Collett v. Houston & T. C. R. Co.

• Decision Date: 05 April 1916
• Docket Number: (No. 940.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: 186 S.W. 232
• Parties: COLLETT et al. v. HOUSTON & T. C. R. CO. et al.
• Court: Texas Court of Appeals

186 S.W. 232

COLLETT et al. v. HOUSTON & T. C. R. CO. et al.

(No. 940.)^*

Court of Civil Appeals of Texas. Amarillo.

April 5, 1916.

Rehearing Denied May 17, 1916.

COPYRIGHT MATERIAL OMITTED

Appeal from District Court, Wilbarger County; J. A. Nabers, Judge.

Suit by Mrs. L. A. Collett and husband against the Houston & Texas Central Railroad Company, the Corsicana Petroleum Company, and others. From judgments for the Railway Company and the Petroleum Company, plaintiffs appeal. Affirmed.

McLean, Scott & McLean, Mike E. Smith, and L. M. Levy, all of Ft. Worth, and Bonner & Storey, J. S. Cook, and Harry Mason, all of Vernon, for appellants. Baker, Botts, Parker & Garwood and Parker & Kennerly, all of Houston, Berry, Stokes & Morgan, of Vernon, Carrigan, Montgomery & Britain, of Wichita Falls, Geo. C. Greer, of Dallas, and W. H. Francis, of Ft. Worth, for appellees.

HUFF, C. J.

Mrs. L. A. Collett, joined by her husband, W. B. Collett, brought suit against the Houston & Texas Central Railway Company, the Corsicana Petroleum Company, a corporation, H. Fleischauer, the Farmers' Loan & Trust Company, a corporation, the Central Trust Company, a corporation, the Southern Pacific Company, a corporation, Dudley Olcott, 2d, and James N. Wallace, to recover from all the defendants the title and possession of an undivided one-half of the oil, coal, or other minerals within and underlying section No. 15, in block No. 13, of the Houston & Texas Central Railway Company's survey of land situated in Wilbarger county, Tex., with the rights to prospect for, explore, drill, mine, and take out, remove, and dispose of the same, and all the rights of ingress and egress and all easements necessary to that end, and tendering to pay certain purchase-money notes against said section of land, all costs, taxes, expenses, and charges legitimately due defendants, or either of them, by the appellants, by reason of the notes on the land, and to recover the oil taken from the land and disposed of by the defendants, or either of them, or, in the alternative, if not entitled to recover of the Corsicana Petroleum Company, to recover of all other defendants one-half of the value of the oil and mineral rights conveyed by them, or either of them, and also to cancel a deed made by Mrs. Collett and her husband to H. Fleischauer, agent of the defendant the Houston & Texas Central Railroad Company dated February 17, 1913, upon the ground of fraud and deceit. In the appellants' petition, the title of Mrs. Collett in and to an undivided half interest in the section mentioned, was specifically set out and pleaded.

The Houston & Texas Central Railroad Company and the Corsicana Petroleum Company answered by separate answers, setting up quite a number of exceptions to the petition, as well as a denial of the several allegations made by Mrs. Collett, specifically setting up the statute of limitations of three, four, five, and ten years, and an abandonment on the part of Mrs. Collett, and alleged rescission on the part of Olcott, etc., which will be unnecessary, as we view the matter at this time, to set out specifically.

The land in question was granted to the Houston & Texas Railway Company by the state of Texas, and thereafter patented to the Houston & Texas Railway Company May 7, 1889. The Houston & Texas Railway Company executed deeds of trust to Sheppard and House, trustees, upon this property, together with other lands and property, to secure a bonded indebtedness of the railway company, on May 7, 1877. Thereafter, on the 26th day of May, 1886, the United States Circuit Court for the Eastern District of Texas, sitting at Galveston, in a suit by the trustees and others, appointed Charles Dillingham and others receivers of the Houston & Texas Railway Company, and its lands; and on the 7th day of December, 1886, the two receivers were removed, continuing Charles Dillingham as sole receiver. On March 26, 1888, the United States Court for the Eastern District of Texas foreclosed the mortgages on all the property of the railway company. The decree entered was in what is known as consolidated cause No. 196, foreclosing the mortgage and ordering Charles Dillingham, as special master commissioner, to sell the lands embraced in the decree, including the section of land involved in this suit. Dillingham, by his report dated September 26, 1888, shows that in accordance with the decree he sold the land in controversy and other property to F. P. Olcott, for $10,835,000. On December 4, 1888, the Circuit Court of the United States in that cause confirmed the sale, as reported by Charles Dillingham as special master commissioner, to F. P. Olcott. Charles Dillingham, as special master commissioner, on the 18th day of January, 1889, in conformity with the order of the court, executed a deed to F. P. Olcott, conveying certain railroads and railroad property, and the land in question, together with other land. It is shown that on August 1, 1889, F. P. Olcott and others organized a new railroad company, and secured a charter therefor, under the name of the Houston & Texas Central Railroad Company, the charter reciting that Olcott had previously become the owner of the railroads formerly owned by the Houston & Texas Central Railway Company, and that it was the purpose of the new corporation to acquire, maintain, and operate the railroads theretofore forming a part of the railroads of the Houston & Texas Central Railway Company. This charter was signed by Olcott and others July 24, 1889, and was approved by the Attorney General, J. S. Hogg, and filed in the department of state August 1, 1889.

It appears that on April 1, 1890, by a certain trust indenture between F. P. Olcott, the Farmers' Loan & Trust Company, and the Southern Pacific Company, Olcott mortgaged all the lands he had acquired by the sale and deed of Charles Dillingham, special master commissioner, to secure the payment of $5,086,000 of bonds, executed and to be executed by the Houston & Texas Central Railroad Company. The mortgage is styled a trust indenture and included the section of land here in controversy. This instrument, after naming the parties thereto, Olcott, Farmers' Loan & Trust Company, and the Southern Pacific Company, recites substantially that Olcott purchased on September 8, 1888, at foreclosure sale of the Houston & Texas Central Railway Company, and recites the fact that Olcott had thereafter caused a corporation to be organized, under the name of the Houston & Texas Central Railroad Company, and had by deed of even date with said trust deed indenture conveyed to it the railways, not including the lands, and that the Houston & Texas Central Railroad had executed and delivered, or was about to make, execute, and deliver, consolidated mortgage bonds, describing them, and giving the form of the bonds and the interest warrants annexed thereto, and the trustee's certificate to be indorsed thereon. It recited further the execution and delivery by the Houston & Texas Central Railway Company to the Farmers' Loan & Trust Company of its consolidated mortgage or deed of trust, covering the property conveyed to the railroad company by Olcott, and after so reciting the trust indenture conveyed in trust to the Farmers' Loan & Trust Company, "for the purpose of further securing the payment of said bonds, with interest to accrue thereon," all the lands acquired by Olcott at the foreclosure sale conveyed by the mortgage of the former existing railway company, known as its "main line and western divisions consolidated mortgage," being the mortgage of the last-mentioned company to the Farmers' Loan & Trust Company, trustee, dated October 1, 1872, and other lands upon certain trust conditions, covenants, and agreements contained in certain paragraphs.

Generally, it may be stated that it was provided in this indenture that, until the Houston & Texas Central Railway Company should make default in the payment of the principal and interest of the bonds, Olcott should be permitted to possess and enjoy the lands and to collect and receive the income earnings, and profits thereof, but should apply the same in the first instance to the payment of taxes, the protection of the title, and general expenses incident to ownership and sale, turning over any surplus of the proceeds of the lands as provided in the instrument. It is provided in the indenture that the Houston & Texas Central Railroad Company, and its successors and assigns, might from time to time sell or contract for the sale of the lands covered by the trust indenture, provided that such sales or contracts should be approved by the Southern Pacific Company as fair and just, and the fact of such approval certified to the trustee, the Farmers' Loan & Trust Company, upon the happening of which Olcott, his heirs, executors, or assigns, should convey the land sold to such purchaser or purchasers, and that the trustee should release the same from the lien of said trust indenture. There is a clause providing for the application of the money received from such sales to the payment of the bonds, with interest thereon, after paying certain expenses. There is a clause in this indenture that Olcott, "his heirs, executors, and assigns, is and are to be at all times at liberty to sell and dispose of, at his or their discretion, all right, title, and interest which he or they, or any of them, may have in, to, or in respect to the property or premises hereby conveyed to the party of the second part, in trust, as aforesaid."

Mrs. Collett derives her claim of title through an order of the United States court empowering Charles Dillingham, as sole receiver, to make sales of and deeds for the land in his possession heretofore sold to the purchasers, Olcott and Downs, with directions, however, to report all such sales, before deeds are given, to Olcott, of the lands bought by him. On the 15th day of August, 1889, Charles Dillingham conveyed the land in question, as...