Luzenburg v. Bexar Bldg. & Loan Ass'n.

• Decision Date: 19 December 1894
• Court: Texas Court of Appeals
• Parties: LUZENBURG et al. v. BEXAR BLDG. & LOAN ASS'N.<SMALL><SUP>1</SUP></SMALL>

Page 237

29 S.W. 237

LUZENBURG et al. v. BEXAR BLDG. & LOAN ASS'N.¹

Court of Civil Appeals of Texas.

December 19, 1894.²

Appeal from district court, Bexar county; W. W. King, Judge.

Action by Bexar Building & Loan Association against E. A. Luzenburg and others on several promissory notes, and to foreclose a lien securing the same. Judgment was rendered for plaintiff, and defendants appeal. Modified and affirmed.

C. A. Keller, for appellants. Wm. Aubrey, for appellee.

Conclusions of Fact.

JAMES, C. J.

The following are the uncontradicted facts from the testimony: (1) E. A. Luzenburg and wife and Letitia Egan (afterwards Zanderson) entered into an agreement with Sheperd & Edwards, dated November 3, 1890, acknowledged November 5, 1890, and recorded November 10, 1890, whereby Sheperd & Edwards agreed to erect a frame building upon a lot, the homestead of Luzenburg and wife, and gave said Sheperd & Edwards a lien on the premises to secure the consideration for said improvements, — $2,500, — represented by 102 monthly notes, dated November 3, 1890, signed by said Luzenburg and Letitia Egan, all payable to Sheperd & Edwards, each monthly note bearing interest from its maturity at 12 per cent. per annum, and providing for an addition of 10 per cent. attorney's fees in case of litigation concerning the notes or monthly payments. It was also provided in said agreement that when any three of said notes or monthly payments became due, and not paid in whole or in part, then the balance of the notes remaining should, at the election of the holder, become due and payable. Provision was also made in said agreement for insurance by the owners in favor of Sheperd & Edwards, and for payment of all taxes, and that, if Sheperd & Edwards had to pay for insurance or taxes, the amounts thus paid should be added to the original indebtedness, and bear interest at above rate, and be secured by the said lien. (2) It does not appear that any portion of the improvements was placed on the premises prior to the written agreement (the answer alleges otherwise), and it appears that the improvements were finished afterwards, according to the provisions of said agreement, and accepted by the owners. (3) It appears that, when this suit was begun, there was default in more than three of said notes, and also that Luzenburg and wife and Letitia Egan had sold the premises to defendant Ashby A. Brown, who had assumed the balance due in said agreement as a part of the consideration. (4) It clearly appears from the testimony of the secretary of the association, and of Luzenburg and wife, that the latter arranged with the association for the means that constructed the improvements, that the association refused to lend money for that purpose, and the course adopted by their arrangement was for the owners to enter into a proper contract with Sheperd & Edwards, contractors and builders, for the erection of the improvements for the sum of $2,500, giving a lien, and that the association was to take a transfer from the contractors, and furnish the money to erect the improvements under the contract. (5) The contract and notes were so made and assigned, and the house built and accepted, plaintiff paying for the same on the estimates of the architect who had made the plans and specifications for Luzenburg, and employed by him. (6) It appears that the contract and notes were dated November 3, 1890, and acknowledged on November 5, 1890, and the assignment to the association of the notes bears date November 6th. The association paid sums at different times on estimates. The first payment ($250) was made November 22, 1890, to Sheperd & Edwards, and the last item on April 8, 1891, to pay off what the evidence states was a mechanic's lien on the property. The uncontradicted evidence shows that the association paid out $2,400, on these estimates, and the evidence conflicts as to the association having paid out another hundred. It was shown that, if the association paid out less than $2,500 on the improvements, the remainder should be paid to Sheperd & Edwards. (7) As to attorney's fees the evidence is as follows: "He [William Aubrey, the attorney who brought the suit] gets a guarantied salary, and if there is anything in excess as in matters like this, he gets his share of that. He is guarantied so much. The association collects fees, and pays him so much of their guaranty, and, at the end of the year, draws him an extra check for the money due on such matters. If no fees are received during the year, he simply gets the amount guarantied by the association for his services, and no more. He is liable to get more if he recovers this suit." (8) The court on June 5, 1894, directed a verdict for plaintiff, which was done, and judgment was entered for the balance claimed by the petition including interest and 10 per cent. attorney's fees.

Conclusions of Law.

The second, fifth, and ninth assignments present substantially the same question, which is that the purchase of the contract and notes by the association from Sheperd & Edwards was a discounting transaction, and the former could not maintain suit upon them, under section 16, art. 16, of the constitution of this state. In order to dispose of the questions arising from the assignments, we need go no further than to state that, in our opinion, the contract and the notes stand as to Luzenburg and Letitia Egan, so far as the lien is concerned, as if the contract had been made directly with the association. It is clear from the testimony that the notes and contract were made with Sheperd & Edwards directly, with a view to their passing, as a part of the same transaction, into the hands of the association, from whom the funds were to come to make the improvements. This may have been done from a mistaken idea that it was safer in affording a lien upon the premises than if the contract and notes were made directly to the association. We must look to the real transaction, and it is unmistakable that the intention of the owners of the lot was to contract to pay $2,500 in time notes, bearing interest, to secure these improvements; that the means for making the same were to come from the association; and that a lien should exist on the premises for the contract price. The form in which this was done is immaterial. Lippencott v. York, 86 Tex. 276, 24 S. W. 275. The association having become the holder of this lien, in pursuance of the arrangement entered into, we conclude they are entitled to assert it, and, under the circumstances shown, it cannot be regarded as having acquired the paper by a discounting transaction; and the merits of this question we need not discuss.

The third assignment does not disclose an error. The petition alleged that the notes and contract...