Forgie, as Alanis had already been released from jail when Forgie signed the contract. The trial court agreed with this argument finding that "[b]y the time Charles Forgie signed the indemnity agreement, all of the acts required to be performed by [Benson], as specifically stated in the indemnity agreement, had been performed."
However, the fact that Forgie signed the contract after Alanis was initially released is not determinative. Whether a guaranty is independent of the debt it guarantees is not simply a question of the order in which the documents are signed. First Com. Bank v. Palmer, 226 S.W.3d 396, 398 (Tex. 2007). If the guarantor's promise is given as part of the transaction that creates the guaranteed debt, the consideration for the debt likewise supports the guaranty. Universal Metals & Mach., Inc. v. Bohart, 539 S.W.2d 874, 878 (Tex. 1976).
Even when the guaranty is signed after the principal obligation, "the guaranty promise is founded upon a consideration if the promise was given as the result of previous arrangement, the principal obligation having been induced by or created on the faith of the guaranty." Palmer, 226 S.W.3d at 398 (quoting 38 Am. Jur. 2d Guaranty § 43, at 905 (1999)). Guaranties that were signed or agreed to after the underlying obligation have often been enforced in Texas without the requirement of additional consideration to the guarantor. See, e.g., Palmer, 226 S.W.3d at 398 (guaranty signed months after note); Bohart, 539 S.W.2d at 878 (machinery delivered before guaranty signed); Windham v. Cal-Tim, Ltd., 47 S.W.3d 846, 849-50 (Tex. App.-Beaumont 2001, pet. denied) (guaranty signed two months after lease); Holland v. First Nat'l Bank, 597 S.W.2d 406, 410 (Tex. Civ. App.-Dallas 1980, writ dism'd) (guaranty signed after note). The Restatement similarly explains that a "promise made in recognition of a benefit previously received by the promisor from the promisee is binding to the extent necessary to prevent injustice.
" Restatement (Second) of Contracts § 86 (Am. L. Inst. 1981).
The Restatement also explicitly states that it does not use the term "past consideration" because that term is inconsistent with the meaning of consideration. Restatement (Second) of Contracts § 86 cmt. a.
The question here is whether Forgie's guaranty was part of the transaction securing the two bail bonds for Alanis's release. The contract provides the following language:
For and in consideration of ACT FAST BAIL BONDS, hereinafter referred to "Bonding Company" securing the release from jail of SAUL ALANIS hereinafter referred to as "Bond Person", I CHARLES FORGIE, Indemnitor, agree to pay the sum of FIFTY FIVE THOUSAND DOLLARS and 00/100 ($ 55,000,00) such amount constituting bail bond(s) posted for the release being the amount of Bail bond(s) posted for release of bonded person to Bonding Company at 2217 Hemphill, Fort Worth, Texas 76110, within five (5) days of bond forfeiture or writ forfeiture of Bonded
Person.Forgie's argument implies that once Benson posted the two bonds, the performance between all parties was complete. However, that argument does not reflect the overall transaction that occurred securing Alanis's release.
The Code of Criminal Procedure allows a surety-such as Benson-to discharge his liability on the bond by returning Alanis to custody any time before forfeiture. See Tex. Code Crim. Proc. Ann. art. 17.16(a). Therefore, Alanis's continued freedom from jail was contingent on Alanis appearing at the bondsman's office after his release and signing the agreements governing the terms of his release. Forgie's guaranty of Alanis's obligation was also a required piece of the transaction to secure and maintain Alanis's release. Had Forgie not signed the contract as Alanis's guarantor, Benson could have promptly returned Alanis to jail and discharged his $55,000 liability on the two bonds.
Forgie also attempted to rebut the presumption of consideration by testifying that he received no benefit and nothing of value from signing the contract. The trial court agreed finding that "Forgie was not given anything of value from anybody in return for signing this indemnity contract guaranty." However, when parties enter a guaranty, the consideration need not pass to the guarantor directly, instead "consideration is sufficient if the primary debtor receives some benefit." Material P'ships, 102 S.W.3d at 262; see also Restatement (Second) of Contracts § 71(4) ("The performance or return promise may be given to the promisor or to some other person."). Forgie does not dispute that Alanis received a benefit from Forgie's signature of the contract. He also does not dispute that Benson suffered a detriment because of his promise.
Rather, Forgie testified that the consideration described-Alanis's freedom-had no value or benefit for him. Forgie's testimony regarding his subjective value of the consideration recited does not rebut the prima facie presumption of consideration nor does it satisfy his burden to establish a lack of consideration.
Forgie also testified that he would not have signed the contract if he had known what he was signing. However, the law is clear that a party's failure to read a contract does not invalidate the contract or excuse performance. "Instead of excusing a party's failure to read a contract when the party has an opportunity to do so, the law presumes that the party knows and accepts the contract terms." Nat'l Prop. Holdings, L.P. v. Westergren, 453 S.W.3d 419, 425 (Tex. 2015) (collecting cases).
The trial court's legal conclusion that the contract lacked consideration is not supported by legally-sufficient evidence. Therefore, we sustain Benson's sole issue on appeal.
III. Conclusion
Having concluded the trial court reversibly erred and that Forgie did not produce legally-sufficient evidence supporting his defenses of mutual mistake and lack of consideration, we reverse the take-nothing judgment of the trial court and render the judgment the trial court should have rendered: judgment in favor of Benson on his breach-of-contract cause of action. Because Benson sought attorney's fees, we remand for proceedings limited to consideration of attorney's fees.