Christian v. Manning

• Decision Date: 04 February 1933
• Docket Number: No. 12780.,12780.
• Citation: 59 S.W.2d 234
• Parties: CHRISTIAN et al. v. MANNING.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

59 S.W.2d 234

CHRISTIAN et al. v. MANNING.^*

No. 12780.

Court of Civil Appeals of Texas. Fort Worth.

February 4, 1933.

Rehearing Denied March 25, 1933.

Appeal from District Court, Tarrant County; Frank P. Culver, Jr., Judge.

Suit by J. S. Manning against J. D. Christian and others. From the judgment, defendant named and another appeal.

Reversed and remanded with directions.

H. D. Payne, of Floydada, for appellants.

Goggans & Ritchie, of Dallas, and Homer L. Baughman, of Fort Worth, for appellee.

DUNKLIN, Justice.

On September 20, 1922, J. D. Christian and wife, Everil Christian, executed a deed of trust on 640 acres of land situated in Floyd county in favor of the Conservative Loan Company of Texas to secure the payment of their promissory note of even date therewith in the principal sum of $15,000, due January 31, 1933, with interest thereon at the rate of 7 per cent. per annum, payable annually, evidenced by eleven coupon notes of even date with the principal note and attached thereto, the first maturing January 1, 1922, and the others on January 1st of each succeeding year thereafter, respectively, and all drawing interest from maturity at the rate of 10 per cent. per annum.

At the same time Christian and wife executed to the Conservative Loan Company seven other notes for additional interest on the $15,000 note, six for the sum of $450 each, the first due and payable January 1, 1924, and one due on the 1st day of January of each succeeding year, and another note for $300 due January 1, 1930. Another deed of trust was executed contemporaneously with the deed of trust first mentioned to secure the payment of those additional notes and covering the same land. Each of those seven notes bore interest after maturity until paid at the rate of 10 per cent. per annum, payable annually, and provided for 10 per cent. additional as attorneys' fees on default of payment, if placed in the hands of an attorney for collection. The mortgage given to secure those notes stipulates that the same would be subordinate to the mortgage given for the $15,000 note. Three of the interest coupon notes given to secure the principal note for $15,000 in the sum of $1,050 each and numbers 7, 8, and 9 of that series were transferred to J. S. Manning, who instituted this suit to recover thereon and to foreclose the mortgage given to secure the same. J. D. Christian and wife and the Conservative Loan Company of Texas were made parties defendant in the suit, and, later, the Federal Life Insurance Company, who acquired the $15,000 note from the Conservative Loan Company of Texas likewise became a party defendant.

Defendants J. D. Christian and wife filed an answer to the suit, in which they pleaded that all the notes executed by them to the Conservative Loan Company were tainted with usury in that they provided for the payment of more than 10 per cent. interest on the amount of money borrowed from the loan company, to wit, $15,000, and further pleaded certain payments made as interest which they sought to have decreed as credits on the principal of the $15,000 note.

Both plaintiff and the Federal Life Insurance Company filed replies to that plea, denying any usury and the Federal Life Insurance Company sought a decree establishing its lien for the principal sum of $15,000 and two of the interest coupon notes Nos. 10 and 11 of the first series, which were unpaid, as a valid and subsisting lien on the land as against Christian and wife and as a first and superior lien to that claim by the plaintiff, but seeking no foreclosure.

Upon a trial of the case a judgment was rendered overruling the plea of usury; awarding plaintiff a recovery for the three interest coupon notes sued on by him in the aggregate of $3,786, with foreclosure of the mortgage given to secure the same; also establishing the mortgage lien held by the Federal Life Insurance Company for the principal sum of $15,000 and the two unpaid interest coupon notes, Nos. 10 and 11 of the first series, as a valid and subsisting lien and superior to plaintiff's lien. The judgment recites a finding that six of the interest coupon notes attached to the principal note for $15,000 and Nos. 1 to 6 had been paid by the Christians.

Whether or not the plea of usury presented by the Christians should have been sustained is the principal question to be determined here.

The note for $15,000, drawing interest at the rate of 7 per cent. per annum, payable annually according to coupon interest notes attached, has this further provision:

"The principal sum of this note shall bear interest after the same becomes due and payable at the rate of ten per cent per annum until paid.

"If default be made in the payment of any installment of either principal or interest, when due, or if any of the covenants contained in the mortgage securing this note be breached, then the entire indebtedness evidenced hereby shall, at the option of the legal holder hereof, become at once due and payable without notice."

The deed of trust given to secure that note contains this provision:

"In case the said second party, its successors and assigns, satisfies any charge, of whatever nature, on the property hereby conveyed, or shall make any advances for taxes, insurance premiums, assessments or otherwise, to or on account of the grantors herein, the amount so paid for such purposes, including the interest thereon, shall be secured by this mortgage and shall be forthwith due and payable, and the said second party, its successors and assigns, shall be subrogated to all the rights of the party to whom such payments have been made.

"It is hereby further especially agreed that if any part of said note or interest coupons thereto attached, or any taxes or assessments, or premiums on insurance, or charge of any kind against said property, which shall have been paid by the said second party, its successors or assigns, remains unpaid for thirty days after the same shall have become due, or in the event of a breach of any covenant or condition by first party, as hereinbefore provided, then at the option of the said second party, its successors or assigns, the whole indebtedness and all sums secured by this mortgage, towit, the principal and interest then accrued on said note, and all advances made to or on account of the first party herein, for taxes, assessments, premiums on insurance, and charges of every kind, shall at once become due and payable. * * *

"If the said note, principal and interest be well and truly paid, as the same becomes due and payable according to the tenor and effect thereof, and if all sums advanced by said second party, its successors and assigns, under the provisions hereof shall be paid, with interest thereon as above provided, and all of the covenants and agreements herein contained be faithfully kept and performed, then and in that event only, this conveyance of said premises shall become null and void, and this instrument shall be released at the cost of first party, which cost he agrees to pay."

On the trial it was agreed by counsel for all parties that the seven notes mentioned in the second deed of trust were for interest on the $15,000 note additional to the interest coupons attached to that note; and it was further agreed that defendant J. C. Christian has paid to the Federal Life Insurance Company interest on the $15,000 note in different amounts and at different times, aggregating $5,783.66, which has been applied by the Federal Life Insurance Company on the interest coupons attached to the $15,000 note.

The second deed of trust, given to secure the seven additional interest notes, contains this provision:

"This deed of trust, however, is subject to a first mortgage of even date herewith executed by said parties of the first part to Conservative Loan Company of Texas for $15,000 and said notes herein described and secured are given as a part of the agreed interest on said mortgage of $15,000 as evidenced by said note, secured by the first mortgage aforesaid; and the said party of the third part is entitled hereby to all of the rights of subrogation granted and secured by said first mortgage.

"And it is hereby agreed that if default shall be made in the payment of any of the notes hereby secured, or any installment of interest on said first lien note, when due, or failure to perform any or all of the covenants and conditions in said first mortgage, or to protect the lien of this trust deed against foreclosure of said first mortgage, then the holder of the notes herein secured may at his option, declare the whole of the indebtedness hereby secured due and payable at once without notice."

Each of those notes for...