Van Burkleo v. Southwestern Manuf'G Co.

• Decision Date: 19 December 1896
• Citation: 39 S.W. 1085
• Parties: VAN BURKLEO et al. v. SOUTHWESTERN MANUF'G CO. et al.<SMALL><SUP>1</SUP></SMALL>
• Court: Texas Court of Appeals

39 S.W. 1085

VAN BURKLEO et al. v. SOUTHWESTERN MANUF'G CO. et al.¹

Court of Civil Appeals of Texas.

December 19, 1896.

Appeal from district court, Dallas county; Edward Gray, Judge.

Suit by Nannie J. Van Burkleo and another against W. R. Wheeler, F. J. Shutt, and others. The Southwestern Manufacturing Company intervened. From a judgment in favor of intervener, plaintiffs appeal. Affirmed.

Thomas & Turney and Bower & Lewis, for appellants. Dickson & Moroney, for appellees.

LIGHTFOOT, C. J.

November 27, 1894, appellant sued to recover an interest of three-eighths in a certain tract of 288 acres of land in Dallas county, Tex., the suit being brought against W. R. Wheeler, G. S. Wilson and wife, C. E. Wilson, H. C. Wear, F. L. Garner, D. M. Sliger, W. W. Milton, John W. Balch, Jess Ramsey, F. J. Shutt, Ben Brandenberg, Sr., R. G. Penn, H. S. Carr, J. R. Daniel, J. H. Brandenberg, S. H. Finley, S. F. Hustedd, I. W. Vinyard, and the Gulf, Colorado & Santa Fé Railway Company, and she prays for partition, etc. Defendants G. S. and C. E. Wilson, J. M. Ramsey, R. T. Brandenburg, W. W. Milton, D. M. Sliger, and I. W. Vinyard disclaim, except as to certain interests, especially set up, and about which no question is made. R. G. Penn disclaimed. Defendant Shutt pleaded the general issue. Defendant Gulf, Colorado & Santa Fé Railway Company set up special rights, about which no question is made. The Southwestern Manufacturing Company, a corporation of Maine, doing business in Texas, intervened in the case against the plaintiff and the other defendants November 20, 1895. Its petition was in the form of an action of trespass to try title, and set up title to itself to the land in controversy, except certain specific portions particularly set out, and prayed for judgment for title and possession. The issues were disposed of to the satisfaction of the parties, except as between plaintiffs, intervener, and defendant Shutt, and it is only necessary for us to examine the issues concerning said parties. The court charged the jury to find a verdict in favor of the plaintiffs as against the defendant Shutt, and in favor of intervener as against both plaintiffs and defendant Shutt, which was done, and upon such finding judgment was rendered in favor of intervener and against both the plaintiffs and defendant Shutt, from which plaintiffs have appealed.

It was shown by the uncontroverted evidence, and is admitted in appellees' brief, that plaintiff, Mrs. Van Burkleo, was the owner of an undivided interest of three-eighths in the land in controversy by inheritance from her deceased mother and sister, and that her right to recover is clear unless her title has passed to an innocent bona fide holder. The legal title to the 288 acres of the Hale survey became vested in R. G. Penn, August 2, 1873, and was community property between himself and his wife. Mrs. Penn died, leaving appellant Mrs. Van Burkleo and another daughter, who subsequently died, and thus by inheritance from the mother and sister Mrs. Van Burkleo became the equitable owner of three-eighths of the tract, the legal title still remaining in the father, R. G. Penn. After some other conveyances, not in issue on this appeal, and covering about 25 acres, R. G. Penn, on December 3, 1888, borrowed $10,000 from the Texas Land & Mortgage Company, Limited, executing therefor his promissory note, due December 3, 1893, with coupons attached, for 9 per cent. semiannual interest. To secure this note, Penn executed to C. E. Wellesley, as trustee, a deed of trust in the nature of a mortgage, covering 1,095 acres of land, including the unsold portion of the Hale survey. This trust deed contained a power of sale in the usual terms, but, so far as the record shows, did not authorize the appointment of a substitute trustee. There is nothing in the record showing whether or not the mortgage company had notice of Mrs. Van Burkleo's equitable claim. On August 5, 1889, Penn conveyed by general warranty deed to F. R. Malone, 1,490 acres of land, embracing all the land in the Wellesley trust deed, as well as additional lands, and including the land in controversy. The recited consideration was $25,000 in cash paid and the assumption of the Wellesley $10,000 mortgage. At the time of Malone's purchase, he had notice of sufficient facts to charge him with notice of appellant's title. On June 15, 1892, Malone conveyed by general warranty to F. J. Shutt the lands embraced in the deed last mentioned, except a small tract not now in controversy, and including that portion of the Hale survey now in controversy. The actual and recited consideration was the assumption of the Wellesley mortgage, and 15 negotiable vendor's lien notes for $2,000 each, due, respectively, from 1 to 15 years, inclusive, after date, with 6 per cent. semiannual interest, and attorney's fees clause in usual form. To secure these 15 notes, Shutt executed to B. Blankenship, as trustee, a deed of trust on the land, with power of sale in the usual form, and providing that, if default should be made in the payment of any of said notes, or any installment of interest thereon when the same should become due and payable, all the notes should become due and payable at the option of the holder or holders thereof; and further providing that the deed or deeds which should be given by the trustee to the purchaser or purchasers at such sale should be prima facie evidence of the truth of all recitals therein as to default in the payment of said notes, or either of them, or any interest due thereon, the request to the trustee to sell, the advertisement of such sale, the proceedings at such sale, the facts, if any, authorizing a substitute to act in the premises, and of everything necessary to the validity of the sale. At the time of Shutt's purchase he had notice of sufficient facts to charge him with notice of Mrs. Van Burkleo's title. The same day, June 15, 1892, Malone indorsed the 15 Shutt notes in blank, and delivered them to the North Texas National Bank of Dallas as collateral security for a pre-existing debt of Malone's to the bank for upward of $60,000. Afterwards, at a date not shown, but prior to February, 1893, by agreement between the bank and Malone, the latter sold to the bank said notes, and his debt was credited with their face value. It was shown at the trial that Malone was insolvent. It was shown by the undisputed testimony that after the North Texas National Bank became owner of the Shutt notes, for its own protection it kept the interest paid on the $10,000 debt to the Texas Land & Mortgage Company (known as the "Wellesley mortgage debt"), and after the purchase by Edwards, Case, and the National Bank of Redemption of the Shutt notes, as hereafter shown, James B. Case, one of said parties, also bought the said $10,000 debt and mortgage, and there is some evidence tending to show that this mortgage was foreclosed about July 2, 1895, by John A. Pope, who claimed to be acting as trustee, substituted in lieu of Wellesley, but by what authority such substitution was made does not affirmatively appear from the record. At this sale James B. Case became the purchaser of the property in controversy. From the bill of exceptions it appears that the deed from John A. Pope was offered in evidence by appellants' counsel for the purpose of showing the extinguishment of the Shutt notes, and in offering it counsel attempted to limit the testimony to that purpose alone. If it should be considered for the purpose indicated by appellants' counsel, we cannot see that appellants' case can be benefited. It was shown that appellants set up no claim under the deed from Pope to Case; that the appellee Southwestern Manufacturing Company took possession of the property under the sale to Case, claiming it under some arrangement between itself and Case, and rented it to appellee Shutt, who is in possession under such tenancy.

Has Mrs. Van Burkleo's equitable title to three-eighths of the land in controversy been divested by the land having been bought by an innocent bona fide purchaser of the Shutt notes and mortgage without notice of her title? When Penn sold to Malone, the latter had notice; when he sold to Shutt, the latter had notice; and when appellee Southwestern Manufacturing Company bought at the trustee's sale under the Shutt mortgage, it had notice by the pendency of this suit. The only ground upon which the rights of an innocent bona fide purchaser can rest will be the bona fides of the holders of the notes after they passed out of the hands of Malone. The evidence is undisputed that the notes given by Shutt to Malone, and which were secured by the mortgage, were transferred by the latter to the North Texas National Bank in part payment of a pre-existing debt; that the bank parted with no money or thing of value at the time it acquired title to said notes, but merely gave Malone credit on his indebtedness...