Dallas Joint Stock Land Bank of Dallas v. Harrison, 13983.

• Decision Date: 01 December 1939
• Docket Number: No. 13983.,13983.
• Citation: 135 S.W.2d 573
• Parties: DALLAS JOINT STOCK LAND BANK OF DALLAS v. HARRISON et al.
• Court: Texas Court of Appeals

Page 573

135 S.W.2d 573

DALLAS JOINT STOCK LAND BANK OF DALLAS v. HARRISON et al.

No. 13983.

Court of Civil Appeals of Texas. Fort Worth.

December 1, 1939.

Rehearing Denied January 12, 1940.

Appeal from District Court, Clay County; Earl P. Hall, Judge.

Action by M. E. Harrison and another against the Dallas Joint Stock Land Bank of Dallas for damages for alleged fraud and deceit in connection with the sale of land. From a judgment for plaintiffs, defendant appeals.

Affirmed.

Lawther, Cramer, Perry & Johnson, of Dallas, for appellant.

Stine, Bunting & Stine, of Henrietta, for appellees.

DUNKLIN, Chief Justice.

At a regular meeting of the Board of Directors of the Dallas Joint Stock Land Bank of Dallas, a corporation, held on November 14th, 1934, the following resolution was passed:

"Resolved, that H. W. Ferguson, the President, and H. O. Pool, the Treasurer of this Bank, or either of them, be and they are hereby authorized to sell and dispose of, to rent or lease for mineral development, any and all lands now owned by the Bank, or which may hereafter be acquired by the Bank, at such price or consideration as they deem most advantageous to the Bank and upon such terms as may be agreed upon, and to execute such title papers as may be necessary to sell, convey, rent or lease any and all of said lands; and

"Be it further resolved, that either of them be and they are hereby authorized to execute releases, transfers or assignments of any notes held by the Bank; and

"Be it further resolved, that the Secretary or any Assistant Secretary of this Bank be and they are hereby authorized to attest any document so executed by the President or Treasurer and to affix thereto the corporate seal of this Bank."

On July 15th, 1936, the Dallas Joint Stock Land Bank of Dallas, by H. W. Ferguson, its president, as seller, and W. B. Allen and M. E. Harrison, of Byers, Clay County, as buyers, executed a sales contract, by the terms of which the Bank agreed to sell and Allen and Harrison agreed to buy a tract of 440 acres in Clay County, for a total consideration of $15,000, of which $1,500 was to be paid in cash and the balance evidenced by three promissory notes, one for $12,000 payable in 20 annual instalments, and two notes for $750 each, one maturing November 1st, 1936, and the other November 1st, 1937.

The contract embodied these provisions: "The seller agrees to furnish an abstract of title showing a marketable title to said land free of all liens not specifically mentioned in the consideration for use in examining the title to said land. The buyer agrees to submit in writing his objections, if any, to said title within fifteen days from receipt thereof, and the seller agrees to perfect said title within a reasonable time thereafter. In the event the seller does not own all the minerals, it shall not be required to warrant the title to more than it owns, but the purchaser shall have the option to accept the title without all the minerals or reject the title if the seller does not acquire all the mineral rights within a reasonable time. The abstract shall be returned to the seller to be retained until all the purchase price is paid.

"This contract shall be closed on or before the 15th day of August, 1936, subject to the other provisions hereof.

"The seller shall pay all taxes up to and including the year 1935. All taxes thereafter shall be paid by the buyer.

"If there is any insurance on the property same shall be prorated as of the date of closing.

"The buyer has deposited the sum of $500.00 and a copy of this contract with Dallas Joint Stock Land Bank, which said sum shall be applied at the date of closing as a part of the cash consideration, but in the event the buyer fails or refuses to perform this contract then such sum shall be paid to the seller as liquidated damages."

Thereafter, the Bank executed to Allen and Harrison its deed, dated August 4th, 1936, but not delivered until September 21st, 1936, stipulating that for the consideration expressed in the sales contract, it "has granted, sold and conveyed, and by these presents does grant, sell and convey unto the said W. B. Allen and M. E. Harrison, of the County of Clay, State of Texas, except as below stated, all that certain lot, tract or parcel of land situated in the County of Clay, State of Texas, and described as follows: (Here follows description of the 440 acres covered by the sales contract).

"To have and to hold the above described premises, together with all and singular the rights and appurtenances thereto in any wise belonging unto the said W. B. Allen and M. E. Harrison, their heirs and assigns forever, and said grantor does hereby bind itself, its successors and assigns, against every person whomsoever lawfully claiming, or to claim the same, or any part thereof, except any mineral interest which grantor does not own.

"There is reserved and excepted from this conveyance one-fourth of the minerals in and under the land hereby conveyed, but if none is produced from said land within ten years from the date hereof this conveyance shall cover the entire interest owned by grantor. Grantor's reserved interest is limited to the royalty payments and does not participate in bonus or delay rental payments. Grantor expressly gives to grantee, his heirs, administrators or assigns, the right to lease without the joinder of grantor seven-eighths of the grantor's reserved undivided mineral interest under a standard form of lease providing for a royalty of at least one-eighth of the undivided interest reserved by grantor.

"But it is expressly agreed and stipulated that the Vendor's Lien is retained against the above described property, premises and improvements, until the above described notes, and all interest thereon are fully paid according to their face and tenor, effect and reading, when this deed shall become absolute.

"Executed by authority of the Board of Directors of the Bank as evidenced by certified copy of resolution hereto attached this the 4th day of August, 1936.

"(Signed) The Dallas Joint Stock Land Bank of Dallas, by H. O. Pool, Treasurer.

"Attest: J. A. Mounts, Assistant Secretary." And duly acknowledged (as the evidence introduced showed).

W. B. Allen and M. E. Harrison instituted this suit against the Bank to recover damages for alleged fraud and deceit, which induced them to purchase the 440 acres in controversy. The sales contract and deed were averred, followed by allegations that plaintiffs' execution and acceptance of same was induced by representations made to them by certain duly authorized agents of the Bank, including one J. A. Mounts, that 340 acres of the land was free of any oil and gas lease, while in fact there was then an outstanding, valid and duly recorded oil and gas lease on the entire 440 acre tract, in favor of the Texas Company, executed by the Bank of date October, 1932, running for ten years from its date and as long thereafter as oil is found in paying quantities. That plaintiffs paid the defendant the cash consideration of $1,500 and executed the notes, as stipulated in the sales contract; that had the 340 acres been free of the prior outstanding oil and gas lease, it would have been worth $10 per acre more than it is worth with said lease outstanding; by reason of all of which plaintiffs have sustained damages in the sum of $3,400, for which a recovery was sought.

The answer of the defendant included a general and special demurrer, general denial and specific verified denial of agency of any of the persons alleged by plaintiffs to have made the misrepresentations which induced them to enter into the sales contract and to accept defendant's deed to the 440 acres in controversy.

Trial was before a jury, and in connection with special issues submitted, the court gave these general instructions and definitions:

"For representations of a fact to become an `inducing cause' of the purchase of property, it is necessary that the person to whom the representations were made would not have bought the property had not such representations been made.

"By the term `within the authority' is meant that an agent has been empowered and given the right by the principal to do the things in question.

"By the term `apparent authority' is meant such authority as a reasonably prudent man, using diligence and discretion, in view of the principal's conduct, would naturally and reasonably suppose the agent to possess.

"By the term `market value' is meant the amount of money that a person desiring to sell, but not bound to do so, could, within a reasonable time, procure for such property, from a person who desires to buy, but is not bound to purchase the property."

Findings of the jury in answer to certain special issues were adverse to plaintiffs' asserted right to bind the defendant by misrepresentations of C. E. Harding, C. W. Filey and C. B. Harder, alleged to have been made by them while acting as the duly authorized agents of the defendant. Hence, the pleadings and evidence relating to those persons need not be further noticed.

But in answer to special issues Nos. 13 to 18, inclusive, the jury found that J. A. Mounts, as agent of defendant, represented to plaintiffs that only 100 acres of the 440 acres described in the deed was under an oil and gas lease; that the statement so made to plaintiffs by Mounts was within his actual authority, and also within the apparent scope of his authority; that plaintiffs believed said statement of J. A. Mounts that only 100 acres of the 440 acre tract was under an oil and gas lease, to be true, and were induced thereby to buy the land from the defendant.

According to further findings of the jury, the market value of the 340 acres in controversy in September, 1936, with the oil and gas lease then outstanding in favor of the Texas Company, was $25 per acre; but had the same been then free of said lease, its market value would have been $35 per acre, a difference of $10 per...