Kerr v. Galloway

• Decision Date: 31 October 1901
• Citation: 64 S.W. 858
• Parties: KERR et al. v. GALLOWAY.
• Court: Texas Supreme Court

Page 858

64 S.W. 858

KERR et al. v. GALLOWAY.

Supreme Court of Texas.

October 31, 1901.

Error to court of civil appeals of First supreme judicial district.

Action by P. M. Galloway against S. M. Kerr and others. From a judgment of the court of civil appeals (63 S. W. 180) reversing a decree in favor of defendants, defendants bring error. Reversed.

Frost, Neblett & Blanding, for plaintiffs in error. Hill, Dabney & Carlton, for defendant in error.

GAINES, C. J.

On the 20th day of May, 1889, Charles S. Swindells executed a deed in trust upon the property in controversy, to wit, a certain lot in the city of Dallas, for the purpose of securing a certain note made by him on the same day to the Dallas Land & Loan Company. The trust deed contained a power of sale, and also a power of substitution in case the trustee should fail or refuse to act. It was not filed for record until September 14, 1891. On the 26th day of November, 1889, Swindells borrowed of the Texas Loan Agency the sum of $1,600, and gave seven notes therefor. The first was for $1,600, and was payable on the 1st of December, 1892, and bore interest at the rate of 7 per cent. per annum until maturity, and 12 per cent. per annum interest after that time. The six others were for $24 each, and were due, respectively, 6, 12, 18, 24, 30, and 36 months after December 1, 1889. These notes were given for part of the interest upon the loan, and bore interest after maturity at 12 per cent. per annum. At the same time Swindells executed two deeds in trust upon the property in controversy,— one to secure the first note, and the other to secure the other six. H. G. Damon was made trustee in both deeds, and was empowered to make a sale upon default; and, in case of his refusal to act, the holder of the notes was authorized to appoint a substitute with like power. The deed in trust to secure the first note provided that the sale should be made in Navarro county; that to secure the others stipulated for a sale in Dallas county. At the time the money was borrowed and the deeds of trust were executed, the Texas Loan Agency had no notice of the prior unrecorded mortgage to secure the note due the Dallas Land & Loan Company. The Texas Loan Agency made some collections upon the six small notes for the interest on the original loan, but in November, 1892, caused a sale to be made for the balance due thereon by a substitute trustee. The attempted sale was ineffectual, for the reason that the latter, instead of describing the property subject to the mortgage, described a different lot. The loan agency took possession of the property under the pretended sale, and, with the acquiescence of the mortgagor, collected the rents. In 1898, Miller, the trustee in the deed in trust to secure the note of the Dallas Land & Loan Company, having refused to act, the defendant in error, Galloway, being the holder of the note, appointed a substitute, who in May of that year sold the property in accordance with the terms of the deed in trust, and Galloway became the purchaser, and received a deed therefor. In October, 1898, the Texas Loan Agency appointed another substitute trustee under its two deeds in trust, who advertised the property for sale thereunder at the court house door of Dallas county. On the 28th day of that month the plaintiff in error instituted this suit, praying that the sale be enjoined, that the Texas Loan Agency be compelled to account for the payments made upon its notes and for the rents received upon the property, and for a judgment in favor of the plaintiff for the title and possession of the mortgaged premises. The defendant the loan agency pleaded, among other things, that the words "Navarro county," in its deed in trust securing the $1,600, were inserted instead of "Dallas county" by the mutual mistake of the parties, and asked that the instrument be reformed. After trial the district court reformed the Texas Loan Agency's deed in trust as prayed for by it, and dissolved the injunction as to the sale under the deed in trust made to secure the note for $1,600, charged the Texas Loan Agency with the payments made upon the indebtedness and with the rents of the property while in its possession, declared the six small notes satisfied by such payments and rents, and that, after so satisfying them, adjudged a balance to be applied to the note for $1,600, and gave judgment in favor of plaintiff against Swindells and Minyard, who were alleged to be setting up some claim to the property. The court of civil appeals held that the trial court erred in reforming the deed in trust, and reversed its ruling in that particular, and rendered judgment in favor of the plaintiff below for the title and possession of the property in controversy, and decreed that the mortgage of the Texas Loan Agency be canceled.

The view we take of the case renders it unnecessary, as we think, to pass upon the question of the ruling of the court of civil appeals holding that it was error to reform the deed. We are of opinion that the substitute trustee under the deed in trust securing the $1,600 note was authorized to sell the lot in Dallas county, although the deed provided that the sale should be made in Navarro county. The statute under which the question of the trustee's power arises is as follows: "All sales of real estate made in this state under powers conferred by any deed of trust or other contract lien shall be made in the county in which such real estate is situated," etc. Rev. St. art. 2369. The contention is that, since this provision makes it imperative that all sales under mortgages and deeds in trust shall be made in the county where the land is situate, and since the stipulation in the instrument in question authorizes a sale in Navarro county only, the power is incapable of execution, and must fail...