Cooper v. Ford

• Decision Date: 15 March 1902
• Citation: 69 S.W. 487
• Parties: COOPER et al. (MAY, Intervener) v. FORD et al.<SMALL><SUP>1</SUP></SMALL>
• Court: Texas Court of Appeals

69 S.W. 487

COOPER et al. (MAY, Intervener) v. FORD et al.¹

Court of Civil Appeals of Texas.

March 15, 1902.

Appeal from district court, Dallas county; Richard Morgan, Judge.

Action by T. W. Ford, receiver of the Watkins Land & Mortgage Company, against S. M. Cooper and another, defendants, and Mrs. S. L. May, intervener. From a judgment for plaintiff, defendants and intervener appeal. Affirmed.

McCormick & Spence, for appellants. A. E. Firmin and Watts & Aldridge, for appellee.

TEMPLETON, J.

On December 13, 1889, S. L. May and wife deeded the lot which is in controversy in this suit to May's widowed sister, Mrs. S. M. Cooper. May and wife, with their children, and Mrs. Cooper, with her children, resided on the lot; both families occupying the same residence. The lot was the homestead of May and wife. The deed to Mrs. Cooper was in the usual form, contained general covenants of warranty, and was duly acknowledged. It recited a consideration of $4,500 cash, and two notes, for $2,000 each, bearing interest from date at the rate of 9 per cent. per annum, and due in two and three years, respectively. May at once sold the notes to J. B. Watkins Land & Mortgage Company, which was represented in the transaction by its agent, M. J. Dart. On November 23, 1896, T. W. Ford, receiver of the Watkins Company, brought suit on said notes against Mrs. Cooper as maker, and May as indorser. He sought a foreclosure of the vendor's lien on said lot. Mrs. May intervened. The defendants and intervener set up the fact that the lot was the homestead of May and wife, and alleged that the deed to Mrs. Cooper was made, not with the intention of conveying title, but for the purpose of creating an apparent vendor's lien, in order to enable May to borrow money on the security of said notes. It was charged that the Watkins Company, through its said agent, knew that the lot was homestead and the conveyance simulated. The plaintiff denied notice, and pleaded that, if Dart had notice, the same was not received in the course of his agency, and, further, that if Dart had notice he concealed the facts from his principal, and colluded with appellants to defraud it. The defendants interposed the statute of limitations in bar of a recovery on the notes. A jury was impaneled to try the case, and was instructed by the court that the first note was barred, but that the second note was not. Appellants complain of the charge in respect to the second note. The contention is that a right of action accrued on that note when default was made on the other note. The contention is based on a stipulation which is contained in both notes, and which reads thus: "It is understood and agreed that failure to pay this note, or any installment of interest thereon, when due, shall, at the option of the holder, mature this note and all other notes this day given by me to said S. L. May in payment for said property, and the holder can proceed to collect the same in the same manner as if the full time had expired." We had occasion to consider a similar question in the case of Harrington v. Claflin (recently decided, and not yet officially reported) 66 S. W. 898. That case is decisive of the question under consideration. The stipulation above set out was not self-operative, and did not have the effect to change the time of maturity as stipulated in the note, in the absence of an election on the part of the holder of the note to take advantage of the option. The charge of the court was correct. On the issues joined concerning the lien the jury returned a verdict for the plaintiff, and this appeal is prosecuted from a judgment entered on such verdict.

The evidence showed conclusively that the lot was the homestead of May and wife; that the object of the conveyance to Mrs. Cooper was to create an apparent lien on the homestead, so that May could borrow money thereon; that the Watkins Company bought the notes before maturity, and paid value therefor. The deed and notes were sufficient on their face to create a valid lien on the lot. It follows that the Watkins Company is entitled to a foreclosure, if it did not have notice of the fictitious character of the conveyance. On this issue it was shown that the company did not have such notice unless its agent, Dart, knew the facts constituting notice, and his knowledge should be imputed to his principal. If Dart knew the facts, he did not communicate the same to the company. On the issue of notice three questions are presented: (1) Whether Dart knew that the conveyance was simulated; (2) whether, if he knew that fact, he acquired such knowledge in the course of his agency and (3) whether, if he knew the fact, he colluded with May to defraud the company.

The evidence was sufficient to support a finding by the jury that Dart did not have notice of the fact that the conveyance was a sham. The only complaint made by appellants on this score relates to the part of the charge wherein the jury was instructed that the fact that Dart knew that the property was homestead, and that May and wife continued to reside thereon after the deed was made to Mrs. Cooper, was not sufficient, in itself alone, to put him upon inquiry as to whether the deed was a mere sham or pretended conveyance. The charge is attacked as being upon the weight of the evidence. Dart knew that the lot was the homestead of May and wife, and that they and Mrs. Cooper continued to reside on the premises after the deed was made. The deed was sufficient on its face to convey the homestead, and the grantee in the deed was in actual occupation of the premises conveyed. Under these circumstances, it is true, as stated in the charge, that Dart's knowledge of the homestead character of the property, and of the fact that May and wife did not vacate the premises, did not impose upon Dart the duty of making inquiry as to whether the conveyance was simulated. Eylar v. Eylar, 60 Tex. 319; Love v. Breedlove, 75 Tex. 649, 13 S. W. 222. The charge simply instructed the jury as to the legal effect on the issue of notice of the continued possession by May and wife of the premises deeded by them to Mrs. Cooper. Possession of land is sometimes notice of the real right and title of the possessor, and sometimes not. When possession is relied on to show notice, it is not improper to instruct the jury as to the legal effect...