Shaw v. Morrison

• Decision Date: 15 March 1929
• Docket Number: (No. 550.)
• Citation: 14 S.W.2d 953
• Parties: SHAW, Banking Com'r, v. MORRISON.
• Court: Texas Court of Appeals

14 S.W.2d 953

SHAW, Banking Com'r, v. MORRISON.

(No. 550.)

Court of Civil Appeals of Texas. Eastland.

March 15, 1929.

Appeal from District Court, Eastland County; Geo. L. Davenport, Judge.

Suit by James B. Morrison against James Shaw, Banking Commissioner, as such commissioner and liquidating agent of the Commercial State Bank of Cisco, Tex. Judgment for plaintiff, and defendant appeals. Affirmed.

L. C. Sutton and John W. Goodwin, both of Austin, for appellant.

Butts & Wright, of Cisco, for appellee.

LESLIE, J.

This suit was instituted by appellee, J. B. Morrison, against James Shaw, banking commissioner, appellant, as such commissioner and "liquidating agent" of the Commercial State Bank of Cisco, Tex. The appellee sued to recover $500 which he had paid to the appellant under a contract to purchase certain real estate, having made such payment as a part of the purchase price and to guarantee that he would carry out his part of the contract, and alleging that the banking commissioner had not furnished an abstract showing merchantable title in compliance with the terms of the contract. The commissioner answered by general demurrer, general denial, and specially contended that he had furnished an abstract showing "good and merchantable title," and was therefore, under the terms of the agreement, entitled to retain the $500. A trial before the court resulted in a judgment in favor of appellee, plaintiff below, for the $500, with 6 per cent. interest from January 1, 1928, and further decreeing the judgment a preferential claim against the banking commissioner as to the assets which came into his hands as receiver of said bank, and ordering defendant to pay the judgment first from such assets. From this judgment the defendant below has appealed.

Propositions 1, 2, and 3 complain of the court's having overruled the defendant's demurrers to the plaintiff's petition upon the ground that the petition showed the plaintiff refused to carry out the contract, and further failed to allege that such refusal was based upon a defect in title which could not be cured in a reasonable time. The petition is not believed subject to the demurrers urged. These propositions are overruled. The questions sought to be raised by them will be considered on their merits under propositions 4, 5, and 6, which will now be considered together.

By the contract between the commissioner and Morrison the former contracted to convey to the latter a tract of land situated in Eastland county, Tex.; said contract being, in part, as follows:

"Being seventy (70) acres of land off of the East end of a One Hundred (100) acre tract, being the North side of the North West one-fourth (NW¼) of Section No. 67, in Block No. 3 of the H. & T. C. Ry. Co. lands in Eastland County, Texas, save and except the following lots located in the South Side Addition, which addition is located in part of said seventy (70) acres, to-wit: Lots 4 and 13 in Block 1, 9 and 10 in Block 2, Lot 1 in Block 6, Lot 5 in Block 8 of said addition. Being the same land conveyed to the Commercial State Bank, Cisco, Texas, by Sheriff's deed of date July 10th, 1925, and being commonly known as the Grover Ellis 70 acres.

"The party of the second part agrees to pay Thirty-five ($35.00) dollars per acre, Twenty Four Hundred and Fifty Dollars ($2450.00), Five Hundred ($500.00) cash in hand, the receipt of which is hereby acknowledged and Nineteen Hundred Fifty Dollars ($1,950.00) when this deal is consummated.

"Party of the first part agrees to furnish party of the second a merchantable abstract brought down to date. * * *.

"If party of the second part refuses to carry out this contract for any other reason than a fatal defect in the title which cannot be cured in a reasonable time, the above Five Hundred Dollars ($500.00) shall be retained by the party of the first part as liquidated damages."

Abstracts and supplemental abstracts were furnished in due time, and Morrison's attorneys examined each, and the conclusion of the whole matter resulted in Morrison's rejection of the title tendered upon the sole ground that the abstract disclosed 50 acres of the entire tract had been platted into town lots with the usual streets and alleys, impressed with an easement in favor of the public, and constituting an incumbrance. This presents the controlling question arising upon the merits of the controversy.

The appellant's contention is that the description of the land in the contract of sale put the purchaser, Morrison, on notice that the land was located in a city cut up in lots and blocks and streets and alleys, and that under the terms of the contract Morrison necessarily purchased the land subject to the streets and alleys. Appellant, in his brief, states that no decisions in this state passing upon this particular question have been discovered by him, but that the following cases appear to recognize the rule that an express warranty will not be applied to cover an open or known defect as to land with reference to which parties have contracted, citing Doyle v. Hord, 67 Tex. 621, 4 S. W. 241; Mayer v. Wooten, 46 Tex. Civ. App. 327, 102 S. W. 423.

The contention is that the purchaser of land takes it subject to an easement of an existing public highway and is not protected by even a warranty against incumbrances; that a street or alley is a public highway.

Our attention is particularly directed to the case of Sandum v. Johnson, 122 Minn. 368, 142 N. W. 878, 48 L. R. A. (N. S.) 619, Ann. Cas. 1914D, 1007, in which it was held that a highway across land conveyed by warranty deed of the form in common use does not constitute a breach of the covenants usually contained in such deeds. In that opinion, it is pointed out: "Incumbrances are of two kinds, viz.: (1) Such as affect the title; and (2) those which affect only the physical condition of the property. A mortgage or other lien is a fair illustration of the former; a public road, or right of way, of the latter."

That opinion is to the effect that a servitude imposed upon land, which is visible to the eye but which affects not the title but the physical condition of the property, does not constitute a breach of covenant. Courts of different jurisdictions have taken different views upon the question suggested by the appellant. Such views were set forth and carefully considered in Sandum v. Johnson, supra....