Palmetto Lumber Co. v. Gibbs

• Citation: 52 S.W.2d 120
• Decision Date: 12 May 1932
• Docket Number: No. 2111.,2111.
• Parties: PALMETTO LUMBER CO. et al. v. GIBBS et al.<SMALL><SUP>*</SUP></SMALL>
• Court: Texas Court of Appeals

52 S.W.2d 120

PALMETTO LUMBER CO. et al. v. GIBBS et al.^*

No. 2111.

Court of Civil Appeals of Texas. Beaumont.

May 12, 1932.

Rehearing Denied June 22, 1932.

Appeal from District Court, Harris County; Charles E. Ashe, Judge.

Action by the Palmetto Lumber Company and others against J. P. Gibbs and others. From judgment rendered, plaintiffs appeal, and defendants file cross-assignments of error.

Affirmed.

W. J. Howard, Andrews, Streetman, Logue & Mobley, Chas. C. McRae, and Homer Mabry, all of Houston, for appellants.

Dean & Humphrey, of Huntsville, and Baker, Botts, Andrews & Wharton, of Houston, for appellees.

WALKER J.

This was an action for accounting and to recover the title and possession of 6,493.05 acres of land situated in Jasper and Newton counties, filed on the 17th day of May, 1927, by appellants, Palmetto Lumber Company, hereinafter referred to as lumber company, A. C. Ford, R. W. Miller, and A. L. Black, as plaintiffs, against appellees, holders of the estate of Mrs. Sallie E. Gibbs, deceased, J. P. Gibbs, the estate of W. S. Gibbs, deceased, the estate of T. C. Gibbs, deceased, H. Y. Robinson and his wife, Alla G. Robinson, O. L. Norsworthy and his wife, Sanford G. Norsworthy, H. Hawley and his wife, Leota G. Hawley, J. P. Gibbs and J. V. Butler, independent executors of the last will of W. S. Gibbs and T. C. Gibbs, deceased, and Gibbs Bros., a copartnership composed of appellees, as above named. After the filing of the suit, the death of H. Y. Robinson was suggested, and his heirs made themselves parties defendant, and are appellees herein. The trial was to the court without a jury, with judgment in favor of appellants against appellees for $10,129.84 on the issue of accounting, but in favor of appellees on the issue of title to the land. Conclusions of fact and law were filed in support of the judgment. Appellants complain of the judgment against them, both on the issue of accounting and on the issue of title, under the following propositions:

The action for the land was in the nature of trespass to try title. The lumber company bought the land in controversy and 3,000 acres of timber adjacent thereto from George W. Carroll, and then deeded the land to Mrs. Sallie E. Gibbs on the 3d of October, 1907. After negotiating for some time with Mr. Carroll to buy this land and timber, on April 4, 1907, appellant A. C. Ford, as president of the lumber company, wrote to W. S. Gibbs, the general manager of the business of his mother, Mrs. Sallie E. Gibbs, through whom appellees hold, the following letter: "I got a phone report this afternoon from Black & Hardesty on the timber in Newton County. * * * There seems to be quite a good deal more timber that can be gotten in that locality at from $1.50 to $2.00 per M, buying land and timber. I want you to go in with me and help me buy it for the Palmetto Lumber Company. I will make you this proposition on it. If you will advance us the initial payment of $50,000.00 we will pay you 8% interest on the loan, you to arrange to carry it for at least two years. We will also deed you the land amounting to 7,000 acres after timber is removed. If I can arrange for the initial payment I can arrange in a very short while—not over 4 months to bond the whole proposition for the entire amount including the timber in the bend, and pay back the money borrowed from you as well as pay you cash for the timber in the bend & I think I can borrow the money from the bank—but I don't want to risk that."

The purchase of the land and timber from Mr. Carroll was made by the lumber company with money advanced by Mrs. Gibbs under the conditions of this letter, except it was necessary for her to advance in cash only $47,643.75; and, on the conditions of the letter, the lumber company deeded her the land. At that time the land had a value of $2 per acre. The facts of the sale were pleaded by appellants, but they did not pray for the cancellation of the deed from the lumber company to Mrs. Gibbs. The theory of the petition was that the deed was absolutely void because the only consideration paid by Mrs. Gibbs for the land was the usurious interest on the $47,643.75. The trial court found that the interest so paid was usurious, but denied them recovery on the legal conclusion that the deed from the lumber company to Mrs. Gibbs, though executed upon a usurious consideration, was not void, but only voidable. If we correctly understand appellants' contentions, they concede that the judgment denying them recovery for the land was correct, provided the deed was only voidable and not absolutely void; that is, if it was necessary to cancel the deed, they could not recover the land because they had no prayer for its cancellation. They state their contention as follows: "The only question arising is, was said deed void in the sense that it failed to divest the Lumber Company of the title to the land herein described and permit of the said Lumber Company recovering such land without first having the deed set aside?"

Appellants base their contention that the deed was absolutely void upon article 5069, R. S. 1925, which defines usury and provides that "all contracts for usury are contrary to public policy and shall be void." This article does not support their proposition. It outlaws only executory contracts and not executed contracts such as the one at bar. Under the admitted facts, every element of the usurious contract under which Mrs. Gibbs acquired title to this land had been fully executed. Such contracts do not fall within the provisions of article 5069, but to have relief the complaining party must resort to an affirmative action, either for the cancellation of the deed or for the recovery of the value of the land under article 5073, which provides that "within two years after the time that a greater rate of interest than 10 % shall have been received or collected upon any contract, the person paying the same, or his legal representative, may by an action of debt recover double the amount of such interest from the person, firm or corporation receiving the same." Appellants rely upon Shear Co. v. Hall (Tex. Com. App.) 235 S. W. 195. As we construe that case, it is not at all in point on the facts of this case, in that the sale there construed as void "was made under the terms of a deed of trust securing a usurious loan," and hence fell exactly within the provisions of article 5069. While our statutes outlaw usurious contracts, they do not inhibit the payment of usurious debts. The payment of such debts operates to discharge them in full, and the title to the money or property used as a medium of payment passes to the payee. Thus in Hicks v. Marshall, 67 Ga. 713, it was said: "A debtor may pay a usurious debt as well as any other, and he may pay it in money or he may pay it in land." Again, in Harris v. Hull, 70 Ga. 831, it was held that a deed, given in payment of a usurious debt, was a valid payment of the debt and that conclusion could follow only upon the theory that the creditor acquired title to the land. Though all the consideration for the deed was usurious interest, it was not void in the sense contended for by appellants, but was merely voidable. Under McCampbell v. Durst, 15 Tex. Civ. App. 522, 40 S. W. 315, appellants could not recover the land without first having a cancellation of this deed, which relief was not prayed for in the petition.

The judgment on the issue of title to the land is in all things affirmed.

In addition to the $47,643.75, borrowed from Mrs. Gibbs, as the cash payment for the Carroll land and timber, the lumber company assumed notes and executed new notes in an additional amount of approximately $113,000, representing the balance of the purchase price of the Carroll land and timber. During the years immediately following this purchase, the lumber company was not able to repay Mrs. Gibbs the money borrowed from her, nor to pay the notes executed and assumed by it in payment of the balance of the purchase price. So, to protect her loan against this land and timber, Mrs. Gibbs was forced to take up all the outstanding notes as they matured, except one small note, until by 1910 the lumber company owed her $196,750. On December 6, 1910, the lumber company, by general warranty deeds conveyed to Mrs. Gibbs the Carroll timber and certain other timber in San Jacinto county. Contemporaneously with the execution and delivery of these deeds the parties entered into the following selling contract involving the timber covered by these deeds: It was recited that by the deeds the lumber company had sold the timber to Mrs. Gibbs, and that the timber so sold amounted to 78,700,000 feet, for which Mrs. Gibbs was paying $2.50 per thousand, amounting to $196,750; that Mrs. Gibbs had offered and promised to pay the lumber company upon the resale of the timber within ten years from the 2d of November, 1910, half the difference between the selling price of the timber and its cost to her, including taxes and carrying charges, etc., with interest at the rate of 10 per cent. per annum, upon condition that the lumber company would guarantee to her, upon such resale, that the timber would sell for enough to pay cost, taxes, carrying charges, etc., with interest at 10 per cent. per annum. On the conditions stated, the lumber company guaranteed to Mrs. Gibbs that upon the resale of the timber within 10 years from the 2d of November, 1910, she would realize her different cost items with interest, and, on consideration of the guaranty thus made by the lumber company Mrs. Gibbs promised and agreed to pay over to the lumber company, upon the resale of the timber, one-half of the net profits calculated upon the basis of the return to her of her investment with 10 per cent. interest, and, further, (a) that she would not make a sale of the timber within three years from the 2d of November, 1910, except at a price satisfactory to the lumber company; (b) that she would sell the timber...