Jasper State Bank v. Braswell

• Court: Texas Supreme Court
• Writing for the Court: Smedley
• Citation: Jasper State Bank v. Braswell, 111 S.W.2d 1079, 130 Tex. 549 (Tex. 1938)
• Decision Date: 12 January 1938
• Docket Number: No. 1741-7321.,1741-7321.
• Parties: JASPER STATE BANK v. BRASWELL et al.

111 S.W.2d 1079

JASPER STATE BANK v. BRASWELL et al.

No. 1741-7321.

Commission of Appeals of Texas, Section B.

January 12, 1938.

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

Suit in trespass to try title by Mrs. Ethel Braswell and another against the Jasper State Bank, wherein the defendant filed a cross-action. Judgment for the plaintiff was affirmed by the Court of Civil Appeals, 107 S.W.2d 681, and the defendant brings error.

Reversed and remanded, with directions.

Richardson & Lanier, of Jasper, and Williams, Lee, Sears & Kennerly and Jesse J. Lee, all of Houston, for plaintiff in error.

Synnott & Smith, of Jasper, for defendants in error.

SMEDLEY, Commissioner.

The Court of Civil Appeals affirmed a judgment of district court in favor of Mrs Ethel Braswell, defendant in error, against Jasper State Bank, plaintiff in error, for the title to an undivided one-eighth interest in an improved lot in the town of Jasper in Jasper county, and an undivided one-half interest in a section of land in Swisher county. 107 S.W.2d 681.

Mrs. Braswell acquired her interest in the Jasper county property by inheritance from her mother. The other interests in that property were owned one-fourth by J. M. Orton, Mrs. Braswell's father, and five-eighths by Robert Orton, Mrs. Braswell's brother. The undivided one-half interest in the Swisher county land was acquired by Mrs. Braswell from her aunt, Mrs. A. D. Wagley, who conveyed the land to Mrs. Braswell and her brother, Robert Orton, as a gift, but with the additional consideration recited in the deed that the grantees should assume the payment of Mrs. Wagley's indebtedness to Jasper State Bank by reason of her indorsement of notes of J. M. and Robert Orton in the amount of approximately $17,500, and should give the bank a lien on the said property to secure such indebtedness.

J. M. Orton, Robert Orton, and Kern L. Braswell, the husband of Mrs. Ethel Braswell, were engaged in the drug business and became indebted to Jasper State Bank in the total principal sum of approximately $17,500, evidenced by their four notes executed in the latter part of 1930 and the early part of 1931; one for $6,500, due June 26, 1931; one for $1,725, due July 21, 1931; one for $1,450, due June 18, 1931; and the fourth for $7,900, due October 4, 1931. Each of the four notes was signed by the two Ortons, Kern L. Braswell, and Mrs. A. D. Wagley, and the fourth was signed also by Mrs. Braswell. On April 4, 1931, J. M. Orton, Robert Orton, Kern L. Braswell, and Mrs. Braswell executed and regularly acknowledged a deed of trust conveying the property in Jasper county to a trustee to secure the payment of the above-described notes; and on July 7, 1931, the day on which the Swisher county land was conveyed by Mrs. Wagley to Robert Orton and Mrs. Braswell, another deed of trust was executed and regularly acknowledged by Robert Orton and Mr. and Mrs. Braswell conveying the Swisher county land to the same trustee to secure the payment of the same four notes. The Jasper county property was incumbered by a deed of trust given in 1925 as security for an indebtedness of $12,500 payable in ten annual installments to the Southwestern Life Insurance Company.

J. M. Orton, Robert Orton, and Kern L. Braswell were adjudged bankrupts on June 8, 1932. After proof was made of the claims of Jasper State Bank and the Southwestern Life Insurance Company, the land in Swisher county and the property in Jasper county were sold free of liens by the trustee in bankruptcy, and the sales duly confirmed. Both tracts were purchased by Jasper State Bank; the Swisher county land for $6400, to be credited on the claim, and the assumption of all taxes, and the Jasper county property for $5,000, to be credited on the claim, the assumption and payment of a balance of $6,600 due on the claim of the Southwestern Life Insurance Company, and the assumption of all taxes. It was further provided by the orders and by the deeds made by the trustee in bankruptcy to Jasper State Bank pursuant to said orders that the purchaser should make no further claim against the estate. The trustee's deeds, which were executed August 30, 1932, do not describe the property conveyed as undivided interests, but merely describe the land. Jasper State Bank paid the $6,600 to the Southwestern Life Insurance Company and immediately after its purchase took possession of both tracts, claiming them by virtue of the purchase and under the trustee's deeds, and has since had exclusive possession, claiming ownership in fee. Possession was not taken with the consent of Mrs. Braswell nor under any agreement with her. There is no evidence that she ever made any objection to the bank's possession before the filing of this suit. The bank after its purchase collected rents from the land in Swisher county, as well as from the property in Jasper county, made improvements for the preservation of the property in Jasper county, kept it insured, and paid all taxes on it. It is correctly stated in the opinion of the Court of Civil Appeals that the undisputed facts show that Jasper State Bank took possession of the two tracts of land in the belief that it acquired a fee-simple title to all interests therein under its deeds from the trustee, that it held possession under that belief at a time when none of the notes was barred by limitation, and with the knowledge of Mrs. Braswell and her husband continued in possession, collected the rents, paid the taxes, and made the improvements.

Jasper State Bank pleaded the facts above detailed, particularly its ownership of the unpaid notes secured by liens against the two tracts of land, its possession and the expenditures made, as equities sufficient to defeat recovery by Mrs. Braswell or to require payment of her pro rata of the amount due on the notes as a condition precedent to recovery. In reply Mrs. Braswell pleaded that the notes and the liens securing them were barred by limitation.

It is apparent that the important question presented is whether the bank was, at the time the suit was filed, a mortgagee lawfully in possession entitled to retain possession against Mrs. Braswell until she paid her pro rata part of the indebtedness against the property.

The deeds of trust executed by Mrs. Braswell with joinder by her husband created valid liens against her interests in the two tracts of land. Article 1299, Revised Civil Statutes of 1925; Red River National Bank v. Ferguson, 109 Tex. 287, 293, 206 S.W. 923; Kellett v. Trice, 95 Tex. 160, 168, 66 S.W. 51; Bernard v. Jefferson County Investment & Building Association, 128 Tex. ___. 95 S.W.2d 1307; Speer's Law of Marital Rights, 3d Ed., § 184, p. 248. As Mrs. Braswell was not a party to the proceedings in bankruptcy, her interests in the property were in no way affected by the orders of the court of bankruptcy, and Jasper State Bank acquired by its purchase and under the trustee's deeds only the interests of the two Ortons. Foster v. Christensen, Tex.Com.App., 67 S.W. 2d 246.

The general rule in this state and in other jurisdictions is that a mortgagee lawfully in possession has the right to retain possession until his debt is paid. Duke v. Reed, 64 Tex. 705, 715; Browne v. King, 111 Tex. 330, 336, 235 S.W. 522; Hannay, Adm'r, v. Thompson, 14 Tex. 142; French v. Grenet, 57 Tex. 273; Calhoun v. Lumpkin, 60 Tex. 185; Rodriguez v. Haynes, 76 Tex. 225, 13 S.W. 296; Mozoch v. Sugg, Tex.Com.App., 254 S.W. 770; Baker v. Collins, 4 Tex.Civ.App. 520, 23 S.W. 493; Hays v. Tilson, 18 Tex.Civ.App. 610, 45 S.W. 479 (application for writ of error refused); Vanderwolk v. Matthaei, Tex.Civ. App., 167 S.W. 304 (application for writ of error refused); Elliott v. C. C. Slaughter Co., Tex.Civ.App., 236 S.W. 1114; Majors v. Strickland, Tex.Civ.App., 6 S.W.2d 133; Bryan v. Kales, 162 U.S. 411, 16 S.Ct. 802, 40 L.Ed. 1020; Stouffer v. Harlan, 68 Kan. 135, 74 P. 610, 64 L.R.A. 320, 104 Am.St. Rep. 396; Jaggar v. Plunkett, 81 Kan. 565, 106 P. 280, 25 L.R.A.,N.S., 935; Kaylor v. Kelsey, 91 Neb. 404, 136 N.W. 54, 40 L.R.A., N.S., 839; Jones on Mortgages, 8th Ed., Vol. 2, §§ 886, 887, pp. 219-221.

It is settled also that the mortgagee has the right to retain possession until the debt is paid, even though the debt is barred by limitation. Rodriguez v. Haynes, 76 Tex. 225, 232, 13 S.W. 296; Hays v. Tilson, 18 Tex.Civ.App. 610, 45 S.W. 479, 481 (application for writ of error refused); Elliott v. C. C. Slaughter Co., Tex.Civ.App., 236 S.W. 1114; Note 40 L.R.A.,N.S., 839, 846; Jones on Mortgages, 8th Ed., Vol. 2, § 886, p. 219; 19 R.C.L. § 105, p. 330. The conflicts in the decisions are in the main with respect to the meaning of the term "lawfully in possession." Who is a mortgagee lawfully in possession to whom the right is given to retain possession until the debt, even though barred, is paid? The opinion of the Court of Civil Appeals quotes a case note in 7 Texas Law Review, p. 170, in which it is said that the decisions in the states following the lien theory of mortgages fall into three groups in their determination of the character of entry necessary to give the status of a mortgagee in possession. In one group possession must be with the consent of the mortgagor, express or implied. In another group the rights of a mortgagee in possession are extended to one who has peaceably and in good faith taken possession under a void foreclosure. In the third group it is enough that the possession be peaceably acquired. The decisions in this state, without conflict, give to a mortgagee in possession with the express or implied consent of the mortgagor the right to retain possession until the debt is paid. Hannay, Adm'r, v. Thompson, 14 Tex. 142; Calhoun v. Lumpkin, 60 Tex. 185; Rodriguez v. Haynes, 76 Tex. 225, 13 S.W. 296; Majors v. Strickland, Tex.Civ. App., 6 S.W.2d 133.

There are statements in the opinion of the Court of Civil Appeals in McCamant v. Roberts, 25 S.W. 731, and in the opinion...