Yett v. Houston Farms Development Co., 9560.

• Decision Date: 24 June 1931
• Docket Number: No. 9560.,9560.
• Citation: 41 S.W.2d 305
• Parties: YETT v. HOUSTON FARMS DEVELOPMENT CO. et al.
• Court: Texas Court of Appeals

Page 305

41 S.W.2d 305

YETT v. HOUSTON FARMS DEVELOPMENT CO. et al.

No. 9560.

Court of Civil Appeals of Texas. Galveston.

June 24, 1931.

Rehearing Denied July 22, 1931.

Appeal from District Court, Galveston County; C. G. Dibrell, Judge.

Suit by the Houston Farms Development Company and others against Richard Yett, receiver of Turnbow Oil Corporation, and others. Judgment for plaintiffs, and defendant named appeals.

Affirmed.

Howth, Adams & Hart, of Beaumont, W T. Williams and W. T. Williams, Jr., both of Austin, and Ralph Durham, of Beaumont, for appellant.

Williams, Neethe & Williams, of Galveston, and Vinson, Elkins, Sweeton & Weems, and Fred R. Switzer, all of Houston, for appellees.

LANE, J.

This suit was brought by Houston Farms Development Company, successor in title of T. Martin's estate, against numerous individuals and against the known and unknown stockholders of the Turnbow Oil Corporation and the Turnbow Production Company.

The petition was in the usual form of petitions in suits of trespass to try title. The purpose of the suit was to try title to certain described 5,737 acres of land situated in Galveston county, a part of 36,000 acres formerly conveyed by T. W. Davis, independent executor of the estate of T. Martin, and Aline Martin, widow of T. Martin, to W. C. Turnbow in January, 1919, and which was later reconveyed by Turnbow and wife to T. W. Davis, executor, in consideration of the cancellation of the unpaid purchase-money notes and other obligations executed and assumed by W. C. Turnbow moving his vendors to convey said lands to him.

After this suit was filed, one Richard Yett was appointed receiver for the Turnbow Oil Corporation, and he made answer in the suit as a defendant and disclaimed as to all interest in the 5,737 acres, except as to seven-eighths of the minerals, which had been conveyed by W. C. Turnbow to the Turnbow Oil Corporation prior to the reconveyance by Turnbow to Davis, executor. As to said seven-eighths of the minerals, such receiver alleged that the Turnbow Oil Corporation had acquired its title thereto in the following manner:

First. By deed from the executor of the estate of T. Martin and his widow to W. C. Turnbow of date January 2, 1919, by which such parties conveyed to Turnbow the 5,737 acres of land involved in this suit, together with other lands, for a consideration of $537,783.30, payable by the assumption by Turnbow of certain vendor's liens existing against the lands, amounting to about $185,000, and the execution by him of eleven vendor's lien notes, aggregating the sum of $325,707.

Second. By a deed from W. C. Turnbow to Turnbow Oil Corporation of date January 27, 1920, whereby the said seven-eighths of the minerals upon and under the land was conveyed to the Turnbow Oil Corporation, it being expressly stated in such deed that one-eighth of such minerals was reserved to the grantee.

Pleading further, the receiver alleged:

That "on the 14th day of March, 1922, W. C. Turnbow, being unable to meet his obligations to the Martin Estate and unable to pay the notes representing the balance of the purchase price of the said land, entered into an agreement with the representatives of the Martin Estate to reconvey the lands by quit-claim deed, conditioned upon the cancellation and surrender of the remaining unpaid vendor's lien notes executed by W. C. Turnbow to the estate, and this agreement was carried into effect by W. C. Turnbow and wife conveying, on the 14th day of March, 1922, to the executor of the Martin Estate, the lands and premises covered by the deed from said estate to Turnbow above described, and in this deed of reconveyance it is expressly stated that the consideration was the cancellation and surrender of the remaining unpaid vendor's lien notes executed by W. C. Turnbow to T. W. Davis, executor of the Martin Estate, and described in the deed to W. C. Turnbow from T. W. Davis, executor, dated January 2, 1919, and further expressly describing the notes and also expressly stating a further consideration of the cancellation of all indebtedness due by W. C. Turnbow to T. W. Davis, executor of the estate under certain other instruments.

"That the legal effect of this agreement and reconveyance in pursuance thereof was that W. C. Turnbow and wife conveyed only the interest they then had in the said lands, to-wit, the surface and one-eighth of the minerals, and that by such agreement the title and possession of the Turnbow Oil Corporation to seven-eighths of the minerals under said lands were released and freed of all liens and claims against said minerals by the Martin Estate.

"That the legal effect of the agreement between the Martin Estate and Turnbow for his reconveyance was an election on the part of the estate to rescind the original sale to W. C. Turnbow by the Martin Estate receiving back whatever right, title and interest Turnbow and his wife had at that time, to-wit, the surface and one-eighth of the minerals, the consideration to Turnbow being that his remaining indebtedness to the estate should be cancelled, and that the Martin Estate was bound by its election to rescind and was estopped to assert any right or title in the seven-eighths of the minerals conveyed by Turnbow to Turnbow Oil Corporation.

"That the reasonable market value of the interest in the said lands remaining in Turnbow at the time of his reconveyance as above stated, to-wit, the reasonable market value of the surface and one-eighth of the minerals, was at least equal to, if not greater than, the balance of the indebtedness then owed by Turnbow to the Martin Estate.

"That at the time of the agreement aforesaid between the Martin Estate and Turnbow and at the time of his reconveyance in pursuance of said agreement, or at about said time, W. C. Turnbow, without any authority whatsoever, undertook to reconvey by joint deed from Turnbow Oil Company and Turnbow Production Company, through himself as president of each company, by quit-claim deed, all of the right, title and interest of the two corporations to the said lands, that is, purporting to convey seven-eighths of the minerals that had been theretofore conveyed by W. C. Turnbow to Turnbow Oil Corporation, which said corporation had, in the meantime, conveyed seven-eighths of the minerals under certain definite portions of said lands to the Turnbow Production Company; that the said joint deed from the two corporations was void and of no legal effect to convey any title out of the said corporations, because same was without any authority whatsoever from the respective officers or stockholders of said corporation, but that the purported conveyance was for the sole benefit of W. C. Turnbow, purporting to act as the president of each company, and for the purpose of cancelling his personal indebtedness to the Martin Estate and others; and that thereby the Martin Estate having agreed to cancel Turnbow's indebtedness in consideration that he reconvey what title and interest he personally had in said lands at said time, was estopped to claim any right or title under the purported joint deed from the Turnbow Oil Corporation and the Turnbow Production Company.

"That, premises considered, it was the duty of the Martin Estate to notify the defendant, Turnbow Oil Corporation, either that they elected to rescind the contract and take back the property or that they would file suit for the balance due and foreclose the vendor's liens, if the estate was claiming the title to the mineral interest conveyed by Turnbow to the Turnbow Oil Corporation, but that it had failed to make any such claim or give any such notice to the proper officers, agents or stockholders of the said corporation, and that in the circumstances it was the duty of the Martin Estate to file suit for foreclosure, making W. C. Turnbow and the two corporations defendants in order that the rights and interests of the corporations should be duly protected, because equities had intervened, in that the Turnbow Oil Corporation paid a valuable consideration for seven-eighths of the minerals and the said W. C. Turnbow had paid substantially half of the purchase price for said land and had made permanent improvements thereon of the value of approximately One Hundred Thousand ($100,000.00) Dollars, and that the reasonable market value of what Turnbow himself reconveyed to the Martin Estate was at least equal to the amount he still owed the estate on the purchase price; and that, therefore, the Martin Estate could not arbitrarily rescind its contract of sale to W. C. Turnbow, at least could not rescind such sale with respect to the interest that had been conveyed by Turnbow to the Turnbow Oil Corporation, but was in a position to rescind, if at all, only by agreement with W. C. Turnbow with respect to his reconveying the interest he then had.

"That the Martin Estate was further estopped to assert any right or title under the purported deed from Turnbow Oil Corporation, because monies belonging to said corporation were used by W. C. Turnbow to pay off part of Turnbow's indebtedness to the Martin Estate, and that the officers and agents of said estate accepted the said money knowing that it was paid by W. C. Turnbow with and out of the funds belonging to the Turnbow Oil Corporation; and that the Martin Estate frequently granted extensions of time within which the said vendor's lien notes should be paid, and thereby waived their rights to strict performance of payments of said vendor's lien notes according to their tenor.

"That plaintiff and the Martin Estate were estopped to assert any claim to seven-eighths of the minerals conveyed to the Turnbow Oil Corporation, because at the time of the agreement between the Martin Estate and W. C. Turnbow for his reconveyance as aforesaid, the deed from Turnbow to Turnbow Oil Corporation was duly recorded and the officers and agents of the Martin Estate had actual and constructive knowledge at the time of said reconveyance...