Hill v. Preston

• Citation: 34 S.W.2d 780
• Decision Date: 21 January 1931
• Docket Number: No. 4942.,4942.
• Parties: HILL v. PRESTON et al.
• Court: Supreme Court of Texas

Page 780

34 S.W.2d 780

HILL v. PRESTON et al.

No. 4942.

Supreme Court of Texas.

January 21, 1931.

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

Action by W. L. Hill against C. S. Preston and others. Judgment for defendants was affirmed (296 S. W. 925), and plaintiff brings error.

Reversed and remanded.

A. M. Barton, of Palestine, and P. Harvey, John C., Randolph, and J. R. Hill, all of Houston, for plaintiff in error.

Cole, Cole, Patterson & Kemper and Sewell, Taylor, Morris & Garwood, all of Houston, for defendants in error.

SHARP, C.

W. L. Hill instituted this suit in the district court of Anderson county against C. S. Preston, individually, C. S. Preston as executor of the estate of Richard Lloyd, deceased, Mrs. Dora L. Preston, wife of C. S. Preston, and Mrs. Cora Neff and husband, Theo L. Neff, alleging in substance that on the 18th day of December, 1917, W. L. Hill purchased from Richard Lloyd 1,655 acres of land, and in payment therefor executed forty notes, each for the sum of $1,000, dated December 19, 1917, and due on or before ten years after date, and bearing interest at the rate of 6 per cent. payable annually. A vendor's lien was retained against the land to secure the payment of the notes, and as additional security for the payment of the $40,000 Hill gave Lloyd a deed of trust on 1,944.7 acres of land in addition to that covered by the vendor's lien notes. This tract of land is referred to as the Hill tract; the other tract as the Lloyd tract. Hill sold the land to La Rue and Parker, who assumed payment of the notes to Lloyd, and Hill retained a vendor's lien to secure the payment of their obligations. La Rue and Parker sold to Woodward. Woodward defaulted in the payment of the interest for the year 1921, amounting to $2,400. The principal was not due until 1927. Lloyd thereupon demanded of Hill that he pay the interest. When Woodward defaulted in the payment of the interest, he offered to surrender the possession of the land and to release it to Hill or Lloyd. He did, or was ready to, abandon possession. It was thereupon arranged by and between Hill and Lloyd that Lloyd and Preston, who was the son-in-law and subsequent executor of his estate, should take possession of the two tracts of land and rent them and apply the rents to the payment of the debt. Preston accordingly rented the premises and collected from the rents $15,000 for the year 1921, $18,000 for the year 1923, and $16,000 for 1924; that the rental value of the land is $15,000 per annum. The market value of the Lloyd land is $150,000.

In January, 1923, Preston as Lloyd's executor filed suit against Hill on the notes, and secured a personal judgment against Hill for the amount of the notes, principal, interest, and attorney's fees, amounting to approximately $55,000, with a foreclosure of the deed of trust lien on the Hill tract and a foreclosure of the vendor's lien on the Lloyd tract.

In January, 1925, Preston demanded that Hill pay this judgment. Hill demanded that Preston credit the judgment with money collected from the rent of the land, and offered to pay any balance that might be owing on the judgment. Preston refused to do this, and then for the first time told Hill that Woodward had conveyed the Lloyd land to Preston, and that it was his (Preston's) land, and that Hill was not entitled to the rents. The Hill tract was not conveyed to Preston, and the title to that tract is not in issue in this case.

Preston then caused an execution to issue against Hill with an order of sale of the land. No accounting has ever been made to Hill of the rents from the Hill tract. Hill secured an injunction restraining the execution of the judgment against him and the order of sale against the land, and thereafter filed this suit. Defendants then filed an answer in the injunction suit declaring the judgment satisfied.

That Hill in his answer in the injunction suit offered to pay whatever amount was due on the vendor's lien notes executed by him to Lloyd. That in this suit Hill alleges that, if said credits so claimed by him derived from the rents and revenues of said land in the possession of Lloyd and his successor, Preston, are not sufficient to satisfy said indebtedness, he (the said Hill) offers to pay whatever amount remains due on said judgment after said credits have been made.

That at the time of the issuance of the execution of the order of sale in January, 1925, Preston had collected $49,000 from the rent of the two tracts of land. At the date of the judgment the amount collected from the rent for 1925 had not been ascertained. Plaintiff alleged on information and belief that it was approximately $20,000. Hill offered to pay any balance the court might find to be owing on the judgment, and prayed for a judgment for the land. The rental value of the two tracts of land is $15,000 per annum. The value of the Lloyd land is $150,000. It is not shown how much money was collected from the Hill tract. Plaintiff stated in his petition that he did not know as to this, and prayed that Preston be required to make an accounting. This was not done.

The trial court sustained a general demurrer to plaintiff's original and supplemental petitions. Thereupon an appeal was made by plaintiff to the Court of Civil Appeals at Texarkana, and that court affirmed the judgment of the trial court. 296 S. W. 925. Hill applied for a writ of error, which was granted by the Supreme Court.

The parties hereto will be designated as they were in the trial court.

Plaintiff submits the following propositions:

(1) Lloyd and Preston were mortgagees in possession.

(2) A mortgagee in possession is bound to apply the revenues from the mortgaged premises to the payment of the mortgage debt.

(3) When the revenues from the mortgaged premises were sufficient to satisfy the mortgage debt, the title to the premises passed to the mortgagor, free from lien, and the title of the mortgagor became absolute.

(4) Where the holder of vendor's lien notes demands that the maker thereof pay same, and then sues the maker on the notes, obtains personal judgment against the maker with foreclosure of the vendor's lien, and issues execution and order of sale on the judgment, such acts constitute an election on the part of the holder of the notes to affirm the contract of the sale of the land and operates as a renunciation of title to the land.

(5) Where the vendor of land takes a conveyance from the subvendee of his vendee, and afterwards elects to affirm the sale and pursues his vendee on the notes to personal judgment, foreclosure of the vendor's lien, and the issuance of execution and order of sale, the title acquired by the deed from the subvendee is merged in the judgment, and, where the judgment is satisfied, the title vests in the vendee.

Defendants contend that the action of the trial court in sustaining a general demurrer to plaintiff's cause of action was correct, and the action of the court should be sustained upon the following contentions:

"It is contended by defendants that the oral agreement, alleged by plaintiff is void and unenforceable, for the following reasons:

"1. It was not in writing, and, therefore, invalid under the statute of frauds;

"2. It did not create a trust. Mr. Hill was neither in possession nor entitled to possession at the time of the alleged agreement and

"3. There was no consideration for the agreement."

In reply to the contentions urged by the defendants, plaintiff submits the following propositions:

(a) That Lloyd, being the vendor, and Preston, his executor, being the holder of the vendor's lien notes executed in payment for the premises in controversy, having elected to sue Hill on the notes, and, by obtaining judgment thereon and by seeking to enforce said judgment personally against Hill, thereby electing to pursue Hill on the debt, could not claim title to the land, even though Woodward had conveyed the land to Preston; and Hill, having offered to pay whatever balance might have been found by the court to be due on the purchase money, had a right to recover the premises in controversy, even though there had been no consideration for the agreement that Preston should hold the possession of the land and rent it and apply the rents to the payment of the debt.

(b) And, even though the court might hold that the conveyance to Preston, after he had promised to hold possession and apply the rents thereof to the payment of Hill's debt, did not create a trust for Hill's benefit, yet, when the defendants elected to pursue Hill on the debt, they lost the right to claim the land, and Hill, having offered to pay the debt, had a right to recover the land.

(c) That no consideration was necessary to support the agreement to apply the rent money to the debt.

(d) That there was a valid consideration for said agreement.

The allegations made by plaintiff are, in substance:

That Hill bought the land from Lloyd and gave his notes therefor, secured by a vendor's lien on the premises, and, as additional security therefor, executed a deed of trust on 1,967 acres of land. That Woodward, Hill's subvendee, defaulted in the payment of the interest on the notes, and offered to give up the premises, and did surrender possession thereof in December, 1921. That Lloyd demanded that Hill pay the interest on the notes. That he did not surrender the notes to Hill or agree to release Hill from the payment of the notes. That Lloyd then agreed to take possession of the land and rent it and apply the rents to the payment of the debt. That Lloyd did enter into possession of the premises under such agreement in December, 1921, and that Preston, his successor and executor, collected from the rent on the premises during the year 1922 the sum of $15,000, and then on December 7, 1922, procured a deed from Woodward to the premises. That thereafter, in January, 1923, Preston, as Lloyd's executor, sued Hill on the notes, and obtained a...