Ashford Developments, Inc. v. USLife Real Estate Services Corp.

WHITHAM, Justice. The appellant, Ashford Developments, Inc., acting through a mortgage broker, the appellee, Carruth Mortgage Corporation, applied to appellee, USLife Real Estate Service Corporation, for a standby first mortgage loan commitment to be issued through a USLife affiliate company. Contending that the loan commitment issued contained an improper requirement, Ash-ford refused to accept the commitment and brought this action against USLife and Car-ruth to recover the application fee. Car-ruth counterclaimed for a separate fee it claimed was due it from Ashford pursuant to a separate application agreement between Ashford and Carruth. The trial court rendered judgment against Ashford on its action against USLife' and Carruth and rendered judgment in favor of Carruth on its counterclaim against Ashford. The principal issue involved in this appeal is whether it was proper for the loan commitment to contain a requirement that a designated street (Antoine) be 100% complete. We conclude that the lender was authorized to place the requirement in the loan commitment. Accordingly, we affirm. Ashford sought to finance construction of an office building and warehouse development in Houston, Texas. Ashford’s president testified that the project was to be “constructed to face on Mitchelldale and Antoine, if and when Antoine went through.” With the loan application Ash-ford furnished Carruth and USLife the following map showing the location of the project (“site”) in relation to the streets, roads, freeways and highways in the area. [98] [[Image here]] [99] The dashed line identified as “antoine extension” adjacent to and immediately to the east of the site is the street the lender required to be 100% complete. Ashford placed the dashed line on the form of map used before submitting the foregoing map to Carruth and USLife. At the time of the loan application the “antoine extension” right of way had been dedicated but no construction had been done on the street. At the time of the loan application none of the parties had any control over the construction of that part of Antoine Street in question. That construction was under the sole control of the City of Houston. The loan application is described as a “Letter of Financing Intent” and is in the form of a letter from USLife to Ashford wherein USLife advises Ashford that it is “prepared to present the following proposal to one or more of our life insurance company affiliates for their consideration.” Below USLife’s signature on the letter, Ash-ford executed the instrument indicating that the proposal was “accepted and agreed to.” The controversy centers on the first sentence in the following paragraph contained in the loan application: Should one or more of our life insurance company affiliates approve this transaction, a mortgage loan commitment will be issued on the form attached hereto which will incorporate the terms specified above and to which supplemental provisions may be added as deemed reasonably necessary by their counsel to conform to the particular requirements of this transaction. Upon such issuance of the commitment and acceptance thereof by you, the Application Fee will be applied and fully credited toward the Commitment Fee specified above. [Emphasis added.] The loan commitment tendered Ashford by a USLife affiliate contained sixteen typed paragraphs that did not appear on a blank copy of a printed form of a mortgage loan commitment attached to the loan application. The principal issue in this appeal involves one of those sixteen typed paragraphs which appears as paragraph 46 of the tendered loan commitment and reads as follows: 46. STREET COMPLETION: Evidence satisfactory to us shall be submitted prior to closing which shall reflect 100% completion of Antoine Street and the payment in full of any paving lien imposed in connection with any improvement required herein. The blank copy of the printed form of a mortgage loan commitment attached to the loan application as well as the subsequent loan commitment tendered Ashford by the USLife affiliate contained the following printed paragraph 23: 23. Access: All streets necessary for access to the Property Security must be dedicated and accepted for maintenance and public use by the appropriate governmental authorities and satisfactory evidence thereof must be submitted to us prior to closing. USLife and Carruth argue that the lender had the right to include paragraph 46 in the loan commitment. Ashford argues that the lender had no such right. USLife and Carruth contend that under the terms of the loan application the lender could add such additional terms to the loan commitment as “deemed reasonably necessary by [Its] counsel” and that the evidence established that the lender’s counsel deemed paragraph 46 of the loan commitment “reasonably necessary.” Ashford contends that while the loan application afforded the lender “the right to enumerate details with respect to the terms set forth in the contract; it did not, however, bestow upon [the lender] a free reign to attach new conditions to or alter the substance of the terms of the contract, no matter how reasonable they might in hindsight appear, merely because counsel deemed them reasonably necessary.” [Emphasis in Ashford’s brief.] In the present case the parties agree that the loan application constitutes a valid contract. Moreover, Ashford agrees that the lender had the right to add provisions to the loan commitment that “enumerate details with respect to the terms set forth in the [loan application].” Thus, we are not confronted with the argument that [100] the loan agreement is unenforceable as an agreement to make a contract in the future without specifying the terms and details of the proposed contract. Scott v. Ingle Bros. Pacific, Inc., 489 S.W.2d 554, 555-56 (Tex.1972); Stekoll Petroleum Co. v. Hamilton, 152 Tex. 182, 255 S.W.2d 187, 192 (Tex.1953); Radford v. McNeny, 129 Tex. 568, 104 S.W.2d 472, 474 (1937). Accordingly, we treat the present case as governed by the rule recognized by the Supreme Court in Scott. “But parties may agree upon some of the terms of a contract, and understand them to be an agreement, and yet leave other portions of an agreement to be made later.” Scott at 555. But in the present case those “other portions of [the] agreement to be made later” must be made in conformity to “the particular requirements of the transaction.” We hold that the terms of a contract cannot be unilaterally remade by one of the parties. Kitten v. Vaughn, 397 S.W.2d 530, 533 (Tex.Civ.App.—Austin 1965, no writ). See also Commercial Credit Corporation v. Bryant, 490 S.W.2d 644, 647 (Tex.Civ.App.—Amarillo 1973, no writ). Therefore, we disagree with USLife and Carruth that the lender could add such additional terms to the loan commitment “as deemed reasonably necessary by [Its] counsel.” We agree with Ash-ford that the loan application does not “bestow upon [the lender] a free reign to attach new conditions to or alter the substance of the terms of the contract, no matter how reasonable they might in hindsight appear, merely because counsel deemed them reasonably necessary.” In the present case, however, the loan application provides a method by which additions of some character may be made in the loan commitment by the lender subsequent to execution by the parties of the loan application. Therefore, the lender has the contractual right to make “additions.” The question presented here is whether the lender has exceeded his contractual right to add provisions to the loan commitment. We conclude that the lender did not. The loan application imposes limitations on the lender. In addition to being “deemed reasonably necessary” by lender’s counsel, terms added must be “supplemental” to something contained in the loan application and must “conform to the particular requirements of [the] transaction.” We decline, however, the temptation to interpret for the ages the meaning of the loan application. Instead, we look to Ashford’s own interpretation of the loan application. Ashford agrees that the loan application afforded the lender “the right to enumerate details with respect to the terms set forth in the contract [loan application].” We conclude that under Ashford’s own interpretation of the loan application the lender could add paragraph 46 to the loan commitment. The parties understood Antoine Street to be a street “necessary for access to the Property Security.” Ashford represented as much to Carruth and USLife when it submitted the above map with the loan application. Ashford confirmed as much when its president testified that the project was to be “constructed to face on Mitchelldale and Antoine, if and when Antoine went through.” The loan application by attachment of the form of mortgage loan commitment provided that “[All] streets necessary for access to the Property Security must be dedicated and accepted for maintenance and public use by the appropriate governmental authorities and satisfactory evidence thereof must be submitted to [lender] prior to closing.” We conclude, therefore, that paragraph 46 of the loan commitment was, in Ashford’s language, the enumeration of “details with respect to the terms set forth in the contract [loan application].” Accordingly, we hold that under the terms of the loan application the lender could add paragraph 46 to the loan commitment and that Ashford could not refuse to accept the loan commitment because of the addition of paragraph 46 to the loan commitment. We find no merit in Ashford’s point asserting error in the admission into evidence of certain documents. The documents were offered solely with respect to the issue of the reasonableness of USLife’s conduct and not to prove the truth of the matters contained therein. The documents were admissible for that purpose. McAfee [101] v. Travis Gas Corp., 137 Tex. 314, 153 S.W.2d 442 (1941). Moreover, in view of our disposition of the case, it is not necessary to address Ashford’s point contending that the conduct of USLife constituted a deceptive trade practice under the Deceptive Trade Practices Act, Tex.Bus.Com.Code Ann. § 17.41 et seq. (Vernon Supp.1982). Affirmed.