stating that the “concept [of the implied covenant of good faith and fair dealing] is contrary to our well-reasoned and long-established adversary system” and that the implied covenant did not apply to a contract between homeowners and mortgagee
How later courts described this case
- stating that the “concept [of the implied covenant of good faith and fair dealing] is contrary to our well-reasoned and long-established adversary system” and that the implied covenant did not apply to a contract between homeowners and mortgagee
- holding that under the terms of a similar deed of trust, the mortgagee was entitled to collect the insurance proceeds after a fire and “to apply such proceeds to the indebtedness and pay the remainder to [the mortgagor]”
- finding no promissory es-toppel when plaintiff could not show that he would not have taken his detrimental actions if defendant had not made promise
- concluding that there is no covenant of good faith and fair dealing implied in every contract
Written by the judges who cited it.
The opinion
SPEARS, Justice,
concurring.
I agree with the majority’s conclusion that an implied covenant of good faith and fair dealing does not override the express terms of this transaction. Hence, this case is consistent with Naquin v. Texas Sav. & Real Estate Investment Ass’n, 95 Tex. 313 , 67 S.W. 85 (1902). In Naquin , as here, the court gave effect to the intent of the parties as reflected in the contract. The different result in Naquin stems from the different contractual provision.
I would note, however, that Texas courts have read a duty of good faith and fair dealing into many types of contractually-based transactions. The common thread among the cases in which courts have done so is a special relationship between the parties to the contract. That special relationship either arises from the element of trust necessary to accomplish the goals of the undertaking, or has been imposed by the courts because of an imbalance of bargaining power. Among the more familiar areas in which this duty has been recognized are: insurance, Stowers Furniture Co. v. American Indemnity Co., 15 S.W.2d 544 (Tex. Comm’n App.1929, opinion adopted) (insurance company must make good faith effort to settle), see also Massey v. Armco Steel Co., 652 S.W.2d 932 (Tex.1983); oil and gas, Schlitter v. Smith, 128 Tex. 628 , 101 S.W.2d 543 (1937) (holder of executive rights owes duty of utmost fair dealing to holder of royalty interest), see also Amoco Production Co. v. First Baptist Church of Pyote, 611 S.W.2d 610 (Tex.1980) (implied covenant that lessee act in good faith in marketing gas); partnership, Johnson v. Peckham, 132 Tex. 148 , 120 S.W.2d 786 , 120 ALR 720 (1938) (partner purchasing other’s partnership owes “the highest duty of honesty and fair dealing in making the trade”), see also Morgan v. Arnold, 441 S.W.2d 897 (Tex.Civ.App.—Dallas 1969, writ ref’d n.r.e.), Inman v. Parr, 311 S.W.2d 658 (Tex.Civ.App.— Beaumont 1958, writ ref’d n.r.e.); joint adventure, Fitz-Gerald v. Hull, 150 Tex. 39 , 237 S.W.2d 256 (1951) (joint adventurers owe one another an obligation of utmost good faith); and agency, Kinzbach Tool Co. v. Corbett-Wallace Corporation, 138 Tex. 565 , 160 S.W.2d 509 (1942) (good faith and fair dealing required from agent in every transaction on behalf of principal), see also Anderson v. Griffith, 501 S.W.2d 695 (Tex.Civ.App.—Fort Worth 1973, writ ref’d n.r. *525 e.). A similar duty applies to all contracts governed by the Uniform Commercial Code. See TEX.BUS. & COM.CODE ANN. § 1.203 (Tex.UCC) (Vernon 1968).
In all the cases cited above, the duty of good faith and fair dealing springs from the relationship, not from the contract; there may be other such relationships. In situations where the duty of good faith and fair dealing does exist, public policy would dictate that it cannot be disclaimed. On the other hand, the instant case involves a fairly negotiated contract between individuals. Moreover, there were attorneys as parties on both sides of the bargain. These parties were certainly capable of stating their agreement in its entirety. There is no reason to infer that they did not.
As I read the majority opinion, it has no effect on the cases cited above. As a result, I concur.
ROBERTSON, J., joins in this concurring opinion.