State National Bank of El Paso v. Farah Manufacturing Co.

678 S.W.2d 661 (1984)

From our private database of 46,300+ case briefs, written and edited by humans—never with AI.

State National Bank of El Paso v. Farah Manufacturing Co.

Texas Court of Appeals
678 S.W.2d 661 (1984)

RW

Facts

The Farah Manufacturing Company, Inc. (company) (plaintiff) signed a refinancing agreement with State National Bank of El Paso and other lenders (defendants). The lenders attributed the company’s financial straits to the actions of its ex-president, William Farah. Therefore, the refinancing agreement contained a clause (the anti-Farah clause) empowering the lenders to block Farah’s return to management. When it became clear that many of the company’s directors wanted to reinstate Farah, the lenders could not agree on whether to invoke the anti-Farah clause. Despite that uncertainty, one of the lender’s lawyers decided to bluff the directors into withdrawing their support for Farah. The lawyer assured the directors that if Farah regained control, the lenders would immediately invoke the anti-Farah clause, withdraw their financial support, and drive the company into bankruptcy. The bluff worked. It was some time before Farah retook the company’s presidency, but when he did, he quickly restored the company’s profitability. The company sued the lenders for fraud. The trial court awarded the company hefty damages for the profits it could have earned had the lawyer’s bluff not delayed Farah’s return to power. The lenders appealed to the Texas Court of Appeals.

Rule of Law

Issue

Holding and Reasoning (Schulte, J.)

What to do next…

  1. Unlock this case brief with a free (no-commitment) trial membership of Quimbee.

    You’ll be in good company: Quimbee is one of the most widely used and trusted sites for law students, serving more than 815,000 law students since 2011. Some law schools even subscribe directly to Quimbee for all their law students.

  2. Learn more about Quimbee’s unique (and proven) approach to achieving great grades at law school.

    Quimbee is a company hell-bent on one thing: helping you get an “A” in every course you take in law school, so you can graduate at the top of your class and get a high-paying law job. We’re not just a study aid for law students; we’re the study aid for law students.

Here's why 815,000 law students have relied on our case briefs:

  • Written by law professors and practitioners, not other law students. 46,300 briefs, keyed to 988 casebooks. Top-notch customer support.
  • The right amount of information, includes the facts, issues, rule of law, holding and reasoning, and any concurrences and dissents.
  • Access in your classes, works on your mobile and tablet. Massive library of related video lessons and high quality multiple-choice questions.
  • Easy to use, uniform format for every case brief. Written in plain English, not in legalese. Our briefs summarize and simplify; they don’t just repeat the court’s language.

Access this case brief for FREE

With a 7-day free trial membership
Here's why 815,000 law students have relied on our case briefs:
  • Reliable - written by law professors and practitioners, not other law students
  • The right length and amount of information - includes the facts, issue, rule of law, holding and reasoning, and any concurrences and dissents
  • Access in your class - works on your mobile and tablet
  • 46,300 briefs - keyed to 988 casebooks
  • Uniform format for every case brief
  • Written in plain English - not in legalese and not just repeating the court's language
  • Massive library of related video lessons - and practice questions
  • Top-notch customer support

Access this case brief for FREE

With a 7-day free trial membership