Masterson v. Burnett

• Decision Date: 07 December 1901
• Citation: 66 S.W. 90
• Parties: MASTERSON v. BURNETT et al.<SMALL><SUP>1</SUP></SMALL>
• Court: Texas Court of Appeals

66 S.W. 90

MASTERSON v. BURNETT et al.¹

Court of Civil Appeals of Texas.

December 7, 1901.

Appeal from district court, Harris county; Wm. H. Wilson, Judge.

Suit by J. H. Burnett and others against W. B. Turner and others. From a decree for plaintiffs, defendant M. Masterson appeals. Affirmed.

H. & A. R. Masterson, for appellant. Ewing & Ring and J. R. Burnett, for appellees.

GILL, J.

This was a suit by appellee J. H. Burnett against W. B. Turner, J. O. Ross, trustee, and the appellant, H. Masterson, to foreclose a mortgage deed of trust upon four certain tracts of land in Harris county, one designated as "Day Land & Cattle Company Survey," another as "J. H. Burnett Survey," and the two others as "Sections 6 and 8, Washington County Railroad Company Surveys," off of each of which 100 acres had been sold, leaving a remnant of 540 acres each. The foreclosure was resisted by the defendant H. Masterson on the ground that he had become the owner of the land under an execution sale against the debtor, W. B. Turner, which it was claimed had been made in virtue of a judgment lien that was prior and paramount to the lien of the mortgage deed of trust. The court, trying without a jury, sustained the defense as to the first-named two tracts, but denied it as to the sections 6 and 8, giving judgment for the full amount of the mortgage debt, principal and interest, against the debtor, W. B. Turner, and foreclosing the mortgage line on such sections, less the sold portions thereof, against him and the other defendants. From this judgment the defendant H. Masterson has alone appealed.

The facts are as follows: On February 14, 1899, J. H. Burnett conveyed to W. B. Turner, by two deeds of that date, for a recited cash consideration, the first above mentioned two tracts of land, being the two designated as Day Land & Cattle Company and J. H. Burnett surveys, respectively, which deeds were filed for record of April 7, 1899. The mortgage deed of trust was not executed until April 5, 1899, and previous to its execution the judgment lien to be noticed had attached to such tracts; hence, as to them, the defense urged was allowed to prevail. On March 7, 1899, the appellant, H. Masterson, obtained judgment against W. B. Turner for the sum of $1,166.32, besides interest, and caused an abstract of the judgment to be duly recorded, indexed, and cross indexed, in Harris county, March 9, 1899. At this time W. B. Turner had no interest in said sections 6 and 8, nor did he acquire any until April 5, 1899, at which time the mortgage deed of trust was contemporaneously executed. The trade by which Turner acquired from Burnett the sections 6 and 8, less the sold-off portions, was, in substance, that Burnett would convey such tracts to Turner in exchange for other lands, estimated in value at $16,200, and also lend him $7,500 on the security of such tracts; and that Turner would convey to Burnett the other lands, valued as stated, for such tracts, and also execute to him a mortgage deed of trust on the latter to secure the $7,500 loan. The consideration on the one part was the acquisition of such tracts and obtaining the loan of $7,500, and it was on the other part the acquisition of the exchanged property and the obtaining of the mortgage interest in such tracts as security for the loan. The conveyances and mortgage deed of trust bore the same date, to wit, April 5, 1899, were simultaneously executed and delivered between the same parties, and were filed for record at the same instant of time, to wit, at 11:40 o'clock, forenoon, on April 7, 1899. The mortgage deed of trust bore date, as above stated, April 5, 1899, and secured the payment of three notes, of even date, for the principal sum of $2,500 each, bearing interest at 8 per cent. per annum from their date, and providing for 10 per cent. attorney's fees in case of default in payment. The loan of $7,500 was made by J. H. Burnett, as agreed, the appellant, H. Masterson, being present when the money was paid over, and actually receiving $3,000 of the money on a debt owing him by Turner; but he was not present when the instruments were executed and delivered. After Turner acquired the unsold parts of sections 6 and 8, executions were run on the aforesaid judgment in favor of H. Masterson against W. B. Turner, under which such unsold parts of said sections were sold and conveyed by the sheriff, on June 6, 1899, to one J. M. Cobb, who conveyed the same to appellant, J. H. Masterson, to whom Turner afterwards executed a confirmation deed. H. Masterson, under like execution sales, also acquired the other tracts hereinbefore mentioned, but, as they are not involved in this appeal, they will not be noticed further. The trial court found that the deed of Burnett to Turner and deed of trust sued on were executed at the same time; that the loan on the one hand and the execution of the deed of trust on the other were a part of the consideration moving the parties to make the exchange, and without which the trade would not have been consummated; that the two instruments constituted an indivisible transaction by which the land passed to Turner burdened with the lien created by the deed of trust. He also found that Masterson, at the date of the transaction between Burnett and Turner, had no knowledge or notice of the mortgage on the land to Burnett, and at that time Masterson's judgment had been duly abstracted and recorded. As to whether Cobb had notice of the facts of this transaction when he bought the two tracts of land at execution sale, and as to whether he acted for himself or for Masterson in making the purchase, the court did not find; nor is there any finding as to whether Masterson, prior to the time when he acquired the land, had learned of the nature of the transaction between Burnett and Turner, or had become possessed of facts which should have put him upon inquiry.

Appellant, complaining of the judgment of the trial court, makes, by his assignments of error, the following questions: First. Did the court err in permitting Burnett to show by parol that the two instruments above named were executed and delivered at the same instant of time; that each was a component part of an indivisible transaction; and that the loan of the money by Burnett to Turner and the execution by the latter of the deed of trust to secure the payment of same entered into and became a part of the consideration, so that the transaction would not have been made but for them? Second. If it be conceded that it was proper to resort to parol proof for such a purpose, were the two instruments of such a nature (the one being a deed reciting the consideration fully paid, and the other a mortgage to secure a loan) as to be susceptible of a blending into a single and indivisible transaction? Third. Inasmuch as the court found that he had no notice of the arrangement between Burnett and Turner at the date of the transaction and at the date when his judgment lien took effect, could his lien be properly postponed to the lien of the mortgage? Fourth. The deed of trust being an instrument capable of being placed of record, could it take precedence over the judgment lien, in the absence of a proper record of it prior to the attaching of the judgment lien?

The questions thus presented embody our conception of the questions presented by appellant's brief. We will not, therefore, take up and dispose of the assignments of error in detail. Did the court err in permitting Burnett to establish by parol the unity of the transaction, the deed and the deed of trust failing to disclose fully the relationship of each to the other? A deed absolute on its face, but in fact made as a security for a debt, is held to be a mortgage. Its real nature may be shown by parol, and the owner of a judgment lien prior in date cannot successfully assert it against the real owner of the land if he have notice of the true state of the title before foreclosure, nor can the purchaser at execution sale prevail against it unless he is a purchaser for value without notice. Michael v. Knapp (Tex. Civ. App.) 23 S. W. 280. We are unable to perceive any distinction in principle between the case supposed and the case before us, so far as this question is concerned. It is also generally true that the consideration supporting an instrument may be shown by parol. Though a deed recites a cash consideration paid in full, it may be shown as between the parties and those having notice that such consideration was in fact not paid. These propositions are not questioned, and it would follow, it seems to us, that, if the loan and the trust deed were in fact a part and parcel of the sale of the land to Turner, constituting a material part of the consideration moving to the bargain, it was proper to permit plaintiff to establish the fact by parol. The assignments predicated upon this phase of the case and assailing the action of the court in admitting parol and other evidence upon the issue cannot be sustained. Appellant, however, contends that the evidence should have been excluded, because he had no notice of the details of the transaction. In reply to this it is sufficient to say it is always permissible for a person to establish the existence of the facts when, in order to maintain his rights, it devolves on him to visit notice of such facts on the adverse party. How can notice of the facts be shown unless the existence of the facts themselves is first established? Here it was necessary not only that Burnett should show the unity of the transaction represented by the two papers, but to show that appellant had notice thereof, or was in possession of facts which should have led to such knowledge, prior to the acquisition by appellant of his rights under the purchase at execution sale. Does the proof sustain the finding of the...