"The appeal of the cause is prosecuted by appellants from a final judgment of dismissal by the trial court, after such court had sustained appellee's general demurrer and appellants had declined to amend. The petition filed by appellants shows that they are husband and wife, and that they reside in the City of Hillsboro, Hill County, Texas, where in 1934 they owned a home on land described in the petition, burdened with a valid lien to secure an indebtedness in the sum of $1512.40. On November 19, 1934, appellants availed themselves of the provisions of the Home Owners Loan Act, (48 Stat. 128, as amended, see 12 U. S.C.A. § 1461 et seq.) executed in favor of appellee their certain promissory note in the principal sum of said indebtedness, payable in monthly installments, the first installment being payable December 19, 1934, and a like installment being payable on the 19th day of each succeeding month thereafter, until said note was finally paid. The payment of the note was secured on the same day by the execution of a deed of trust to James Shaw, as trustee for the benefit of appellee; thereby evidencing a valid lien upon their home in the amount of said indebtedness.
"The note under inquiry provides that, `* * * in the event of default in the payment of any installment thereof for a period of ninety days, the defendant (appellee) or other holder of said note, at its option, may declare the balance owing on said note at once due and payable * * *.' The deed of trust provides that, in the event such default shall be made in the payment of any installment of said note, or the appellee shall fail to keep or perform any of the conditions, stipulations or covenants of said deed of trust, then the whole of said note shall, at the option of appellee, or other holder thereof, become at once due and payable, without notice, and the trustee named in said deed of trust, or his successors in trust, shall be and are authorized and empowered, when requested so to do by the holder of said note, at any time after such default, to sell the above described real property at public auction, to the highest bidder for cash * * *. (Then follows the time and place of such sale, and the provision that a deed be executed to the purchaser conveying the land in fee simple.)
"The said deed of trust further provides that, in case of the death of James Shaw, the trustee named therein, or of his refusal, failure or inability, for any reason, to make such sale or perform said trust, the appellee, or other holder of said note, shall have the right and is hereby authorized and empowered to appoint in writing a suitable person who resides in the State of Texas, who shall become the trustee thereunder, as the substitute for the trustee named therein, and said substitute trustee shall thereupon succeed to all of the assets, rights, powers and trusts thereby granted to or vested in the said James Shaw, as trustee.
"The petition shows that the parties further contracted in respect to a substitute trustee, `it is further expressly provided that the corporation (meaning the defendant), in any event, is hereby authorized at its option to appoint in writing a substitute trustee to act instead of the trustee named herein; and the authority to appoint other substitute trustees, successively, during the life of this loan, and such trustees shall each and all succeed to all of the rights and powers of the first trustee named herein.' The petition further shows:
"`That said defendant was created under an Act of Congress of June 1933, known as the Home Owners Loan Act of 1933, (48 Stat. 128) which Act with reference to the creation of the defendant provides: that the board known as the Federal Home Loan Bank Board, created under and by an Act of Congress known as the Federal Home Loan Bank Act [see 12 U.S.C.A. §§ 1421-1449] is authorized and directed to create a corporation to be known as the Home Owners Loan Corporation, which shall be an instrumentality of the United States, which shall have authority to sue and be sued in any court of competent jurisdiction, federal or state, and which shall be under the direction of the Board and operated by it under such by-laws, rules and regulations as it may prescribe for the accomplishment of the purposes and intent of this section. The members of the Federal Home Loan Bank Board shall constitute the board of directors of the Home Owners' Loan Corporation; pursuant to which act and provisions thereof, the defendant was incorporated and is now operating and is being operated, run, managed and controlled by the Federal Home Loan Bank Board acting as its board of directors, and said Federal Home Loan Bank Board has always, since the creation of said defendant corporation, acted as the Board of Directors thereof.'
"The petition further shows that appellee, acting through its Board of Directors, passed the following resolution:
"`Be It Resolved: That the following officers of Home Owners Loan Corporation, to-wit: The Chairman of the Board or Vice-Chairman, the General Manager or any Deputy General Manager, the Secretary or any Assistant Secretary, the Treasurer or any Assistant Treasurer, any Regional or Assistant Regional Manager, any Regional or Assistant Regional Treasurer, be, and each is, hereby authorized to execute, seal with the corporate seal, attest, acknowledge on behalf of the Corporation, and deliver or accept any instrument, and perform any and all acts necessary or appropriate, in connection with: (a) the exercise of any power of attorney now or hereafter running to Home Owners Loan Corporation and the appointment of substitute trustees under deeds of trust or other instruments securing debt now or hereafter held by the Corporation, or (b) the foreclosure of any mortgage or security now or hereafter held by said Corporation, including foreclosure deeds in pursuance of sales under power of attorney, or (c) the purchase, sale for cash or on terms or rental of any property to or by said Corporation, including deeds conveying title to real estate, or any interest therein now or hereafter held by the Corporation and contracts or other obligations for the sale of real estate or any interest therein now or hereafter held by the Corporation, or (d) the acquisition by giving in payment, reconveyance, assignment, complete or partial release, subordination, satisfaction, cancellation or discharge of any judgment, lien security, mortgage or instrument of indebtedness now or hereafter held by said Corporation, or (e) the appointment of an attorney in fact to act for the Corporation in the foregoing matters or to acknowledge any instrument on behalf of the Corporation.'
"At the time of the adoption of the above resolution, and ever since said time, Joseph R. Smith, III, has been, and is now, appellee's Regional Manager for Region 5-B, which includes Hill County.
"It is further shown by the petition that, prior to June 1, 1936, appellants had been in default in the monthly payments for a period of time in excess of ninety days
and that on said date, because of said default, Joseph R. Smith, III, as Regional Manager, declared all of the indebtedness then evidenced by said note due and payable, and made demand upon James Shaw, the trustee named in the deed of trust, to proceed to enforce the power of sale in the deed of trust by sale of the property therein conveyed, in the manner, during the time and at the place prescribed in said deed of trust. However on September 4, 1936, the said trustee submitted his resignation as trustee to the Regional Manager, and refused to foreclose the lien of the deed of trust by sale of the property, and on the same day said Regional Manager appointed John R. Russell substitute trustee. All of this is alleged to have been done in pursuance of said resolution of the Board of Directors.
"The substitute trustee executed the power of sale in the deed of trust, strictly in compliance with the terms of the deed of trust, and the property was sold at public auction October 6, 1936, before the courthouse door of Hill County, to the highest and best bidder for cash, at which sale appellee became the purchaser of the property. A deed of conveyance was duly executed and delivered to appellee by Russell, the substitute trustee. If the Regional Manager was clothed with lawful authority to accelerate the note in question, and was also clothed with lawful authority to appoint the substitute trustee, on the resignation of the trustee named in the deed of trust, it is admitted by appellants that the deed to appellee by the...
