Rhoton v. Texas Land & Mortgage Co.

• Decision Date: 08 February 1935
• Docket Number: No. 1368.,1368.
• Citation: 80 S.W.2d 763
• Parties: RHOTON et al. v. TEXAS LAND & MORTGAGE CO., Limited, et al.
• Court: Texas Court of Appeals

80 S.W.2d 763

RHOTON et al. v. TEXAS LAND & MORTGAGE CO., Limited, et al.

No. 1368.

Court of Civil Appeals of Texas. Eastland.

February 8, 1935.

Rehearing Denied March 15, 1935.

Appeal from District Court, Howard County; Chas. L. Klapproth, Judge.

Suit by D. A. Rhoton and others against the Texas Land & Mortgage Company, Limited, and others, in which defendants brought a cross-action. From a judgment for defendants and cross-complainants, plaintiffs appeal.

Affirmed.

See, also (Tex. Civ. App.) 56 S.W.(2d) 678.

Woodward & Coffee, of Big Spring, and T. L. Price, of Post, for appellants.

Wagstaff, Harwell, Wagstaff & Douthit, of Abilene, and Coke & Coke, of Dallas, for appellees.

HICKMAN, Chief Justice.

Appellants D. A. Rhoton and wife, Fannie Rhoton, and Southland Royalty Company brought this suit against appellees the Texas Land & Mortgage Company, Limited, hereinafter called the Mortgage Company, L. C. Harrison, T. F. Hunter, J. B. Harrison, Fred Read, Hugh Corrigan, W. J. Garrett, and G. E. Lockhart, seeking to recover about 5,750 acres of land. In a nonjury trial judgment was rendered that appellants take nothing, and that the appellees recover on their cross-actions, and this appeal followed.

All parties claimed title under appellants Rhotons as the common source of title. The Mortgage Company's title is based upon (a) a quitclaim deed from D. A. Rhoton and wife, Fannie Rhoton, to it; (b) an agreed judgment in the district court of Howard county; and (c) a trustee's deed from W. James Mitchell, substitute trustee, to the Mortgage Company—all these instruments being dated February 7, 1933. The other appellees hold under the Mortgage Company. The appellants attacked all the instruments relied upon by the Mortgage Company upon the ground that they were obtained through fraudulent acts and conduct on the part of the defendants G. E. Lockhart, T. F. Hunter, and L. C. Harrison, and sought to have them canceled and set aside, and thus vest title in themselves. The appellant Southland Royalty Company further alleged that the trustee's sale and deed above referred to were void as to it, and that title to the mineral interests held by it in the lands was never divested out of it. The court, upon request of appellants, prepared and filed findings of fact and conclusions of law, in which all of the material facts were found against appellants, and in which the special defenses of the appellees were sustained. Among these findings were the following: "I further find that in the negotiations on the part of Hunter and Harrison, with the Rhotons, that no fraudulent representations or concealments of any kind, at any time, were made by either Harrison or Hunter to the Rhotons, in order to procure said contract, or in order to procure the sale of the property on the 7th day of February, 1933, or in order to procure the quit claim deed from the Rhotons, which was introduced in evidence, or to procure and agree to the judgment entered in the District Court of Howard County, Texas, in cause No. 143, same being in the record, to which reference is here made; and I further find that the said Hunter and the said Harrison were at no time guilty of actual or constructive fraud to the Rhotons. I further find that G. E. Lockhart made no false representations, or concealments to the Rhotons in any of the negotiations between the said Rhotons and the said Lockhart after the first of January, 1933, and that the said G. E. Lockhart did not make any false representations or conceal anything from the Rhotons, and was not guilty of fraud in the transactions towards the Rhotons, either actual or constructive."

Manifestly, if these findings of the court are upheld, they afford support for the judgment as against the appellants Rhotons. They have assumed the burden in this court of establishing, not only that the evidence would have supported contrary findings, but that there was no evidence supporting the court's findings, and that, as a matter of law, fraud was perpetrated upon them by the named persons. They have assumed the further burden of establishing, as a matter of law, that Harrison was the agent of the appellee Mortgage Company. The assignments have caused us to make a careful study of the statement of facts, which facts have been considered in the light most favorable to the appellees, and our conclusion is that there is evidence supporting these findings.

On December 6, 1926, the Rhotons executed a deed of trust to A. G. Wood, trustee for the use and benefit of the Mortgage Company. In March, 1932, W. James Mitchell, acting as substitute trustee under the deed of trust, advertised said lands for sale on April 5, 1932. On April 2, 1932, the Rhotons employed G. E. Lockhart, of Lubbock, as their attorney to institute a suit enjoining the sale as advertised, and at the same time executed and delivered to Lockhart a warranty deed to an undivided one-half interest in the lands as his fee. On that same day Mr. Lockhart prepared a petition seeking an injunction against the sale of said lands by the substitute trustee, the petition alleging that the deed of trust was void for reasons not material to this suit. This petition was presented to the district judge, upon the basis of which he granted a temporary restraining order. At the same time a hearing was set for the 23d day of April, 1932, to determine whether an injunction pendente lite should issue. At this hearing the injunction was refused, but, the Rhotons having given notice of appeal to this court, the order provided that the temporary restraining order theretofore granted should remain in full force and effect pending appeal in so far as four sections of the land were concerned. The appeal was duly perfected to this court, but, by order of the Supreme Court on equalization of the dockets of the several courts of civil appeals, the case was transferred to the Court of Civil Appeals at Amarillo for hearing, and on January 4, 1933, that court affirmed the judgment of the trial court without making any decree as to the temporary restraining order kept in force by order of the trial court pending the appeal. 56 S.W.(2d) 678. A motion for rehearing was timely filed on behalf of the Rhotons, but was overruled on February 8, 1933.

During this time there resided in Howard county a man named A. M. Sullivan, whose business was described as a commission business. He testified that before the injunction suit was filed by Lockhart on April 2, 1932, he began to undertake, as the agent and representative of the Rhotons, to procure an oil and gas lease on this land, with the hope of enabling them to discharge the indebtedness held by the Mortgage Company. That in the fall of 1932 he began to try to interest the appellees L. C. Harrison and T. F. Hunter in the proposition. They became interested in procuring a lease on this land, and on the 9th day of January, 1933, five days after the judgment of affirmance had been entered by the Court of Civil Appeals at Amarillo, a written contract was entered into between the Rhotons and Sullivan, as parties of the first part, and L. C. Harrison, as party of the second part. This contract recited that the Mortgage Company was attempting to sell the land here involved under the terms of their deed of trust, and that a suit restraining the sale was pending. It further recited that Harrison had negotiated with all parties to said suit for an option to purchase the fee title to said land, and for an oil and gas lease thereon. The contract obligated Harrison to begin the drilling of a well on the land within sixty days after he should procure an oil and gas lease thereon from the Mortgage Company, together with an option for a period of six months to buy the land in fee for an amount equal to the total indebtedness against same, including unpaid taxes and court costs, and compilation of an abstract, and to prosecute the drilling thereof with reasonable diligence to a depth of 3,000 feet, or to where oil and gas was found in paying quantities at a lesser depth. It was further provided that if, after he procured the oil and gas lease and the six months' option from the Mortgage Company, he should fail within five months of said time to exercise his option to buy the fee title, then the Rhotons and Lockhart should have the right to exercise the option at any time during the sixth month thereof. A further provision of the contract was that, in the event Harrison should procure the oil and gas lease and the option to purchase, and should exercise that option, he would then convey and set over unto the first parties two-tenths of one-eighth of the oil, gas, and other minerals produced, saved, and marketed from said land. In consideration of the premises the Rhotons agreed to join with the Mortgage Company in dismissing the pending cause and to withdraw their protests to the sale of the land under the deed of trust. This contract recited in its opening paragraph that it was made by and between D. A. Rhoton and wife, Fannie Rhoton, and A. M. Sullivan, all of Howard county, and G. E. Lockhart, of Lubbock county, Tex., parties of the first part, and L. C. Harrison, of Howard county, Tex., party of the second part. T. F. Hunter drew the contract and had a third interest with Harrison in the project. Just why Sullivan should have joined as a party of the first part is not made clear by the record. This contract was duly executed by the Rhotons, Sullivan, and Harrison, and was presented by Hunter to Lockhart for his signature in Lubbock. Until this contract was presented to him, Lockhart had no knowledge of its existence, or of any pending negotiations between the Rhotons and Sullivan with Harrison and Hunter. He read the contract and declined to execute it. Later a man named Edwards, whose interest in the matter does not appear from the record, visited Lockhart and proposed to him that, if he would execute this contract, Harrison would buy his interest...