Hammann v. H. J. McMullen & Co.

• Decision Date: 23 June 1933
• Docket Number: No. 5946.,5946.
• Citation: 62 S.W.2d 59
• Parties: HAMMANN v. H. J. McMULLEN & CO.
• Court: Texas Supreme Court

Page 59

62 S.W.2d 59

HAMMANN v. H. J. McMULLEN & CO.

No. 5946.

Supreme Court of Texas.

June 23, 1933.

Error to Court of Civil Appeals of Tenth Supreme Judicial District.

Suit by Henry Hammann against Arthur E. Smith and wife, H. J. McMullen & Co. and another, in which the company filed a cross-action. The judgment rendered was reversed by the Court of Civil Appeals [34 S.W.(2d) 909], and the cause remanded, and plaintiff brings error.

Judgment of the District Court reformed and, as reformed, affirmed, and that part of the judgment of the Court of Civil Appeals remanding the cause to the District Court affirmed, and cause remanded to the District Court, with instructions.

Mayer & Rowe, S. C. Rowe, and Stanley Bransford, all of Fort Worth, for plaintiff in error.

Charles L. Terry, of Fort Worth, for defendant in error.

Thomson, Dilworth & Marshall, Leslie Byrd, and Sylvan Lang, all of San Antonio, as amici curiæ.

PIERSON, Justice.

For a comprehensive statement of the case and issues to be determined, we quote the following from the opinion of the Honorable Court of Civil Appeals :

"Appellee Henry Hammann, on September 14, 1929, instituted this suit against Arthur E. Smith and wife, Myrtle Mae Smith, to recover the balance due on a promissory note dated July 17, 1919, in the principal sum of $2,200, with interest from date at the rate of 8 per cent. per annum and for 10 per cent. additional on the amount due as attorney's fees. Said note was by its terms payable in monthly installments of $15 each, together with all interest accrued on the principal sum to such date; the first of said installments being due August 10, 1919, and one each month thereafter. Said note further provided for accelerated maturity at the option of the holder upon default of any payment. Appellee also sought foreclosure of a deed of trust lien on a certain lot of land in the city of Fort Worth. He also sued for the sum of $450.12 paid by him in discharge of state, county, and city taxes on said lot, and claimed subrogation to the tax lien securing the taxes so paid. Appellee made H. J. McMullen & Co., a corporation, and others not necessary to mention, parties defendant in said suit, and alleged that they and each of them were asserting some claim against said property, the exact nature of which was unknown to him. Appellee Arthur E. Smith and wife filed an answer, consisting merely of a general demurrer and denial.

"Appellant, H. J. McMullen & Co., in reply to plaintiff's petition, filed a general demurrer and denial, and, in addition thereto, filed a cross-action against appellee and all its codefendants, in which it alleged that Smith and wife, on November 20, 1926, executed and delivered to A. B. Sibbett their certain mechanic's lien note for the sum of $239, payable in thirty-eight monthly installments of $6.85 each, the first of said installments being due February 1st, 1929, and a like installment due on the same day of each month thereafter, with interest at the rate of 7 per cent. per annum, payable monthly, and providing for the payment of 10 per cent. additional as attorney's fees in case of suit and for accelerated maturity at the option of the holder upon default of any payment. Appellant admitted that the sum of $58.25 had been paid thereon. Appellant further alleged that said note was secured by a good and valid mechanic's lien fixed upon said lot in accordance with the Constitution and laws of the state. Appellant alleged that said note and lien had been for a valuable consideration transferred to it by said Sibbett. It further pleaded the statute of four years' limitation against all installments of principal and interest on the note sued on by appellee which were more than four years past due at the time he exercised his option to declare his entire note due and filed suit thereon. Appellant further alleged that it held, under the Constitution and laws of this state, a first and superior lien on the improvements made upon said lot in consideration of the note and lien sued on by it; that such improvements were then and there of the reasonable value of $239, and that the value of said lot had been enhanced by the making of said improvements in said sum; that without said improvements the lot and other improvements thereon were worth the sum of $1,500 only, but that, including said improvements, said lot with all improvements thereon was worth the sum of $1,739. Appellant further alleged that said improvements consisted of concrete and cement work, and that the value of the same would be entirely destroyed if the same were removed from said lot. Appellant prayed for judgment for the balance due on its note, for foreclosure of its mechanic's lien, for the sale of said lot and all improvements thereon as a whole, and pro rata division of the proceeds of the sale thereof between it and appellee. * * *

"The case was tried by the court, and judgment rendered in favor of appellee [Hammann] against said Arthur E. Smith for the sum of $2,162.50 principal and interest, $216.25 attorney's fees, and the further sum of $450.02 for taxes paid by him, amounting in the aggregate to $2,828.77, and for foreclosure of deed of trust and vendor's lien on said lot to secure the same, and declaring appellee also subrogated to the tax lien securing the sum paid by him as taxes on said lot as aforesaid and foreclosing such lien. Judgment was also rendered in favor of appellant [McMullen & Co.] against said Arthur E. Smith for the sum of $243.06 principal and interest and $24.31 attorney's fees, amounting in the aggregate to $267.37, and establishing and foreclosing a mechanic's lien on said lot to secure the payment of same, but declaring said lien inferior and subordinate to appellee's liens so foreclosed. Said judgment further directed that order of sale issue thereon and said lot with the improvements thereon be seized and sold as under execution, and the proceeds of sale applied, first, to the payment in full of appellee's recovery herein, together with all costs of suit and sale; second, to the payment of appellant's recovery, together with all costs accrued against it, and that the surplus, if any, after discharging both such recoveries, be paid to said Arthur E. Smith. Appellant [McMullen & Co.] presents said judgment and the proceedings on which it is founded to this court for review."

The Honorable Court of Civil Appeals reversed the judgment of the district court in two particulars. It held (1) that a number of the installments in Hammann's note, amounting to $800, were barred by the four-year statute of limitations; and (2) that McMullen & Co.'s mechanic's lien was not inferior or subordinate to Hammann's prior deed of trust lien and vendor's lien, and directed that the proceeds of the sale of the property be prorated between the lienholders according to the values found.

Plaintiff in error, Hammann, presents two questions: First, were any of the installments of his vendor's lien note barred under the statute of limitations governing installment or serial notes, R. S. art. 5523; and, second, were his deed of trust lien and vendor's lien superior and entitled to priority over the later acquired mechanic's lien of defendant in error for improvements on the property?

We have carefully analyzed the facts of this case, and conclude that the Honorable Court of Civil Appeals correctly held that limitation ran against the installments mentioned in the opinion.

The part of article 5523 pertinent to the facts of this case reads as follows: "Provided, if several obligations are secured by said mortgage or deed of trust, the same may be enforced at any time prior to four years after the note or obligation last maturing has matured and may be enforced as to all notes and obligations not then barred by the four years statute of limitations."

The revision of the statutes in 1925 changed the wording in some respects, but not as to its application to the liens here involved.

In construing this article in the case of Citizens' National Bank v. Graham, 117 Tex. at page 360, 4 S.W.(2d) 541, 542, this court said:

"But for the limiting effect of the concluding words, the proviso declared a policy that several of a series of vendor's lien notes would be protected from the four years' statute of limitations as long as the last one of the series was not barred. It reads: `Provided, if several obligations are secured by said deed of conveyance the same may be enforced at any time prior to four years after the note or obligation last maturing has matured.' If the article had stopped there, it is perfectly clear the Legislature would have declared a policy of protecting from the four years' bar all of `several obligations' or notes until four years after the maturity of the last one. The concluding words, `and may be enforced as to all notes not then barred by the four years' statute of limitations,' are simply a limitation that this immunity shall extend only to such of the notes as are not `barred by the four years' statute of limitations' at the time mentioned—that is, at the maturity of the last note. This fixes the public policy that such notes are not to be barred if their maturity falls within a period of four years prior to the maturity of the last note of the series. * * *

"Construing the article in both of its parts, and giving effect to the proviso according to the clear meaning of the language used, it seems to us clear that it was intended to fix the date the last note matured as the date from which to calculate the four years' limitation as applied to `several obligations' secured by reservation of `superior title retained in any deed of conveyance.'"

Thus it will be seen that notes of a series which are more than four years past due at "the date the last note matured" fall under the bar of limitations.

In the case before us, as stated in Chief Justice Gallagher's opinion, plaintiff in error on September 14, 1929, ...