Pioneer Building & Loan Ass'n v. Johnston

• Decision Date: 24 March 1938
• Docket Number: No. 1985.,1985.
• Citation: Pioneer Building & Loan Ass'n v. Johnston, 117 S.W.2d 556 (Tex. App. 1938)
• Parties: PIONEER BUILDING & LOAN ASS'N v. JOHNSTON et al.
• Court: Texas Court of Appeals

Page 556

117 S.W.2d 556

PIONEER BUILDING & LOAN ASS'N v. JOHNSTON et al.

No. 1985.

Court of Civil Appeals of Texas. Waco.

March 24, 1938.

Rehearing Denied May 12, 1938.

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

Suit by A. C. Johnston and Mrs. L. B. Johnston, his wife, against the Pioneer Building & Loan Association to cancel notes and trust deeds and to restrain the sale of mortgaged property under such trust deeds. From a judgment for plaintiffs, defendant appeals.

Reversed and rendered.

Street & Street, of Waco, for appellant.

A. C. Johnston and John B. Atkinson, both of Waco, for appellees.

ALEXANDER, Justice.

This suit was brought by A. C. Johnston and wife against Pioneer Building & Loan Association to cancel the notes and deeds of trust evidencing two separate loans and to restrain a sale of the mortgaged property under the powers given in the deeds of trust. Johnston contended that the loan contracts were void because of fraud in the procurement thereof, in that the loan company had misrepresented the rate of interest that the contracts would bear. He also contended that the contracts were usurious and that payments made as interest were sufficient to discharge and overpay the balance of the unpaid principal. There were two loan contracts, one of date January 1926 for $1,000.00, and the other of date September 1926 for $1,990.00. Each of the loan contracts provided for interest at the rate of 9 per cent per annum and for certain fines and penalties usual in building and loan contracts. The jury, in answer to special issues, found that prior to the making of the loan contract in January, 1926, the defendant represented to plaintiff A. C. Johnston that under the defendant's plan of operation the rate of interest charged would not exceed 7½ per cent per annum, and that plaintiffs would not have entered into said contract but for such representations. The jury further found that the plan used by the defendant in the preparation of its loan contracts was so used for the purpose of enabling it to charge more than ten per cent for the use of its money. Based on the verdict, the court entered judgment for the plaintiffs, adjudging said contracts to be usurious, declaring the defendant's debt fully paid, cancelling the liens, and restraining a sale of the property under the powers given in the deeds of trust. The court also entered a money judgment in favor of the plaintiffs against the defendant for the sum of $279.26 for overpayments made on the loan contracts. The defendant appealed.

Johnston's proof of alleged fraud in misrepresenting the rate of interest to be borne by the loan contracts consists of his own testimony. He testified, in effect, that a few days before the first loan contract was closed he visited the office of the loan company to discuss the procurement of a loan and was informed that under the loan company's plan of operation the rate of interest charged by it would not exceed 7½ per cent per annum. Thereafter, he furnished an abstract of title for examination and a few days later went back to the loan company and signed the loan papers and closed the loan. The note on its face provided for interest at 9 per cent per annum. Johnston was a lawyer and experienced in handling loan matters. He testified that at the time of closing the loan he was suffering from a disability, as the result of a previous automobile accident, and, as a consequence, he could not read very well; that he could have read the rate of interest stipulated in the note but that he did not do so because he was relying on the previous representation of the loan company that under its plan of operation the interest rate would not exceed 7½ per cent per annum. It will be noted that Johnston's testimony related wholly to a representation made to him in the prior negotiations and that he did not testify to any misrepresentation having been made at the time of entering into the contract. In fact, the jury did not find that any misrepresentation was made by the loan company as to the contents of the written instrument signed by Johnston, but merely found that prior to the execution thereof the loan company had misrepresented the interest charged under its plan of operation. There was no proof offered as to any misrepresentations having been made at the time the loan papers were signed. In fact, it was not contended either in the pleadings or in the evidence that the contents of the document executed by Johnston were misrepresented or that any fraud or imposition was resorted to to prevent his being advised as to the contents of the contract. The above evidence, in our opinion, was insufficient to raise an issue authorizing the setting aside of the contract on account of fraud. Whatever oral negotiations were had between the parties at the first conference were presumed to have been waived or embodied in the written contract when finally executed by Johnston. In the absence of proof of fraud misleading Johnston as to the contents of the written contract actually executed by him, and in the absence of proof of any conduct on the part of the loan company, or its representatives, that prevented Johnston from informing himself as to the contents of such instruments, he is presumed to have known the contents thereof and therefore is not entitled to have such instruments cancelled. 7 Tex. Jur. 922; 10 Tex.Jur. 366; Duncan v. Robertson, Tex.Com.App., 105 S.W.2d 214; Indemnity Ins. Co. v. Macatee & Sons, Tex. Com.App., 101 S.W.2d 553; Parker v. Schrimsher, Tex.Civ.App., 172 S.W. 165; Distributors Inv. Co. v. Patton, Tex.Com. App., 110 S.W.2d 47.

Johnston was likewise the only witness who attempted to testify to any fraud with reference to the second loan contract executed in September, 1926. In this connection, he testified that the representative of the loan company had told him in the preliminary negotiations that he could let him have a second loan at the same rate as the previous one; that when he went to execute the loan papers, he discovered that they provided for interest at 9 per cent per annum, and upon calling the matter to the attention of the loan company, he was informed by the company's representative that the contract had been prepared that way merely "as a matter of form." As we understand the law, a party who, for a valuable consideration, has signed a written contract with full knowledge of its contents cannot afterwards successfully contend that there was a contemporaneous parol agreement that the terms of the written contract should not be binding. 17 Tex.Jur. 792; 7 Tex.Jur. 922; 10 Tex. Jur. 98, 99; Guarantee Life Ins. Co. v. Davidson, Tex.Com.App., 234 S.W. 883; Parker v. Schrimsher, Tex.Civ.App., 172 S.W. 165; Kasch v. Farmers' Gin Co., Tex. Com.App., 3 S.W.2d 72; McGaughey v. American National Bank of Austin, 41 Tex.Civ.App. 191, 92 S.W. 1003; Duncan v. Robertson, Tex.Com.App., 105 S.W.2d 214; Indemnity Insurance Co. v. Macatee & Sons, Tex.Com.App., 101 S.W.2d 553; Ætna Ins. Co. v. Holcomb, 89 Tex. 404, 34 S.W. 915; Morrison v. Insurance Company of North America, 69 Tex. 353, 6 S.W. 605, 5 Am.St.Rep. 63.

The defendant was a building and loan association incorporated and operating under pertinent provisions of our statutes...