Sutton v. Grogan Supply Co., Lumber Division, 8079

• Decision Date: 29 February 1972
• Docket Number: No. 8079,8079
• Citation: 477 S.W.2d 930
• Parties: Curtis SUTTON et ux., Appellants, v. GROGAN SUPPLY COMPANY, LUMBER DIVISION, et al., Appellees.
• Court: Texas Court of Appeals

Page 930

477 S.W.2d 930

Curtis SUTTON et ux., Appellants, v. GROGAN SUPPLY COMPANY, LUMBER DIVISION, et al., Appellees.

No. 8079.

Court of Civil Appeals of Texas,

Texarkana.

Feb. 29, 1972.

Guy Jones and Lynn Cooksey, Texarkana, for appellants.

Tom J. Mays, Carney & Mays, Atlanta, for appellees.

RAY, Justice.

Curtis Sutton and wife, Donna Sutton (Plaintiffs) Appellants, brought suit against Grogan Supply Company, Lumber Division; C. M. Grogan, Trustee, and Charles E. Harrist (Defendants) Appellees, seeking to cancel a second lien note and the deed of trust and vendor's lien securing it. The instruments sought to be canceled (introduced into evidence without limitation as joint exhibits) were dated August 26, 1964, and suit was brought on June 12, 1969, more than four years after the signing of the instruments. Appellants sought to set aside the second lien on the basis that it and the note in the sum of $1,950.00 were procured by fraud and without consideration. Appellants also sued to have the cloud removed from their title and for exemplary damages against Charles E. Harrist who conveyed the house and lot to Appellants. The case was tried to a jury and all special issues were answered in favor of the Suttons with the exception of Special Issue No. 14, in which the jury found that the Suttons had failed to exercise reasonable diligence to discover the legal effect of the vendor's lien note and deed of trust which they signed on August 26, 1964. The Suttons timely filed their motion for judgment, based upon the findings of the jury that no consideration was paid by Appellee Grogan Supply for the note and deed of trust, and for the further reason that the jury had found that the second lien and note had been procured by fraud. In the same motion, Appellants moved the court to disregard the jury's answer to Special Issue No. 14 and enter judgment upon the answers to Special Issues Nos. 1 through 13 (Special Issue No. 2, concerning Mrs. Sutton's separate acknowledgment, had been withdrawn by Appellants and the jury did not answer it).

The Appellants submitted to the court affidavits from each of the members of the jury that they had intended to answer Special Issue No. 14 in favor of the Suttons. However, these jurors were not subpoenaed to testify at the hearing on the motion for new trial, nor were they subpoenaed to testify for Appellants at the time the motion for judgment was under consideration by the trial court. All the Appellees (Defendants) joined in a motion for judgment in their favor, based upon the fact that the jury had answered Special Issue No. 14 favorably to them, finding that the Suttons failed to exercise reasonable diligence to discover the legal effect of the note and deed of trust which they had signed. The Appellees had entered a defensive plea of the four-year statute of limitations and urged the trial court to enter judgment for them because Appellants' cause of action was barred after four years when the Suttons failed to exercise reasonable diligence to discover the legal effect of the note and deed of trust.

The record reflects that the trial court granted Appellees' (Defendants) motion for judgment, and the Suttons timely filed their motion for new trial. The motion for new trial was set for hearing and was overruled by the trial court. Appellants timely filed their notice of appeal and appeal bond and now submit five points of error for consideration by this court.

The facts surrounding the land transaction in question are that Charles E. Harrist and wife, Geraldine, owned a house and lot in Texarkana, Texas, which they wanted to sell. The testimony reflects that Appellee Harrist approached the parents of Appellant Curtis Sutton (Harrist and Sutton's parents having once been neighbors), and inquired if they knew of anyone who would like to assume a loan on a small home in Bowie County, Texas, and pick up the payments on the house and lot with no down payment, closing costs, or other fees. Appellants contended that Harrist represented to them that they would merely assume the indebtedness against the house and lot with Surrey Investment Company, and that they could move in and commence making monthly payments with no down payment or other costs. Subsequently, Harrist informed the Suttons that all papers were ready to be signed and, upon presentation of the papers to Appellants, they signed all that were placed before them, without examining the contents of the instruments.

Appellants moved into the house and started making the monthly payments to Surrey Investment. Four years and eight months later the Suttons received a letter from Appellee, Grogan Supply Company, Lumber Division, informing them their note to Grogan Supply in the sum of $2,583.77, being the principal and accrued interest, would be payable on or before the 26th day of August, 1969. Upon receipt of the letter, Appellants began to inquire about the note and learned that they had signed a note and deed of trust directly to Grogan Supply Company in the sum of $1,950.00 on August 26, 1964, bearing interest at the rate of 6 1/2% Per annum with no payment by way of principal and interest to be made for a period of five years. Appellants testified that they did not have any dealings with Appellee Grogan Supply in relation to the purchase of the house and lot. The Suttons' testimony is corroborated by that of Mr. Parker, an employee of Appellee Grogan Supply. The testimony established that Appellee Harrist owed Grogan Supply $1,950.00, and had the Suttons sign a vendor's lien note in that amount, payable directly to Grogan Supply, and secured it by a second lien deed of trust and a vendor's lien in the deed executed by the Harrists to the Suttons. No contact was ever had between Grogan Supply and the Suttons until the Suttons received the letter stating that the note would soon be due.

Appellants' first Point of Error is as follows:

'The court erred in granting judgment for Appellees, the effect of which is to allow Appellees to enforce the provisions of a Deed of Trust upon Appellants' home, when the jury had found that same was not supported by consideration.'

The jury found in answer to Special Issue No. 1 that Appellee Grogan Supply had not paid a consideration to the Suttons to execute the note and deed of trust. The jury also found that Harrist had represented to the Suttons that they were merely assuming the balance of an indebtedness to Surrey Investment Company, and that Harrist had represented that the amount that the Suttons would be paying for the land would be the sum of $9,800.00. Further, the jury concluded that the Suttons did not have knowledge that they were executing a note and deed of trust in favor of Appellee Grogan Supply, nor were they in possession of facts or information which would have put an ordinarily prudent person upon inquiry, which if diligently pursued would have led to the discovery prior to August 26, 1968, that they had signed such note and deed of trust.

The evidence shows that Appellee Grogan Supply accepted the note and deed of trust in liquidation of a pre-existing debt owed by Appellee Harrist to Appellee Grogan Supply, and that the Suttons were not a party in any manner to the transaction which established the debt from Harrist to Grogan Supply.

Appellants' Point of Error No. 1 is without merit. The facts clearly show that the Suttons got all of the consideration they bargained for, that being the house and lot. Appellant Charles Sutton testified that he thought his house was worth $14,000.00 at the time of trial, which is considerably more than he assumed and agreed to pay, even if the Surrey Investment Company balance of $9,800.00 is added to the Grogan Supply Company note of $1,950.00. It is obvious that the consideration which moved to the Suttons was the house and lot. They did not have to receive a consideration directly from Grogan Supply Company. As the testimony of Appellee Harrist and Appellee Grogan's employee, Mr . Parker, clearly shows, Harrist owed Grogan Supply for materials used in a house built for a Mr. Sims in Atlanta. Mr. Sims had traded and conveyed to Harrist the house and lot which Harrist later sold to Appellants. Because Harrist still owed Grogan $1,950.00 for materials used in the Sims house, Harrist prevailed upon Grogan to accept the second lien and the note it secured as payment for the debt that Harrist owed Grogan Supply. It is not necessary that a consideration be paid to the grantor in a deed (such as Harrist was here), but it may be paid to a third person, with the grantor's knowledge and consent. Furthermore, a third person for whose benefit the contract is made may enforce it, though no consideration passes from him (such as Grogan Supply here) to the promisor (such as the Suttons in this case). 13 Tex.Jur.2d, Sec. 44, p. 176.

If there were a mistake of fact as to the amount to be paid for the house by the Suttons, their remedy was by way of recision or reformation within four years of the date of the transaction. Those remedies were already barred by the four-year statute of limitation, Art. 5529, Tex.Rev.Civ.Stats. prior to the commencement of the action in this case. Gaither v. Gaither, 234 S.W.2d 135 (Tex.Civ.App. Texarkana 1950, N.R.E.); Redburn v. Shield, 338 S.W.2d 323 (Tex.Civ.App. San Antonio, 1960, Err. Dism'd). Appellants' First Point of Error is overruled.

The Second Point of Error urged by Appellants is as follows:

'The court erred in granting judgment for Defendants after the jury found that the note and deed of trust in question was obtained by fraud.'

Appellants' Second Point of Error must be overruled because the four-year statute of limitation, Art. 5529, Tex.Rev.Civ.Stats., bars Appellants' attempt to cancel the note and deed of trust to Grogan Supply on the basis that the execution of these instruments was procured by fraud. Appellants contended that they did not read the instruments which they signed...