Moran v. Wheeler

• Decision Date: 27 June 1894
• Citation: 27 S.W. 54
• Parties: MORAN v. WHEELER et al.
• Court: Texas Supreme Court

Page 54

27 S.W. 54

MORAN v. WHEELER et al.

Supreme Court of Texas.

June 27, 1894.

Error from court of civil appeals of fourth supreme judicial district.

Action by Martin Moran against W. E. Wheeler and others on a note, and to foreclose a vendor's lien. A judgment allowing plaintiff a personal judgment only against one of the defendants was affirmed by the court of civil appeals (26 S. W. 297) and plaintiff brings error. Affirmed.

Marshall Fulton, for plaintiff in error. Wright & Summerlin, J. B. Davies, and C. Von Carlowitz, for defendants in error.

BROWN, J.

Plaintiff in error sued W. E. Wheeler, as maker, and Franz Bernhardt, Henry Kensing, and Max B. Mayer, indorsers, and the Land Mortgage Bank, as subsequent incumbrancer, to recover judgment upon the note hereafter set out, and to foreclose the lien of said note. The suit was discontinued as to Bernhardt and Kensing. Judgment was rendered in favor of Mayer, because suit had not been brought within the time required by law to hold him liable as indorser. Wheeler made no answer. The Land & Mortgage Bank answered that the land was mortgaged to it to secure a loan of $25,000 made to Wheeler, without notice of plaintiff's lien. The court rendered judgment against Wheeler for the amount of the note, refusing to foreclose the lien as against the Land & Mortgage Bank. Moran appealed, and the court of civil appeals affirmed the judgment of the district court.

The facts, so far as necessary to an understanding of the point involved, are these: Kensing sold to Wheeler two surveys of land, described in the note below, and took two promissory notes, one of which was sued upon, and is as follows: "$400.00. Mason, Texas, May 24th, 1884. On or before May 24th, 1886, I promise to pay to the order of Henry Kensing the sum of four hundred dollars, with interest, at the rate of ten per cent. per annum, from date hereof until paid, for value received. This note is given in part payment for survey No. 111, G., C. & S. F. R. R. Co., containing 320 acres, and survey No. 123, H., E. & W. T. R. R. Co., containing 588 acres of land, in Mason county, Texas, this day deeded to W. E. Wheeler; and for the payment hereof, together with the interest thereon, according to the tenor and reading thereof, a vendor's lien is acknowledged; and, in case of legal proceedings on this note, I agree to pay ten per cent. of the amount as attorney's fees. Witness my hand, at Mason, this 24th day of May, 1884. W. E. Wheeler." Kensing made a deed to Wheeler of the same date, reciting the notes, and retaining a vendor's lien upon the land, which was duly recorded. The note was by Kensing indorsed, and delivered to Max B. Mayer, for value, who, for value, indorsed and delivered it to plaintiff, both indorsements being before its maturity. October 20, 1886, Kensing, without the knowledge or consent of plaintiff, executed and delivered to Wheeler an instrument in writing, in which he acknowledged the payment of the two notes, and released the vendor's lien on the land described in his deed and notes. At the time the release was executed, the plaintiff owned the note sued upon. The release was acknowledged and recorded in the proper records of Mason county on the 29th day of October, 1886; and on the 27th day of June, 1887, the Land & Mortgage Bank, a foreign corporation, authorized to do business in Texas, loaned to W. E. Wheeler $25,000, taking his note and a mortgage on a large number of tracts of land, embracing those described in the note, which was duly acknowledged and recorded in Mason county, on the same day. The Land & Mortgage Bank had no notice of the note, except as appeared in the record of the deed from Kensing to Wheeler, and the release thereof.

The plaintiff in error presents the case to this court upon three propositions, which may be expressed in one; that is, the court erred in holding that the Land & Mortgage Bank, by its deed of trust, acquired a lien upon the land superior to that of the vendor's lien note in the hands of the plaintiff. The transfer of the note sued upon carried with it the vendor's lien upon the land, and the recital in the deed from Kensing to Wheeler was notice to the Land & Mortgage Bank that all of the purchase money had not been paid, and that the note sued upon had been executed to secure it. The question to be determined is, did the release of the lien upon the land, made by Kensing after plaintiff had acquired the note, protect the Land & Mortgage Bank, and give it priority, it having parted with its money to Wheeler upon the faith of the release, and without any notice that Kensing had transferred the note? There is a conflict between two claimants, who are equally free from any intentional wrong, and without any knowledge of the wrong that was perpetrated by Kensing. The conflict must be settled by a resort to the principles of law, which, though sometimes seemingly in conflict, can generally be reconciled upon sound reason. The note sued upon is negotiable, which, in the hands of the plaintiff, was not subject to any equities existing between Kensing and Wheeler. But this does not protect it against equities arising in favor of subsequent purchasers without notice, for a valuable consideration. For example, if the note had been in the form that it is, but there was no recital in the deed as to the purchase money being unpaid, the plaintiff's rights against Wheeler to enforce the lien would have been the same; but in that case, if...