Southern Trust & Mortgage Co. v. Daniel, A-324.

• Decision Date: 30 December 1944
• Docket Number: No. A-324.,A-324.
• Parties: SOUTHERN TRUST & MORTGAGE CO. v. DANIEL.
• Court: Texas Supreme Court

Page 465

184 S.W.2d 465

SOUTHERN TRUST & MORTGAGE CO. v. DANIEL.

No. A-324.

Supreme Court of Texas.

December 30, 1944.

Rehearing Denied January 24, 1945.

Error to Court of Civil Appeals of Eighth Supreme Judicial District.

Suit in trespass to try title and for other relief by Mrs. R. J. Daniel, a feme sole, against B. F. Henderson and another, wherein defendant Southern Trust & Mortgage Company filed a cross-action. Judgment for defendants was affirmed in part and in part reversed and cause remanded by Court of Civil Appeals, 183 S.W.2d 242, and defendant Southern Trust & Mortgage Company brings error.

Judgment of the Court of Civil Appeals affirmed.

Earl A. Forsythe, Stewart, Burgess & Morris, and P. O. Lopp, all of Dallas, for plaintiff in error.

C. O. McMillan, of Stephenville, for defendant in error.

HICKMAN, Commissioner.

The basic question for decision in this case is the validity of a trustee's deed executed by a trustee under powers contained in a deed of trust. The deed of trust was executed by Mrs. R. J. Daniel, respondent, a feme sole, to A. M. Costa, trustee, to secure the payment of a promissory note in the principal sum of $6,000 signed by Mrs. Daniel and two other persons and payable to the order of B. F. Henderson. It authorized the trustee to sell the land described therein upon default by the makers of the note and prescribed the steps to be taken by the trustee in effecting the sale. It contained no provision that the trustee might sell to himself. Default having been made, the trustee, at the request of Henderson, the payee in the note, sold the property at public sale under the powers contained in the deed of trust. It was struck off to petitioner, Southern Trust and Mortgage Company, a corporation, on the bid of its president, F. M. Love, in the sum of $5,000. No other bid was made. Thereafter, Costa, as trustee, executed a deed to the Company for the property.

Fifteen days later this suit was filed by Mrs. Daniel to recover the property. Her first count was in the form of an action in trespass to try title. She then pleaded specially certain grounds for setting aside the sale, alleging as one ground of illegality that Costa, the trustee, was a stockholder, director, vice-president, secretary and treasurer of the corporation to which he executed the deed and the sale was therefore, in effect, a sale to himself. The Court of Civil Appeals construed this pleading as a pleading in equity in which she offered to do equity. As that construction of the pleading has not been challenged, we shall treat the case as one of that nature, without considering the pleadings. After this suit was filed the petitioner paid Henderson the principal and interest owing on the note to that date and took from him an assignment of the note and lien, and thereafter filed a cross action in the suit seeking to recover the property by virtue of the trustee's deed to it and, alternatively, declaring upon the note transferred to it by Henderson and praying for a foreclosure of the lien securing same. In the trial court judgment was rendered that respondent take nothing and in favor of the petitioner on its count in trespass to try title. The Court of Civil Appeals affirmed that portion of the judgment referable to the controversy between respondent and Henderson, the payee in the note, on the ground that it was shown that he had no further interest in the subject matter. As between respondent and petitioner, that court reversed the judgment of the trial court and remanded the cause "for the adjustment of any equities between them and that plaintiff may have the opportunity to redeem her property * * *." Daniel v. Henderson, 183 S.W.2d 242, 245.

We have concluded that the case cannot be distinguished in principle from, and is therefore ruled by Parks v. Worthington, 101 Tex. 505, 109 S.W. 909, 911. In that case the wife of the trustee named in the deed of trust was the purchaser at his sale and one of the questions presented for decision was the validity of such sale. The sale was made regularly and in accordance with the provisions of the deed of trust. Justice Williams, in speaking for this court, reasoned on the question as follows:

"* * * But virtually the purchase was by the trustee himself. No evidence was offered that the consideration was furnished out of Mrs. Parks' separate estate. The conveyance was to her during marriage, and the presumption is that it became common property. It is too well settled to require citation of authorities that property so obtained cannot be held against the application of the beneficiary to set it aside, accompanied by the offer to restore the consideration paid. To say the least, it is voidable at plaintiff's option upon her doing equity. This is all the judgment allows. Nor do we intimate that the result of this case would be...