McGeorge v. Van Meter
| Citation | 358 S.W.2d 580,163 Tex. 552 |
| Decision Date | 20 June 1962 |
| Docket Number | No. A-8797,A-8797 |
| Parties | Mary E. McGEORGE, Petitioner, v. Ruth VAN METER et al., Respondents. |
| Court | Supreme Court of Texas |
Hardwicke, Haddaway & Pope, Fort Worth (Claude D. Brown, Fort Worth, with above firm), for petitioner.
Sewell & Forbis, Decatur, for respondents.
This is an action in trespass to try title brought by Ruth Van Meter and others against Mary E. McGeorge for the recovery of title and possession of an undivided one-half of all the oil, gas and other minerals in, on and under a 95.34 acre tract of land situated in Wise County, Texas. Judgment for the plaintiffs was rendered by the District Court and affirmed by the Court of Civil Appeals.
The case turns upon the question of whether or not a deed of trust foreclosure sale held on January 5, 1937 effectively passed the Stokes (Van Meter et al.) interest to Arthur McGeorge, the purchaser at said sale. The petitoner, Mary E. McGeorge, claims under Arthur McGeorge.
It was agreed that the common source of title was M. A. Small and wife, Laura C. Small.
On June 3, 1916, M. A. Small and Laura A. Small conveyed the 95.34 acre tract to Walter Stokes for a cash consideration.
On June 10, 1916, Walter Stokes and wife, Corine Stokes, executed a deed of trust to W. A. Bonner, Trustee, conveying among other lands, the 95.34 acre tract here involved. This deed of trust was given to secure four promissory notes including one for $1450.00 due December 1, 1922 and payable to The Bonner Loan & Investment Company. In the briefs this instrument is generally referred to as the first deed of trust.
On November 10, 1919 at a time when all of the notes above mentioned, except the $1450.00 note, had been paid, Walter Stokes and wife conveyed the 95.34 acre tract to G. W. Griffith for a cash consideration of $6500.00 and the assumption of the $1450.00 note above mentioned. In this deed the grantor reserved the mineral interest which is the subject matter of this action. The wording of the reservation was that, 'Grantor reserves one-half of the royalty and one-half of the mineral lease rights on the hereinafter described tract.'
On March 1, 1923 G. W. Griffith and the heirs of his deceased wife executed a deed of trust to secure a promissory note for $3,000.00 due February 1, 1933 and payable to Percy McGeorge. This deed of trust contained the following provision:
'The holder of the indebtedness secured hereby is expressly subrogated to any and all liens paid by the proceeds of this mortgage.
'The note secured hereby is given in renewal and in extension of a note for $1,450.00 dated October 10, 1916, and due December 1, 1922, executed by Walter Stokes and wife to the Bonner Loan and Investment Company, and secured by a deed of trust recorded in Book 32, Page 133, of the trust deed records of Wise County, Texas, and the holder hereof is subrogated to all the rights, powers, and equities of the original owners and holders of said note.
'The money loaned by the said third party is borrowed for the purpose of providing funds necessary for the payment of debts owing by the estate of Addie E. Griffith, deceased, and constituting valid claims against said estate.' (Italics supplied.)
In the briefs this 1923 deed of trust is generally referred to as the second deed of trust.
On March 14, 1923, Percy McGeorge received a written assignment of the Stokes $1450.00 note from J. A. Simmons who held the same under mesne assignments from Bonner Loan & Investment Company.
Griffith defaulted in the payment of the $3,000.00 note secured by the second deed of trust and on January 5, 1937 the 95.34 acre tract was sold at trustee's sale to Arthur McGeorge for $500.00.
Deed of trust sales are largely controlled by statute in this state, Article 3810, Vernon's Ann.Tex.Stats., and the provisions of the deed of trust given by Stokes to W. A. Bonner, trustee, on June 10, 1916, were substantially the same as those contained in the later deed of trust of March 1, 1923, insofar as the procedures relating to an extra-judicial foreclosure in case of default in the payment of indebtedness were concerned. The Court of Civil Appeals held in effect that Griffith could have agreed with McGeorge that the power of sale contained in the second deed of trust would be effective to foreclose the Stokes reserved mineral interest insofar as the indebtedness originally represented by the $1450.00 note was concerned, but that the language selected by them in their wording of the second deed of trust did not disclose such intention. 1
We are unable to agree with this latter conclusion.
The Stokes $1450.00 indebtedness was originally secured by a deed of trust lien covering the entire 95.34 acre tract. Griffith had assumed payment of this indebtedness and was authorized to extend the payment thereof without the joinder of Stokes. He could not however subject the Stokes retained mineral interest to any additional indebtedness. The second deed of trust was, however, effective to extend the $1450.00 note and preserve the lien securing the payment thereof. Article 5522, Vernon's Ann.Tex.Stats. As pointed out by the Court of Civil Appeals, the controlling question presented is whether the exercise of the power of sale under the second deed of trust effectively foreclosed the Stokes mineral interest.
We think that it did. While the second deed of trust does not contain the words 'merged' and 'incorporated', it did expressly provide that the note secured by the second deed of trust was given in renewal and extension of the Stokes $1450.00 note and that the holder thereof was 'subrogated to all the rights, powers, and equities of the original owners and holders of said $1450.00 note.' This is the usual and customary language employed in instruments which have for their object the carrying forward of an indebtedness and its securing lien for the purpose of incorporating the same into a new form of security.
The facts disclosed by the opinion in Countiss v. Baldwin, Tex.Civ.App., 151 S.W.2d 235, dism., judg. cor., are similar to those shown by the record before us. In Countiss, it appears that in 1919 one Kirk executed a deed of trust to secure an indebtedness due the Federal Land Bank. In 1920 he conveyed a mineral interest to Baldwin. In 1925 the Federal Land Bank advanced further monies to Kirk, extended the time of payment of the 1919 loan, and took a new deed of trust from Kirk. In commenting upon the effect that a foreclosure under this deed of trust had on the Baldwin interest, the Court of Civil Appeals said:
'Appellees (the holders of the Baldwin mineral interest) contend that their royalty interest was not foreclosed by the trustee's sale made under the 1925 deed of trust, because they did not join in the execution of this deed of trust. Appellees took their mineral deed burdened by the deed of trust lien of 1919, and Kirk could renew and extend this lien without the...
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