Eidson v. Perry Nat. Bank

• Decision Date: 10 September 1959
• Docket Number: No. 3650,3650
• Citation: 327 S.W.2d 683
• Parties: John R. EIDSON et al., Appellants, v. PERRY NATIONAL BANK, Appellee.
• Court: Texas Court of Appeals

Page 683

327 S.W.2d 683

John R. EIDSON et al., Appellants, v. PERRY NATIONAL BANK, Appellee.

No. 3650.

Court of Civil Appeals of Texas, Waco.

Sept. 10, 1959.

Rehearing Denied Oct. 1, 1959.

Magus F. Smith, McAllen, Rawlings, Sayers, Scurlock & Eidson, Fort Worth, W. H. Wren, Hamilton, J. P. Rice, Dallas, H. B. Gordon, Hamilton, for appellants.

Abney, Hammett & Lynch, Lampasas, H. W. Allen, Truman E. Roberts, Hamilton, for appellee.

TIREY, Justice.

This is a suit in trespass to try title. At the conclusion of the testimony the Court overruled appellants' motion for peremptory instruction and submitted six issues to the jury. Since the jury, under the Court's instructions, did not answer issues two and three, we quote substantially only issues one, four, five and six:

'(1) Do you find from a preponderance of the evidence that James A. Eidson, either in person or through a tenant or tenants, or partly in person and partly through a tenant or tenants, held exclusive peaceable and adverse possession of the land in controversy in this suit, cultivating, using and enjoying the same continuously, for any period of ten years or longer after July 5, 1940 and prior to his death in 1954? A. No.

'(4) Do you find from a preponderance of the evidence that E. A. Perry executed and delivered the deed dated March 30, 1940, from himself to the Perry National Bank, with the intention of vesting in said Perry National Bank all the right, title or interest in and to the land in controversy that was formerly owned by James A. Eidson and deeded by him to E. A. Perry by deed dated November 5, 1931, and for the purpose of foreclosing thereon in behalf of said bank? A. Yes.

'(5) Do you find from a preponderance of the evidence that the Perry National Bank at any time during or prior to the year 1946 applied the stock in Eidson Club Lake, a corporation, (assigned by James A. Eidson to said Bank on November 3rd, 1931) to the extinguishment of a debt or debts owing said bank by said James A. Eidson? A. Yes.

'(6) Do you find from a preponderance of the evidence that James A. Eidson knew, or in the exercise of ordinary care should reasonably have known of such application of such stock to the extinguishment of such debt or debts on or prior to April 9th, 1952? A. Yes.' (Appellee made no exceptions to the Charge nor did it ask for the submission of any other issue.)

The Court overruled appellants' motion for judgment non obstante veredicto and granted appellee's motion for judgment. Pertinent to this discussion the judgment decreed that the Perry National Bank recover of the plaintiffs and the cross-defendants, naming them, an undivided 443/500ths interest in the 600 acre tract of land describing it by metes and bounds. The judgment further decreed that the bank recover from plaintiffs and cross-defendants, naming them, and other parties not pertinent here, the title to and possession of 443 shares of common capital stock of the Eidson Club Lake, a corporation, as well as certificates evidencing the same, and decreed accordingly. The judgment taxed all costs against plaintiffs and cross-defendants. Appellants assail the judgment on 24 points. We have grouped them into the following: (1) Since the evidence shows without dispute that the deeds in question and the stock were given in one transaction by Eidson to the bank for the purpose of securing his indebtedness to the bank, that such transaction created the relationship of mortgagor and mortgagee, and that such situation continued until it was proven otherwise; (2) Since the evidence shows that there was no foreclosure on the land or stock the relation of mortgagor and mortgagee continued to exist at all times between Eidson and the bank, and such relationship existed when appellants filed their suit; (3) That the jury's answer to issues 1 and 4 do not support a judgment in favor of the bank; (4) That the answers of the jury to issues 4, 5 and 6 are not sustained by the evidence, and that the answer to each of said issues is so contrary to the overwhelming weight of all the evidence as to be clearly wrong and unjust and will not sustain the judgment of the court.

It is our view that since the plaintiffs grounded their cause of action on the theory that the deeds and the stock were given by Eidson to secure his indebtedness to the bank, and since the bank admits that it accepted the deeds and the stock certificates as security of Eidson's indebtedness, that plaintiffs thereby made out a prima facie case to the effect that they were entitled to pay the debt and have title quieted in them, and that such undisputed factual situation voided the bank's claim that title had passed to it under the deeds, or that it had title to the stock. This we understand to be the Rule announced in King v. Hill, 138 Tex. 187, 157 S.W.2d 881, points 1, 2 and 3 (Comm. of App., opinion adopted;) same cause 141 Tex. 294, 172 S.W.2d 298 (Comm. of App., opinion adopted) see points 1 to 4, pages 299-300. The Court in the foregoing case, made this statement of the Rule [138 Tex. 187, 157 S.W.2d 883]:

'By proving that the purported deed was in fact a mortgage they rebuteed or avoided the claim of defendants in error that title passed to them under said purported deed.'

In the case at bar in addition to the proof of plaintiffs, defendants admitted the transaction to be a mortgage. We think the Rule in Texas is that once an instrument or transaction is established as a mortgage that such condition is presumed to continue to exist until proven otherwise. Judge Smedley in Martinez v. Gutierrez, Tex.Com.App., 66 S.W.2d 678, 684, point 9, stated it in this manner:

'It is also true that a law or a condition once proven or known to exist will be presumed, in the absence of evidence to the contrary, to have continued in effect.'

See also statement of the Rule by Judge Holmes in Humble Oil & Refining Co. v. Sun Oil Co., 5 Cir., 191 F.2d 705, pt. 17 at page 715, certiorari denied 342 U.S. 920, 72 S.Ct. 367, 96 L.Ed. 687, in a trespass to try title suit. Under the foregoing authorities it is obvious that since plaintiffs plead and proved, and the bank and its attorney admitted that the deeds and the stock were given in the same transaction to the bank to secure Eidson's debt, that the plaintiffs discharged their burden because they plead that they were willing to pay the debt with interest, and were entitled to have the title to the property quieted in them. See also T.J. 29, Mortgages, Secs. 20 and 21, pages 813-814, and authorities there cited. That leads us to say that under the authorities heretofore cited and since no judicial foreclosure is shown, the judgment of the trial court cannot be sustained on the jury's answers to issues 1 and 4. See Humble Oil & Refining Co. v. Atwood, 150 Tex. 617, 244 S.W.2d 637, 640; Whitaker v. Hill, Tex.Civ.App., 179 S.W. 539; Ullman v. Devereux 46 Tex.Civ.App., 459, 102 S.W. 1163 (writ ref.).

Can the judgment of the trial court be sustained on the answers of the jury to issues 5 and 6, or either of them? We think the answer is 'No.'

A statement is necessary. On November 5, 1931, Eidson executed a deed to Perry, the bank president, and the Eidson Club Lake executed a deed on the same date to the bank, both deeds purporting to convey the land in question. At the same time Eidson placed his Eidson Club Lake stock certificates with the bank, and on November 6, 1931, the bank's Combined Customer's Statement-Liability Ledger showed that Eidson executed Note No. 5480, dated November 5, 1931, in the sum of $7,660.44, payable to the bank on May 5, 1932. This indebtedness was carried forward and renewed from time to time until April 1, 1945, at which time it was renewed by note for $5,488.50, payable to the bank 12 months after date on April 1, 1946. Testimony was tendered to the effect that Mr. Manning, President of the Bank, agreed with Joe H. Eidson, Jr., that at the time of James A. Eidson's death on January 13, 1954, that he owed the bank on such indebtedness $6,378.30. The note dated April 1, 1945, among other things provided:

'In the event of non-payment of this note when due, we, and each of us, hereby authorize the holder of this note to sell any collateral security attached hereto, assigned, transferred or deposited with the said The Perry National Bank, or its assigns, and such sale may be either public or private, and without notice or legal proceedings, to make any transfers that may be required, and the proceeds arising therefrom to be applied to the payment of this note, hereby ratifying and affirming all that may be done by virtue hereof.'

This note of date April 1, 1945, had the following credits:

'1/11/50, paid $600.00'

'2/50, paid $600.00'

Testimony was tendered to the effect that these credits were from oil and gas leases that the bank had executed on the land, and that it was the bank's contention that they did not represent credits on Mr. Eidson's indebtedness to the bank but they made the notation for their convenience in dealing with other stockholders who had an interest in the land because the corporation was defunct. There is a total absence of testimony to the effect that the bank made an accounting of such credits to the other stockholders. Mr. Manning further testified to the effect that he had been connected with the bank since 1928 with the exception of a period from about April 1942 to April 1946, during which time he was with the Examination Division of the Federal Deposit Insurance Corporation; that he had been President of the bank since January 1, 1958. With reference to the deed that Eidson gave to Perry, he said: 'I think that the purpose of that was to place title to that property in Mr. E. A. Perry as the agent of the Perry National Bank to secure payment of some money that Mr. Eidson owed the bank at the time.'

'* * * Q. Now Mr. Manning, I believe your attorney said yesterday that at the same time these deeds were made and the notes...