Barreda Corporation v. Ballenger

• Decision Date: 03 February 1938
• Docket Number: No. 3194.,3194.
• Citation: 116 S.W.2d 442
• Parties: BARREDA CORPORATION et al. v. BALLENGER et al.
• Court: Texas Court of Appeals

116 S.W.2d 442

BARREDA CORPORATION et al. v. BALLENGER et al.

No. 3194.

Court of Civil Appeals of Texas. Beaumont.

February 3, 1938.

Rehearing Denied March 30, 1938.

Dissenting Opinion April 28, 1938.

Appeal from District Court, Cameron County; A. M. Kent, Judge.

Trespass to try title by Mrs. Ethel Ballenger and another against the Barreda Corporation and others, wherein C. P. Barreda intervened. Judgment on a directed verdict for plaintiffs, and defendants and intervener appeal.

Affirmed.

R. A. Dunkelberg, H. L. Faulk, and Graham, Graham & Graham, all of Brownsville, for appellants.

Montgomery & Bowie, of San Benito, and Seabury, Taylor & Wagner, of Brownsville, for appellees.

WALKER, Chief Justice.

This was an action in trespass to try title by appellees, Mrs. Ethel Ballenger joined by her husband, Joe G. Ballenger, against the Barreda Corporation to recover the title and possession of 6,419.61 acres of land, a part of the Ojo de Agua tract of land in Cameron county, filed on the 11th day of July, 1936. On the 2d day of October, 1936, C. P. Barreda, with permission of the court, filed his plea of intervention, followed by the filing of original and supplemental pleadings by all parties to this litigation. On the 4th day of November, 1936, judgment was entered in favor of appellees on an instructed verdict for title and possession of the land, and for other relief prayed for. The appeal was perfected to the San Antonio Court of Civil Appeals by the original defendant and the intervener, and was transferred to this court by order of the Supreme Court.

By deed dated the 21st day of November, 1931, C. P. Barreda, joined by his wife, conveyed the land in controversy to the Barreda Corporation for and in consideration of five vendor's lien notes, each for the sum of $50,000, of even date with the deed, and numbered 1 to 5, and maturing respectively one, two, three, four, and five years after date. These notes passed into the possession of Mrs. Ballenger, and, together with the superior title to the land, were sold at her trustee's sale, and bought by her for $40,000, which she credited against her claimed indebtedness against intervener. It was the theory of appellees' action in trespass to try title that, owning these notes and the superior title, she had the right to rescind the original sale, which she exercised, thereby vesting in her the superior title to the 6,419.61 acres of land.

The pleadings and the evidence present the following issues: (1) Did the evidence raise a jury issue that the National Bank of Commerce, a prior holder of the five vendor's lien notes, held the legal title, the paramount title, to the land; (2) as a matter of law, with no issue for the jury, did the sale of the notes by the trustee vest in Mrs. Barreda the superior title to the land; (3) as a fact issue for the jury, did the evidence support any defense alleged by appellants against the sale of the notes by the trustee; (4) did the evidence, as a fact issue for the jury, support Mr. Barreda's cross-action for damages on his allegation that the sale by the trustee was fraudulently made; (5) did the court err in refusing to disqualify appellees' attorneys, Seabury, Taylor & Wagner, and in permitting them to appear in behalf of appellees, and to prosecute this suit against appellants. It is our conclusion that all these issues must be answered in support of the judgment of the lower court.

The National Bank of Commerce of San Antonio did not hold the superior title to the land. The vendor's lien was reserved in the deed by C. P. Barreda and wife to the Barreda Corporation to secure the payment of the five vendor's lien notes; these notes and lien and superior title were conveyed by Barreda and wife by an instrument in writing dated the 2d day of February, 1933, to E. C. Breedlove as trustee to secure the payment of one note for the sum of $11,756 due by the grantors to Mrs. R. A. Plummer, and a second note for the sum of $37,046.35 due by Barreda to appellee Joe G. Ballenger, and the trustee was vested with title to the notes, lien, and superior title to the land in trust for the benefit of the holders of these notes. By an instrument in writing dated the 1st day of February, 1935, Mrs. Plummer assigned her note and her interest in the five Barreda notes, and in the superior title to the land, to Joe G. Ballenger. By an instrument dated the 8th day of April, 1935, Ballenger assigned the two notes due him by Barreda, together with the five vendor's lien notes held by him as collateral, and his interest in the 6,419.61 acres of land to his wife, Mrs. Ethel Ballenger. On the 7th day of September, 1935, Ballenger and his wife assigned the two Barreda notes together with the five collateral notes to the National Bank of Commerce of San Antonio; we quote as follows from this transfer: "We, Joe G. Ballenger and Ethel Ballenger * * * do now and hereby and by these presents transfer and assign to the National Bank of Commerce, its successors and assigns, the vendor's lien so reserved and retained in and by said deed from C. P. Barreda to the Barreda Corporation, with all and every right that we or either of us could or would have in and to same, and with and for the purpose of enforcing all of the said liens, collaterals, and pledges pertinent to each, all and any and every of said notes, with right of foreclosure." This transfer was made to the bank to secure it in an indebtedness of $10,000 due it by Joe G. Ballenger. The Ballengers paid this indebtedness to the bank, and on the 11th day of May, 1936, the bank, by an instrument in writing, conveyed back to the Ballengers all collateral held by it as security for its indebtedness against the Ballengers; this assignment recited that the bank "desires to and does hereby reinvest the said Joe G. Ballenger and Ethel Ballenger in their respective claim, right and title in and to said notes and collateral thereto." There was no language in this assignment conveying back to the Ballengers the superior title to the 6,419.61 acres of land. The National Bank of Commerce did not own the superior title to the land for the following reasons: (1) The conveyance by the Ballengers to the bank did not convey the superior title to the land, but only the vendor's lien against the land with the right of foreclosure; (2) if that conveyance should be construed as conveying the superior title to the bank, it was only a conveyance in trust to secure the Ballengers' indebtedness to the bank, and when that indebtedness was paid the title held by the bank to secure its payment was extinguished, 19 R. C.L. 453; (3) at the time Ballenger and wife conveyed their collateral to the bank, they did not hold the superior title to the land, but it was vested in Breedlove as their trustee, and he did not join in the conveyance.

The sale by the trustee to Mrs. Ballenger of the five vendor's lien notes against the land in controversy, together with the superior title to the land, was in all things regular, and vested in her the title to the notes and the superior title to the land, with the right of rescission. Appellants make the following propositions against the validity of this sale by the trustee: The note for $37,046.35, secured by the deed of trust covering the five vendor's lien notes, was void; this contention, if conceded, would not invalidate the sale. Cameron County Water Improvement District No. 8 was organized in 1929, and voted bonds to the amount of one million dollars to improve the district with a drainage system, etc. On the 6th day of September, 1929, the district made a contract with Joe G. Ballenger to construct its irrigation system, on the agreed price of $283,000 to be paid in the manner set out in the contract; 15 per cent. of the contract price was to be retained by the district, evidenced by its notes. C. P. Barreda made a separate contract with Ballenger guaranteeing the payment of this "retained percentage"; this retained percentage amounted with interest to $37,043.35, for which Barreda executed this note, and in the course of his subsequent dealings with Ballenger this note was secured in the manner stated above. It is the contention of appellants that the note for the retained percentage was void, for the reason that it created a debt against the district without a vote of the people, and as the principal debt was void, Barreda's guaranty of the debt was also void. Appellants also asserted other grounds of invalidity. The parties voluntarily made the contract which was executed for them by the trustee in the manner agreed upon; without invoking the aid of the courts. The following proposition of law announced by Judge Sonfield in Hall v. Edwards, Tex.Com.App., 222 S.W. 167, 169, sustains the sale against the contention that the note for $37,046.35 was void; in the Hall Case the title to real estate was attacked on the ground that the note secured by the deed of trust, foreclosed by the trustee's sale, was void; sustaining the sale Judge Sonfield said:

"But the illegality of the transaction did not prevent the exercise of the power of sale conferred upon the trustee, by agreement of the parties, through the deed in trust. At this sale plaintiff in error became the purchaser, and acquired the title remaining in Pennington and Hill though the retention of the vendor's lien and that of defendant in error acquired by her deed from Hughes." (The indebtedness in this case was secured by the deed in trust as well as by the vendor's lien.) "The sale put an end to the illegal contract. It was fully executed by the parties themselves, acting through the trustee, who, in the execution of the trust, was the agent of all the parties thereto. Plaintiff in error's title, though arising out of the illegal contract, was not dependent upon it; that is, no action of the court was necessary to enforce the contract, or any of its terms, in order to make the title perfect or complete.

"A title or...