Mercer v. Daoran Corp., 01-83-00210-CV
| Decision Date | 15 September 1983 |
| Docket Number | No. 01-83-00210-CV,01-83-00210-CV |
| Citation | 662 S.W.2d 382 |
| Parties | Jon MERCER, Appellant, v. DAORAN CORPORATION, Appellee. Houston (1st Dist.) |
| Court | Texas Court of Appeals |
Theodore Flick and Alister Mahon, Houston, for appellant.
Kee & Patterson, Leland B. Kee, Joseph Patterson, Angleton, for appellee.
Before EVANS, BULLOCK and LEVY, JJ.
This partition action involves a determination of the priority of certain liens on real property. The plaintiff, Jon Mercer, who purchased a judgment debtor's undivided one-half interest at an execution sale, appeals from a summary judgment entered in favor of the defendant, Daoran Corporation, the purchaser at a deed of trust foreclosure sale. We affirm the trial court's summary judgment.
The summary judgment record shows that the essential facts are undisputed. In 1974 Pauline Ducroz and her son, Charles L. Ducroz, joint owners of the 15-acre tract in suit, executed a promissory note to the First National Bank of Angleton in the principal amount of $55,000, which was secured by a deed of trust on the 15-acre tract.
In February, 1975, an abstract of judgment was filed, creating a judgment lien in favor of the appellant, Jon Mercer, against the undivided one-half interest owned by Charles L. Ducroz in the 15-acre tract.
In September, 1975 Charles L. Ducroz and Pauline Ducroz executed a new deed of trust to secure payment of their indebtedness to the First National Bank of Angleton. This second deed of trust did not expressly recite that it was made in renewal and extension of the original indebtedness and lien securing same, but it recited the debt was for the same principal amount as the original debt. This deed of trust contained the following provision:
It is understood and agreed that the proceeds of the aforesaid note to the extent that the same are utilized to take up any outstanding liens and charges against the lands above described, or any portion thereof, have been advanced by Noteholder at Grantors' request and upon Grantors' representation that such amounts are due and are secured by valid liens against the above described land. Noteholder shall be subrogated to any and all rights, superior titles, liens and equities owned or claimed by any owner or holder of any outstanding liens, charges and indebtedness, however remote, regardless of whether said liens, charges or indebtedness are acquired by Noteholder by assignment or are released by the holder thereof upon payment. The security herein and hereby provided shall not affect, nor be affected by, any other or further security taken or to be taken from the same indebtedness, or any part thereof.
In 1976 Pauline Ducroz, who had in the interim acquired her son's one-half interest in the property, executed a third deed of trust in favor of First National Bank of Angleton. This instrument secured payment of a promissory note in the principal amount of $68,192, and expressly recited that the note had been "executed in renewal and extension" of the September, 1975 note in the principal amount of $55,000, plus interest. In 1977 Pauline Ducroz executed a fourth deed of trust securing a promissory note in the principal sum of $72,433 to First National Bank of Angleton, and in 1978 she executed a fifth deed of trust securing payment of a $76,000 note to that bank. Both the fourth and fifth deeds of trust recited that they were made in extension and renewal of the 1975 deed of trust.
On September 4, 1979 an execution sale was held on the February, 1975 judgment lien, and the appellant, Jon Mercer, purchased that interest for $5,500 and obtained a sheriff's deed covering the property which was recorded on September 5, 1979. Meanwhile, Pauline Ducroz had defaulted on the payments required by the 1978 note, and the bank posted the property for foreclosure. A foreclosure sale was held on September 2, 1980, and the First National Bank of Angleton, as the high bidder at $9,581.91, acquired a trustee's deed to the property. That deed was recorded on September 4, 1980. Finally, in 1981, the First National Bank of Angleton conveyed the property to the defendant, Daoran Corporation. Thereafter Jon Mercer, the purchaser under the execution sale, brought this action against Daoran Corporation to establish its claim to an undivided one-half interest in the property. As stated above, the trial court granted Daoran's motion for summary judgment and Mercer appeals from that judgment.
Mercer contends that the summary judgment proof does not establish, as a matter of law, that the lien created by the August, 1974 deed of trust was legally extended by the 1975 deed of trust, and he contends that the foreclosure of that lien was barred by the four year statute of limitations. TEX.REV.CIV.STAT.ANN. art. 5520 (Vernon 1958). Mercer argues, therefore, that the Bank's foreclosure in 1980 was based solely on the 1978 lien and that his title, being based upon the 1975 judgment lien, was superior to the title acquired by Daoran at the trustee's sale.
Mercer urges that the language in the 1975 deed of trust was not sufficient to renew and extend the lien created in 1974, because the 1975 deed of trust did not specifically express the grantor's intent to extend the 1974 indebtedness and lien. In support of his position, he cites McGeorge v. Van Meter, 163 Tex. 552, 358 S.W.2d 580 (1962).
In McGeorge, the original deed of trust was given to secure four promissory notes, including one for $1,450, from Walter Stokes and wife to the Bonner Loan & Investment Company. At a time when all of the notes except the $1,450 note had been paid, Stokes and wife conveyed the property in question to D.W. Griffith, who assumed payment of the $1,450 note, and the Stokes reserved a one-half mineral interest. Griffith later executed a deed of trust in favor of Percy McGeorge to secure a $3,000 promissory note, reciting in the deed of trust that the note was given in renewal and extension of the $1,450 note, and that the holder of the indebtedness secured by the deed of trust was expressly subrogated to any and all liens paid by the proceeds of the mortgage and "to all of the rights, powers and equities of the original owners and holders of said ($1,450) note." Thereafter, Griffith defaulted on the payment of the $3,000 note secured by the second deed of trust, and the property was sold at trustee's sale to Arthur McGeorge for $500. The parties owning the Stokes's reserved mineral interest then brought suit to establish their title to an undivided one-half mineral interest against McGeorge, who claimed the full title under the trustee's sale. Both the trial court and the Court of Civil Appeals held in favor of the owner of the reserved mineral interest. The Court of Civil Appeals decided that the language of the second deed of trust did not disclose an intention that the power of sale contained in the second deed of trust would effectively foreclose the reserved mineral interest.
Disagreeing with that conclusion, the Supreme Court, speaking through Justice Norvell, stated:
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 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.
McGeorge v. Van Meter, 358 S.W.2d 580, 582. (Emphasis in original). The Supreme Court in McGeorge explained that its holding in that case should not be construed as meaning that, in every case, a power of sale given in a deed of trust will automatically be extended by the giving of a second deed of trust, even though the time for payment of the underlying debt may be so extended. The Supreme Court explained, by way of example, that in Winters v. Slover, 151 Tex. 485, 251 S.W.2d 726 (1952), the second deed of trust did not extend such power because its terms expressed only an intention to extend the time for payment of the notes and the vendor's lien. 358 S.W.2d at 583. Distinguishing the circumstances involved in the Winters case, the Supreme Court decided that in McGeorge the original debt and deed of trust lien had been carried forward and incorporated in the new form of security evidenced by the second deed of trust, so that the holder of the new note acquired all of the rights, powers and equities of the owner of the original note that was secured by the first...
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Mercer v. Daoran Corp.
...rendered summary judgment for Daoran Corporation, the senior lienholder. The court of appeals affirmed the judgment of the trial court. 662 S.W.2d 382. We reverse the judgments of those Two questions are presented by this appeal: (1) whether a junior lienholder can move up in priority upon ......