Dallas Trust & Savings Bank v. Brashear

• Decision Date: 28 November 1933
• Docket Number: No. 1404-6036.,1404-6036.
• Citation: 65 S.W.2d 288
• Parties: DALLAS TRUST & SAVINGS BANK et al. v. BRASHEAR.
• Court: Texas Supreme Court

65 S.W.2d 288

DALLAS TRUST & SAVINGS BANK et al. v. BRASHEAR.

No. 1404-6036.

Commission of Appeals of Texas, Section B.

November 28, 1933.

Error to Court of Civil Appeals of Third Supreme Judicial District.

Suit by J. C. Brashear against the Dallas Trust & Savings Bank and others. A judgment for plaintiff in part was reversed and rendered in part and otherwise affirmed by the Court of Civil Appeals [39 S.W.(2d) 148], and all parties bring error.

Judgments affirmed in part, and in part reversed and rendered.

McBride, O'Donnell & Hamilton, of Dallas, for plaintiffs in error.

W. A. Morrison, W. A. Morrison, Jr., and E. A. Wallace, all of Cameron, for defendant in error.

RYAN, Judge.

J. C. Brashear borrowed $3,000 from the Dallas Trust & Savings Bank, at the rate of 9 per cent. interest per annum, secured by lien on certain real estate in Milam county. He and his wife executed, as "mortgagor," to the bank, as "mortgagee," a conveyance in trust of said real estate, dated May 17, 1921, for the better securing of four certain promissory notes of even date therewith, thereinafter called "bond"—three notes for the sum of $200 each, due respectively on May 1, 1923, May 1, 1924, and May 1, 1925, and one note for the sum of $2,400 due May 1, 1931. Said notes bear interest from date until maturity at the rate of 7 per centum per annum, payable annually on the 1st day of May in each year, and after maturity at the rate of 10 per centum per annum, as well on unpaid matured interest installments, as on principal.

Included in each of said notes is the obligation to pay an attorney's fee of 10 per cent. on principal and interest then due, if said note be placed in the hands of an attorney for collection "under the provisions of the mortgage securing the same."

The "mortgage" securing said notes provides, as one of its conditions, that on failure to pay said notes with the interest thereon as the same becomes due and payable, "the said principal sum hereby secured, and all interest thereon to the date of payment thereof, shall at the option of the holder be and become immediately due and payable," and may be collected by sale under the mortgage or by suit in the courts of Dallas county, or otherwise, as the mortgagee may elect. If sold, as under deed of trust, the proceeds of sale should be applied, after payment of expenses of sale, including a commission to the party making the sale, to the payment of said notes together with all interest thereon, after which the surplus, if any, to the mortgagor, his heirs or assigns, less any taxes, assessments, insurance, or other payments made for or on account of the mortgagor, with interest.

This part of the transaction will, for convenience, be referred to as obligation No. 1.

Representing the remaining 2 per centum interest agreed to be paid by Brashear, he and his wife, on May 17, 1921, executed their second mortgage to the Dallas Trust & Savings Bank as "mortgagee," conveying, in trust, the same premises described above in obligation No. 1, to secure payment of five promissory notes as follows: Note No. 1 for $102.67, due May 1, 1922; note No. 2 for $102.66, due May 1, 1923; note No. 3 for $102.67, due May 1, 1924; note No. 4 for $102.66, due May 1, 1925; and note No. 5 for $102.67, due May 1, 1926 (aggregating $513.33); each of said notes bear interest after maturity at the rate of 10 per centum per annum, and provide for an attorney's fee of 10 per centum, if placed in the hands of an attorney for collection after maturity or after the same is declared to be due under the provisions of the mortgage securing same, or for collection through the probate court. Each of said notes also contains the following recital: "This note is given for a part of the interest on a loan made to the undersigned by said Dallas Trust & Savings Bank of $3000.00 due on the first day of May, A. D. 1931, and is secured by second mortgage on real estate in Milam County, Texas."

Said second mortgage recites: "This mortgage is made subject to said first mortgage to the said mortgagee securing four notes for $3000.00 payable to said mortgagee." Also that said notes secured thereby are "for a part of the interest on a loan of $3000.00 secured by said first mortgage."

It was also provided in said second mortgage that if the indebtedness secured by the first mortgage and the notes secured by the second mortgage be paid according to their face, tenor, and effect, the lien should be released at the cost of the mortgagor, but if default be made in the payment of any of the notes above described, or of the "bond" or any of them secured by the first mortgage aforesaid, or if default should be made in compliance with any of the terms or conditions of said first mortgage, which are hereby adopted and made a part of this instrument, or if any option of prepayment provided for in said first mortgage is exercised, then the whole sum of money hereby secured shall become due and payable, at the election of the holder thereof without notice of said election to the mortgagor; and the mortgagor hereby fully authorizes and empowers the said mortgagee or other legal holder of said notes, or their attorney or agent appointed in writing, and acting at their request, at any time after default or failure, as aforesaid, to sell said land on the first Tuesday in some month, between the hours of 10 a. m. and 4 o'clock p. m. to the highest bidder for cash, at the courthouse door of Milam county, after giving notice, by posting written notices, now required by law in making sales under deed of trust. And after said sale, aforesaid, the said mortgagee, or other legal holder of said notes, or their attorney or agent acting for them, shall make, execute, and deliver to the purchaser or purchasers of said premises a good and sufficient deed or deeds in law to the property so sold, in fee simple, and any statement or recital of facts in such deed shall be prima facie evidence of the truth of such statement or recital, and shall receive the proceeds of said sale, to be applied as follows: First, to the cost and expenses of making said sale, including a reasonable compensation to said mortgagee, or other legal holder of said notes, their attorney or agent, for services; second, to the payment and satisfaction of said notes, and any other indebtedness hereby secured; third, to the payment and satisfaction of the "bond" secured by the above-mentioned first mortgage, or of any taxes, insurance, or other sums due under the terms of said first mortgage, according to the conditions thereof; fourth, the balance, if any, to be paid to the mortgagor or to the heirs, assigns or legal representatives of the mortgagor.

This part of the transaction will, for convenience, be referred to as obligation No. 2.

On September 9, 1922, Brashear paid to Dallas Trust & Savings Bank the sum of $314.10 representing interest on the $3,000 principal loan for the first year, and comprised 7 per cent. interest provided in obligation No. 1, plus note No. 1 for $102.67 of obligation No. 2, with interest on such amounts from May 1, 1922 (their due dates), to September 9, 1922 (date of payment).

On July 14, 1921, the Dallas Trust & Savings Bank assigned (without recourse on it) obligation No. 1 to the Connecticut General Life Insurance Company of Hartford, Conn., for which the assignee paid full value.

The Connecticut Company received its interest on obligation No. 1 out of the above referred to payment of $314.10 made on September 9, 1922, from the date said obligation was sold to it; the Dallas Trust & Savings Bank received the interest theretofore accrued from date of the obligation.

About May 1, 1924, Brashear paid $847, all received by the Connecticut Company and representing principal notes Nos. 1 and 2, each for $200, of obligation No. 1, and interest for the second and third years at 7 per cent. per annum on $3,000, principal, thus leaving outstanding, of obligation No. 1, on principal, only note No. 3 for $200, due May 1, 1925, and note No. 4 for $2,400, due May 1, 1931.

By instrument dated January 10, 1924, the Dallas Trust & Savings Bank, for full value and without recourse on it, assigned to the United States Bond & Mortgage Company the four unpaid notes of obligation No. 2, the lien securing the same and all claims under said second mortgage. On January 23, 1924, said assignee, United States Bond & Mortgage Company, sued Brashear and wife in the district court of Dallas county, for a recovery on said notes and foreclosure of the lien securing same, having declared them due under the acceleration of maturity provision of the mortgage securing them, and on March 13, 1924, obtained judgment by default for the sum of $467.07, principal, interest, and attorney's fees, together with foreclosure of lien on the mortgaged property, subject, however, to the first lien against it securing three said notes above described for $200 each, and one for $2,400, aggregating $3,000. An order of sale issued by virtue of said judgment; the property was levied on and advertised for sale, to prevent which Brashear on May 2, 1924, paid to the sheriff of Milam county the sum of $473.16, judgment and interest, plus $37.62 costs, aggregating $510.80, which was applied accordingly, in payment of the four notes of obligation No. 2, interest thereon and attorney's fees.

On June 23, 1924, Brashear brought this suit against the Dallas Trust & Savings Bank, United States Bond & Mortgage Company, and Connecticut General Life Insurance Company, to recover double the amount of alleged usury...