230 F.2d 330 (5th Cir. 1956), 15465, Kirby Lumber Corp. v. Williams

Docket Nº:15465.
Citation:230 F.2d 330
Party Name:KIRBY LUMBER CORPORATION, Appellant, v. John W. WILLIAMS et al., Appellees.
Case Date:February 10, 1956
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 330

230 F.2d 330 (5th Cir. 1956)

KIRBY LUMBER CORPORATION, Appellant,

v.

John W. WILLIAMS et al., Appellees.

No. 15465.

United States Court of Appeals, Fifth Circuit.

February 10, 1956

Rehearing Denied April 24, 1956.

Page 331

Claude C. Roberts, Houston, Tex., Fountain, Cox & Gains, Houston, Tex., for appellant.

James R. Cornelius, Jr., Lufkin, Tex., Collins, Garrison, Renfrow & Zeleskey, Lufkin, Tex., for appellees.

Before HUTCHESON, Chief Judge, and BORAH and BROWN, Circuit Judges.

HUTCHESON, Chief Judge.

The suit was for the title and possession of a fractional interest in a 100 acre tract of land in Jasper County, Texas, which had been deeded by the agreed common source of title, W. W. McBryde, to one R. J. Williams during the lifetime of his first wife, Emma Barrow Williams, the mother of the defendants.

The claim was that, by the acquisition by the First National Bank of Jasper of notes secured by a deed of trust lien, given after the death of his first wife by R. J. Williams, and the purchase of the property in the foreclosure suit, to which after the death of Williams the defendants were made parties as his heirs, the bank had acquired the legal title of the defendants, as heirs of their father, and also the equitable title, which they had inherited from their mother.

This claim took two forms. The first was that, since the defendants to this suit were defendants to the foreclosure suit and judgment was rendered against them for debt and foreclosure, the sheriff's deed passed all of their title to the bank. The second was: that the bank was a purchaser for value of the deed of trust lien upon the land in controversy and the debt secured thereby and, therefore, of the title to the land at the sheriff's sale, without notice of the equitable title of the children of Emma Barrow Williams; and that plaintiff succeeded to its status or rights as such.

The defendants, on the other hand, asserting the equitable title of their mother, insisted that neither plaintiff nor any of its predecessors in title was, or could claim to be, a bona fide purchaser for value without notice of their interest, and that it was not divested out of them by the foreclosure proceedings and the sheriff's deed thereunder.

Tried to the court without a jury, the case was submitted upon written briefs and arguments, and the district judge, in a full and thorough opinion, 1 stated the facts and set out the record title, one link in which was a quitclaim deed from the bank to Mrs. Cleona Trotti, through whom plaintiff claims. 2 Canvassing the

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contentions of the parties and determining that because of the existence in plaintiff's chain of title of this quitclaim deed, plaintiff could not assert the claim of innocent or bona fide purchase, he denied plaintiff a judgment against defendants as to the interest in the tract inherited from Emma Williams.

Appealing from that judgment, plaintiff is here insisting that, under Laffare v. Knight, Tex.Civ.App., 101 S.W. 1034, Donald v. Davis, Tex.Civ.App., 208 S.W.2d 571, and Regan v. Andrews, Tex.Civ.App., 241 S.W.2d 249, the court erred in so holding, and the judgment must, therefore, be reversed; and further that, upon the undisputed facts of record, the equitable title of defendants was divested by the foreclosure sale and, if not, the defendant bank, through whom plaintiff claims, was an innocent purchaser for value of the lien and title, and judgment must be here rendered in appellant's favor.

Appellees, conceding, as indeed they must, that the court erred in holding that, because of the quitclaim deed executed by the bank, plaintiff could not make the claim of innocent purchase, yet insists, upon the authority of Faubion v. Rogers, 66 Tex. 472, 1 S.W. 166; Linder v. Thomas, Tex.Civ.App., 228 S.W.2d 300; Hampshire v. Greeves, 104 Tex. 620, 143 S.W. 147; Walraven v. Farmers' & Merchants' Nat. Bank, Tex.Civ.App., 53 S.W. 1028, and Wood v. Franklin Life, 5 Cir., 17 F.2d 80, that the district judge was right in holding that defendants' title under Emma Williams was not put in issue in, and was not affected by, the foreclosure proceeding, and in further finding as a fact that when the notes and deed of trust were executed by Williams to the Jasper Mercantile Co., the grantees therein knew of the death of his first wife leaving children surviving her. They further argue that, though the district judge did not make a finding that the bank did not acquire the notes and lien as a bona fide purchaser, the evidence not only justified but required such a finding because (1) the bank, not having taken an assignment of the lien, did not acquire the legal title to it, (2) it showed as matter of law that the bank knew, or was charged with knowledge, of the existence of the equitable title in these defendants, and (3) having purchased the notes after maturity, the bank was not a purchaser in due course, and it took the notes and lien, as the mercantile company had taken them, charged with notice of any defects in the title to, and defenses against, them, and that this included notice of secret equities in the title to the property secured by the lien.

The opinion of the district judge fully and correctly sets out the facts and states the issues, and we can, without restating them, proceed directly to a determination of the questions this appeal raises. We shall do this, where the district judge has made a determination and expressed an opinion, by stating our agreement or disagreement with his views, and, where he has not, by making and stating ours.

Upon its first contention so vigorously argued by the appellant, that, because in the foreclosure proceeding the judgment was against those sued as defendants in this cause for the amount of the debt sued for and for foreclosure of the lien for that amount against the property described, it must be held that the district judge erred in holding that the judgment, execution, order of sale, and sheriff's...

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