First Texas Joint Stock Land Bank v. Chapman

• Decision Date: 06 February 1932
• Docket Number: No. 12615.,12615.
• Parties: FIRST TEXAS JOINT STOCK LAND BANK OF HOUSTON et al. v. CHAPMAN et ux.
• Court: Texas Court of Appeals

Page 651

48 S.W.2d 651

FIRST TEXAS JOINT STOCK LAND BANK OF HOUSTON et al. v. CHAPMAN et ux.

No. 12615.

Court of Civil Appeals of Texas. Fort Worth.

February 6, 1932.

Rehearing Denied April 2, 1932.

Appeal from District Court, Wise County; J. E. Carter, Judge.

Suit by the First Texas Joint Stock Land Bank of Houston and others against J. L. Chapman and wife. From the judgment, plaintiffs appeal.

Reversed in part and rendered.

Baker, Botts, Andrews & Wharton, of Houston, and C. T. Gettys, of Decatur, for appellants.

J. V. Patterson and H. E. Lobdell, both of Decatur, for appellees.

CONNER, C. J.

As finally presented by the pleadings in this case, the appellant First State Joint Stock Land Bank of Houston sought judgment upon a promissory note executed by J. L. Chapman for the sum of $5,900, on October 19, 1922, and to foreclose a trust deed lien upon 101 acres of land, described in the pleadings, situated in Wise county, which had been executed on the same date by J. L. Chapman and his wife, Lottie Chapman. Chapman and wife defended on the ground that the land had been used and occupied by them as their homestead for many years, including all times mentioned in the pleadings, and they prayed that the trust deed be canceled and the cloud cast thereby on their title be removed.

The Houston Bank answered by a general denial and specially, in substance, that the note for $5,900 and the trust deed given to secure the same had been executed in consideration of moneys advanced to Chapman with which to pay off and discharge two previous obligations and liens created by Chapman resting upon the lands in controversy. One of these previous liens was alleged to have been executed in October, 1917, and the other in October, 1918; that these liens had been discharged with the sums of money so advanced, and that the bank had become subrogated to the rights thereby created; that upon no date or time involved did the land in question constitute the homestead of Chapman and wife. The bank further pleaded, however, that, if mistaken in its contention that the lands did not constitute the homestead of Chapman and wife, at the time of the creation of the liens of 1917 and 1918, or if for any reason those liens were invalid, Chapman and wife were estopped to claim otherwise, in that prior to the time the bank advanced the sum of $5,900 Chapman and wife executed an affidavit in which they swore that, at the time of the execution of the notes and deeds of trust of 1917 and 1918, the property involved was not their homestead, but, on the contrary, they were occupying a place in the city of Decatur as their homestead; that, if the statements made in the affidavit and application for the loan were untrue, as alleged by Chapman and wife, the bank, at the date of the closing of the loan of 1922, had no knowledge or notice of invalidity, if any, of the liens of 1917 and 1918, by reason of the homestead claim, or for any other reason; and that to permit Chapman and wife to take advantage of the falsity of their sworn representations upon which the bank relied would constitute a fraud on the bank and be inequitable, and the bank therefore prayed that it might have judgment on the amounts due upon the $5,900 note with a foreclosure of the trust deed lien.

Chapman and wife by supplemental petition alleged that he could not read, and that, if they executed the affidavit pleaded by the bank, they did not read or understand it, and that their signatures thereto were secured by fraud and misrepresentation on the part of S. A. Lillard, Jr., whom they alleged was acting as agent for the bank in the transaction, which was not deceived by any representation made by them. The bank denied these allegations, and alleged that the entire transaction had been closed by the Chapmans and their own agent selected by them, or by others whose interests were adverse to the interest of the bank.

The case came on for trial on December 3, 1930, and the court, after the introduction of the evidence, discharged the jury which had been impaneled, and rendered judgment in favor of the bank for the full amount of its indebtedness against J. L. Chapman and for a foreclosure of its asserted lien to the extent necessary to secure the sums advanced by the bank to pay off the indebtedness due on the obligation and trust deed executed in October, 1917, but for the moneys advanced to pay off and discharge the lien of October, 1918, denied the foreclosure of the bank's asserted lien. From this judgment the bank has duly prosecuted this appeal.

The following facts seem to be undisputed: The valid and binding effect of the Chapman obligation and trust deed, dated October 24, 1917, is not questioned. At the date of the trial, the amount due upon that obligation of Chapman's was found by the court to be $3,270.27, with interest thereon at the rate of 6 per cent., and to that extent, and that extent only, the prayer of appellant bank for judgment with a foreclosure of its trust deed on the lands involved was decreed, and to such decree no objection is urged in this court, and it must therefore be left undisturbed. The court held, however, that at the time of Mr. Chapman's obligation and the trust deed of October 24, 1918, the lands involved constituted the homestead of Chapman and wife. At the date of the judgment, the amount due on the obligation of October, 1918, was an unpaid balance of $2,673.50, and to this extent the prayer of the bank was denied and the trust deed securing it set aside, and it is from this order the appeal has been prosecuted.

The lien of October 24, 1918, was evidenced by a note of Chapman's to the City National Bank of Decatur, Tex., secured by a trust deed covering the land in controversy upon which obligation at the time of the trial there was due, as stated, $2,673.50. J. Warren Lillard was appointed trustee in the trust deed. These instruments were duly recorded, and the sums so stated to be due thereon were paid to the Decatur bank by the Houston bank upon drafts of Chapman; the obligations having been transferred to the Houston bank.

Chapman's application was dated July 12, 1922. It was therein stated, among other things, that: "Applicant lives on this land. All the property offered as security for the loan applied for, and is claimed as homestead. Been in adverse and peaceful possession of the land twenty-two years."

Thereafter the Houston bank addressed a letter to Mr. Chapman, in which, after inquiries relating to the title, we find the following: "Please give us also full information with reference to the indebtedness existing upon the land and of the disposition to be made of it in the loan. In this connection we call to your attention that the property now appears as homestead. Give us full information as to the homestead at the time the liens, proposed to be paid by us, were created."

On page 71 of the statement of facts we find an affidavit to which J. L. Chapman acknowledged his signature, made before S. A. Lillard. Jr., a notary public, on the 4th day of October, 1922, in which he says that his homestead and the homestead of his family was "lots Nos. 2 and 3 out of block No. 26 in South Decatur Addition, being the land deeded to me by J. J. Sweet and wife and by Grace Traxler and husband. That this was our homestead until February 12, 1919, at which time we moved to our farm. That this was our homestead for more than three years prior to our moving to the farm."

On the 26th day of October, 1922, as appears in the statement of facts, J. L. Chapman and wife, Lottie Chapman, executed the following affidavit:

"The State of Texas, County of Wise:

"Before me, the undersigned authority, on this day personally appeared J. L. Chapman and wife, Lottie Chapman, known to me, who, after having been by me duly sworn deposed and said:

"Whereas they have applied to First Texas Joint Stock Land Bank of Houston for a loan of $5,900.00 to be applied in renewal and extension of the amount due Reynolds Mortgage Company on the indebtedness described in and secured by two deeds of trust dated October 24, 1917, given by J. L. Chapman and wife, Lottie, to C. T. Burns, Trustee, for said Reynolds Mortgage Company, and recorded in Volume 35, on pages 222 and 225, respectively, of the Deed of Trust Records of Wise County, Texas, upon which there is now due the sum of $3,226.50, and also in renewal and extension of an interest of $2,672.50 of the indebtedness described in and secured by a Deed of Trust by J. L. Chapman and wife, Lottie, to J. W. Lillard, Trustee, for City National Bank of Decatur, Texas, dated October 24, 1918, and recorded in volume 38, on page 271, of the Deed of Trust records of Wise County, Texas, upon which indebtedness there is due a sum in excess of $2,672.50; therefore, for the purpose of inducing said First Texas Joint Stock Land Bank of Houston to make said loan, and for the further purpose of assuring said First Texas Joint Stock Land Bank that the Deed of Trust to be given by us to C. S. E. Holland, Trustee, to secure the payment of said loan will be a valid and subsisting lien on the land we represent that the indebtedness to be renewed and extended thereby is due and just and that the liens above referred to securing the payment thereof are valid and subsisting liens on the land described in said deeds of trust; that at the time said Deeds of Trust to C. T. Burns, Trustee, and to J. Warren Lillard, Trustee, above referred to, were executed by us the land described in said Deeds of Trust was neither used, occupied nor claimed by us as a homestead, and we had no intention of using, occupying or claiming said land as a homestead in the future but to the contrary we were on the dates of said Deeds of Trust using, occupying and claiming as our homestead certain property situated in the City of Decatur, Texas.

                               "[Signed]  J. L. Chapman
                                         "Lottie Chapman
                

"Sworn to and subscribed...