El Fresnal Irrigated Land Co. v. Bank of Washington

• Decision Date: 26 January 1916
• Docket Number: (No. 5593.)<SMALL><SUP>*</SUP></SMALL&gt
• Citation: El Fresnal Irrigated Land Co. v. Bank of Washington, 182 S.W. 701 (Tex. App. 1916)
• Parties: EL FRESNAL IRRIGATED LAND CO. v. BANK OF WASHINGTON.
• Court: Texas Court of Appeals

Page 701

182 S.W. 701

EL FRESNAL IRRIGATED LAND CO. v. BANK OF WASHINGTON.

(No. 5593.)^*

Court of Civil Appeals of Texas. San Antonio.

January 26, 1916.

Appeal from District Court, Cameron County; W. B. Hopkins, Judge.

Action by the Bank of Washington against the El Fresnal Irrigated Land Company. From a judgment for the plaintiff, the defendant appeals. Reversed.

Spears & Montgomery, of San Benito, for appellant. F. W. Seabury, of Brownsville, for appellee.

FLY, C. J.

This is a suit instituted by appellee on two promissory notes for $750 each, purporting to have been executed by appellant to the San Benito Land & Water Company, and it sought the foreclosure of a lien on certain land. The trial court rendered judgment in favor of appellee for $1,955.25 and for the foreclosure of a lien on 2,000 acres of land.

The cause is brought to this court on the following agreed statement of facts:

(1) "The defendant is a corporation incorporated and existing under the laws of Texas, for the purpose of constructing, maintaining, and operating canals, ditches, flumes, feeders, laterals, dams, reservoirs, lakes, and wells, and for conserving, storing, conducting, and transferring water to all persons entitled to the use of same for irrigation," etc.

(2) "The defendant was at all the times hereinafter stated, and is now, the owner of a tract of 2,000 acres of land in Cameron county, Tex., known as the El Fresnal Irrigated Land Company's subdivision of land in the Espiritu Santo grant in this county of Cameron, same being a part of share 1 in the partition of said grant, and being the same land conveyed by C. P. Barreda to Samuel Spears, trustee, by deed dated February 12, 1912, and recorded in Book 18, pages 144-147, of the deed records of this county, and by said Samuel Spears, trustee, conveyed to defendant by deed dated July 1, 1912, and recorded in Book 19, pages 452-454, of said records, having acquired and owing same for its corporate purposes."

(3) "On May 26, 1913, S. A. Robertson, as president and acting for said corporation, executed and delivered to the San Benito Land & Water Company the two promissory notes sued upon herein, same being in the principal sum of $750 each, bearing the date aforesaid, and due, respectively, on July 1, 1913, and January 1, 1914, which notes are identical, except as to their dates of maturity, and said note first maturing is now here copied in full as a statement of the terms of said two notes, as follows:

"`$750.     San Benito. Texas, May 26, 1913
                

"`On July 1, 1913, after date we promise to pay to the San Benito Land & Water Company, or order, seven hundred fifty and no/100 dollars, with interest at the rate of ten per cent per annum from maturity until paid, interest payable annually, and further hereby agree that if this note is not paid when due to pay all costs necessary for collection, including 10 per cent. on all unpaid principal and interest for attorney's fees; past-due principal, interest, and attorney's fees to draw interest at 10 per cent. per annum the same as principal, with annual rests.

"`This note is secured by a lien for water charges for the year 1913 on 2,000 acres of land in Cameron county, Texas, being El Fresnal Irrigated Land Company's subdivision of Espiritu Santo grant, in Cameron county, Texas, which said lien is set out in a deed by the San Benito Land & Water Company conveying said land, and this note shall not be held to change the terms and provisions of said deed in any other respect except as herein expressly provided.

"`Voluntary payments on this note shall be made at San Benito, Texas, but if suit be brought thereon for debt, or for debt and foreclosure, same may be instituted and tried in Cameron or Travis counties, Texas, at the option of the holder.

             "`El Fresnal Irrigated Land Co
                                "`By S. A. Robertson, Pres.'"
                

(4) "At the time said notes were executed by S. A. Robertson, as president of the defendant corporation, there was no provision in the charter or by-laws of the corporation, nor was there any resolution, order, vote, or other action of its board of directors, as far as shown by the minutes of said board, expressly granting to said president power or authority to execute notes and obligations in its name, or create a lien on said land for the purpose of securing any debt owing by it, but he was, as such president, lawfully in charge of and personally managing the business of defendant corporation, and, as such president, customarily executed, without express authority, all notes and obligations that were issued in the name of the corporation, and all notes and obligations so executed by him, except the present notes, were regularly paid or honored by the corporation. The two notes in question were, however, executed by S. A. Robertson, as such president for defendant corporation, under a misapprehension of facts as follows: At said time the defendant was not at all indebted to the San Benito Land & Water Company, and has not since been indebted to said company, and the defendant did not receive, nor did the San Benito Land & Water Company pay, any valuable consideration for said notes. That the San Benito Land & Water Company had not then, and has not since, executed any deed to defendant conveying said land, nor entered into any contract with defendant whereby a lien was fixed on said land for water charges for the year 1913, and that said land was acquired by defendant only in the manner above stated, and that, while there was a contract between defendant and the San Benito Land & Water Company, then duly recorded in Cameron county, Tex., whereby the latter company undertook to furnish water for the irrigation of said land, yet said contract provides that no water charges shall be made against the defendant, or constitute a lien upon its said lands so long as same remain in the hands of defendant, it being contemplated that the land should be subdivided, and water charges were to run only on the subdivision thereof after same were sold by the defendant. Said contract did not create any obligation on defendant to pay any moneys to the San Benito Land & Water Company, or create any lien on said lands for the water charges of the year 1913, mentioned in said notes. That the foregoing facts were well known to both defendant and to the said San Benito Land & Water Company at the time said notes were executed and delivered, but same were overlooked by the parties, and said notes, in fact, executed by mutual mistake."

(5) "On May 26, 1913, the San Benito Land & Water Company became indebted to the Rio Grande Construction Company in the sum of $3,500, to evidence which it on that day executed and delivered its notes for said sum to the said Rio Grande Construction Company, as collateral security therefor, the two notes herein sued on, which were duly indorsed by said San Benito Land & Water Company, the payee thereof, and in addition by S. A. Robertson."

(6) "On June 1, 1913, plaintiff herein loaned to the Hidalgo Construction Company, the Rio Grande Construction Company, and S. A. Robertson the sum of $10,000, then and there paid to them in cash, and to evidence said loan took from them a note for said sum by the terms of which note the Rio Grande Construction Company pledged as collateral security therefor the said $3,500 note given it by San Benito Land & Water Company, together with the notes herein sued on, collateral to said $3,500 note, and delivered same to plaintiff, who has ever since been, except as hereinafter stated, the legal and equitable owner and holder of the notes here sued upon, as such pledgee. Plaintiff paid and loaned the said sum of money on the security of the two notes herein sued upon, with other securities, and at that time had not had, and did not have, any actual knowledge of the circumstances surrounding the execution and delivery of the two notes here sued upon, as above set out."

(7) "Subsequently, the said $10,000 not having been paid at the maturity thereof, plaintiff, acting in accordance with its rights as pledgee, and in compliance with the terms of said pledge, did on June 15, 1914, and on September 21, 1914, sell the various collaterals pledged with it to secure said $10,000 note, and at such sales became the purchaser of said $3,500 note given by the San Benito Land & Water Company, and of the two notes herein sued upon, for a valuable consideration. That before the time of said two sales plaintiff had received information that the defendant herein denied the obligations of the two notes sued upon, and claimed same were given without consideration, and plaintiff then knew that the statement in said notes in regard to the lien securing same was untrue in respect to the matters hereinbefore pointed out."

(8) "Plaintiff is now, under the pledgee's sale aforesaid, the legal and equitable owner and holder of said two notes and of any lien that under the foregoing facts may exist upon said lands securing the payment of said notes."

(9) "No part of the principal or interest of said notes has been paid, and that on October 22, 1914, plaintiff placed said notes in the hands of F. W. Seabury, an attorney, for collection, and contracted with him to pay for his services in making such collection the 10 per cent. attorney's fees in said notes respectively stipulated, which amount would be a fair and reasonable compensation for such service and the compensation usually allowed in suits of this character."

(10) "Plaintiff has collected a part of the other collateral to its said $10,000 note, and has sold out all the collateral thereto not so collected, and realized from such sales and collections the sum of $2,539.50, which has been credited on said $10,000 note. That, the remainder of said note being overdue and unpaid, pl...