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December 27, 1972


From the District Court of Lubbock County; 72nd Judicial District; No. 51,441; Honorable Pat S. Moore, Judge

Author: Reynolds

Summary judgment was rendered in favor of a bank, sued for fraudulent and conspiratorial conversion of property, upon a summary judgment motion theory of res judicata and estoppel by avouched final judgments of absolution of the bank's representatives for the acts asserted against the bank. Affirmed.

A statement of the litigation is required for a proper perspective. Plaintiffs are Homer G. Maxey, William Goodacre and wife, and Tommy Elliott and wife. Their original suit sought some twenty million dollars actual and exemplary damages from Citizens National Bank of Lubbock, Texas, two of its related corporations, some of the executive officers and all of the directors of the bank, four bank attorneys and two bank customers, for conversion, by fraud and conspiracy in bank transactions, of plaintiffs' extensive properties. Prior to a jury trial, the pleas of privilege of nine non-resident defendant directors were sustained; subsequently, all of these defendants were granted summary judgments, and the only three of which that were appealed were affirmed.*fn1 One defendant director was summarily exonerated by a July 12, 1968 judgment, to which no exception was taken or notice of appeal given. The trial court granted the motions of, and rendered summary judgments for, fifteen resident defendant directors on September 11, 1969, and plaintiffs gave notice of appeal therefrom. Thereafter, plaintiffs filed their third amended original petition naming as defendants the bank, two bank corporations, five executive officers, three of whom were directors, three bank attorneys, one of whom was a director, and two customers of the bank, all of whom were the original defendants remaining after entry of the judgments above mentioned. One defendant bank customer was dismissed from the lawsuit for want of jurisdiction, and no exception was taken, or notice of appeal given, to this judgment dated October 9, 1969.

Trial began before a jury. When plaintiffs closed their evidence, the remaining defendants moved for an instructed verdict. All motions, except the bank's, were granted and a judgment was entered to that effect on January 5, 1970. Plaintiffs excepted and gave notice of appeal. No order of severance was entered with respect to any of the aforementioned judgments.

Based on the jury's findings to issues submitted as to the bank, judgment was entered on March 3, 1970, decreeing that plaintiffs recover of and from the bank $913,378.53 actual damages and $1,500,000.00 exemplary damages. The judgment last entered neither incorporated nor made reference to the prior judgments entered in the cause, and no order of severance was entered. Plaintiffs gave no further notice of appeal, did not file an appeal bond with respect to any of the judgments, or a part thereof, and filed no appellate record in the appellate court. The bank, following the overruling of its motion for new trial, gave notice of appeal from the March 3, 1970 judgment, perfected its appeal and filed the appellate record. On appeal, the judgment rendered against the bank was reversed because of the insufficiency of the evidence to support the jury's material findings, and the cause was remanded to the trial court. Citizens National Bank of Lubbock v. Maxey, 461 S.W.2d 138 (Tex.Civ.App. - Amarillo 1970, writ ref'd n.r.e.).

On remand, the bank filed a motion for summary judgment. The two grounds stated in the motion were that, since any liability of the bank is derivative from the conduct of the other original defendants who previously have been personally exonerated, plaintiffs' alleged cause of action is barred by the doctrines of res judicata and estoppel by judgment. Plaintiffs controverted the motion and thereafter filed their fourth amended original petition in which only the Citizens National Bank of Lubbock, Texas, was named as a defendant. Following a hearing, the trial court granted the bank's motion for summary judgment, reciting in the judgment entered as the reason that the bank is entitled to such judgment as a matter of law.

Plaintiffs filed a motion for new trial on the basis that the summary judgment was entered under an erroneous concept of corporate liability. The new trial motion was amended to include the contention that the trial judge was disqualified from presiding over the summary judgment proceedings. Plaintiffs requested a hearing on their amended motion for new trial, particularly with respect to the disqualification allegations, but the trial judge denied the hearing and overruled the amended motion for new trial.

Plaintiffs present three points of error for consideration. The first point is that the trial court erred in granting the motion and entering summary judgment in favor of the bank. The second and third points are that the trial judge was disqualified from participating in the determination of the motion for summary judgment, and erred in refusing a hearing on the motion suggesting disqualification. The last two points will be considered first.

Judge Pat S. Moore, presiding judge of the 72nd Judicial District Court, who conducted the original jury trial, presided over these summary judgments proceedings. Disqualification of Judge Moore was asserted under the Constitution of the State of Texas, art. 5, § 11, because of Judge Moore's alleged interest in the case stemming from two circumstances alleged to have become known to plaintiffs subsequent to the entry of the summary judgment. These circumstances are (1) the ownership of a $24,000.00 principal promissory note given in payment of 37.5 percents interest in real property conveyed by Judge Moore to Bill Smith Gin, Inc., which, two years later, conveyed a 67.5 percents interest in the same property in trust to secure the payment, in five annual installments, of its $116,750.39 principal promissory note owned by Citizens National Bank; and (2) the bank's holding of a delinquent note or chose in action obligation of Jean David Smith, Judge Moore's only brother, in an amount greater than all of his assets. The interest of Judge Moore in these transactions was alleged to be such as to create prejudice and bias on the part of Judge Moore against plaintiffs so as to constitute deprivation of plaintiffs' rights of equal protection of the laws, due process of law, and the privileges and immunities of citizenship pursuant to the Fourteenth Amendment to the Constitution of the United States. Attached to the amended motion was an affidavit executed by plaintiff Homer G. Maxey in which he states, on information and belief, that Judge Moore "acquired 37.5 percents, approximately, of the capital common stock of Bill Smith Gin, Inc." and "(as) of April 24, 1972, such promissory note owed by Bill Smith Gin, Inc., to Citizens National Bank of Lubbock, Texas, was in default. If Citizens National Bank forecloses upon the property securing such note, Judge Pat S. Moore in all probability will lose the value of her investment in that corporation, or she will become a co-owner or joint venturer in the operation of such property with Citizens National Bank of Lubbock."

The disqualification motion sub judice was premised upon the judge's financial involvement with Bill Smith Gin, Inc., an alleged default debtor of the defendant bank, and her brother's indebtedness to the defendant bank, as giving her a disqualifying interest in the case. Further, by virtue of such interest in the case, it was submitted that Judge Moore held prejudice and bias against plaintiffs in that she would not want to offend the bank, causing it to cease its forebearance and foreclose upon the obligations it held. The financial transactions set forth in the motion were unchallenged; it was, and is, the bank's position that the motion's allegations, taken as true, do not establish a disqualifying interest. Obviously, Judge Moore, in refusing a hearing on and overruling the motion, found the motion to present no legal grounds for, or to raise any fact issue with respect to, her disqualification, and determined that she was not disqualified. We hold her action to be correct.

While delicate discretion might indicate a judge's withdrawal from a case in a contentious situation, there is no compulsion to step aside when the judge is not legally disqualified; indeed, unless legally disqualified, it is the duty of the judge to preside. Grounds of disqualification in civil matters are dictated by Vernon's Ann.Tex.Const. art. 5, § 11,*fn2 and by Vernon's Ann.Civ.St. art. 15,*fn3 and the grounds there enumerated are inclusive and exclusive. Love v. Wilcox, 119 Tex. 256, 28 S.W.2d 515 (1930). The particular ground relied on by plaintiffs is that no judge "shall sit in any case wherein he may be interested."

It long has been established that the interest - other than the personal interest resulting from the prohibited relationship and status as counsel - required for disqualification by the constitution and statute is one of a pecuniary nature, capable of an estimated value, that the judge may gain or lose by the judgment rendered in the case. King & Davidson v. Sapp, 66 Tex. 519, 2 S.W. 573 (1886); Taylor v. Williams, 26 Tex. 583 (1863). Such interest must be a direct, real and certain interest in the subject matter and result of the instant litigation, not merely indirect, incidental, remote, possible or speculative. Sun Oil Company v. Whitaker, 483 S.W.2d 808 (Tex.Sup. 1972); Elliott v. Scott, 119 Tex. 94, 25 S.W.2d 150 (1930).

This instant suit does not involve the validity of any of the financial transactions, the attendant obligations pertaining thereto, the securing liens on the property pledged to insure performance, or the adjudication of any right connected with these transactions, all of which are unrelated to the subject matter of the suit at bar. The legal rights of all parties connected with the financial transactions alien to this suit would not be affected directly and necessarily by the judgment rendered in the instant cause, and its result on the financial transactions, if any, at most would be only highly remote, conjectural and speculative. See Hidalgo County Water Improvement District No. 2 v. Blalock, 157 Tex. 206, 301 S.W.2d 593 (1957). Thus, the motion per se does not factually allege constitutional or statutory disqualification on the basis of interest.

Because the constitutional and statutory disqualifying grounds are inclusive and exclusive, mere prejudice and bias are excluded as a disabling factor. Taylor v. Williams, supra. Any error resulting from prejudice and bias alone would occur in the rulings made by the judge and not from presiding over the litigation, Quarles v. Smith, 379 S.W.2d 91 (Tex.Civ.App. - Houston 1964, writ ref'd n.r.e.), and plaintiffs have no point of error assigning any erroneous ruling as a result of prejudice and bias. The prejudice and bias allegations in the motion are conclusory in nature rather than factual. The presumption of integrity accompanying an act performed by a judge under sanction of official oath cannot be overcome by inference, conjecture or speculation; the challenge of disqualification must be ...

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