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Centex Corporation v. Dalton

Supreme Court of Texas
840 S.W.2d 952 (1992)


Facts

Centex Corporation (Centex) (defendant) is a company engaged in residential and commercial construction and related financial services. Dalton (plaintiff) is an executive of a Texas thrift institution. In 1988, the Federal Home Loan Bank Board (Bank Board) directed all thrift institutions to close, merge, liquidate, or be sold to larger companies. In November 1988, Centex contacted Dalton and requested his assistance in acquiring other thrift institutions. Specifically, Centex was interested in Dalton’s help in acquiring a group of four Texas thrift institutions known as the “Lamb Package.” On December 23, 1988, Centex entered a written agreement promising to pay Dalton $750,000 over three years if Centex was successful in acquiring the Lamb Package. On December 28, 1988, the president of Centex learned that the Bank Board would likely not approve this arrangement to pay finder’s fees to Dalton. Centex continued, however, in successfully acquiring the Lamb Package and forming a wholly-owned subsidiary known as Texas Trust Savings Bank, FSB (Texas Trust). The Bank Board ultimately prohibited the payment of fees by Centex to Dalton, and on January 31. 1989, adopted an amendment prohibiting all payment of similar fees to affiliates of Texas Trust. Dalton performed all services required of him under his written agreement with Centex, but Centex refused to pay him the $750,000. Centex’s refusal to pay Dalton was due to the Bank Board’s prohibition of such fees when it approved Centex’s acquisition of the Lamb Package on December 29, 1988, as well as the prohibition amendment the Bank Board adopted on January 31, 1989. Dalton filed suit in Texas state court against Centex seeking to enforce their agreement and recover the $750,000 promised him. In August 1989, while Dalton’s suit was still pending, the United States Congress passed the Financial Institutions Reform Recovery and Enforcement Act (FIRREA). FIRREA abolished the Bank Board and gave all powers previously held by the Bank Board to the new Office of Thrift Supervision (OTS). On December 11, 1990, OTS issued an order specifically prohibiting Centex or Texas Trust from paying any fees to Dalton pursuant to the December 23, 1988 written agreement. The state court held, however, that Dalton’s contract with Centex was not made unenforceable by FIRREA or the order of OTS. Centex appealed.

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Holding and Reasoning (Gammage, J.)

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Dissent (Mauzy, J.)

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