TH Mastin & Co. v. Kirby Lumber Co.

• Decision Date: 29 April 1936
• Docket Number: No. 609.,609.
• Citation: 14 F. Supp. 858
• Parties: T. H. MASTIN & CO. et al. v. KIRBY LUMBER CO. MEACHUM v. TEMPLE LUMBER CO. et al.
• Court: U.S. District Court — Southern District of Texas

14 F. Supp. 858

T. H. MASTIN & CO. et al. v. KIRBY LUMBER CO.

MEACHUM v. TEMPLE LUMBER CO. et al.

No. 609.

District Court, S. D. Texas, Houston Division.

April 29, 1936.

Andrews, Kelley, Kurth & Campbell, E. J. Fountain, Jr., and Daffan Gilmer, all of Houston, Tex., for receiver of Kirby Lumber Co.

Roy L. Arterbury, of Houston, Tex., and R. E. Minton, of Lufkin, Tex., for Temple Lumber Co., et al.

KENNERLY, District Judge.

By supplemental and ancillary bill in the nature of an original bill in this receivership cause, the receiver of the Kirby Lumber Company (for brevity called receiver) sues the Temple Lumber Company, a Texas corporation, with its domicile in the Eastern District of Texas (for brevity called Temple Company), and certain persons who are heirs at law of T. L. L. Temple, some of whom reside in and are citizens of Texas, and some of whom reside in and are citizens of other states, to recover title and possession of 100 acres of land located partly in San Augustine county and partly in Sabine county, in the Eastern District of Texas (all are collectively for brevity called respondents). T. B. Roberts, who resides in San Augustine county, in the Eastern District of Texas, and is a citizen of Texas (for brevity called Roberts), is made a party defendant upon his alleged warranty of the title of the land to Kirby Lumber Company.

The case, after having been brought to issue, went to a master for hearing and report, and he has reported in favor of the Temple Company, and the receiver has filed exceptions to the report. This is a hearing on such exceptions.

1. This being an ancillary and supplemental bill in the nature of an original bill by the receiver against persons claiming adversely property in the hands of the receiver, there is jurisdiction here. Riehle v. Margolies, 279 U.S. 218, 220, 49 S.Ct. 310, 73 L.Ed. 669, 671; White v. Ewing, 159 U.S. 36, 15 S.Ct. 1018, 40 L.Ed. 67; Ex parte Tyler, 149 U.S. 164, 13 S.Ct. 785, 37 L.Ed. 689; Wabash Railroad Co. v. Adelbert College, 208 U.S. 38, 28 S.Ct. 182, 52 L.Ed. 379; Central Union Trust Co. v. Anderson County, 268 U.S. 93, 45 S.Ct. 427, 69 L.Ed. 862; Porter v. Sabin, 149 U.S. 473, 13 S.Ct. 1008, 37 L.Ed. 815; Barton v. Barbour, 104 U.S. 126, 26 L.Ed. 672; Bien v. Robinson, 208 U.S. 423, 28 S.Ct. 379, 52 L.Ed. 556; Jenkins v. Dillingham (C.C.A.) 175 F. 1021, certiorari denied 220 U.S. 620, 31 S.Ct. 723, 55 L. Ed. 613; Keith Lumber Co. v. Houston Oil Co. (C.C.A.) 257 F. 1, 4, certiorari denied 250 U.S. 666, 40 S.Ct. 13, 63 L.Ed. 1197; Gordon v. Dillingham (C.C.A.) 158 F. 1019; Hollander v. Heaslip (C.C.A.) 222 F. 808, 811; Knox & Lewis v. Alwood (D.C.) 228 F. 753; Hume v. City of New York (C.C.A.) 255 F. 488; Franklin Opera House Co. v. Armstrong (Gunby v. Armstrong) (C.C.A.) 133 F. 417, 427; Bottom v. National Railway Building & Loan Association (C.C.) 123 F. 744; Peck v. Elliott (C.C.A.) 79 F. 10, 38 L.R.A. 616; Ross-Meehan Brake-Shoe Foundry Co. v. Southern Malleable Iron Co. (C.C.) 72 F. 957; Cherry v. Insull Utility Investments (D.C.) 58 F.(2d) 1022; Green-Boots Construction Co. v. Hays (C.C.A.) 56 F.(2d) 829; Kreitmeyer v. Baldwin Drainage District (D.C.) 2 F.Supp. 208; Samuel v. Houston Oil Co. (Tex.Civ.App.) 193 S.W. 246 (writ of error refused).

2. The master found J. B. Drawhorn to be the common source of title to the land in question as between receiver and all respondents. I do not agree with him, but since the title of all parties comes through Drawhorn, the discussion will for the present proceed upon that theory. From the report of the master and the evidence before him, the title of the Temple Company et al. is shown to be as follows:

(a) Warranty Deed, dated December 22, 1879, from J. B. Drawhorn to L. S. Wright, covering the land in controversy, and reciting the payment of a consideration of $50. The evidence shows, and the master finds, however, that Wright in fact paid nothing for the land, but gave his vendor's lien note for the consideration, payable in the fall of the year (1880) following the date of the deed. By this, it is meant that in the note, Drawhorn reserved the vendor's lien to secure the unpaid purchase money. Wright's testimony is as follows:

"Q. Did you or not ever see a deed purporting to be signed by said Drawhorn to you, purporting to convey to you 100 acres south of Tebo Creek out of the Northwest corner of a tract out of the William Roberts League purporting to contain 633 1/3 acres of land? A. I did, he made me a deed.

"Q. If you have said you did so purchase the 100 acres of land, did you pay for it then in cash or otherwise? A. I never did pay a cent on it.

"Q. If you did not then pay for it, when were you to do so? A. I bought it in the fall of 1879, and I was to make a payment on it the next fall.

"Q. If you did not then pay for it, was the purchase money secured or not in any manner, and if so, how? A. I gave a Vendor's Lien note as a security for the purchase price."

(b) The evidence clearly shows, and the master in effect finds, that Wright did not file his deed for record, and that when his note came due (in the fall of 1880, or thereabouts), he was unable to pay it, and returned the deed to Drawhorn, and Drawhorn returned to him his note, both agreeing to a rescission of the sale, and that both the deed and note should be destroyed. Wright destroyed the note, but Drawhorn, for some reason, did not destroy the deed. Wright's testimony makes this clear:

"Q. If you have said you gave a Vendor's Lien Note expressly retaining a lien to secure the purchase money, did you or not thereafter pay said note? A. No sir, he gave me the note back, and I gave him the deed back.

"Q. If you have said you did not pay said note, then what, if anything was done about it, and when? A. In the following fall I went to him, told him I was not able to pay on the land. I told him I was not able to pay on the land, and I asked him to take the land back. He agreed to do so, and I gave him the deed back, and he gave me the note back. I destroyed the note, and he was to destroy the deed; this was our agreement. When we agreed to this I asked him how we would manage the exchange, and he asked me if the deed had been recorded: I told him it had not. He then told me that I could return the deed to him, and he would give me back my note, and we would destroy both of them. I did as promised, and destroyed the note, but he did not destroy the deed. I do not know why he did not destroy the deed, as he had promised to do.

"Q. How long after this did you remain in the neighborhood? A. I stayed there two years longer on Dr. Cobb's place, and then moved seven or eight miles away.

"Q. Did you or not make any improvements on the land in question? A. No sir I made no improvements.

"Q. If you moved away from that neighborhood, where and how far did you go? A. I moved seven or eight miles away near what is known as Mott Prairie."

(c) Drawhorn, on October 20, 1881, conveyed the land to P. B. Watson by general warranty deed, and the Temple Company et al. hold under Watson by a regular chain of conveyances of the title.

The deed from Drawhorn to Wright and the note from Wright to Drawhorn must be construed together. When so construed, they constitute an executory contract between Drawhorn and Wright, with the superior title and the legal title remaining in Drawhorn, and with only an equity passing to and in Wright. Dunlap's Adm'r v. Wright, 11 Tex. 597, 599, 62 Am.Dec. 506; Baker v. Ramey, 27 Tex. 52, 53; Peters v. Clements, 46 Tex. 114, 115; Baker v. Clepper, 26 Tex. 629, 634, 84 Am.Dec. 591; McKelvain v. Allen, 58 Tex. 383, 387; Lundy v. Pierson, 67 Tex. 233, 237, 2 S.W. 737; Anderson v. Silliman, 92 Tex. 560, 567, 50 S.W. 576, 577. The facts in Anderson v. Silliman last cited are shown by the following quotation therefrom to be substantially similar to those here (italics mine):

"On the 10th day of April, 1884, Williams, acting for himself and as attorney in fact for A. E. Anderson and Mrs. Snider, sold to J. R. Blackerby the 933-acre tract above referred to, executing to him an absolute deed, reciting the capacities in which Williams acted, which did not reserve any lien for the purchase money, and which is not shown to have recited the giving of a note therefor, or that it was unpaid. The deed itself is not in evidence, its contents being proved as stated. At same time he took from Blackerby a note for the purchase money, of which the following is a copy:

"`Palestine, Texas, April 10, 1884.

"`On or before Jany. 1st next, I promise to pay J. King Williams or bearer the sum of eleven hundred dollars, with 12 per cent per annum from maturity, for value received, in payment for (933) nine hundred & thirty-three acres of land, a part of the Thos. Bristow Hd. Rt. survey in Anderson Co., this day purchased from said Williams; and this note holds a vendor's lien on the same until paid.'"

The holding of the court is in this language (italics mine):

"According to the well-established rule of decision in this court, the contract of sale of the land in controversy, evidenced by the deed of Williams in his own right, and as attorney in fact of Anderson and Mrs. Snider, and the note which retained a lien for the purchase money, was executory. McKelvain v. Allen, 58 Tex. 383, 387; Lundy v. Pierson, 67 Tex. 233, 2 S.W. 737. We are also of the opinion that the legal title remained in the vendors, to wit, Anderson, Mrs. Snider, and Williams."

Wright having paid nothing on the land, having made no improvements nor other expenditures thereon, having only an equity therein, and having agreed to a rescission of the sale, and there being then no person to complain, whatever title he had passed back into Drawhorn. The rule respecting rescission under such circumstances is well settled in Texas. Lundy v. Pierson, supra; Rooney v. Porch (Tex.Com.App.) 239 S.W. 910, 911; Scott & Carmody v. Canon (Tex.Com.App.) 240 S.W. 304, 305; Lanier v....