Pioneer Building & Loan Ass'n v. Cowan

• Decision Date: 15 December 1938
• Docket Number: No. 2054.,2054.
• Parties: PIONEER BUILDING & LOAN ASS'N v. COWAN.
• Court: Texas Court of Appeals

123 S.W.2d 726

PIONEER BUILDING & LOAN ASS'N v. COWAN.

No. 2054.

Court of Civil Appeals of Texas. Waco.

December 15, 1938.

Rehearing Denied January 19, 1939.

Appeal from District Court, Nineteenth District, McLennan County; R. B. Stanford, Judge.

Suit by Effie Cowan against the Pioneer Building & Loan Association and another to restrain sale of property under trust deed and to have the trust deed canceled and cloud on plaintiff's title removed, wherein named defendant filed a crossaction. Defendant E. C. Street filed disclaimer. From an adverse judgment, the named defendant appeals.

Reversed and remanded for new trial.

Street & Street, of Waco, for appellant.

W. V. Dunnam, of Waco, for appellee.

GEORGE, Justice.

This suit was instituted by Effie Cowan, mortgagor, against Pioneer Building & Loan Association, mortgagee in possession of the mortgaged property, and E. C. Street, trustee in deed of trust, seeking an injunction forever restraining sale or offering for sale of property under power in deed of trust, on the grounds (1) that the deed of trust was void because it was the homestead of Miss Cowan at all times in question and the notary was disqualified; (2) that the note was without consideration in part; (3) that Pioneer Building & Loan Association failed to use reasonable care after it came into possession of the property in renting and collecting the rents therefrom, and that if it had exercised such care, the rents collected would have been sufficient to have paid off and discharged the installments and interest on maturity; (4) that if the reasonable rental value of the premises in the sum of $60 had been applied to the loan, there would not have been due any sum whatever, and praying that the injunction be made perpetual; that she recover the title and possession of the property; that an accounting be had; that the rental value of $60 per month from July, 1933, be applied to the payment and discharge of the indebtedness; that the deed of trust be cancelled and that the cloud cast on the title by reason thereof be removed.

Temporary injunction was granted on ex parte hearing on November 2, 1935, restraining advertised sale for November 5, 1935, and restraining offering of property for sale under power contained in deed of trust. E. C. Street filed disclaimer. Pioneer Building & Loan Association answered and plead general demurrer and general denial and asked that the temporary injunction be dissolved, and by way of cross action alleged sale of property on November 5, 1935, under power of sale in deed of trust after default and after due notice of sale given in the time and manner provided by law and in the deed of trust without notice of the granting of the injunction, and asked that the sale be confirmed, and, in the alternative, prayed for judgment for its debt and foreclosure of lien.

The jury found (1) that the reasonable monthly rental of the property from June 20, 1933, to June 18, 1937, was $50 per month; (2) that Pioneer Building & Loan Association failed to cause the property to produce its reasonable rental value; (3) that Pioneer Building & Loan Association failed to exercise ordinary care in the management and renting of the property; (4) that the failure to exercise ordinary care in the management and renting was the proximate cause of Miss Cowan's damages; (5) that the failure to exercise ordinary care in the management and renting was negligence; (6) that Miss Cowan had sustained actual damages by reason of the failure of Pioneer Building & Loan Association to collect the reasonable rental value of the property; (7) that her damages were the proximate result of the negligence of Pioneer Building & Loan Association in failing to collect the reasonable rental value of the property; (8) that the sum of $1159.20 would reasonably compensate Miss Cowan for the damages suffered by her for the loss of rents occasioned as the proximate result of the negligence of Pioneer Building & Loan Association and its failure to exercise ordinary care in the management and renting of her property, and the collection of rents therefrom; (9) that Pioneer Building & Loan Association, by taking and retaining possession of the property under the rent assignment, intended to waive its privilege to declare the note due and foreclose its lien during the time the possession of such property was retained by it; (10) that the schedule of rents collected from tenants did not meet with the approval of Miss Cowan.

The court, on July 1, 1937, rendered judgment declaring and decreeing (a) that $50 per month be applied to the payment and discharge of the indebtedness; (b) that Miss Cowan's indebtedness as of that date to Pioneer Building & Loan Association was the sum of $1162.72; (c) that Pioneer Building & Loan Association waived its right under the deed of trust to foreclose its lien and recover judgment against Miss Cowan during the time of the retention by it of the property; (d) that it was entitled to retain possession thereof until payment of the balance of $1162.72; (e) that all costs incurred be taxed against Pioneer Building & Loan Association and (f) that all other relief sued and prayed for by either party and not expressly granted therein was refused and denied. Hence this appeal by Pioneer Building & Loan Association.

The property consists of a two-story frame eight room residence on Colcord Avenue in Waco that could be used and rented as two apartments. Appellee, feme sole, on January 25, 1930, executed and delivered her promissory note to appellant in the sum of $3500 payable in approximately 128 months, bearing interest at the rate of 8.4% per annum, interest payable monthly as it accrued, providing for 10% attorney's fees on principal and interest due and stipulating that failure to make the monthly payments of interest as they accrued or to make payments on shares of stock should, at the election of the holder, mature the note and subject lien to foreclosure; and she, on the same day, in order to secure the prompt payment of the interest on the note and the installments on the shares of stock, taxes, insurance, interest, etc., executed and delivered deed of trust to E. C. Street, trustee, Pioneer Building & Loan Association, cestui que trust. She thereafter, in January, 1933, moved to Mart, Texas, and on June 20, 1933, being in default in payments, assigned the rents accruing from said property to appellant and delivered partial constructive possession of the property to appellant, with the request that it look after the collection of the rents, and upon the understanding that it would apply all rents collected by it to the upkeep of the property, furnishing of water, payment of taxes, insurance, interest, dues, etc., and that she would assist in finding suitable tenants for the building. She, at the time of the assignment, had the downstairs apartment rented at either $17.50 or $18 per month, and the upstairs apartment for $15 per month. She thereafter, on divers occasions, consulted with appellant as to the tenants in the building and as to the rent to be paid by them, and she on different occasions acquiesced in the renting of the property and in the amount of rent to be received therefrom. She retained possession of a part of the residence for her individual use for a part of the time. She did not pay any taxes after securing the loan in January, 1930, with the exception of the year 1931, and admits being in default on June 20, 1933. Appellant rendered an accounting of all receipts and disbursements in connection with the property from June 20, 1933, to the date of trial showing in detail the rents collected and how credited, the bills for water, repairs, taxes and insurance paid and charged. The items charged were first paid out of the rent as received and the balance of the rent was applied to the payment of the interest and installments, and no payments were made by appellee after June 20, 1933, otherwise. Appellant, on or before October 10, 1935, matured the note and caused the trustee on that date to post notices of the sale of the property for Tuesday, November 5, 1935.

Appellant introduced testimony tending to establish the fact that the property was duly sold by the trustee at public auction to it without notice of the granting of the temporary injunction, and that the deed was not delivered for the reason that notice was given to the trustee and it within a few minutes after the sale and before the preparation and delivery of deed.

Appellant contends (1) that the trial court erred in refusing to confirm the sale of November 5, 1935, on the ground that the uncontradicted evidence shows sale of property to appellant in conformity with the law and the deed of trust before notice of granting of injunction was received by either the trustee or appellant; (2) that the trial court erred in submitting to the jury special issue No. 9, inquiring whether appellant by accepting rent assignment intended to waive its right of foreclosure and in founding its judgment on the jury's answer thereto on the ground that there was no evidence to raise such issue or support such...