## Facts

- Tony and Dorothy Kuciemba made four unsecured loans evidenced by promissory notes signed only by Manubhai (“Manu”) Patel: $35,000 (1990), $60,000 (1992), $20,000 (1994), and $50,000 (1996), at 12% interest.
- Manu and Ilaben M. Patel were married, but Ilaben did not sign the notes and lacked knowledge that Manu executed them.
- Manu handled borrowing and dealings with the Kuciembas; there was no evidence Ilaben negotiated the loans or represented that Manu could bind her personally.
- Some loan-related checks were drawn on a joint account bearing both spouses’ names, but there was no evidence Ilaben signed checks used to obtain the loans.
- After Manu’s death in 1997, Ilaben made interest payments for several months using Manu’s business accounts, then denied the debts and requested proof.
- Separately, DAS Investment Corporation (owned through a partnership with Ilaben and another partner) held title to a convenience store property and had a purchase-money deed of trust.
- Before a threatened foreclosure, DAS conveyed the property to Manila Corporation, with Manila agreeing to assume the deed-of-trust debt; DAS used Manila’s purchase money to pay off the secured note and obtain release of the lien.
- A jury found (1) Manu had apparent authority to sign the notes as Ilaben’s agent, (2) Ilaben ratified Manu’s execution of the notes, and (3) DAS made a fraudulent transfer to Manila; the trial court entered judgment for the Kuciembas.

## Issues

1. Whether legally and factually sufficient evidence supported the finding that Manu had apparent authority to bind Ilaben on the promissory notes.
2. Whether legally and factually sufficient evidence supported the finding that Ilaben ratified Manu’s execution of the promissory notes.
3. Whether legally and factually sufficient evidence supported the finding that DAS’s conveyance of real property to Manila was a fraudulent transfer under the Texas Uniform Fraudulent Transfer Act.
4. Whether admission of a Dun & Bradstreet report was reversible error.

## Decision

- The court reversed the judgment holding Ilaben personally liable on the notes and rendered a take-nothing judgment as to her.
- The court reversed the fraudulent-transfer judgment against Manila and DAS and rendered a take-nothing judgment as to those defendants.
- The court held there was no reversible evidentiary error regarding the Dun & Bradstreet report; any error was harmless given the absence of sufficient proof on the controlling liability theories.

## Legal Principles

- Apparent authority is an estoppel doctrine that must be based on the principal’s conduct communicated to the third party; it cannot be established by the agent’s acts alone or by assumptions arising from marriage or a jointly titled bank account.
- A third party must show justifiable reliance on the principal’s manifestations of authority and resulting detriment.
- Ratification requires proof that the alleged ratifier, with full knowledge of material facts, intentionally affirmed an unauthorized act by words or conduct; post-event payments do not establish ratification absent proof of knowledge and intent to adopt the obligation.
- A fraudulent-transfer finding under TUFTA requires evidence of actual intent to hinder, delay, or defraud creditors (often shown through recognized badges of fraud), or a transfer for less than reasonably equivalent value while the debtor is insolvent or made insolvent.

## Conclusion

The appellate court set aside the verdict because the record lacked proof that Ilaben, through her own representations, authorized Manu to bind her or knowingly adopted the notes after the fact, and it also lacked sufficient evidence that the DAS-to-Manila property conveyance was fraudulent under TUFTA; judgment was rendered that the Kuciembas take nothing from Ilaben, Manila, and DAS.


Patel v. Kuciemba, 82 S.W.3d 589 (Tex. App.—Corpus Christi 2002)