First Valley Bank of Los Fresnos, Norwest Bank of Texas, N.A., and Wells Fargo Bank (Texas), N.A. v. Sam Martin

Summary

The Supreme Court of Texas reversed a judgment awarding damages to Sam Martin on his malicious-prosecution claim against banks that reported his disposition of secured cattle to law-enforcement authorities. The court held that the banks had probable cause as a matter of law because Martin admitted the objective elements of the offense, and that the banks did not procure the indictment through material false statements or omissions. The court remanded for entry of judgment consistent with the jury’s finding that Martin owed the banks approximately $50,000.

Holdings

1. The Bank had probable cause as a matter of law because Martin admitted the objective elements of the charged offense: he was a debtor under an overdue note, the security agreement restricted disposition of the cattle, he sold 58 cattle without written consent, and he retained most of the proceeds.
2. The Bank was not liable for malicious prosecution because there was no evidence that it made a false statement or failed to disclose information material to the offense for which Martin was indicted.
3. The director's alleged participation in moving the cattle did not establish apparent authority or waiver of the Bank's security interest in the sale proceeds.
4. The written security agreements controlled and pledged all livestock owned or later acquired by Martin, not merely 75 cattle.

Questions Presented

1. Whether the Bank had probable cause to report Martin's sale of secured cattle and thereby defeat his malicious-prosecution claim.
2. Whether alleged inaccuracies or omissions concerning other cattle made the Bank responsible for Martin's indictment.
3. Whether a bank director's participation in moving cattle created apparent authority or impliedly waived the Bank's security interest in the proceeds.
4. Whether the parties' written security agreements, rather than prior oral discussions, controlled the scope of the collateral securing Martin's debt.

Disposition

reversed_and_remanded