Prestonview Co., Ltd. v. State Mut. Investors, 19665

• Decision Date: 12 March 1979
• Docket Number: No. 19665,19665
• Citation: 581 S.W.2d 701
• Parties: PRESTONVIEW COMPANY, LTD., Appellant, v. STATE MUTUAL INVESTORS, Appellee.
• Court: Texas Court of Appeals

Page 701

581 S.W.2d 701

PRESTONVIEW COMPANY, LTD., Appellant, v. STATE MUTUAL INVESTORS, Appellee.

No. 19665.

Court of Civil Appeals of Texas, Dallas.

March 12, 1979.

Rehearing Denied April 12, 1979.

Linda S. Aland, L. Vance Stanton, Strother, Davis & Stanton, Dallas, for appellant.

Schuyler B. Marshall, Nancy L. Benoit, Thompson, Knight, Simmons & Bullion, Dallas, for appellee.

Before AKIN, ROBERTSON and CARVER, JJ.

CARVER, Justice.

This is an appeal by a partnership from a summary judgment granted to the lender in a usury case. The lawsuit concerns three parties: Prestonview, a partnership; State Mutual, a lender; and Crawford-Strauss Properties, a corporation. The appellant partnership sued the appellee lender claiming that the lender charged a rate of interest exceeding ten percent per year on a loan. The partnership argued that the loan was actually made to the partnership, and not to the corporation as stated in the loan documents. The partnership alleged that title to the real property which served as security for the loan was in the partnership's name at the time the loan was funded. Appellant reasons that since the lender had constructive notice through the recording statutes that title to the security was in the partnership's name, the lender knew it was making a loan to the partnership. Appellant claims, therefore, that appellee was guilty of usury since the rate of interest on the loan exceeded ten percent per year. The loan documents, however, are regular on their face and show that the loan was made to the corporation, not to the partnership. Accordingly, we affirm the trial court and hold that the constructive notice given by the recording statute, Tex.Rev.Civ.Stat.Ann. art. 6646 (Vernon 1969), is insufficient to charge the lender with usury.

The relevant facts are undisputed. Crawford-Strauss Properties, Inc., the corporate borrower, sought both interim and permanent financing to acquire real property and to erect improvements on the property. It reached an agreement with State Mutual, the lender, whereby $2,600,000 was to be advanced to Crawford-Strauss as interim financing. Crawford-Strauss signed a promissory note bearing 101/8 percent interest per year and agreed to acquire the real property as a part of the security for the loan. Later, State Mutual executed a written commitment to Crawford-Strauss for permanent financing at the same 101/8 percent interest rate. In January and February of 1971, Crawford-Strauss acquired title to the real property and commenced improvements. Later, Crawford-Strauss by deed dated April 16, 1971, and recorded on May 20, 1971, conveyed the property to Prestonview, the partnership. State Mutual had no actual knowledge of this conveyance and at all times thought it was lending the money to Crawford-Strauss. More than one year later, in June of 1972, State Mutual closed the permanent financing by advancing funds to Crawford-Strauss. Thus, at the date of closing and for approximately one year preceding the closing, the partnership, not Crawford-Strauss, held title to the property which served as collateral for the loan from State Mutual to Crawford-Strauss. The title insurance policy, however, and all loan documents recited that the corporation held title.

An attorney, employed by Crawford-Strauss, testified by deposition that he participated in the closing of the permanent financing in ignorance of the earlier deed to the partnership. When he learned of the earlier deed, the attorney did not tell State Mutual, but "fixed" it by getting a deed from the partnership to Crawford-Strauss....