Whiteselle v. Texas Loan Agency

• Decision Date: 06 June 1894
• Parties: WHITESELLE et al. v. TEXAS LOAN AGENCY.
• Court: Texas Court of Appeals

27 S.W. 309

WHITESELLE et al. v. TEXAS LOAN AGENCY.

Court of Civil Appeals of Texas.

June 6, 1894.

Appeal from district court, Navarro county; Rufus Hardy, Judge.

Bill in equity, brought by the Texas Loan Agency against J. E. Whiteselle & Co., to enjoin a sale under a mechanic's lien. There was a decree for plaintiff, granting the injunction, from which defendants appeal. Reversed.

This suit was instituted to enjoin the sale of the land described in plaintiff's petition. The facts alleged in said petition are, in substance, as follows: That on October 6, 1888, the Navarro Fair Association borrowed of appellee $8,000, and to secure same executed a deed of trust on said land, which was duly filed for record October 11, 1888. That said land was sold by the trustee in said deed of trust on October 7, 1890, and appellee became the purchaser, and received a deed to same, on same date, and went into immediate possession, and has since retained possession of same; the said deed being filed for record October 13, 1890. That said loan was made upon the faith of having a first lien on said land as security, and that said association represented to appellee that there were no other liens on same, except certain vendors' liens, for which the money was borrowed to pay off. That on December 31, 1888, appellants filed in the clerk's office, for record, an account for $1,205.06, purporting to be for work and labor done and material furnished in erecting certain improvements on said land, thereby intending to fix a lien upon said land. The account filed, however, was against the Navarro County Fair Association. That on June 3, 1890, the appellants filed suit against the Navarro County Fair Association, and on July 11, 1890, obtained judgment by default against said association for the sum of $1,452.06, with 12 per cent. interest from date, foreclosing the mechanic's lien on said land and ordering sale thereof, and that writ of possession issue. That appellee was not a party to said suit, and did not know same had been filed until long after the adjournment of the term of court, and did not know, until it heard said judgment had been rendered, that appellants claimed a lien on said land. That an order of sale had been issued in said case, and R. H. Cubley, sheriff, was proceeding to execute same by selling the land, and that said order of sale would, in his hands, operate as a writ of possession. That the prices charged by appellants in said account were exorbitant. That there was no agreement to pay 12 per cent. interest, and that said judgment was obtained through connivance of J. E. Whiteselle, then president of said association, and was rendered for a greater sum than was due. That the account filed was against the Navarro County Fair Association, and the affidavit thereto states that items thereof were done and furnished by contract with the Navarro County Fair Association, the real name of said concern being "Navarro Fair Association." That the items of said account are dated on several days, beginning September 6, and ending October 1, 1888, but said account was not filed until December 31, 1888, — more than 30 days after the accrual of said account, or any part thereof. That appellants were not original contractors, the said account being for work done and material furnished under a verbal contract, as shown by petition and defendants' answer. That no written contract was entered into, or filed, but that the filing of the account alone was depended upon to fix the lien. That the affidavit to the account filed does not comply with the law, in that it does not contain the words "that all legal offsets, payments, and credits have been allowed." When appellee learned that appellants claimed a lien upon said lands, while denying the validity of same, it offered, if allowed to open up said case and contest the validity of said lien, to pay off same, or any part thereof held by the court to be a lien thereon. That appellee is ready, willing, and able to pay off any sum of money the court may hold to be a valid lien on said premises, and prays the court, if it should find appellants entitled to a lien on said lands, to ascertain the correct amount of same, and allow appellee to pay it and redeem the property, and now tenders payment of the amount found to be a lien. Plaintiff averred that, at the time the loan was made, J. E. Whiteselle, a member of the firm of J. E. Whiteselle & Co., was also a stockholder and director in said Navarro Fair Association, and, if he did not join in the representations to plaintiff that there was no lien or liens on the lands, he knew same were made, and that plaintiff was making the loan on the faith of such representations, and he did not disclose to plaintiff that he or his firm claimed or had any lien thereon; that, as such director, said Whiteselle was taking an active part in the management of the affairs of said association, and had a voice in the management of all its business affairs, and that he was the managing partner and representative of appellants' firm; that he was present at the meeting of the board of directors when it was decided to apply to plaintiff for a loan, and advised that the application be made, and was a member of the committee appointed to confer with plaintiff about getting said loan; that plaintiff made the loan upon the express understanding that it would have the first lien on said property, and Whiteselle knew this, but did not mention the lien now claimed, but joined in the representations to plaintiff that the property was good security, and clear of all other liens; that, but for said representations, plaintiff would not have made this loan; that, at the time the money was borrowed from plaintiff, Whiteselle & Co. expected to be paid out of same, and for this reason claimed no lien, but though Whiteselle was a director in said corporation, and had a voice in the appropriation of the money, he did not collect his debt; and that, said corporation being now insolvent, the lien is being claimed on the property which it was not intended at the time to claim, which property is not sufficient security for appellee's debt. It was further alleged that the money was borrowed from appellee with the understanding that it would be appropriated to the payment of certain debts which were a first lien on the property, and that plaintiff should thereafter have and hold a first lien on said property, and that the money was so applied, and that Whiteselle knew this, and, with the other directors, agreed to it. Hence, plaintiff says it is and should be subrogated to the rights of said first lien holders. Plaintiff averred that, by a sale of said land under said judgment, its possession of the land would be disturbed, a cloud cast upon its title, and appellee unnecessarily harassed and annoyed; that when it purchased said land it did not know of the claim of appellants, and did not know a judgment had been rendered, but that appellants, when said suit was filed, had both actual and constructive notice of plaintiff's lien on said land; and that plaintiff was not made a party thereto because appellants hoped thereby to annoy and harass plaintiff, and cloud plaintiff's title to said land, and thereby force it to pay an unjust debt. That plaintiff had no adequate remedy at law, whereby its rights and interest can be protected and adjusted. Plaintiff prayed that the judgment of J. E. Whiteselle & Co. against said Navarro County Fair Association, so far as the same declares and forecloses a lien upon the property in controversy, be set aside, and held for naught, and that the injunction restraining sale under said judgment be made perpetual, but that, if it should be mistaken in asking this relief the rights and equities of plaintiff and defendants be adjusted, the amount due appellants ascertained, and plaintiff allowed to pay off same, and redeem the land, and that, if plaintiff should be mistaken in this ground of relief, it be subrogated to the rights of the first lien holders on said premises, and said first lien be foreclosed for the benefit of this plaintiff. Plaintiff set out all the facts of the case, and prayed for all such general relief as it might be entitled to in the premises. The defendants demurred to the petition of plaintiff, both generally and specially, and answered to the merits, in substance alleging the following: That the judgment referred to in plaintiff's petition in favor of appellants should have been a judgment against the Navarro Fair Association, and that the word "County" was improperly entered upon defendants' books, and in the bill of particulars filed for a lien, for, as defendants averred, at the time of all said transactions, and now, there does not exist in the county a corporation by the name of the Navarro County Fair Association, for but one existed at the time of all the transactions referred to and set out in plaintiff's petition, and that was the Navarro Fair Association, which is the proper and technical name of the corporation to which these defendants furnished the lumber and material for the erection of the houses and fencing on the land described in plaintiff's petition; that said Navarro Fair Association received all the benefits from the material and improvements made on this land; that defendants intended and thought they were charging said account to the Navarro Fair Association, and that they intended and thought that they were fixing their lien against the Navarro Fair Association, and that they had obtained their judgment against the Navarro Fair Association. Defendants prayed that said judgment against the Navarro County Fair Association be amended and corrected to run against the Navarro Fair Association. If this correction be refused to defendants, it being deemed unnecessary by the court, then defendants prayed that the lien already established on defendants' demand be in truth regarded as a lien against the...