E. Y. Chambers & Co. v. Little

• Decision Date: 04 October 1929
• Docket Number: (No. 597.)
• Citation: 21 S.W.2d 17
• Parties: E. Y. CHAMBERS & CO., Inc., v. LITTLE et al.
• Court: Texas Court of Appeals

21 S.W.2d 17

E. Y. CHAMBERS & CO., Inc., v. LITTLE et al.

(No. 597.)

Court of Civil Appeals of Texas. Eastland.

October 4, 1929.

Rehearing Denied November 1, 1929.

Appeal from District Court, Eastland County; Elzo Been, Judge.

Trespass to try title by Eula Little and husband against E. Y. Chambers & Co., Inc. Judgment for plaintiffs, and defendant appeals. Reversed and rendered.

Cockrell, McBride, O'Donnell & Hamilton, of Dallas, for appellant.

Barker & Orn, of Cisco, for appellees.

LESLIE, J.

Eula Little and her husband, Eddie Little, appellees brought this suit against E. Y. Chambers & Co., Inc., appellant, for title and possession of two lots situated in Cisco, Tex., and to cancel a deed of trust lien against the same, and to set aside a trustee's deed conveying said premises to appellant under foreclosure proceedings. The trial was before the court and jury, resulted in a verdict upon which a judgment was rendered in favor of appellees, and the defendant has appealed. The respective contentions of the litigants and the testimony relative to each will be set forth in their proper relation to each other.

Eula Little and her husband base their claim for relief upon the contention that a simulated and fictitious indebtedness and lien were created against their homestead, and that, the appellant's purported title and interest in the property being derived from a sale under a deed of trust merely evidencing such debt and lien, the appellant's claims should be set aside and the purported debt and lien canceled and all clouds by reason thereof removed from their title.

The details of the transactions out of which this suit develops appear to have been cleverly devised, and this contest is waged under the banner of homestead rights.

On June 20, 1927, Eddie Little, desirous of acquiring and improving a homestead for himself and his family, negotiated with W. C. Bedford for the purchase of five lots in the city of Cisco, and, by the arrangements that day entered into, said Little received from W. C. Bedford a duly executed deed to said property, reciting a cash consideration paid in the sum of $500, each lot being valued at $100. No consideration was, in fact, paid.

Eddie Little moved a residence on to the premises and, as found by the jury, has occupied the same as a family homestead since July 10, 1927, until the time of this trial. The residence was placed upon the property about June 20, 1927, and the family occupied the same, as stated, July 10th following.

M. D. Paschall & Son, Crigler Paschall, at this time were the duly authorized agents in Cisco of the Continental Savings & Building Association, and they were authorized to take applications and make loans for the association, such loans to be secured by valid first liens on real estate, as required by law. The loan company in this opinion will be referred to as the association.

According to Eddie Little's testimony, the matter of procuring a loan through the Paschalls from their principal was first discussed about June 20, 1927, at which time Crigler Paschall indicated a willingness to recommend a loan on the property. Said Little at this time suggested that he was then negotiating a loan with other parties, and that, if it fell through, he would take the matter up with the Paschalls. This conversation occurred while said Little was at work on the house, and thereafter, about July 15th following, he testified he informed Paschall that he failed to procure a loan in the amount desired, and that he would take a loan through the Paschalls if as much as $2,500 could be obtained. At the conclusion of this conversation, which is represented as taking place at Paschall's office, he and Paschall went to inspect the property. After such inspection Paschall signified a willingness to recommend a loan for $2,500, with said property as security, and inquired what character of title Little had to the property. On being informed by Eddie Little that he had an unrecorded deed, to the same, Paschall stated, "That is all right, but I can't loan money on a homestead," and, according to the further testimony of Little, Paschall then suggested that he (Little) would have to have them (Bedford and wife) make a deed to some one else and let them deed it back to him (Eddie Little), making $2,500 worth of vendor's lien notes against the property, and his company would take up the same. Upon the trial Crigler Paschall denied any such conversation, or that he had made any such suggestion.

It is further testified by Little that, upon returning to Paschall's office from the inspection of the property, Crigler Paschall told his father, M. D. Paschall that a loan of $2,500 could be made upon the property, but that the title was not in very good shape, but if the deed he (Little) had was torn up, and the property conveyed to some one else, his father or his brother, and a vendor's lien note for $2,500 taken, such note could be handled by the association. As noted, the Paschalls deny they suggested or had knowledge of any such scheme or arrangement as that detailed in Little's testimony.

This record comes before us with a jury finding that during the negotiations the plaintiff, Eddie Little, informed M. D. Paschall (1) that he owned the property in controversy, and (2) that said Paschalls were then endeavoring to make the loan for the association, to be secured by a lien on said property. A further jury finding is that Eddie Little, during the negotiations, informed either M. D. or Crigler Paschall that he held an unrecorded deed to the property, executed and delivered to him by said Bedford. In addition, the jury, in answer to an issue submitted in rather general terms, acquits the Paschalls of the charge of collusion with the Littles to defraud their principal, the association. This finding is not challenged as being unsupported, or insufficiently supported, by the testimony.

The original or unrecorded deed from the Bedfords to Eddie Little seems to have disappeared. It was not introduced upon the trial of this case. Eddie Little contended he left it with the Paschalls, who deny that they at any time had custody of the same.

On July 19, 1927, said Bedford and wife executed a deed to J. M. Little (father of Eddie Little), conveying the same five lots to the father, and reciting a consideration of $500 in cash paid. This deed was filed for record the same day. The Littles and Paschalls differ on what next occurred, but the former's testimony is to the effect that Paschall suggested that the last-mentioned deed be left with them, and that he (Eddie Little) proceed to make out to himself a deed from his father and write up two vendor's lien notes, one in the sum of $2,000 and the other for $500, to be executed and delivered to J. M. Little, and which the association would take up. This purported deed from J. M. Little and wife to Eddie Little recited a consideration of $4,500, $2,000 paid in cash, and the balance evidenced by said notes, which were advanced by the Littles as the basis for the loan which they desired from the association.

Naturally, under the foregoing circumstances, the record title to the property appeared regular and complete in Eddie Little, subject only to the indebtedness evidenced by the two notes purporting to represent the original purchase money obligation and to be secured by an original vendor's lien. The abstract of the property being delivered to the attorneys for the association, it was examined by competent and learned counsel, who approved the same as merchantable, subject to the note and lien aforesaid.

In this connection it may as well be stated that the association, in making the loan, had no notice of any fraud entering into the deal, or any infirmity in the title, unless such knowledge or notice as the Paschalls had was of such character as, when imputed to the association, charged it with knowledge of fraud and infirmity. Such is the agreement in the record.

The association, through its attorneys, to make assurance doubly sure, exacted an affidavit from J. M. Little and wife and Eddie Little and wife, with respect to the facts and bona fides of the deal, as evidenced by the instruments setting forth the purported conveyance from the father to the son, and the notes executed in pursuance thereof. Such an affidavit was furnished and is to be found in the statement of facts. Its contents may be fairly appraised by employing (with the substitution of "affidavit" for "trust deed") the language of our Supreme Court concerning the declarations in an application and deed of trust for a very similar loan terminating in like litigation: "There is no doubt that the application for the loan, and the recitals and declarations in the trust-deed, that the property was not homestead, went as far as words could go to assure the lender that it might safely lend its money without fear that lien would be defeated by the existence of homestead rights." Texas Land & Loan Co. v. Blalock, 76 Tex. 85, 13 S. W. 12, 13.

The father, by his affidavit, testified to the genuineness of the deal as between himself and son, and stated that he made such representations to enable him to sell the notes to the association. Eddie Little and wife testified likewise, and stated that they made such representations for the purpose of inducing the association to make them a loan in the sum of $2,500 with which to take up and extend the time of payment of the $500 and $2,000 notes, with the vendor's lien securing them. These affidavits effected the consummation of the loan, and the association advanced the sum of $2,500, in accordance with the terms of the application and the agreement generally. It took from said J. M. Little an assignment of the notes and the liens securing them, and in extension thereof Eddie Little executed a $2,500 note to the association and vouched for the indebtedness as being the original purchase-money debt secured by original purchase-money...