Texas Life Ins. Co. v. Texas Bldg. Co.

• Decision Date: 01 November 1957
• Docket Number: No. 15846,15846
• Citation: 307 S.W.2d 149
• Parties: TEXAS LIFE INSURANCE COMPANY, Appellant, v. TEXAS BUILDING COMPANY et al., Appellees.
• Court: Texas Court of Appeals

Page 149

307 S.W.2d 149

TEXAS LIFE INSURANCE COMPANY, Appellant, v. TEXAS BUILDING COMPANY et al., Appellees.

No. 15846.

Court of Civil Appeals of Texas, Fort Worth.

Nov. 1, 1957.

Homa S. Hill, Fort Worth, A. D. Mabray, Waco, for appellant.

Borden & Hand, Weatherford, for appellees Edward D. Matlock et ux.

Simon & Ratliff, Fort Worth, for appellee Texas Bldg. Co.

Richard Owens, Fort Worth, for appellees T. J. Bettes Co. and Lynn Institution for Savings.

MASSEY, Chief Justice.

From a judgment in denial of appellant's right to establish its purported lien on certain real estate as a first and superior lien, for its foreclosure, and for the removal of cloud cast upon title thereto by other instruments of conveyance and lien, it brings an appeal. Appellees moved to dismiss the appeal on the ground that the question had become moot, which motion we have heretofore overruled.

Judgment affirmed.

The property in question was a certain lot in a subdivision of the City of Weatherford, Texas, which, along with other lots, comprised a part of a 'speculative' residential addition promoted by two corporations, Nu-Homes, Inc., and Texas Building Company. As is customary to such enterprises, Nu-Homes, Inc., and Texas Building Company needed funds. In obtaining the funds, the lots on which the houses sought to be built and sold were tendered as security. Arrangements for the financing underwent certain changes so that certain groupings of lots were financed by different lending agencies. The appellant advanced to Texas Building Company an amount, which we will assume was at all material times $42,000.00, obtaining a lien secured by a deed of trust on a grouping of lots. This lien did not include the lot in controversy in this suit. At the time, the title thereto was in Nu-Homes, Inc., and the first lien on such lot was held by the Empire Investment Corporation, which is not a party to this suit.

As of October 6, 1954, the $42,000 debt was past due, though payment had been requested. There was a discussion on the part of a representative of the appellant and the debtor at the time, Texas Building Company, culminating in the furnishing of additional collateral to secure the indebtedness owing and represented by notes. This additional collateral was in the form of a deed of trust, subordinate and inferior to liens already against the subject property, dated January 20, 1955 (and placed of record on February 9, 1955) upon the lot in question, as well as upon other real estate. The deed of trust was executed by Texas Building Company to trustee for appellant. It is to be noted that a provision thereof was as follows: 'It is further agreed that, while above indebtedness and this Deed of Trust securing same remains secondary to any aforementioned recorded prior liens on the above described properties in the Country Club Heights Addition to the City of Weatherford, Texas, as described under Tract 1 hereof, for each $400.00 payment made by Grantor herein to said Texas Life Insurance Company, then said Company will execute and deliver to Grantor a partial release of this lien on any one said lot in said addition as designated by Grantor; and that after all said prior indebtednesses and liens on said properties have been paid off and released, then the amount required to be paid by Grantor to said Texas Life Insurance Company for partial release on any one said lot in said Addition, covered by this deed of trust, shall be $1,000.00, instead of $400.00.'

The indebtedness heretofore mentioned was not affected through any written procedure pursuant to the transaction. In other words, the notes evidencing the $42,000 indebtedness were not renewed or extended. The record does reflect that the appellant ceased to insist upon a payment upon the indebtedness, at least temporarily.

Appellant did not make any investigation of the premises in question as of the time the deed of trust was delivered or dated. Its representative had driven by the premises some two months prior thereto and had seen the house located on the lot, but had not observed anything to cause him to believe that there was an occupant. He had not attempted to look inside the house to see if there was any indication of occupancy. Appellant first discovered that the premises were occupied when they had a supplemental abstract of the subdivision made, in which a deed was discovered recorded to Mr. and Mrs. Edward Matlock, appellees in this case. The grantor in the deed was Nu-Homes, Inc. Prior to such time, appellant had not made inquiry of the grantor in the deed of trust about whether the premises were occupied, by whom, or under what right.

Proof introduced in behalf of the appellees, at least as to the appellees who, during the course of the trial, were interested in contesting the suit of the appellant, established that the Matlocks moved into the house on the lot in question on or about September 6, 1954. A few days prior to such date, Mr. Matlock had orally contracted with a Mr. TenEyck, an agent for Nu-Homes, Inc., (as the owner) for the purchase of the property. He had delivered some consideration in the form of cash prior to the time he moved in. The contract was reduced to writing on November 25, 1954. Later, by deed dated January 25, 1955 (entered of record on March 7, 1955) Nu-Homes, Inc., purportedly conveyed to the Matlocks the title thereto. Over a year later, by deed dated April 13, 1956 (entered of record on April 19, 1956) he rceived a warranty deed from Texas Building Company. On date of January 25, 1955, the Matlocks executed a deed of trust to trustee for T. J. Bettes Company, securing indebtedness of $7,200 advanced upon the purchase price for the property. The Matlocks had lived on the property from the date they moved in to the date of the trial, which began October 2, 1956. Mr. Matlock testified that until sometime in the month of April of 1956 he had never heard of any claim by appellant.

At the time the sale to the Matlocks was closed, and accompanied by its financing through T. J. Bettes Company, there was an indebtedness thereon owing by Nu-Homes, Inc., to the Empire Investment Corporation in the sum of $5,950. As is customary, this indebtedness was cleared through the use of the financing funds received through the T. J. Bettes Company, and the lien securing the same was released by instrument dated March 22, 1955, (filed for record on October 28, 1955.) The recitation of the instrument is 'in consideration of the payment in full of the above described note * * * release, discharge and quitclaim unto Mortgagor and Mortgagor's heirs, successors and assigns, all right, title, interest, * * *' as to the property in question.

It appears that as of January 20, 1955, Nu-Homes, Inc., conveyed the property in question to Texas Building Company. The premises in question, along with a great deal of other property, were described as the subject of the transfer, and not only was Nu-Homes, Inc., the grantor in the deed, but other persons, firms and corporations were also grantors therein. It is obvious that such transfer was part and parcel of the transaction whereby additional security was provided for the appellant on the indebtedness owing it by the Texas Building Company. It would appear that the property in question was innocently included.

The deed heretofore mentioned as having been delivered to the Matlocks by the Texas Building Company in April of 1956 was obviously for the purpose of removing any question about the title they had purportedly received by the grant from Nu-Homes, Inc. The date thereof was about two weeks subsequent to the date appellant's suit was filed.

Evidence to the effect outlined was presented to the court, and the case was taken under advisement, no action having been taken toward judgment until December 31, 1956.

While the case was under advisement, another suit was prosecuted to judgment by this same appellant. That suit was against different defendants from those in the instant case except for Texas Building Company, which was a party defendant in both cases. By the judgment therein, the $42,000 debt was reduced to judgment and a foreclosure was decreed as to the lien securing said debt against the grouping of lots originally mortgaged. The property in controversy in the instant suit was not mentioned in this other suit, nor in the judgment entered thereupon. After the Sheriff's Sale of the lots pursuant to judgment, there was still an amount in excess of $20,000 owing on appellant's...