Andrews v. Security Nat. Bank of Wichita Falls, 5712.

• Decision Date: 16 May 1932
• Docket Number: No. 5712.,5712.
• Citation: 50 S.W.2d 253
• Parties: ANDREWS et ux. v. SECURITY NAT. BANK OF WICHITA FALLS.
• Court: Texas Supreme Court

50 S.W.2d 253

ANDREWS et ux. v. SECURITY NAT. BANK OF WICHITA FALLS.

No. 5712.

Supreme Court of Texas.

May 16, 1932.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Suit by the Security National Bank of Wichita Falls against W. R. Andrews and wife. Judgment of district court was reversed by Court of Civil Appeals on plaintiff's appeal [24 S.W.(2d) 509], and defendants bring error.

Judgment of Court of Civil Appeals reversed, and judgment of district court affirmed.

Hiram K. Aynesworth and Jos. H. Aynesworth, both of Borger, for plaintiffs in error.

Weeks, Morrow, Francis & Hankerson, of Wichita Falls, for defendant in error.

Statement of the Case.

CURETON, C. J.

This suit was filed by the Security National Bank of Wichita Falls against W. R. Andrews and his wife, Bennie Andrews, on five promissory notes, each for the principal sum of $1,287.60, with prayer for judgment on the notes and foreclosure of a deed of trust lien on lots 10, 11, and 12, in block 34, in the city of Electra, in Wichita county. The trial court gave a personal judgment against W. R. Andrews, but denied recovery as against Bennie Andrews, and refused a foreclosure of the lien. Upon appeal by the bank, the judgment of the district court, to the extent that it denied a foreclosure of the lien, was reversed and rendered against both Andrews and wife. 24 S.W.(2d) 509.

The case is before us by writ of error. The defense against the foreclosure of the notes was that the property was the homestead of Andrews and wife. It was undeniably their homestead at the time of the execution of the notes sued on. The notes, however, were in renewal of two notes for $3,000 each, originally executed by Andrews in the form of vendor's lien notes, under circumstances which will be hereafter stated; and the validity of the lien ordered foreclosed by the Court of Civil Appeals depends upon the validity of the lien originally given to secure the two vendor's lien notes just mentioned.

There is no statement of facts in the record. In response to a request of the plaintiff below, the trial court filed conclusions of fact and law.

On and prior to December 23, 1924, Andrews and wife owned and occupied lot 1, block 31, in the town of Electra, as their homestead. This property was fully paid for and was then of the reasonable value of $3,000. At the same time one Reuben R. R. Cook owned all of lots 10, 11, and 12, in block 34, in the town of Electra, on which was located a residence, the whole reasonably worth $8,500. Andrews and Cook, on or about the date named, orally agreed to exchange their respective properties upon the values stated, Andrews to pay the $5,500 difference in cash. However, he did not have the money with which to make this payment, and applied to the defendant in error, the Security National Bank, for a loan of that amount. At the time he was indebted to the defendant in error in the sum of $9,000, evidenced by two notes, for which the bank had no security and which at that time was in no way connected with the subject-matter of this suit. The bank agreed to make the loan, provided Andrews would renew the $9,000 indebtedness by executing three notes, each in the sum of $3,000, to be secured by what the parties termed a vendor's lien on the property which Andrews and wife were to receive in exchange for their home. In the course of time, and in accordance with the tenor of the notes, the notes (twelve in number) given for the $5,500, the difference in value between the properties exchanged, were paid off by Andrews, and the first of the $3,000 notes was duly paid. The notes involved in this suit were given in renewal of the last two of the three $3,000 notes, and the deed of trust in renewal or extension of the so-called vendor's lien, to be hereafter described, which secured them. The agreement between the bank and Andrews personally was that the three notes for $3,000 each were to be executed in favor of Cook, and a vendor's lien was to be reserved in the deed from Cook to Andrews reserving a vendor's lien to secure these notes as well as the first twelve notes, which actually represented a part of the purchase price of the property. All the notes were to be indorsed by Cook to the bank without recourse, and the bank was to pay Cook the $5,500 named above. Cook took no part in the negotiations between Andrews and the bank with reference to the three $3,000 notes, and Mrs. Andrews knew nothing about the execution of these notes and the lien until some years thereafter. The findings of the trial court with reference to this matter are as follows:

"(e) I further find in this connection from the evidence before me, that said Cook had no part in said negotiations in regard to the said 3 notes in the sum of $3,000.00 further than when it was mentioned to him, and also stated that said notes were agreed upon between said W. R. Andrews and the bank officials and that he would be expected to indorse them without recourse upon him, that he agreed to the arrangements and had his deed of conveyance prepared so reciting the said series of 15 notes as above stated, and that in pursuance with the request of the said W. R. Andrews, executed the conveyance in exchange for the notes and the conveyance of the lot known as 1 in block 31, Electra, Texas, transferred all of said series of notes to the plaintiff and in return therefor received the sum of $5,500.00, the consideration agreed upon between him and the said W. R. Andrews.

"(f) I further find in this connection that said three notes each in the sum of $3,000.00 were not called for in any deal by and between the said Andrews and the said Cook, that said Cook had no interest therein, and did not claim any benefits thereunder, and that the same did not constitute any part of the consideration in effecting the exchange between the two, Andrews and Cook, but that such consideration, if any, for their existence and delivery was wholly between the said W. R. Andrews and the plaintiff Bank, and that the name of Cook was used in making the conveyance appear to be a lien upon said lots wholly at the instance of the bank, plaintiff herein, and W. R. Andrews, but said deed recited the retention of the vendor's lien until all of said notes were paid.

"(g) I further find in this connection that the plaintiff Bank, paid no consideration to the said Cook, nor the said Andrews beyond what is detailed herein for the making and delivery of said 3 notes, although I find in this connection that when said notes in the sum of Three Thousand Dollars were actually delivered to the said plaintiff by the said Cook that the bank books now show that same were credited to the loan to said W. R. Andrews, and that the said $9,000.00 note above mentioned was cancelled out and was ready to be delivered to the said Andrews; however, I find that the same was not actually delivered to the said Andrews until at the time that he actually paid Note No. 13, on or about July 26th, 1925; that he was not present when said Reuben R. R. Cook delivered all of said notes and received said cash payment in the sum of $5,500.00. That plaintiff Bank in said transaction intended to get a lien upon defendants' property.

"(h) I further find in this connection that W. R. Andrews and his wife, Bennie, discussed the terms of their exchange of the properties and that she knew of the exchange prices, and that she knew that her husband was giving $5,500.00 in cash as the agreed differences in the prices of the respective properties, but that she was not aware of the existence of the three $3,000.00 notes until a short time before the filing of the suit thereon in the year of 1927, and which said suit was dismissed Oct. 11th, 1927, that had she known of the agreement to give said last known notes, that she would not have consented to the exchange of the properties. I find that she knew of their existence at the time of the former suit and also executed the renewal notes and signed the deed of trust upon said lots 10, 11, and 12, block 34, Electra, Texas.

"6th. I further find in this connection that there was no written contract between the said W. R. Andrews and the said Reuben R. R. Cook as to the exchange, but that it was merely verbal negotiations, but that the parties visited the respective properties prior to the final closing of the deal, and that said Andrews and wife bought the said property for a home and place of residence, made approaches to mechanics prior to the delivery of the deed for the purpose of securing their services in doing certain repairs and upon execution of the respective deeds began immediately the improvement of said properties so as to move therein, and did move onto said properties about January 1st, 1925, and that they have at all times since then and are now residing thereon with their family of six children, and that the same is their homestead under the laws of this state and is entitled to the protection of the laws and constitution of this state against liens and encumbrances thereon except as provided by said laws."

On the elaborate conclusions of fact, only part of which we have quoted, and on "the evidence as a whole," the trial court found and filed "Conclusions of law, separate from facts," as follows:

"I conclude from the evidence as a whole and from the facts above found thereon, that the attempted fixing of the lien thereon in the manner and form hereinabove found is and was a fraud upon the rights of the wife and her homestead rights therein, and that the same was simulated and not constituting any part of the consideration for the exchange of the same moving from the said W. R. Andrews to the vendor Reuben R. R. Cook, can not under our laws and the Constitution of this state become a lien upon said lots 10, 11 and 12 in Block 34, Electra, Texas." (Italics ours.)

Opinion.

The homestead section of the Constitution involved in this case, article 16, § 50, reads as follows: "Sec. 50. ...