Austin v. Carter

• Decision Date: 22 April 1927
• Docket Number: (No. 260.)
• Citation: 296 S.W. 649
• Parties: AUSTIN, Banking Com'r, v. CARTER.
• Court: Texas Court of Appeals

296 S.W. 649

AUSTIN, Banking Com'r, v. CARTER.

(No. 260.)

Court of Civil Appeals of Texas. Eastland.

April 22, 1927.

Rehearing Denied June 24, 1927.

Appeal from District Court, Eastland County; Geo. L. Davenport, Judge.

Suit by Chas. O. Austin, Banking Commissioner, against Barney Carter. Judgment for defendant, and plaintiff appeals. Affirmed.

Funderburk & Richardson, of Eastland, for appellant.

G. W. Dunaway, of Ranger, and Conner & McRae, of Eastland, for appellee.

PANNILL, C. J.

Appellant's suit was for specific performance of a contract of sale by appellant to appellee of certain real estate situated in the city of Ranger. The agreement provided that appellant would furnish to appellee a complete abstract of title disclosing a good and marketable title to the property. Appellee was to have a specified time in which to examine the abstract and furnish appellant a written report setting forth the objections made thereto and appellant thereafter a like time to cure the defects. The title as shown by the abstract was rejected by the appellee, and suit followed. The trial was to the court without a jury, and judgment for appellee, from which this appeal has been prosecuted.

The trial court found that the abstract, which was introduced in evidence, did not show a marketable title and refused to require the appellee to specifically perform the contract. It is not considered necessary to state in detail the several objections to the title as shown, nor to all the contentions made by the respective parties, but only so much of the title will be stated as is necessary to illustrate the points which are considered as controlling the disposition of this case.

The title was deraigned from a sale under a trust deed purporting to have been executed by the Guaranty Building Company to the Guaranty State Bank of Ranger. The trust deed was executed by the president of the Guaranty Building Company under the seal of the corporation; but no reference was made in the deed to any authority from the directors for the president to execute the deed. The deed of trust contained this provision:

"It is expressly agreed that the recitals in the conveyance to the purchaser shall be full evidence of the truth of the matters therein stated, and all prerequisites to the said sale shall be presumed to have been performed."

The deed of trust was for the better securing of the Guaranty State Bank of Ranger in a series of notes ranging in amounts from $3,000 to $6,000 and due at different times, beginning November 11, 1920, and continuing to March 27, 1921, aggregating $106,000. In the deed of trust W. P. Ralston was named as trustee, and it was provided that in case of the absence, death, inability, refusal, or failure of the trustee named, his successor and substitute may be named and appointed by the holder of said notes.

On July 1, 1922, John W. Thurman, designating himself as the legal owner and holder of said notes and reciting that the original trustee, Ralston, "is unable to act as trustee by reason of being out of the state of Texas," appointed one Adamson as substitute trustee. There was no evidence of Thurman's ownership or right to $56,000 of the notes of the building company, except as shown by affidavit of A. W. Taber, made on information and belief from the affiant's investigation of certain papers belonging to Thurman. On the 1st of August, 1922, Adamson executed and delivered to O. D. Dillingham a conveyance of said property for a recited consideration of $20,000. This deed recited the execution of the original instrument, the maturity of the notes, that Thurman was the legal owner and holder of said notes, that Ralston, the original trustee, had failed and refused to execute said trust, the appointment of Adamson as substitute trustee, and a regular sale by the substitute trustee after due advertisement as provided in the original deed of trust. The appellee objected to the abstract, among other things, on the ground that the instruments referred to were not sufficient to show a marketable title in the appellant claiming through and under them.

The contract provided for an abstract showing marketable title. That term has been defined to provide for a title free from reasonable doubt and such as a prudent man well-advised as to the facts and their legal bearings could be willing to accept. Maupin on Marketable Title, pp. 767, 768, 769.

"In an action for a specific performance, if there arises during the progress of the suit, a reasonable doubt concerning the title to be made and given by the vendor, the court, without deciding the question between the parties then before it — which decision may not be binding on other persons and therefore might not prevent the same question from being raised by other persons claimants of the land — regards the existence of this doubt as a sufficient reason for not compelling the purchaser to carry out the agreement and accept the conveyance." Greer v. International Stockyards, 43 Tex. Civ. App. 370, 96 S. W. 79; Hughes v. Adams, 55 Tex. Civ. App. 197, 119 S. W. 134; Connely v. Putnam, 51 Tex. Civ. App. 233, 111 S. W. 164; Corbett v. McGregor (Tex. Civ. App.) 84 S. W. 278; McLaughlin v. Brown (Tex. Civ. App.) 126 S. W. 292; Fry on Specific Performance, § 862.

Among titles which are classed as unmarketable are those cases where the title rests upon a presumption of fact which, from the circumstances of the case, would in the event of suit probably become an issue of fact to be decided by a jury. Maupin's Marketable Title, p. 776.

Under these rules, if the title exhibited by appellant upon its face appeared to be reasonably doubtful, a court of equity would refuse a decree of specific performance, as equity does not ordinarily concern itself with questions relating to the title of real estate.

In Devlin on Deeds, § 1497, p. 2696, it is stated that:

"Where a title is based upon a power of sale, a doubt may arise either as to the construction of the power or as to the existence of facts necessary to justify its exercise."

In Townshend v. Goodfellow, 40 Minn. 312, 41 N. W. 1056, 3 L. R. A. 739, 12 Am. St. Rep. 736, in an action for specific performance by the executors under a will providing that they may sell or mortgage any of the real estate of the testator at any time it becomes necessary to do so, to pay expenses or bequests provided in the will, or for the purpose of saving or improving any of the testator's property, the court held that the power to sell was not absolute and could be exercised only for the purposes expressly named, and that under the circumstances as shown in the case it was not clear that the executors were authorized to make a sale for the price offered or in selling a tract so large as that sold, and that a title based on a contract by them to sell was not marketable.

The decisions in our state have repeatedly declared that to make valid a sale by the execution of a power of sale contained in a deed of trust, the provisions therefor...