Ford v. Culbertson, 15790

• Decision Date: 22 February 1957
• Docket Number: No. 15790,15790
• Citation: 300 S.W.2d 152
• Parties: Edwin S. FORD et al., Trustees, Appellants, v. A. B. CULBERTSON, Appellee.
• Court: Texas Court of Appeals

Page 152

300 S.W.2d 152

Edwin S. FORD et al., Trustees, Appellants, v. A. B. CULBERTSON, Appellee.

No. 15790.

Court of Civil Appeals of Texas, Fort Worth.

Feb. 22, 1957.

Rehearing Denied March 22, 1957.

Kilgore & Kilgore and James. A. Kilgore, Dallas, for appellants.

Hudson, Keltner & Sarsgard and Luther Hudson, Fort Worth, for appellee.

BOYD, Justice.

Appellants Edwin S. Ford, Leonard S. Florsheim, Warren Wright, Jr., Lucille P. Markey, joined pro forma by her husband Gene Markey, Harry B. Sutter, and the First National Bank of Chicago, Trustees under the will of Warren Wright, deceased, and Warren Wright, Jr. and Lucille P. Markey, joined pro forma by her husband Gene Markey, individually, sued appellee A. B. Culbertson for damages for the alleged breach of a contract to purchase certain mineral royalty interests owned by the Estate of Warren Wright, deceased, in Mississippi. The case was submitted to a jury and judgment was rendered that appellants take nothing.

Appellee's offer to buy was made on January 16, 1952. He withdrew from the negotiations on November 12, 1952. Early in 1953 the Estate sold the property to Humble Oil & Refining Company for $52,141 less than appellee's offer. The suit was for that amount as damages, with interest.

Appellee pleaded several matters as defenses to the suit. Appellants challenge the judgment by many points of error. The parties have presented their contentions on all the questions by thorough briefs and oral argument. In view of our disposition of the appeal, however, it is necessary to discuss only one phase of the case, that involving the defense of defective title, as we believe that defense was established.

Appellants, through their agent William J. Sherry, caused invitations to bids for the purchase of the property to be sent to more than 200 individuals and firms, one being the Baptist Foundation of Texas, of which appellee was executive director. The Foundation was not interested, but appellee, on January 16, 1952, responded to the invitation to bid by telegram to Sherry, offering $237,605 for the property. On January 19, 1952, Sherry wrote appellee that appellants had accepted his bid. Appellants assumed that appellee was bidding for the Baptist Foundation, and Sherry asked appellee if he wanted the deeds made to the Foundation. Upon receipt of that letter, appellee called Sherry by telephone and told him that the Foundation was not concerned in the matter, and that he wanted the deeds made to Mrs. Finley and Mrs. Sarsgard and the transfer orders for the production runs made to the First National Bank in Dallas. The ladies are appellee's daughters.

Appellee immediately began an investigation of the title to the property, and, also, with his daughters and their husbands, made arrangements with the First National Bank in Dallas for the money with which to pay the purchase price. About April 1, 1952, appellee's daughters and their husbands signed a note to the Dallas bank for $237,605, and appellee executed a mortgage on some property in Fort Worth as additional security for the loan. The sons-in-law had their lives insured for $100,000 each, with the bank as beneficiary, appellee paying the premiums.

Although in the invitation to bids it was stated that the Trustees would convey all of the Estate's right, title and interest in the property without warranty of title, either express or implied, except by passing along the warranties against Wright's predecessors in ownership, before appellants had seen appellee's wire, Sherry told appellee that 'we would furnish him the necessary papers to convey good title.' Sherry testified: 'Q. You just told him you would do whatever was necessary to give him a good title? A. That's right.' In the conversation after appellee received Sherry's letter advising him that his bid had been accepted, appellee told Sherry that he must have either a release of the tax lien or a satisfactory showing of solvency of the Estate. Sherry told appellee that the Estate estimated its tax liability of 'upwards of ten million dollars,' and that appellee would be furnished with a certificate of solvency from the First National Bank of Chicago, or whatever else it took to satisfy appellee his attorneys or his bank. On January 21, 1952, appellee wrote Sherry that 'It will be necessary * * * for the trustees of the estate to give evidence of the payment of the estate and inheritance taxes, or evidence of solvency. Just as soon as title papers can clear I am prepared to pay for the property.' This letter was turned over to Fellows & Fellows, attorneys in Tulsa, who also represented the Estate, and who wrote appellee on January 25, 1952, that the federal tax return had not been made and that 'We will have no trouble furnishing you evidence of solvency, however.' On March 27, 1952, appellee wrote Fellows & Fellows that 'I was assured by you that the estate was solvent and able to meet its taxes and other obligations. Since the First National Bank of Chicago is a trustee, I will be satisfied with a letter from that bank to such effect.' Fellows & Fellows wrote appellee on April 8, 1952, that the First National Bank of Chicago had not acted as Trustee as to the properties in the residuary trusts, and was 'not qualified to know the facts as to the payment of taxes, etc. The attorneys, therefore, furnished me with their own statement, which I enclose.'

The statement enclosed was a letter by Hopkins, Sutter, Halls, DeWolfe & Owen, the Chicago attorneys for the Estate, to Fellows & Fellows. It was dated April 1, 1952, and said: 'All claims against the Estate, other than taxes due to other states, have been paid in full and the Estate is solvent and able to meet its taxes and other obligations. We are writing you this letter instead of getting a letter from the First National Bank of Chicago since it is not yet acting as trustee of the residuary trusts, under the last will and testament of Warren Wright, Deceased.' Appellee was never given a certificate of solvency by the Chicago bank.

Miss Heraty, an employee of the Estate, testified that the Estate borrowed $3,000,000 in March, 1952, and that she did not know when it was repaid, but it was a short-term loan. It was not shown that this loan had been repaid when the Chicago attorneys wrote Fellows & Fellows that all claims against the Estate, other than taxes due other states, had been paid in full. Miss Heraty also testified that the First National Bank of Chicago had been acting as Trustee since May, 1951.

On November 12, 1952, appellee had his attorney write appellant's Dallas attorney, the Tulsa attorneys, and the Chicago office of the Estate that he was no longer interested in the transaction. At that time, the Estate had not cleared its property of the tax liens. This was not done before November 10, 1954. When the property was sold by the Estate to Humble in 1953, the Estate owed close to $500,000 in federal taxes.

We have reached the conclusion that appellee was not bound to pay for the property while it was burdened with the tax lien, and that the court properly entered judgment for him.

It seems to be settled that a purchaser is not required to accept a defective title, unless he agrees to do so, or waives his right to insist that evidence of good title be furnished, or becomes estopped to insist upon it. Jones v. Philips, 59 Tex. 609; Upton v. Maurice, Tex.Civ.App., 34 S.W. 642; Diana Oil Co. v. Cayton, Tex.Civ.App., 20 S.W.2d 108; Howell v. Rosser, Tex.Civ.App., 32 S.W.2d 380; Burris v. Hastert, Tex.Civ.App., 191 S.W.2d 811; Duke v. Garrett, Tex.Civ.App., 276 S.W.2d 587; 38 Tex.Jur., p. 721, sec. 48; 55 Am.Jur., p. 585, sec. 109. This is so, even though the seller offers security to protect the purchaser against defects. 92 C.J.S. Vendor & Purchaser, § 221, p. 89; Mahoney v. Nollman, 309 Mass. 522, 35 N.E.2d 265.

The federal tax lien attached at the time of deceased's death, and was an obligation of the estate, without assessments. Detroit Bank v. United States, 317 U.S. 329, 64 S.Ct. 297, 87 L.Ed. 304.

Indeed, it seems that appellants concede that they were obligated to furnish evidence of good title unless appellee is estopped to rely on that defense, or has waived it. In their brief they say: 'It is true that Mr. Sherry testified that the Estate would not expect a purchaser to take a bad title. Mr. Sherry had authority to make that statement from the witness stand and the Estate will stand behind it. However, in view of the terms of the Invitation to Bids, we think that there should be some obligation upon the Defendant to show a bad title before he can claim that title...