L.G. Mccormick v. Texas Commerce Bank National Association

L.G. McCormick and Beacon Hill Farms, Inc., appeal from a jury verdict in favor of Texas Commerce Bank ("TCB"). TCB sued appellants and W.L. Marshall (not a party to this appeal), alleging that they conspired to commit fraud by a "check kiting scheme." By passing worthless checks and drafts among three banks located in three different cities, appellants took advantage of the time lapse in the check collection process and thereby obtained false credit. These paper transfers, totaling several million dollars, created an overdraft on the Beacon Hill Farms, Inc.s corporate account in the amount of $735,574. When the overdraft was discovered in December 1974, McCormick, as the sole owner of the corporation, personally guaranteed payment of the overdraft and any other indebtedness of Beacon Hill Farms, Inc., but he ultimately failed to make such payment. McCormick and Marshall were indicted by a grand jury for conspiracy to commit theft. A jury trial in 1976 resulted in conviction; McCormick was sentenced to ten years in prison and order to pay a fine of $5,000. His sentence was subsequently suspended; he was placed on probation for ten years and ordered to make restitution of $367,000 to TCB. The restitution remains unpaid.