Chapman v. Clark

• Decision Date: 03 April 1924
• Docket Number: (No. 2875.)
• Citation: 262 S.W. 161
• Parties: CHAPMAN, Com'r of Insurance and Banking, v. CLARK et ux.
• Court: Texas Court of Appeals

Page 161

262 S.W. 161

CHAPMAN, Com'r of Insurance and Banking, v. CLARK et ux.

(No. 2875.)

Court of Civil Appeals of Texas. Texarkana.

April 3, 1924.

Rehearing Denied May 22, 1924.

Appeal from District Court, Cherokee County; L. D. Guinn, Judge.

Action by J. L. Chapman, Commissioner of Insurance and Banking, against W. A. Clark and wife. Judgment for defendants, and plaintiff appeals. Affirmed.

This was an action of trespass to try title, statutory in form, brought by appellant as Commissioner of Insurance and Banking against appellees W. A. Clark and his wife, in which judgment was rendered in favor of appellees. The land in controversy was 143 acres of the J. H. Russell survey in Cherokee county. It appeared from testimony heard at the trial that appellees owned the land and were using it as their homestead November 22, 1919, when, by an instrument purporting to be a deed, they conveyed it to one T. I. Knight. According to recitals in the instrument, the consideration for the conveyance was $3,575 then paid by Knight and the execution and delivery by him of two promissory notes for $1,430 each, payable to Clark's order, one January 1, 1921, and the other January 1, 1922, and secured by a vendor's lien on the land. Appellees' contention in their pleadings and testimony was that the land was their homestead, and that while the instrument referred to was in form a general warranty deed, it was intended by the parties to it to be and to operate as a mortgage only, to secure $2,000 which Clark and Knight had arranged to borrow and did borrow of the Farmers' Guaranty State Bank of Jacksonville. It was charged that no part of the recited cash consideration of $3,575 was ever paid or intended to be. It was charged, further, that the arrangement for borrowing the $2,000 was between the parties to the instrument and the bank, and was that appellees should make the conveyance to Knight, who was to make the two $1,430 notes, which the bank was to take and hold as security for the $2,000 it was to lend Clark and Knight. And it was charged, further, that the transaction was carried out as so arranged. It further appeared that the notes made by Knight contained a stipulation that interest specified should be paid annually, and that a failure to so pay same should entitle the holder to declare both notes due. The interest not having been paid as agreed upon, the bank exercised the option given it as the holder of the notes, and on November 30, 1920, commenced suit thereon in the district court of Cherokee county to recover the amount thereof and to foreclose a vendor's lien to secure them, which it claimed existed on the land. Knight, appellees, and one Cameron, to whom, it seems, Knight had conveyed the property, were the defendants in the suit. At the trial Cameron disclaimed any claim of right, title or interest in the land, and by the judgment, rendered December 16, 1920, he was dismissed from the suit. Neither appellees nor Knight answered the suit, and the judgment as to them was by default. It was in favor of the bank against Knight for the amount of the notes, and against both him and appellees for a foreclosure of the vendor's lien. The land was afterwards sold by the sheriff as directed in the judgment, and was purchased by one Weatherby, special agent acting for appellant, who, the bank having failed, had taken charge of its affairs as provided by law. In their pleadings and testimony appellees attacked the judgment and sale by the sheriff thereunder as void for duress, which was specified, and fraud, in particulars set out, which, they charged, were practiced on them by the bank. The prayer in their answer was that the judgment in said suit commenced November 30, 1920, and the lien asserted on their homestead by virtue of the notes referred to, or otherwise, "be canceled, set aside and held for naught." The jury found, in response to special issues submitted to them, (1) that the land in controversy was appellees' homestead at the time they conveyed it to Knight, and (2) that the instrument by which they made such conveyance was a mortgage. The appeal is from a judgment in appellees' favor for the land.

Carter & Stone, of Dallas, for appellant.

Norman, Shook & Gibson, of Rusk, for appellees.

WILLSON, C. J. (after stating the facts as above).

The findings of the jury, (1) that the land was appellees' homestead at the time they executed and delivered the instrument purporting to be an absolute deed conveying it to Knight, and (2) that that instrument was intended to operate only as a mortgage to secure money loaned by the bank to Knight and appellee W. A. Clark, were warranted by the testimony, as was also the finding of the court, involved in the judgment (article 1985, Vernon's Statutes), that the bank knew that the sale of the land to Knight was a simulated one in pursuance of a scheme to incumber appellees' homestead with a lien in violation of law. If, therefore, the court should have instructed the jury to find in appellant's favor, as he insists it should have done, it must have been because of the judgment in the bank's foreclosure suit referred to in the statement above. Const. § 50, art. 16; Bludworth v. Dudley (Tex. Civ. App.) 173 S. W. 561; Henderson v. Wilkinson (Tex. Civ. App.) 159 S. W. 1045; Insurance Co. v. Slovak (Tex. Civ. App.) 217 S. W. 200; Barnett v. Paving Co. (Tex. Com. App.) 234 S. W. 1081; Graves v. Kinney, 95 Tex. 210, 66 S. W. 293.

Appellant's contention with reference to that judgment was and is that unless and until set aside it was conclusive of any right in appellees to assert the invalidity of their deed to Knight and claim the land as their homestead; and further, that it could not be set aside in a cross-action by appellees in this suit, but must be, if at all, in an independent suit prosecuted by appellees for the purpose. The authorities, as we understand them, are to the contrary of the latter part of the contention and uphold appellees' claim of a right on sufficient grounds, sufficiently pleaded and established by competent testimony, to such relief by a cross-action in a suit like this one is. Moore v. Miller (Tex. Civ. App.) 155 S. W. 573; Patrucio v. Selkirk (Tex. Civ. App.) 160 S. W. 635; Ives v. Culton (Tex. Civ. App.) 197 S. W. 619.

In the light of authorities cited above there can be no doubt that the facts alleged and proven, to wit, that the land was appellees' homestead and that the deed to Knight operated as a mortgage only, entitled appellees to have the foreclosure set aside, as against the bank, for, as shown by testimony and as found, it must be assumed, by the trial court, the bank had full knowledge of, if it was not a party to, the scheme to incumber the homestead with a lien to secure the notes sued upon. Appellant in his official capacity succeeded to only such rights as the bank had, and therefore appellees were entitled to the same relief as against him they were entitled to as against the bank. Brady v. Cobbs (Tex. Civ. App.) 211 S. W. 802; Hall v. Bank (Tex. Civ. App.) 255 S. W. 506.

Because, as indicated by what has been said, we think the trial court did not err when he refused the request of appellant referred to, that he instruct the jury to find in his (appellant's) favor, we overrule the contentions based on such refusal. And we also overrule the contentions based on the refusal of the court to submit an issue to the jury as to estoppel on the part of appellees to assert in this suit that the land was their homestead and that they were entitled to claim it as such. We do not think such an issue was made by the testimony. Bailey v. Bailey (Tex. Civ. App.) 188 S. W. 264. To make such an issue appellant not only must have alleged, but he must have adduced testimony tending to show, the existence of facts constituting the estoppel. Howe v. O'Brien (Tex. Civ. App.) 45 S. W. 813; Lumber Co. v. Arnold (Tex. Civ. App.) 139 S. W. 917. He adduced no such testimony.

Other contentions presented in appellant's brief are based on rulings of the court with reference to either the admission or the rejection of testimony. We are inclined to think none of the contentions is meritorious, but if any of them are we think the error of the court with reference to them should be treated as harmless.

The judgment is affirmed.

On Appellant's Motion for Rehearing.

Appellant insists that the testimony did not warrant a finding that the bank knew that the land in controversy was appellees' homestead and that the sale thereof to Knight was a simulated one, and therefore that we should not have assumed that the trial court found that the bank had such knowledge. The testimony which we thought, and still think, warranted such a finding, was that of appellee W. A. Clark as follows:

"We [the witness and Knight] decided to fix the place and he would make me notes so we could borrow the money on the notes and he did so, and we got the money. We borrowed the money from the Farmers' Guaranty State Bank — from Howard's bank. Up to that time I had not talked to Mr. Howard about how to fix it so we could borrow the money on that place, but I told him when I went to get the money that we had conditionally fixed it and the notes to get the money on them; that was when we went to get the money, but before we had borrowed it. It was the understanding that I had not sold the place to Mr. Knight, but that we just made the notes to get the loan. * * * Q. What became of the $2,000 you got at the bank on those notes? A. I reckon he squandered it. I didn't see any of it. I mean that Mr. Knight got the money. We told Mr. Howard all about this when we went [to] get the money. [Carter, the attorney in asking the question, made that statement. The witness didn't state that he told him all about it]. I told him that it was a conditional sale. * * * At the time the notes were given I told Mr. Howard there was no sale."

A contention vigorously urged by appellant is that we erred...