Cavers v. Sioux Oil & Refining Co.

• Decision Date: 10 June 1931
• Docket Number: No. 1446-5674.,1446-5674.
• Citation: 39 S.W.2d 862
• Parties: CAVERS et al. v. SIOUX OIL & REFINING CO. et al.
• Court: Texas Supreme Court

39 S.W.2d 862

CAVERS et al. v. SIOUX OIL & REFINING CO. et al.

No. 1446-5674.

Commission of Appeals of Texas, Section A.

June 10, 1931.

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

Suit by J. A. Cavers and others against the Sioux Oil & Refining Company and others, in

which certain other parties intervened. Judgment adverse to plaintiffs and interveners was reversed by the Court of Civil Appeals [23 S.W.(2d) 421], and plaintiffs bring error.

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

Bonner, Bonner & Childress, Virgil Childress, Gerald L. Coffey, and Wm. N. Bonner, all of Wichita Falls, and Lyndsay D. Hawkins, of Breckenridge, for plaintiff in error Banner Oil Corporation.

H. R. Wilson, of Fort Worth, for Victor Jeep and others.

Carrigan, Britain, King, and E. R. Surles, all of Wichita Falls, for J. A. Cavers and others.

Fitzgerald & Hatchitt, of Wichita Falls, for Humble Oil & Refining Co.

SHARP, J.

On December 11, 1925, in cause No. 17285-C, J. A. Cavers instituted this suit in the district court of Wichita county against Sioux Oil & Refining Company, to recover on a note for $5,500 due December 14, 1921, and further sought to recover a foreclosure of the deed of trust lien on an undivided interest in an oil and gas lease on 52 acres of land in Stephens county, Tex.

The controversy is over the proceeds of a certain 32.39 per cent. interest in an oil lease in Stephens county. On June 16, 1924, Kloke Investment Company, W. A. Reddick, and Herman Reinboldt, with the National City Bank of New York and others, procured a judgment in cause No. 4655 entitled National City Bank of New York et al. v. Sioux Oil & Refining Company, in the district court of Stephens county, foreclosing a lien dated November 1, 1922, on the property in question, and same was sold at sheriff's sale on August 5, 1924, to William H. Barker. William H. Barker conveyed the property in controversy to Banner Oil Corporation on September 30, 1924. The foreclosure by the National City Bank et al. was upon deeds and mortgages executed by the Sioux Oil & Refining Company, and it appears that this company had in 1920 executed to Kloke Investment Company, trustee, a conveyance of the premises which was recorded, and at the same time there had been executed between said parties another instrument usually referred to as "accompanying letter," and which latter instrument was not recorded for about a year after Banner Oil Corporation acquired its title, and in which letter it was provided that the conveyance to Kloke Investment Company was for the purpose: "To secure all loans made by and through your company to the Sioux Oil and Refining Company and to secure all endorsers on such notes as the Sioux Oil and Refining Company may make for said loans."

It further appears that early in 1920, J. A. Cavers and some twenty or more others had advanced about $100,000 through Kloke Investment Company to Sioux Oil & Refining Company under the terms of an instrument, whereby after six months those advancing the money had the option of taking stock or notes in the Sioux Oil & Refining Company, and if notes were taken they would be secured by the conveyance in trust to Kloke Investment Company of an interest in the lease. The so-called "accompanying letter" addressed to the Sioux Oil & Refining Company is signed by Sioux Oil & Refining Company and Kloke Investment Company, and, after referring to the foregoing assignment, says: "The said assignment is made to you to be held in escrow as collateral security to secure all loans made by and through your company to the Sioux Oil and Refining Company and to secure all endorsers on such notes as the Sioux Oil and Refining Company may make for said loans."

It further appears that early in September, 1925, the Banner Oil Corporation, whose title was then duly recorded and who was in open possession of the lease, operating the same, gave notice to all parties that it claimed the lease entirely, and that the notes of Cavers and others either had been paid, were void, or were barred by the statute of limitation.

In August, 1926, Banner Oil Corporation filed a suit in the district court of Stephens county, Tex., No. 7239, against Kloke Investment Company, to cancel the instruments above mentioned and to quiet its title. Thereafter Banner Oil Corporation was made a party to certain suits and interventions in Wichita county, filed by Cavers, Jeep, and others, and it was agreed that the suit by the Banner Oil Corporation in Stephens county, having first been filed, should be first tried, and the suit in Stephens county was tried on January 27, 1927, and judgment rendered for Banner Oil Corporation "against Kloke Investment Company, Kloke Investment Company, Trustee, and any and every one whomsoever claiming by, through or under them or either of them." The Kloke Investment Company excepted to this judgment and gave notice of appeal, but no appeal was perfected. It further appears from the record that Jeep and others had left their affairs pertaining to this matter to Kloke Investment Company; that Kloke Investment Company had at hand $4,000 which it retained for expenses, and that with the knowledge and consent of Cavers, Jeep, and others, employed the same attorneys to defend the suit brought by Banner Oil Corporation in Stephens county, and to file a suit on their notes to foreclose their lien in Wichita county.

The judgment in Stephens county in cause No. 7239 was pleaded by Banner Oil Corporation in bar of the suit of Cavers et al. in Wichita county, and the plea of res adjudicata urged by Banner Oil Corporation was sustained.

The case was tried before the court without a jury. The trial court heard testimony upon the issue, and the plea in bar of Banner Oil Corporation was sustained. The judgment was rendered for the Humble Pipe Line Company on the merits, and J. A. Cavers and interveners took nothing, except as against Sioux Oil & Refining Company who had signed the notes. An appeal was made to the Court of Civil Appeals at El Paso, and that court reversed and remanded the case to the district court of Wichita county for another trial. 23 S.W.(2d) 421. We refer to the opinion of the Court of Civil Appeals for a more detailed statement of the facts pertaining to some of the questions involved in this appeal. Writs of error were granted by the Supreme Court.

Banner Oil Corporation contends that the Court of Civil Appeals erred in not affirming the judgment as to W. A. Reddick and Herman Reinboldt, because the records conclusively show that they had no cause of action against the Banner Oil Corporation for being members of pool No. 2, described in the instrument dated November 1, 1922, which expressly gave them a lien, and they joined plaintiffs for foreclosure of that lien in cause No. 4655, National City Bank et al. v. Sioux Oil & Refining Company, in the district court of Stephens county and foreclosed that lien, and their interests in that instrument became merged in the judgment in that cause and, as a matter of law, their foreclosure of that lien on the lease in question gave the purchaser, under a judicial sale thereunder, an absolute title as against any other lien which they had or claimed.

The pleadings are voluminous, and same will be recited in connection with the discussion of the issues.

On November 1, 1922, Sioux Oil & Refining Company and the Northern Trust Company executed an instrument styled "Agreement and Conveyance in Trust," and described the creditors in two pools; those in pool No. 1 and those in pool No. 2. W. A. Reddick and Herman Reinboldt appear in one or both pools.

In the petition filed in suit No. 4655, National City Bank et al. v. Sioux Oil & Refining Company, in the district court of Stephens county, Reddick, Reinboldt, and Kloke Investment Company are listed among the plaintiffs filing same. In our opinion, they were parties to that suit, and the judgment rendered in that case merged the claim of Reddick, Reinboldt, and Kloke Investment Company therein. Vieno v. Gibson, 85 Tex. 432, 21 S. W. 1028, 1029; Gutta-Percha & Rubber Mfg. Co. v. Mayor, etc., of Houston, 108 N. Y. 278, 15 N. E. 402, 2 Am. St. Rep. 412; Watson v. Chicago, R. I. & P. R. Co., 169 App. Div. 663, 155 N. Y. S. 808; United States v. Price, 9 How. 83, 91, 94, 13 L. Ed. 56, 59, 60; Hamer v. New York Railways Co., 244 U. S. 266, 37 S. Ct. 511, 61 L. Ed. 1125.

Judge Gaines, in the case of Vieno v. Gibson, supra, after holding, in effect, that a person holding several liens upon the same property can have but one foreclosure, in the absence of anything in the decree reserving or protecting his rights, says: "That the purchaser at a sale under such a decree takes the land discharged of the lien of the second note is affirmed by the text writers, and the doctrine is sustained by an almost, if not quite, unbroken line of adjudicated cases. Wilts. Mortg. Forec. § 494; 2 Jones, Mortg. § 1459; 8 Amer. & Eng. Ency. Law, note, page 196; West Bank v. Chester, 11 Pa. 282, 51 Am. Dec. 547; Poweshiek County v. Dennison, 36 Iowa, 244, 14 Am. Rep. 521; Kimmell v. Willard, 1 Doug. (Mich.) 217; Miles v. Skinner, 42 Mich. 181; Smith v. Smith, 32 Ill. 198; Standish v. Vosberg, 27 Minn. 175, 6 N. W. 489; Fowler v. Johnson, 26 Minn. 338, 3 N. W. 986, 6 N. W. 486; McLean v. Presley, 56 Ala. 211."

We sustain this contention.

This brings us to the consideration of another question. Was the judgment of the district court rendered in cause No. 7239, entitled Banner Oil Corporation v. Kloke Investment Company, in Stephens county, res adjudicata of the matters alleged in this cause in the district court of Wichita county, Tex.?

This record tends to show that the attorney for the defendants in error in acting for them agreed that this action pending in the district court of Wichita county should be stayed and held until cause No. 7239 in Stephens county should be...