Travelers Ins. Co. v. Stiles
| Decision Date | 05 November 1937 |
| Docket Number | No. 13611.,13611. |
| Parties | TRAVELERS INS. CO. v. STILES et al. |
| Court | Texas Court of Appeals |
Appeal from District Court, Dallas County; Towne Young, Judge.
Suit by the Travelers Insurance Company against Mary Rebecca Stiles and others. From the judgment, the plaintiff appeals.
Affirmed.
Renfro & Kilgore, of Dallas, for appellant.
B. F. Edwards, of Clarksville, Austin S. Dodd, of Dallas, and Wm. Hodges, of Texarkana, for appellees.
On August 18, 1921, J. M. Stiles and C. D. Stiles borrowed from the Texas Farm Mortgage Company $8,500, for which loan they executed their promissory note of that date, payable to the order of the lender on November 1, 1931, with interest from date at the rate of 6½ per cent., payable annually, evidenced by coupon notes attached to the principal note. At the same time they executed a second interest note for the principal sum of $1,734.50, payable in equal installments of $346.90, the first installment being payable on the first day of November, 1921, and the same amount on the first day of November of each succeeding year until fully paid, with interest at the rate of 10 per cent. per annum on each installment after its maturity.
Both of those notes were secured by deeds of trust of the same date of the notes on 901 acres of land situated in Red River county, Tex. Both of the notes and the deeds of trust were duly executed by J. M. Stiles and his wife, Mary Rebecca Stiles, and C. D. Stiles and his wife, Loula Stiles. In both of the deeds of trust Leslie Waggoner, of the city of Dallas, was named as trustee.
The deed of trust given for the principal note of $8,500, which will hereinafter be designated as the first deed of trust, contained the stipulation that if default be made in the payment of the principal or interest, or any part thereof, when due, then the holder of the notes should have the option to mature the whole of the indebtedness evidenced by said notes, and the trustee, upon request of any holder of said note or notes, should have authority to take possession of the property and sell the same to the highest bidder at public outcry at the courthouse door of Red River county after due advertisement of such sale as specified in the deed of trust, and to apply the proceeds of said sale (1) to the cost of executing the trust, including a commission to the trustee and 10 per cent. attorney's fee in the event of litigation; (2) "to the payment of the debt due said party of the third part, its successors or assigns, and the remainder, if any there be, shall be paid to the said party of the first part."
The deed of trust given to secure the payment of the additional interest note in the sum of $1,734.50, hereinafter designated as the second deed of trust, was made subordinate to the first deed of trust and stipulated that if default should be made in the payment of any of the installments of the $1,734.50 note, or if any of the covenants or agreements contained in the first deed of trust should be breached, then all of the installments of the $1,734.50 note should become due and payable at the election of the holders thereof and the trustee should, upon request of such holders, sell the real estate covered by the deed of trust in accordance with the powers given in the first deed of trust, which were expressly made a part of the second deed of trust.
The proceeds of such sale were to be applied by the trustee: (1) To the expenses of making the sale, including the trustee's commission; (2) to the payment of the amount due on the $1,734.50 note; (3) to the payment of any delinquent principal or interest or taxes or attorney's fees or other sums due under the first deed of trust, according to the terms thereof; the balance to be paid to the grantors or their heirs or assigns.
On September 12, 1921, which was less than one month subsequent to the date of the principal note in the sum of $8,500, the Texas Farm Mortgage Company, by an instrument in writing, bargained, sold, and conveyed that note, together with the lien created by the first deed of trust, to the Travelers Insurance Company, a corporation organized in the state of Connecticut with its principal offices in the city of Hartford. The consideration recited in that assignment was the payment by the assignee of the interest then accrued on the note.
At the time of the execution of the two deeds of trust, the land described therein belonged to a partnership composed of C. D. and J. M. Stiles, and on February 8, 1928, the two partners executed a written instrument by the terms of which that property, together with other lands, was conveyed to Martin Stiles as trustee, and in which it was recited that there was then outstanding against said property an indebtedness of $8,500 held by the Texas Farm Mortgage Company, due and payable on the 1st day of November, 1931, followed by these provisions: "And, whereas, we, the said C. D. Stiles and J. M. Stiles are desirous of preserving and keeping intact the above described property so that all indebtedness existing against the same might be extinguished, if possible, and the property be turned over under our testamentary declarations at the expiration of this trust in the most practicable manner possible"; followed by provisions prescribing the duties of the trustee, including the collection of rents and all other revenues arising from the property and application of the annual income, first to the expenses of operating the trust, including taxes, insurance, and repairs, and the balance to be set apart as a fund out of which should be paid any interest due on the mortgage lien on the land; also a sinking fund out of which to retire the said mortgage indebtedness when the same became due and with power to invest the same in the meantime in cattle, horses, mules, sheep, and goats, at his discretion, and to make distribution of the net revenues according to the testamentary declarations of C. D. and J. M. Stiles.
There were further provisions that the trust so created would be revocable at any time by the joint consent of the grantors; but should continue for five years after the death of either leaving the other surviving, unless the indebtedness against the property is sooner extinguished with revenues derived therefrom.
Ten days after the execution of that trust deed, J. M. Stiles executed a will, of date February 18, 1928, which contained, among others, these provisions:
C. D. Stiles also executed a will, dated March 26, 1928, which included these provisions:
C. D. Stiles died January 19, 1932, and his will was duly probated.
On January 26, 1933, J. M. Stiles executed to the Travelers Insurance Company, the holder of the principal note mentioned above, a chattel mortgage on certain crops growing and to be grown during the year 1933 on 125 acres of land covered by the two deeds of trust, in consideration of the extension by the holder of the maturity date of $552.50 interest accruing on said note, and due on November 1, 1932; said chattel mortgage to be held as additional security for said loan.
Thereafter, and on March 21, 1933, J. M. Stiles died and his will was also duly probated.
The second interest note for $1,734.50 was kept by the Texas Farm Mortgage Company, its payee, and was fully paid; the last installment being paid on November 1, 1925, which was more than two years prior to the execution of the trust deed. No payment has ever been applied on the principal of the note sued on here for $8,500, but all the coupon interest notes attached thereto were paid as they fell due.
This suit was instituted by the Travelers Insurance Company to recover the principal which matured according to its terms on August 18, 1931, with interest thereon as follows: November 1, 1932, $513.23; November 1, 1933, $552.50.
The petition included allegations of execution of the note and deed of trust securing it; assignment of same to plaintiff by the Texas Farm Mortgage Company; execution by C. D. and J. M. Stiles of the trust deed to Martin Stiles, trustee; execution of the chattel mortgage by J. M. Stiles; deaths of C. D. and J. M. Stiles; death of Mrs. Loula Stiles; and appointment of Jessie Stiles, defendant, as administratrix of her estate; and prayer was for personal judgment against the estates of C. D. and J. M. Stiles for principal and interest on the note, with foreclosure of the mortgage lien against all defendants.
Following were named as defendants, with allegation that each and all of them are claiming some interest in the property covered by the mortgage, the exact nature of which is unknown to the plaintiff:
"Mary Rebecca Stiles, individually and as independent executrix of the estate of J. M. Stiles, deceased;
Martin Stiles, individually and as trustee under a deed of trust executed by C. D. Stiles and J. M. Stiles, and as independent executor of the estate of C....
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