Motor & Indus. Finance Corp. v. Hughes
| Decision Date | 09 May 1956 |
| Docket Number | No. 10384,10384 |
| Parties | MOTOR & INDUSTRIAL FINANCE CORPORATION, Appellant, v. Emery H. HUGHES et ux., Appellees. |
| Court | Texas Court of Appeals |
Cecil C. Rotsch, Louis Scott Wilkerson, Austin, for appellant.
Cofer & Cofer, Austin, for appellees.
Appellant sued appellees on and for a declaratory judgment as to the validity of three promissory notes which were executed by appellees and are payable to appellant at Austin, Travis County, Texas. These notes are: (1) dated November 16, 1951, due November 16, 1961, for $99,900 and on which note $900 has been paid; (2) dated March 20, 1952, due March 20, 1962, for $14,400, and (3) dated May 27, 1953 for $9,376.37 and payable as follows: 20 per cent of the total amount one year after date and 20 per cent each year thereafter until paid in full, the last payment being du May 27, 1958. Notes (1) and (2) bear interest at the rate of 2 per cent per annum 'payable in any event quarterly as it accrues,' past due interest to bear interest at the rate of 4 per cent per annum. Note (3) bears interest at the rate of 4 per cent per annum, payable annually as it accrues and past due interest bears interest at 6 per cent per annum. Each of the notes provide for a contingent attorney's fee of 8 per cent of the principal and interest due and accrued if the note is not fully paid 'on maturity' etc. Each note is secured by a first deed of trust lien on lands in Robertson County which lien is referred to in each of the notes. Each deed of trust after describing the notes provides:
'Now, therefore, should the Grantors not breach any of the covenants undertaken by them and make punctual payment of said note when demand is made on them for such payment, this deed shall be null and void and of no effect, but if the Grantors make default in the payment of the said note on demand or fail to perform any of the covenants undertaken by them therein, it shall thereupon or at any time thereafter be the duty of the Trustee or any successor or substitute thereto as hereinafter provided at the request of the Beneficiary to enforce this trust * * *'
No acceleration clause is contained in either of the notes.
Appellees are husband and wife, reside in Travis County and the land described in the deeds of trust is the separate property of appellee Katherine Brady Highes.
Appellant is a loan company organized under the laws of Texas without banking privileges. Art. 1303b, Vernon's Ann.Civ.St. St. It principal place of business is in Travis County.
At a nonjury trial judgment was rendered 'that as between the parties' notes (1) and (2) supra and the deeds of trust securing their payment are void, of no effect and are unenforceable, that as between the parties appellees are entitled to have said notes cancelled, adjudging note (3) supra to be a valid and binding obligation of appellee Emery H. Hughes and awarding appellant a recovery against him for 40 per cent of the principal of said note, accrued interest and attorney's fees, together with a foreclosure of the deed of trust lien as against both appellees to the extent necessary to satisfy said judgment.
A further recovery on an open account was awarded against Emery H. Hughes but it is not questioned here.
Findings of fact and conclusions of law were requested and were filed.
The trial court found that the consideration for note (3) was:
"(1) Interest on $99,900.00
note dated November 16
1951
November 16, 1951 to
January 10, 1953 ........... $2,299.10
January 11, 1953 to April
14, 1953 ................... 499.16
"(2) Interest on $14,400.00
note dated March 20
1952
March 20, 1952 to April
14, 1953 ................... 613.91
"(3) Collections made by Emery
H. Hughes .................. 3,833.10
"(4) Taxes, interest and
penalties on El Paso land .. 1,901.10
"(5) Attorney fee for El Paso
Attorney ................... 130.00
"(6) Appraisal fee on El Paso
land ....................... 100.00
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Principal amount of note ... $9,376.37"
Appellant presents three points. These are to the effect that the trial court erred (a) in denying it any recovery on notes (1) and (2), in declaring said notes and their respective deeds of trust void and of no effect 'as between the parties' and that 'as between the parties' appellees are entitled to have said notes cancelled; (b) in denying any recovery on at least note (1) as against appellees and in declaring it and its deed of trust void 'as between the parties.' (This point is alternative to point one), and (c) in failing to give effect to the acceleration provisions of the deeds of trust.
Appellees' reply to the above points is to the effect that the ruling of the trial court was correct because: (a) the evidence supports a finding that notes (1) and (2) were without consideration; (b) as to notes (1) and (2) the evidence supports a finding that no estoppel arose in favor of appellant avoiding the necessity for a valuable consideration to support said notes; (c) appellee, Katherine Brady Hughes was not personally liable on any of the three notes because if they were valid they were the personal obligations of Emery H. Hughes and were not executed for any of the purposes authorized by law for which a married woman may bind herself; (d) the evidence supports a finding that the land described in the deeds of trust was not pledged to secure a debt of the husband and the pledge cannot be sustained by an obligation arising by estoppel after the pledge, and (e) appellant was not entitled to accelerate the payment of the notes because they contained no provision for acceleration and the evidence sustains a finding that no condition existed giving rise to such right outside the terms of the notes.
Appellees present one counterpoint which is to the effect that the trial court erred in rendering judgment for any recovery on note (3) because it 'was not based upon a valuable consideration.'
We will dispose of the appeal on the points presented by appellant, appellee's points in reply and their counterpoint.
During the fall of 1951, appellee Emery H. Hughes was a stockholder and manager of appellant and employed an attorney, Mr. Darrouzett, to represent it in securing for it an issuer's permit to sell securities. We quote from appellee's introductory statement contained in their brief:
'Prior to September 17th, 1951, Mr. Darrouzet had conferences with Mr. Hilgers in the Secretary of State's office with a view of securing an issuers permit to sell the stock of the plaintiff company. The interest of the plaintiff in two mutual insurance companies, the Zenith County Mutual and the Zenith Insurance Company, was carried on plaintiff's books for about $45,000.00. Mr. Hilgers objected to these assets of the plaintiff.
'To replace to assets represented by the managing contract of the two insurance companies, Mr. Hughes offered to put some land into the plaintiff corporation. Mr. Darrouzet explained to the directors that the corporation could not own land, and that a note to the value of the land would be signed secured by the land. Mr. Darrouzet and Mr. Hughes explained to Mr. Hilgers, the Security Officer of the Secretary of State's Office, why the note was going to be used, and Mr. Hilgers said, 'Well, your land value is what we are going to look to.' Appraisal of the land satisfactory to Mr. Hilgers was made.
'At the November Board of Directors meeting the whole plan was explained to the Directors that in order to bring the corporation out of a deficit and in order to qualify the company, Mr. Hughes was using his land, but because the corporation couldn't hold land, the $99,000.00 note was used to get and land into the corporation.
'The directors approved the plan, and discussed the donation of the land. Everybody was optimistic and felt sure the corporation was going to make a lot of money, and it was discussed that when the surplus of the corporation got to a certain point, this land would be returned to Mr. and Mrs. Highes.
'Mr. Hilgers was told that it was anticipated that the land would be returned if the corporation prospered.
'The transaction was arranged and no money was paid to Mr. Highes for the note. So far as Mr. Darrouzet knew, nothing passed from the corporation to Mr. or Mrs. Highes, because the idea was to add something to the corporation in order to get rid of the deficit.
'Mrs. Darrouzet also made a full disclosure of the transaction to the Banking Commission.
'When the $99,000.00 note was given by the Higheses to the plaintiff, Mr. Darrouzet testified that there was never any evidence of intent that the note would ever be used by the corporation for the purpose of transferring such note to somebody else and securing money by the sale of the note, or that the note should be discounted. In fact the manifest intent was to the contrary.
'On November 14th, 1951, Mr. Hughes wrote a letter in which he informed Mr. Hilgers that he spoke for his wife and himself, and that 'she intends' to give, joined by him, 3500 shares of six per cent debenture preference stock of the plaintiff to the plaintiff, and an outstanding $45,000.00 note was to be cancelled, and Mr. and Mrs. Highes would sign a new note in the principal sum of $99,000.00 two per cent, ten years, secured by land located in Hearne, Texas.
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Stricklin v. Levine, 05-87-00925-CV
...to accelerate in the deed of trust. If there is none in the note, the deed of trust prevails. Motor & Industrial Finance Corp. v. Hughes, 294 S.W.2d 182, 190 (Tex.Civ.App.--Austin 1956), rev'd on other grounds, 157 Tex. 276, 302 S.W.2d 386 (1957); Mazzola v. Lucia, 109 S.W.2d 273, 275 (Tex.......
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Motor & Industrial Finance Corporation v. Hughes
...enforced, even for purposes of foreclosure only, for the full principal amount of the notes until such conditions precedent were shown. 294 S.W.2d 182. Both the plaintiff and defendants have filed applications for writs of error. The plaintiff contends that the foreclosure clauses in questi......