Duvall v. Clark

• Decision Date: 23 October 1941
• Docket Number: No. 2295.,2295.
• Citation: 158 S.W.2d 565
• Parties: DUVALL et ux. v. CLARK et al.
• Court: Texas Court of Appeals

158 S.W.2d 565

DUVALL et ux. v. CLARK et al.

No. 2295.

Court of Civil Appeals of Texas. Waco.

October 23, 1941.

On Rehearing December 11, 1941.

Rehearing Denied February 5, 1942.

Appeal from District Court, Bosque County; O. B. McPherson, Judge.

Usury suit by W. H. Duvall and wife against E. E. Clark, Jr., trustee, and Kansas City Life Insurance Company, wherein last-named party filed a cross-action to enforce obligations involved. From the judgment rendered, the plaintiffs appeal and the Kansas City Life Insurance Company files cross-assignments of error.

Judgment reversed, and judgment rendered for Kansas City Life Insurance Company in accordance with opinion.

W. V. Dunnam, of Waco and H. C. Stinnett, of Gatesville, for appellants.

Hamilton, Lipscomb, Wood & Swift, of Dallas, for appellees.

TIREY, Justice.

This is a usury suit and is the third appeal to this court. The first appeal is reported in Duvall v. Kansas City Life Ins. Co., 96 S.W.2d 793, opinion on motion for rehearing 104 S.W.2d 10, opinion by Supreme Court, 129 Tex. 287, 104 S.W.2d 11. The second appeal is reported in Kansas City Life Ins. Co. v. Duvall, 129 S.W.2d 770. A comprehensive statement of the facts and the law applicable thereto will be found in the foregoing opinions. The third trial was before the court without a jury and the court found the contract usurious and applied all interest paid to the principal debt and found that Kansas City Life Insurance Company was entitled to recover of W. H. Duvall on its cross-action the sum of $13,405.90, as of the date of judgment, which sum included the unpaid balance on the principal notes, interest at six per cent after maturity, a portion of taxes paid, insurance premiums paid, and attorney's fees, together with legal interest from date of the judgment and foreclosure of deed of trust lien; that 180¾ acres of the tract of 363½ acres involved was homestead at the time the notes and deed of trust were executed and delivered; and decreed that the non-homestead be sold first in satisfaction of the judgment. The trial court made permanent the temporary injunction theretofore issued in behalf of plaintiffs, enjoining the sale of the property by the trustee under the deed of trust, and adjudged the costs against the defendant Kansas City Life Insurance Company. At the request of plaintiffs (the Duvalls), the trial court made and filed findings of fact (in addition to findings of fact set out in the judgment entered) and conclusions of law. Plaintiffs, Duvall and wife, and defendant Kansas City Life Insurance Company excepted to the judgment entered, and plaintiffs have appealed. Kansas City Life Insurance Company will hereafter be referred to as "appellee."

Appellants' first proposition is: "The act of appellee, Kansas City Life Insurance Company, in changing the face of the interest note after its execution and without the knowledge and consent of the appellants so as to increase the burden of appellants' debt from $900.00 to $930.00 constituted a material alteration of the contract and rendered the same void in toto and all indebtedness under the loan unenforceable, and the trial court erred in failing to so find." We overrule this assignment. The note shows on its face that it was an interest coupon note in the principal sum of $900, representing one year's interest, calculated at the rate of six per cent per annum on the $15,000 note. The amount of the note in figures, "$900.00," was typed in the top left-hand margin; the figures "900.00" had been stricken by running a mark through the same; and a penciled notation of "930.00" was placed in the margin to the right of the "900.00" so stricken. No changes were made in the written words that constituted the body of the note. It is elementary that the written words of an instrument control and prevail over figures. It is well settled that an alteration of an instrument, to have effect, must be a material one. In our opinion, the penciled alteration was a marginal memorandum that did not change the original legal effect of the instrument, and therefore it was not a material alteration. 3 C.J.S., Alteration of Instruments, p. 905, § 4, p. 949, § 33, p. 933, § 29; 2 C.J. 1173; 2 Tex.Jur. 707; Chamberlain v. Wright, Tex.Civ.App., 35 S.W. 707.

Appellee's second cross-assignment of error is: "The burden was upon appellants to prove that under prevailing standards of valuation fixed from year to year and under prevailing rates fixed from year to year, the taxes which might be levied against the notes, when added to the interest contracted for, would cause the amount to exceed ten per cent per annum; and there being no proof of valuation of the notes at any time, there is an absence of any proof of usury, and under the undisputed facts judgment should have been rendered for the full amount of the unpaid principal, interest and attorney's fees." This assignment must be sustained.

We have carefully searched the statement of facts, and we find no proof of the market value of the notes involved in this suit, nor do we find any evidence in the record from which the trial court could infer such market value. But appellants contend that since they "alleged and the proof shows that the notes involved in the suit were credits payable in money (as distinguished from personal property) and taxable as such on the basis of the full value of the same so payable as provided by statute, and since money necessarily has a value of one-hundred cents on the dollar," such notes were taxable as a matter of law on the basis of the face of the notes, and they based such contention on the last paragraph of Art. 7174, Vernon's Ann.Civ.St. We cannot agree with this contention. The first sentence of said paragraph is: "Every credit for a sum certain, payable either in money or property of any kind, shall be valued at the full value of the same so payable." We think a careful reading of the above Article of the statute in its entirety contemplates that all property shall be assessed for taxes at its "true and full value" notwithstanding the provisions of the statute in the last paragraph thereof. It is true that Art. 7149, Vernon's Ann.Civ.St., same Title, defines, among other things, the terms "money," "credits," and "true and full value," as used in this Title, and defines the term "`Credits' * * * to mean and include every claim and demand for money or other valuable thing, and every annuity or sum of money receivable at stated periods, due or to become due, and all claims and demands secured by deed or mortgage, due or to become due." But we think that we must also consider Art. 10, sec. 8, Vernon's Ann.Civ.St., which governs the construction of civil statutory enactments, and which provides, in part, as follows: "* * * but the said statutes shall constitute the law of this State respecting the subjects to which they relate; and the provisions thereof shall be liberally construed with a view to effect their objects and to promote justice." Surely, such a strict interpretation of the statute as asserted by appellants does not comply with the liberality of the rule of construction provided by Art. 10, supra. Moreover, such construction violates Art. VIII, sec. 1, of the State Constitution, Vernon's Ann. St., which provides, in part, as follows: "Taxation shall be equal and uniform." Our Supreme Court has laid down the rule that "equality of taxation necessarily depends upon uniformity of assessment." Lively v. Missouri, K. & T. Ry. Co., 102 Tex. 545, 120 S.W. 852, 857. And it is well settled that an assessment at less than actual or market value when uniformly applied is valid. City of El Paso v. Howze, Tex.Civ. App., 248 S.W. 99, par. 4, writ refused. Now it is true that the trial court found "that in the preparation of said loan contracts it was the intention * * * to require the payment by plaintiffs of such taxes as might be assessed by the State of Texas and political subdivisions thereof against said notes as credits on the basis of the value of the sum payable, as provided by Art. 7174 of the Revised Civil Statutes, and that such exactions were made as a condition of the loan"; and that appellee had the right, during the term of the loan, to establish and maintain a situs for the taxation of said notes in the city of Meridian, Waco, or Dallas, and require the rendition and assessment of the notes at their true and full value in money; and further that the rate of tax assessable against said notes and the rate of tax lawfully fixed during the term of the loan in any one of the places aforesaid, together with the interest otherwise provided in the loan contracts, exceeded 10% as a charge for the use by plaintiffs of the sum loaned. However, it is undisputed that no taxes were ever assessed against the notes in question and no primary evidence was offered as to the value of the notes. It is also undisputed that a part of the indebtedness became delinquent on January 1, 1928, and that the remainder of the indebtedness became delinquent as it accrued; that, beginning with the year 1930, appellee had paid taxes accruing against the property to protect its security and had thereafter paid taxes for the years 1931, 1932, 1933, 1934, and 1935, respectively, for the same purpose; and that appellants had failed to pay the fire insurance premiums accruing, as provided for by the contract in suit. We therefore think the undisputed facts precluded the trial court from finding from the facts or from inference or as a matter of law that a basis of assessment of the notes had been shown for the purpose of taxation. "* * * it was incumbent upon debtors to prove facts showing that under its terms [meaning the contract in suit] the interest rate, by reason of tax levies, would at some time during the contractual life of the bond exceed 10 per cent." Robertson v. Connecticut General Life Ins. Co., 134 Tex. 588, 137 S.W.2d 760, points 3, 4, page 765. We think the debtors wholly...