Barker v. Coastal Builders

• Decision Date: 23 June 1954
• Docket Number: No. A-4324,A-4324
• Citation: 153 Tex. 540,271 S.W.2d 798
• Parties: BARKER et ux. .v COASTAL BUILDERS, Inc.
• Court: Texas Supreme Court

Page 798

271 S.W.2d 798

153 Tex. 540

BARKER et ux. .v COASTAL BUILDERS, Inc.

No. A-4324.

Supreme Court of Texas.

June 23, 1954.

On Rehearing Oct. 20, 1954.

Masterson, Williams & Smith, Angleton, for Barket and wife.

Sam G. Croom, Houston, for Coastal Builders, Inc.

GRIFFIN, Justice.

The respondent brought suit in the District Court of Brazoria County, Texas, against petitioners wherein it sought to remove a cloud from its title to a strip of land 30 ft. X 40 ft. located in the northeast corner of the east half of Lot 8, Block 161, Dow's First Addition to the town of Free-port, Brazoria County, Texas (hereinafter designated the E. 1/2 of Lot 8). It was alleged that through mutual mistake this strip had been included in a warranty deed from Coastal Builders, Inc. (hereinafter called Coastal) to W. K. Martin and wife, conveying the E. 1/2 of Lot 8, but that Coastal had remained in possession of such strip at all times since the execution and delivery of the deed, using and enjoying the same and the improvements situated on such strip; that the Martins and their grantees had acquiesced in the use and claim of title by Coastal to such strip, and all parties had notice of the title claimed by Coastal, and no grantee was an innocent purchaser.

Petitioners were grantees under a warranty deed containing no exceptions or reservations, executed by one S. B. Grisham, et ux. The Grishams were the Martins' grantees under warranty deed containing no reservations or exceptions. Respondent prayed for judgment removing the cloud cast upon its title by filing of the deeds containing no reservation of the strip, and further prayed for judgment correcting and reforming the deed from the Grishams to petitioners so as to give full legal effect to the alleged original agreement between respondent and the Martins and to adjudicate the legal and equitable title to the 30 ft. X 40 ft. strip in respondent.

Petitioners filed an answer containing a general denial, a plea of 'not guilty', that the cause of action for reformation was barred by the four-year statute of limitation, Vernon's Ann.Civ.St. art. 5529; a count in trespass to try title, and other pleadings not necessary to mention. Upon the trial of the case before a jury, judgment was rendered against respondent, and in favor of petitioners on their cross-action for title and possession of the strip. On rehearing that judgment has been reversed and remanded by the Court of Civil Appeals at Galveston upon the ground that the mistake was proved as a matter of law, and that the action was not barred. Tex.Civ.App., 259 S.W.2d 591.

The Barkers, in their application for writ of error, say that the Court of Civil Appeals erred in holding that the evidence established as a matter of law that there was a mutual mistake in the description of the premises contained in the deed to Martin and wife. We sustain this assignment.

Petitioners having secured a jury finding in answer to Special Issue No. One that no oral agreement was made between Coastal and the Martins to reserve the strip in question, it follows there was no mistake in the warranty deed whereby Coastal conveyed the E. 1/2 of Lot 8 to the Martins without any exceptions or reservations. In considering the evidence to determine whether there is evidence to support the jury's answer to Special Issue No. One, we must consider that evidence most favorable to the Barkers, as they were the party prevailing in the trial court. Blanks v. Southland Hotel, 149 Tex. 139, 229 S.W.2d 357; Hickman v. Hickman, 149 Tex. 439, 234 S.W.2d 410; Renfro Drug Co. v. Lewis, 149 Tex. 507, 235 S.W.2d 609, 23 A.L.R.2d 1114; Schiller v. Elick, 150 Tex. 363, 240 S.W.2d 997.

The record shows that Coastal was at all times wholly owned by Mr. H. F. Twombly who resided in Freeport, Texas and Mr. W. M. Dickey, who resided in Houston, Texas. Mr. Twombly handled the transaction for the sale of the property to the Martins, and Mr. Dickey testified that he never had any conversations with the Martins concerning the reservation in the contract, nor did he have any correspondence with either of them about this matter prior to the execution of the deed. In fact, he had no personal dealings with the Martins. The Martins were not present when instructions were given Mr. Kerr, and official of Gibraltar Savings & Building Association (hereinafter called Gibraltar), to reserve the plat from the conveyance of the E. 1/2 of Lot 8, and Mr. Dickey could not swear whether the instructions to reserve the tract were given prior to or subsequent to the signing of the purchase contract with the Martins. Mr. Twombly testified that he never had any written agreement with the Martins regarding the reservation; that all negotiations with the Martins about this were oral and were some two or three weeks prior to the sale of the lot to the Martins; that the last dealings he had with the Martins was when they signed the application to Gibraltar to be used by Gibraltar to secure the acceptance by FHA of the Martins as payee on the $3,650 loan Coastal had secured from the FHA on the E. 1/2 of Lot 8. He further testified that the FHA had reduced the amount loaned on this Martin tract because of the reserved strip. The correspondence with FHA shows the loan was made for $3,650 and covered the whole of the E. 1/2 of Lot 8, without any reservations. He further testified that his oral agreement with the Martins could have been changed prior to the execution of the contract of sale and the deed. The record further shows that sometime prior to July 10, 1942, Coastal had made an application for a loan to Gibraltar on the E. 1/2 of Lot 8 without any reservation. Mr. Dickey testified 'our agent for the financing (of these houses) was Gibraltar Savings & Building Association in Houston', and that James H. Kerr was the official of Gibraltar with whom they did practically all the financing. Generally the business was handled in the following manner: Coastal would apply for a loan on a particular tract of land through Gibraltar. Gibraltar would apply to FHA for insurance on the loan. After approval of the loan by FHA, Coastal would secure a purchaser for the land after agreed improvements had been erected on the land sold. Coastal would proceed to build the desired improvements. At the time a purchaser was secured, he would sign an application to Gibraltar which was to be used to secure FHA's approval of the purchaser as the borrower in place of Coastal. Gibraltar would send in the application, and as soon as FHA notified Gibraltar it would accept the proposed purchaser as its debtor upon completion of the agreed improvements, the purchaser would move in. FHA had made a final inspection prior to the purchaser moving in. When the improvements were completed and the purchaser moved in and paid a certain amount in cash (in our case $675.00), Coastal was released from liability on the loan, and the purchaser became liable.

In our case the first approval was given prior to July 10, 1942. On that date Coastal executed the necessary loan papers to Gibraltar for $3,650 on the E. 1/2 of Lot 8. There were no exceptions in the deed of trust securing the loan or any other papers. On that date Kerr of Gibraltar wrote FHA a letter as follows:

'It appears that at the time the application on this loan was filed there was a tool house situated on the back thirty feet of this lot. This application was filed with a great many others in a rush here and in filing the application we made the same cover the full area of the lot, making no exception as to the back thirty feet. However, the lot plan submitted at that time did show this situation.

'The Avalon Construction Company are requesting that we write you in connection with this matter and ascertain if the values as shown would permit you to substitute for the present commitment, which covers the full area of the lot, a commitment of like amount excepting therefrom the back thirty feet of said lot. If this cannot be done without a reduction in the commitment please advise us. Also advise us if the commitment is left as is and the loan is closed in the name of Avalon Construction Company for the amount of the present commitment and they should sell this property to some prospective purchaser, what effect would it have on a later substitution of this purchaser for the Avalon Construction Company if they should exclude the back thirty feet from their deed to said purchaser? If this cannot be done, advise us if it will be possible for them to remove said tool house from the property without affecting the commitment in any manner.' (Emphasis added.)

The Avalon Construction Company referred to in the above letter was another corporation wholly owned by Dickey and Twombly and through which corporation they also built and sold houses in Dow's First Addition to the town of Freeport, Texas. The identification number on the letter and the reply below show the correspondent had reference to the loan on the E. 1/2 of Lot 8. On July 13, 1942, FHA, by A. C. Ford, District Director, wrote Gibraltar:

'Reference is made to your letter of July 10, concerning the existence of a tool house at the rear of this property.

'The exclusion of a 30-foot strip at the rear of this property would not be desirable. The valuation ascribed in this case was made on a typical lot and this 30-foot strip is an integral part of the typical lot.

'In answer to the question in the second paragraph of your letter, if the builder should exclude this 30-foot strip in a sale of the property the proposal for substitution of borrower would not be acceptable. It will be necessary that this tool house be removed from this property.' (Emphasis added.)

On July 16, 1942, Coastal, acting by W. M. Dickey, and the Martins executed a contract of sale (which the evidence shows was drawn by someone working for Gibraltar) to the E. 1/2 of Lot 8, containing no reservations and exceptions. The Martins agreed to...