Delley v. Unknown Stockholders of Brotherly and Sisterly Club of Christ, Inc., 756

• Decision Date: 18 April 1974
• Docket Number: No. 756,756
• Citation: 509 S.W.2d 709
• Parties: Earl DELLEY et al., Appellants, v. The UNKNOWN STOCKHOLDERS OF the BROTHERLY AND SISTERLY CLUB OF CHRIST, INC., et al., Appellees.
• Court: Texas Court of Appeals

Page 709

509 S.W.2d 709

Earl DELLEY et al., Appellants, v. The UNKNOWN STOCKHOLDERS OF the BROTHERLY AND SISTERLY CLUB OF CHRIST, INC., et al., Appellees.

No. 756.

Court of Civil Appeals of Texas Tyler.

April 18, 1974.

Rehearing Denied May 16, 1974.

Goodwin & Jarrel, Willis Jarrel, Tyler, for appellant Earl Delley.

Kirkpatrick, Grant, Dennis & Ammerman, Ronald Ned Dennis, Marshall, for appellant Ruby Watley Brown.

Blanchard, Walker, O'Quin & Roberts, John T. Cox, Jr., Shreveport, La., Abney & Baldwin, Gaines Baldwin, Marshall, for appellee Arkansas Louisiana Gas Co. MOORE, Justice.

This is an action in trespass to try title. The suit was originally instituted by Ruby Watley Brown, plaintiff, as sole heir of her father and mother, W. W. Watley and Minnie Elizabeth Watley, both deceased. Plaintiff sought a recovery of title and possession of the remaining portion of a two-acre tract of land after a part thereof had been condemned by the State of Texas for highway purposes, and to recover the sum of $13,761.60 paid into the registry of the County Court as damages for the land taken and the destruction of a nursing home situated thereon. Plaintiff instituted suit against defendants Earl Delley and Arkansas Louisiana Gas Company (hereinafter referred to as the 'Gas Company'), as well as other defendants not parties to this appeal. Defendant Delley answered with a plea of not guilty and filed a cross action in trespass to try title. Defendant Arkansas Louisiana Gas Company answered with a plea of not guilty and affirmatively alleged that it was entitled to a first lien on the land and funds deposited for the taking by virtue of a deed executed by The Brotherly and Sisterly Club of Christ, Inc. (hereinafter referred to as the 'Nursing Home'), to W. W. Watley, plaintiff's father, and defendant Earl Delley, wherein Watley and Delley expressly agreed to assume a certain debt owed by the Nursing Home to the Gas Company. The Gas Company prayed for a recovery of the debt and for foreclosure of its equitable lien.

Ruby Watley Brown, administratrix of the estate of Minnie Elizabeth Watley, intervened in the suit seeking a recovery of title to the undivided community interest in the land owned by her mother at the time of her death.

After a trial before the court, sitting without a jury, the trial court rendered judgment finding that the Gas Company was entitled to a first lien and ordered that the debt, together with attorney's fees and interest in the amount of $6,612.56, be paid to the Gas Company out of the funds on deposit in the County Court. The judgment further awarded plaintiff Ruby Watley Brown, individually and as administratrix of the Estate of Minnie Elizabeth Watley, seventy percent (70%) and the defendant, Earl Delley, thirty percent (30%) of the title to the land and the funds remaining in the hands of the County Clerk of Harrison County, Texas, after the satisfaction of the judgment awarded to the Gas Company. A 'take nothing' judgment was rendered against all other parties and the judgment against them became final. Earl Delley duly perfected an appeal to this court. While Ruby Watley Brown, individually, also attempted to appeal, the record shows that neither her motion for new trial, notice of appeal nor appeal bond were timely filed. For convenience the parties will hereinafter be referred to by their respective names rather than as appellant and appellee.

The trial court filed extensive findings of fact and conclusions of law. The following facts, stated in chronological order, are not in dispute. The two-acre tract of land in question was acquired by The Brotherly and Sisterly Club of Christ, Inc., on November 14, 1959. It was used for the purpose of operating a nursing home thereon. In 1962, the Nursing Home contracted with the Gas Company for the installation of a central air conditioning system in the building. Payment was secured by a note and chattel mortgage. Financial difficulties seem to have plagued business from the beginning and as a result the Nursing Home soon fell in arrears on its payments to the Gas Company, as well as numerous other creditors. On February 2, 1967, the indebtedness to the Gas Company was renewed and extended. Finally on July 5, 1967, the directors of the Nursing Home corporation passed a resolution authorizing the officers to sell the land and business for the sum of $100.00, provided the purchaser agreed to assume the debts due and owing to seven specified creditors, including the Gas Company. In February, 1968, the corporation sold the premises to W. W. Watley and Earl Delley. A deed was executed conveying W. W. Watley seventy percent (70%) and Earl Delley thirty percent (30%) of the property. The corporate resolution authorizing the sale contained a stipulation that the grantees agreed to assume the indebtedness of the Gas Company and other creditors. The resolution was incorporated in the deed. At the time Watley and Delley accepted the deed, the Nursing Home owed the Gas Company the sum of $3,847.41. After the purchase Watley continued to operate the Nursing Home. The business continued to suffer financial problems, and as a result Watley, as superintendent, commenced borrowing money from Delley for operating expenses. Finally on May 14, 1968, W. W. Watley and wife, M. E. Watley, borrowed the sum of $2,000.00 from Delley. As security for the loan, they jointly executed a promissory note and a deed of trust on their seventy percent (70%) interest in the Nursing Home premises. The note was payable in two installments, the first in the amount of $1,000.00, being payable one year after date and the second two years after date. On October 6, 1968, W. W. Watley died intestate, leaving as his sole survivors his wife, M. E. Watley, and plaintiff, Ruby Watley Brown. On July 14, 1970, Minnie Elizabeth Watley died intestate, leaving Ruby Watley Brown as her sole surviving heir. Thus, Ruby Watley Brown, under the laws of descent and distribution, inherited the seventy percent (70%) interest in the premises owned by her father and mother subject to the debt due and owing the Gas Company and the debt due and owing Delley. On August 4, 1970, the trustee, acting under the power conferred by the deed of trust, sold the property to Earl Delley for the sum of $500.00. As a result Earl Delley became the owner of record title to the land in question. On April 13, 1971, a judgment was rendered in the County Court of Harrison County condemning approximately one-half of the land for highway purposes. As a result, the Nursing Home, including the air conditioning equipment installed by the Gas Company, was taken. The County Court judgment awarded damages for the taking in the amount of $13,761.60 which was deposited in the registry of the County Court payable to all parties involved in the present suit.

Title to the land, as well as title to the funds, stood in this posture at the time plaintiff Ruby Watley Brown filed the present trespass to try title action on June 10, 1971. We will hereinafter undertake to determine the title owned by each of the parties under the record before us.

THE TITLE OF ARKANSAS LOUISIANA GAS COMPANY

The judgment in favor of the Gas Company recites as follows:

'IT IS FURTHER ORDERED, ADJUDGED AND DECREED that the defendant, Arkansas Louisiana Gas Company, has a claim and valid first lien against the Thirteen Thousand, Seven Hundred, Sixty-one and 60/100 Dollars ($13,761.60) now on deposit in the office of the defendant, Glenn Link, County Clerk of Harrison County, Texas, and that the defendant, Arkansas Louisiana Gas Company recover from such funds the sum of Five Thousand, Seven Hundred Seventy-six and 36/100 Dollars ($5,776.36) principal and interest, together with the sum of Eight Hundred, Thirty-six and 20/100 Dollars ($836.20) attorneys fees, with interest on such amounts from this date at the rate of six percent (6%) per annum, together with its costs.'

In this connection the trial court found (1) that both Earl Delley and Ruby Brown, individually and as administratrix, claim title by, through and under a deed from The Brotherly and Sisterly Club of Christ, Inc., to W. W. Watley and Earl Delley dated February , 1968, (2) that a part of the consideration for the conveyance was the assumption and agreement to pay by W. W. Watley and Earl Delley various indebtednesses owed by the Nursing Home at the time of the conveyance, including the debt owed to the Gas Company, (3) that the undisputed evidence showed that on the date of the conveyance there was an unpaid balance due on the indebtedness to the Gas Company for the air conditioning equipment in the amount of $3,645.76, and (4) an unpaid balance due the company upon an open account in the amount of $201.65.

While the record fails to disclose the date of the deed or the date of delivery, it shows that it was finally acknowledged on March 13, 1968, and filed for record on April 3, 1968. The resolution authorizing the officers of the Nursing Home corporation to sell the land was copied in the deed verbatim and recites, in part, as follows: 'The sale shall be for a consideration of $100.00 cash and the assumption by the purchaser of all liability and responsibility to pay the following, and only the following, debts now owing by the corporation: (1) Arkansas Louisiana Gas Corporation * * *.' Nowhere in the deed is there an express reservation of a vendor's lien, nor does the deed contain an express reservation of superior title.

Earl Delley and Ruby Brown, individually and as administratrix, attack the judgment in favor of the Gas Company. They contend that the trial court erred in finding that the Gas Company was entitled to a first lien on funds in the registry of the County Court of Harrison County on various grounds. We overrule their contentions with one qualification hereafter explained.

The assumption by the grantees in a deed to pay a debt due and owing a third party constitutes a...