Fidelity Union Fire Ins. Co. v. First Nat. Bank

• Decision Date: 12 June 1929
• Docket Number: (No. 3252.)
• Citation: 18 S.W.2d 800
• Parties: FIDELITY UNION FIRE INS. CO. et al. v. FIRST NAT. BANK OF CROSBYTON et al.
• Court: Texas Court of Appeals

18 S.W.2d 800

FIDELITY UNION FIRE INS. CO. et al. v. FIRST NAT. BANK OF CROSBYTON et al.

(No. 3252.)

Court of Civil Appeals of Texas. Amarillo.

June 12, 1929.

Appeal from District Court, Crosby County; Homer L. Pharr, Judge.

Action by the First National Bank of Crosbyton and others against the Fidelity Union Fire Insurance Company and others. From a judgment overruling defendants' pleas of privilege, they appeal. Reversed, with directions, as to individual defendants.

Collins & Houston, of Dallas, for appellants.

Goree, Odell & Allen, of Fort Worth, and W. P. Walker, of Crosbyton, for appellees.

JACKSON, J.

This suit was instituted in the district court of Crosby county, Texas, by the plaintiffs, the First National Bank of Crosbyton, Tex., a national banking institution, and Chesley Smith, against the defendants Fidelity Union Fire Insurance Company, a corporation, and H. G. Corbin, J. W. Wellman, and V. A. Collins, heretofore doing business under the partnership name of the Texas Realty Mortgage Company.

The plaintiffs allege that the First National Bank of Crosbyton is doing business in Crosby county, Texas, and that Chesley Smith resides in McLennan county, Texas; that the Fidelity Union Fire Insurance Company has an office and agent in Dallas county, Texas, and that the other defendants all reside in Dallas county, Texas; that on April 22 1921, Chesley Smith owned section 27, lot 2, containing 640 acres of land, which is situated in Crosby county, Texas; that on said date said land was incumbered by a deed of trust lien, given to the Investors' Mortgage Company to secure a note for the sum of $7,500 executed to said company; that Chesley Smith, being desirous of refinancing said loan and procuring additional money on said section of land, entered into negotiations with the Texas Realty Mortgage Company to secure a loan on said land for that purpose; that such negotiations resulted in an agreement between him and the Texas Realty Mortgage Company that said company would make a loan to Smith out of which the $7,500 note should be paid; that in pursuance to such agreement Chesley Smith and his wife, on April 22, 1921, executed and delivered to the Texas Realty Mortgage Company one note for $12,500, one note for $1,000, and two notes each for the sum of $750, and contemporaneously therewith executed a deed of trust to H. G. Corbin, as trustee, to secure the payment of the last-mentioned notes to the Texas Realty Mortgage Company, a copartnership composed of H. G. Corbin, J. W. Wellman, and V. A. Collins; that the notes and deed of trust to said mortgage company were executed upon the agreement that said company would pay off and discharge the note for $7,500, with the accumulated interest thereon; that as a part of the consideration for the notes and deed of trust to the Texas Realty Mortgage Company it agreed to pay said $7,500 note and discharge the lien securing the payment thereof; that, instead of paying off and discharging said $7,500 incumbrance, as agreed, said mortgage company appropriated to its own use and benefit said $7,500, and for the purpose of concealing from plaintiffs the fact that said $7,500 had not been paid, said company from the year 1921 to 1926, inclusive, paid the interest on said $7,500 loan; that the representations and promises made to Chesley Smith by the Texas Realty Mortgage Company, that it would pay off and discharge the $7,500, were false and fraudulent, and made for the purpose of inducing Smith and his wife to execute and deliver the notes and deed of trust to the Texas Realty Mortgage Company, and that said company never at any time intended to keep such promises; that the plaintiffs believed said $7,500 had been paid and discharged, and did not know until June, 1928, that said indebtedness had not been paid, and that the Texas Realty Mortgage Company had failed to keep such promises; that on January 19, 1923, Smith and his wife conveyed said section of land to the First National Bank of Crosbyton, Tex., for a valuable consideration, subject only to the notes and deed of trust lien executed to the Texas Realty Mortgage Company, and, believing that the $7,500 indebtedness had been discharged as agreed, represented to said bank that said debt had been paid, and warranted the title against all incumbrances save and except the deed of trust lien executed to the Texas Realty Mortgage Company.

Plaintiffs allege that the Fidelity Union Fire Insurance Company now claims to be the owner and holder of the note for $12,500 secured by the deed of trust to the Texas Realty Mortgage Company, and also claims to be the owner and holder of the note and lien for $7,500 that had been executed to the Investors' Mortgage Company as hereinbefore alleged; that it is threatening to sue on said two notes and foreclose the pretended lien on said section of land; that in the transaction between Chesley Smith, his wife, and the Texas Realty Mortgage Company, said company and the individual members thereof were acting as agents for the Fidelity Union Fire Insurance Company which is bound by the representations and promises made by said Texas Realty Mortgage Company; that, if plaintiffs are mistaken in their allegations that the individual members of the Texas Realty Mortgage Company were acting as agents for the Fidelity Union Fire Insurance Company, nevertheless the Fidelity Union Fire Insurance Company acquired the note for $7,500 and the note for $12,500 with knowledge of the representations and promises made by the Texas Realty Mortgage Company, and acquired the $7,500 note with knowledge of such promises and representations, and in acquiring the $7,500 note the Fidelity Union Fire Insurance Company was in truth and in fact recognizing the agreement between Smith and the Texas Realty Mortgage Company; that the $12,500 note and the $7,500 note claimed by the Fidelity Union Fire Insurance Company show an apparent liability of $20,000 against Chesley Smith, and they constitute an apparent charge against said section of land and a cloud on the title thereto.

Plaintiffs allege that they are ready, able, and willing to pay the amount justly due as a charge against the land and have made due tender thereof, which has been refused by the Fidelity Union Fire Insurance Company, and the plaintiffs tender the sum of $12,500 with the unpaid interest thereon, which they allege is the full amount due against said section of land. They pray for judgment canceling all of the indebtedness in excess of the $12,500, and canceling the lien on said section of land for any amount in excess of said $12,500 and accrued interest thereon; that the cloud on the title to said land be removed, and, in the event the relief prayed for is not granted for any reason, that they have judgment against H. G. Corbin, J. W. Wellman, and V. A. Collins for any sum over $12,500 and accrued interest thereon that may be adjudged as a charge against the land, for costs of suit and all other relief general and special, legal and equitable, to which they may be entitled.

The defendants each filed a separate plea of privilege to be sued in the county of Dallas, state of Texas, where each of said defendants reside. To the pleas of privilege filed by the defendants, the plaintiffs filed their controverting affidavit, alleging that the district court of Crosby county has venue to try the suit, because plaintiffs seek to cancel a note in the sum of $7,500 secured by a deed of trust against the land described in the plaintiffs' petition, which land is situated in Crosby county, Texas, and because they seek to remove the cloud on the title to said land created by virtue of said note and deed of trust; that the defendants H. G. Corbin, J. W. Wellman, and V. A. Collins, operating as a partnership under the name of the Texas Realty Mortgage Company, on the 22d day of April, 1921, agreed with the plaintiff Chesley Smith to pay off the $7,500 note secured by the deed of trust against said land, and induced the said Smith and wife to execute an additional incumbrance and lien against said land as alleged in plaintiffs' original petition, and falsely and fraudulently promised to pay off said indebtedness and lien; that in equity the plaintiffs are entitled to judgment canceling said $7,500 debt and the lien securing the payment thereof; that said defendants, in the transaction between the Texas Realty Mortgage Company and Chesley Smith, were acting as agents for the Fidelity Union Fire Insurance Company, and that said fire...