S. Mansukhlal & Co. v. Muhammad Husein and Sultana Husein

Affirmed and Memorandum Opinion filed September 2, 2004 Affirmed and Memorandum Opinion filed September 2, 2004. In The Fourteenth Court of Appeals ____________ NO. 14-04-00018-CV ____________ S. MANSUKHLAL & CO., Appellant V. MUHAMMAD HUSEIN AND SULTANA HUSEIN, Appellees On Appeal from the 125th District Court Harris County, Texas Trial Court Cause No. 02-48952 M E M O R A N D U M   O P I N I O N S. Mansukhlal & Co. appeals the take-nothing judgment rendered by the trial court in favor of appellees Muhammad Husein and Sultana Husein. Appellant contends the trial court erred in finding appellees were not personally liable on nine negotiable instruments. We affirm. Factual and Procedural Background In 1999, Griffen, Inc. purchased goods from appellant valued in excess of $200,000. Griffen, however, began having financial difficulties and was unable to pay the full value of the goods previously delivered by appellant. Thus, upon appellant=s request, Griffen issued ten negotiable instruments in favor of appellant, even though Griffen told appellant the instruments were worthless. The instruments were signed by both Muhammad Husein and Sultana Husein, appellees herein, who were officers and directors of Griffen at the time the instruments were executed. This lawsuit arose after nine of the ten instruments were dishonored by Griffen=s bank for insufficient funds. Appellant initiated legal proceedings against Griffen; however, after Griffen declared bankruptcy, appellant instituted this suit against appellees individually to collect the balance due under the nine dishonored instruments. The case was tried before the court, after which, the court entered judgment in favor of appellees. Appellant brings four points of error on appeal, contending (1) the trial court erred by characterizing the instruments as checks rather than notes; (2) the evidence is legally insufficient to support the trial court=s findings that appellees were authorized to sign the instruments in their representative capacity as agents of Griffen; (3) the evidence is legally insufficient to support the trial court=s finding that the parties did not intend to hold appellees personally liable;[1] and (4) the trial court erred in granting judgment in favor of appellees. Discussion Appellant concedes that if the instruments in question are checks, rather than notes, appellees are not personally liable; thus, appellant first contends the trial court erred by misapplying the Texas Business and Commerce Code (Athe Code@) by characterizing the instruments as checks. See Tex. Bus. & Com. Code Ann. ' 3.104 (Vernon 2002). Appellees, on the other hand, argue the instruments are checks within the meaning of subsection 3.104(f) of the Code and therefore are not liable. See id. Neither party disputes the documents are negotiable instruments, rather the parties argue whether the instruments are properly characterized as either checks or notes. Appellees contend that regardless of whether the instruments are characterized as checks or notes, they signed the documents as representatives of Griffen and therefore, are not liable. Thus, according to appellees, we do not need to reach the issue of the character of the instruments. We agree. We first address appellant=s second issue contending the evidence is legally insufficient to support the trial court=s findings that appellees were authorized to sign the instruments in their representative capacity as agents for Griffen. The trial court=s fact findings are reviewed for legal and factual sufficiency of the evidence under the same standards applied when reviewing evidence supporting jury findings. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). When the appellate record contains a reporter=s record, as it does here, findings of fact are not conclusive on appeal if the contrary is established as a matter of law or if there is no evidence to support the findings. Mladenka v. Mladenka, 130 S.W.3d 397, 402 (Tex. App.CHouston [14th Dist.] 2004, no pet.). When reviewing the legal sufficiency, we consider only the evidence and inferences that tend to support the trial court=s findings and disregard evidence and inferences to the contrary. Sherman v. First Nat=l Bank in Center, Texas, 760 S.W.2d 240, 242 (Tex. 1998); Mestco Distribs., Inc. v. Stamps, 824 S.W.2d 678, 680 (Tex. App.CHouston [14th Dist.] 1992, no writ). If there is any evidence of probative value to support the challenged findings, we must uphold the findings. Mestco, 824 S.W.2d at 680. In this case, the trial court made the following findings of fact: 1. Defendants Muhammad Husein, Jr. and Sultana Husein signed the instruments . . . as the representatives of Griffin [sic], Inc. 2. Defendants Muhammad Husein, Jr. and Sultana Husein were authorized by Griffin [sic], Inc. to sign the instruments . . . on behalf of and a [sic] representatives of Griffin [sic], Inc. 3. The original parties to the transaction did not intend for Defendants Muhammad Husein, Jr. and Sultana Husein to have individual and personal liability for the payment of the amounts represented by the instruments. The nine negotiable instruments in questions have the appearance of a standard issued check, in that each is numbered in the upper-right-hand corner, each bears the name of AGriffen, Inc.@ along with its address and telephone number, each contains account numbers listed on the bottom of the document, and each is payable Ato the order@ of AState Bank of India A/C: S. Mansukhlal & Co.@ Additionally, on the bottom right of each instrument, the following appears: GRIFFEN, INC. PER [signatures of appellees Muhammad Husein and Sultana Husein] AUTHORIZED SIGNATURE Appellant contends this language is insufficient to prove appellees were authorized on behalf of Griffen, Inc. to sign the instruments and therefore appellees should be held personally liable. Section 3.402 of the CodeCwhich applies to all instruments, including checks and notesCgoverns the effect of a signature by an authorized representative. Tex. Bus. & Com. Code Ann. ' 3.402 (Vernon 2002); see Tex. Bus. & Comm. Code Ann. ' 3.104; Suttles v. Thomas Bearden Co., No. 01-02-01077-CV, 2004 WL 1631384, at *2B3 (Tex. App.CHouston [1st Dist.] July 22, 2004, no pet. h.). The relevant portion of that section includes the following: (b) If a representative signs the name of the representative to an instrument and the signature is an authorized signature of the represented person, the following rules apply: (1) If the form of the signature shows unambiguously that the signature is made on behalf of the represented person who is identified in the instrument, the representative is not liable on the instrument. Tex. Bus. & Com. Code Ann. ' 3.402(b). In order for subsection 3.402(b)(1) to apply, appellee=s signature must be authorized and the signature must show unambiguously that it is made on behalf of Griffen. Id. Comment two to this section is also instructive; it provides that an agent is not liable under subsection (b)(1) Aif the form of the signature unambiguously shows that it is made on behalf of an identified represented person (for example, >P, by A, Treasurer=).@ Id. ' 3.402 cmt. 2. Here, the form of the signature contained on the instruments unambiguously shows appellees signed the instruments on behalf of Griffen, Inc. as an authorized agent. Appellant argues that because the instruments state Aauthorized signature@ and do not identify appellees by title, authorization is not shown. This distinction, however, is immaterial because the instrument unambiguously refers to appellees= status as an authorized agent of Griffen.[2] Id. ' 3.402(b)(1). Additionally, Muhammad Husein testified at trial that he and Sultana Husein were specifically authorized by the board of directors for Griffen, Inc. to sign the instruments. Aside from the specific authorization, Muhammed Husein also testified he was authorized to sign the instruments pursuant to his powers as an officer to carry out the day-to-day business of the corporation. By looking at the instruments in question and the testimony of Muhammad Husein, there is some evidence of probative value to support the trial court=s finding that appellees signed the instruments as the representatives of Griffen, Inc. Accordingly, we hold the evidence is legally sufficient to support the trial court=s finding of fact number one. Appellant also argues appellees exceeded the scope of the authority given to them by Griffen because appellees were only authorized to sign checks and were not authorized to borrow money or to sign notes. Section 3.403, subsection (a) of the Code provides that an unauthorized signature is ineffective against the represented party, but liability may be imposed against the signer. Tex. Bus. & Com. Code Ann. ' 3.403(a) (Vernon 2002). Appellant attempts to characterize the dealings between the parties as borrower and lender and not as seller and purchaser. To further this objective, appellant elicited testimony at trial that appellees generally were not authorized to borrow money or sign notes on behalf of the corporation. Appellant then concludes that appellees did Ain fact@ borrow money; therefore, they exceeded their authorization and are personally liable. An unauthorized signature is a signature made without actual, implied or apparent authority. Tex. Bus. & Com. Code Ann. ' 1.201(43); see Tex. Bus. & Com. Code ' 3.403 cmt. 2. Here, the trial court heard testimony from Muhammad Husein that he and Sultana were authorized to execute the specific documents in question by the board of directors for Griffen. Documentary evidence was also presented during trial showing appellees had authority to manage the day-to-day affairs of Griffen. Appellant=s characterization is immaterial because there is some evidence of a probative value to support the trial court=s finding that appellees were authorized to sign the instruments in question. Therefore, we hold there is legally sufficient evidence to support the trial court=s finding of fact number two that appellees were authorized to sign the instruments. Accordingly, we overrule appellant=s second issue. We must sustain the trial court=s judgment if it is correct on any theory of law applicable to the case. Schismatic & Purported Casa Linda Presbyterian Church in Am. v. Grace Union Presbytery, Inc., 710 S.W.2d 700, 707 (Tex. App.CDallas 1986, writ ref=d n.r.e.). Because we have determined the evidence is legally sufficient to support the trial court=s findings that appellees were authorized to sign the instruments in their representative capacity, we do not reach the issue of whether the instruments are properly characterized as checks or notes. The character is immaterial to section 3.402. We hold these findings sufficient to sustain the trial court=s judgment that appellees are not personally liable on the instruments. Accordingly, we overrule appellant=s first issue. In its third issue, appellant challenges the trail court=s third finding of fact, which states the original parties to the transaction did not intend for appellees to be held individually and personally liable. We do not need to reach the merits of this contention because the first two findings present a sufficient basis to affirm the trial court=s judgment; therefore, appellant=s challenge to the third finding, even if the finding was erroneous, would not present a ground for reversal. See Tex. R. App. P. 44.1. Consequently, even assuming error, we hold the error harmless because we have not relied on that finding to affirm the judgment. Id; Grace Union Presbytery, 710 S.W.2d at 708. Appellant=s third issue is overruled. In its final issue, appellant argues the trial court erred by granting judgment in favor of appellees because appellees failed to prove they were authorized to sign the instruments. In lieu of presenting additional argument on this issue, appellant refers to its arguments and authorities presented in its second issue. Appellant is simply restating its previous issues and presents nothing for review. Appellant=s fourth issue is overruled. Conclusion Having overruled appellant=s four issues on appeal, the judgment of the trial court is affirmed. /s/ John S. Anderson Justice Judgment rendered and Memorandum Opinion filed September 2, 2004. Panel consists of Justices Yates, Anderson, and Hudson. [1] In its brief, appellant=s second and third issues complain generally that the trial court erred in finding appellees signed the instruments in their representative capacity and in finding the parties did not intend for appellees to be held individually and personally responsible. Appellant does not identify the nature of its attack on the trial court=s findings and does not set forth the proper standard of review; however, because appellant asks this court to reverse the trial court=s judgment and render judgment in its favorCa remedy available for legal sufficiency challenges, but not for factual sufficiency challengesCwe interpret the issues as raising legal sufficiency points. See Selectouch Corp. v. Perfect Starch, Inc., 111 S.W.3d 830, 835 (Tex. App.CDallas 2003, no pet.); Heritage Res., Inc. v. Hill, 104 S.W.3d 612, 619 (Tex. App.CEl Paso 2003, no pet.). [2] Comment two also provides the following illustrations of when an agent=s signature does not fall within subsection (b)(1): In each case John Doe is the authorized agent of Richard Roe and John Doe signs a note on behalf of Richard Roe. . . . Case #1. Doe signs AJohn Doe@ without indicating in the note that Doe is signing as agent. The note does not identify Richard Roe as the represented person. Case #2. Doe signs AJohn Doe, Agent@ but the note does not identify Richard Roe as the represented person. Case #3. The name ARichard Roe@ is written on the note and immediately below that name Doe signs AJohn Doe@ without indicating that Doe signed as agent. . . . In none of the cases does Doe=s signature unambiguously show that Doe was signing as agent for an identified principal. Tex. Bus. & Com. Code Ann. ' 3.402 cmt. 2. These examples are instructive because, unlike our case, Doe=s signature did not identify that he was signing as an agent for Roe or the note did not identify Roe as the represented party. Here, the instruments unambiguously show appellees signed in their representative capacity on behalf of Griffen.