First State Bank of Wortham v. Bland , 291 S.W. 650 ( 1927 )

Not being able to agree with my associates, I hereby file the following dissenting opinion:

This cause was instituted by plaintiff the First State Bank of Wortham, Tex., on the 14th day of February, 1925, being a suit in trespass to try title, against defendants, J. C. Bland and wife, Mrs. J. C. Bland, to recover certain real property in the town of Wortham, known as the Commercial Hotel, said pleading being in the usual form of trespass to try title, alleging that plaintiff was the owner of said property on January 3, 1925, and was on said date dispossessed by defendants, etc. On July 6, 1925, plaintiff bank filed a first supplemental petition, pleading the common source, through whom it and defendants were claiming title, to be W. L. Tate. Plaintiff also filed additional supplemental petitions, to which reference will hereinafter be made. Defendants filed an answer, containing a general demurrer, general denial, and plea of not guilty; also a cross-bill in which they sought affirmative relief. Defendants also interpleaded S. V. Tate, the vendor of plaintiff bank, and also P. J. Small, as administrator of the estate of W. L. Tate, deceased, alleged to be the remote vendor of plaintiff bank, and the vendor of defendants; also certain special pleas, setting out their source and claim of title.

The case was tried before a jury, and, in response to special issues submitted to them, the jury found as follows:

"(1) The defendant J. C. Bland, before entering into negotiations for the purchase of the hotel property in question, did see S. V. Tate at Saginaw, Tex., with a view of purchasing same.

"(2) S. V. Tate did tell J. C. Bland that he did not own the property in question, and did refer said Bland to W. L. Tate as the owner thereof, if he wished to purchase, before the execution of the contract of purchase and sale between W. L. Tate and J. C. Bland.

"(3) That such statement of S. V. Tate did induce J. C. Bland to enter into the contract of sale with W. L. Tate for the purchase of the property in question.

"(4) That the vice president of the First State Bank of Wortham, or other officer of said bank, did know before it received the deed from S. V. Tate that said S. V. Tate had made said representations to said J. C. Bland, and that said J. C. Bland was induced thereby to enter into the contract of sale and purchase with said W. L. Tate.

"(5) That W. L. Tate did not make a selection of certain specified leases owned jointly by himself and J. C. Bland, in full settlement and satisfaction of the $7,000 deferred payment for the hotel property provided for in the contract of sale entered into between said W. L. Tate and J. C. Bland for the purchase of said property."

"(7) The defendant J. C. Bland did build the 22-room addition to said hotel, and the garage, and make the other improvements specified in the contract of sale within the time specified in said contract.

"(8) The total of all of the improvements placed on the premises in question by J. C. Bland is $10.000."

In response to plaintiff's requested special issue given by the court, the jury found:

"After the death of W. L. Tate, J. C. Bland did assert and claim to own a full one-half interest in the oil and gas leases which stood in the name of W. L. Tate, which said W. L. Tate admitted were owned one-half by said J. C. Bland and one-half by W. L. Tate."

In response to special issue requested by defendants and given by the court, the jury found:

"W. L. Tate did cancel the indebtedness of $7,000 against the property involved in this Suit."

On said findings of the jury and such additional findings by the court as the evidence warranted, the court entered judgment for the defendants. The statement of the case as made in the majority opinion is substantially correct and will not be repeated here.

It is thought the findings of the jury to the first, second, third, and fourth special issues were sufficient to require judgment to be rendered, not only against S. V. Tate, but also against the plaintiff bank, provided there is evidence to sustain the finding in response to the fourth special issue, to the effect that said bank had notice at the time it received its deed from S. V. Tate of the representations by S. V. Tate to J. C. Bland to the effect that the hotel property belonged to W. L. Tate. The contract of sale from W. L. Tate to J. C. Bland was dated November 18, 1921, and filed for record in the deed records of Freestone county on May 15, 1922. The deed from S. V. Tate to plaintiff bank was not made until January 3, 1925, so said bank at the time it received its deed had constructive notice of all the terms of said contract of sale. Again, defendants Bland and wife, since the date of said contract of purchase, have occupied said property, claiming it as their own, and said property is situated only a block or two from the office of said bank. Plaintiff bank knew of their possession of said property at the time it received its deed. The open, exclusive, and visible possession of the property in controversy by defendants Bland and wife was constructive notice to the plaintiff bank of all the rights by which said parties held said property. Watkins et al. v. Edwards et al., 23 Tex. 443; Newman v. Phalen et al. (Tex.Civ.App.) 214 S.W. 958; Cox et al. v. Kearby (Tex.Civ.App.) 175 S.W. 734. But in the trial of the former case of S. V. Tate v. J. C. Bland, filed in 1922 to recover the same property involved here, and in which case a nonsuit was taken, the same facts were involved as are here involved, and the vice-president of plaintiff bank was a witness and was present during said trial. I think the finding of the jury to the fourth special issue is fully sustained by the evidence, and that plaintiff bank had not only constructive notice of all the rights by which defendants claimed to own said property, but also actual notice of all such rights, and that said bank's right of recovery was no better than S. V. Tate's rights would be if he was seeking such relief. The evidence, some of which is copied in the majority opinion, is ample to show that S. V. Tate repeatedly told J. C. Bland that he (S. V. Tate) had no interest in said property, but that it belonged to W. L. Tate. S. V. Tate knew of the sale to J. C. Bland, knew that Bland paid W. L. Tate $3,000 cash on said property, knew that Bland was expending some $10,000 for improvements on same, knew that Bland and wife were occupying it, claiming it, and improving it under their purchase from W. L. Tate. S. V. Tate never paid any taxes on it, never claimed any interest in it, nor attempted to exercise any control over it until after W. L. Tate's death. In 1922, S. V. Tate brought a suit against J. C. Bland and wife to recover the same property, but before the trial was concluded took a nonsuit, without testifying in said cause, and he did not testify in this cause — in fact, he has never testified that he owned any interest in said property. The record is conclusive that J. C. Bland relied upon the statements by S. V. Tate to the effect that he (S. V. Tate) owned no interest in said property, but that W. L. Tate did own same, and Bland was thereby induced to buy said property and pay $3,000 on the purchase price and to expend $10,000 for improvements, and the jury found that the bank knew, before it received the deed from S. V. Tate on January 3, 1925, that S. V. Tate had made said representations to J. C. Bland, and that J. C. Bland was induced thereby to enter into the contract of sale and purchase with W. L. Tate. The findings of the jury to the first four special issues are amply sustained by the evidence, and effectively estopped the bank from the right of recovery, and required the rendition of judgment denying the right of plaintiff bank to recover said property, and the trial court was correct in so holding. It is also true, if said bank had no notice, it could acquire no interest as an innocent purchaser, because it paid nothing of value but took a deed from S. V. Tate in settlement of a preexisting debt it held against W. L. Tate, deceased. McKamey v. Thorp, 61 Tex. 648; Spurlock v. Sullivan, 36 Tex. 511; Steffian et al. v. Milmo Nat. Bank, 69 Tex. 513, 6 S.W. 823.

It is thought clearly the plaintiff bank failed to show any right of recovery of any interest, either legal or equitable, in the property in controversy, and, as far as the plaintiff bank and S. V. Tate, who disclaimed any interest, are concerned, in any view of the case, the judgment awarding the property to Bland and wife is correct and should be affirmed.

Under other assignments the plaintiff bank complains of the failure of the trial court to instruct in its favor for the recovery of $7,000 and accrued interest, same being the amount of deferred payments on the property claimed by plaintiff to be unpaid; and under other assignments plaintiff bank contends it was entitled to judgment for said $7,000 on the findings of the jury. The record shows defendant J. C. Bland and W. L. Tate owned jointly and in equal interests certain oil and gas leases on about 10,000 acres of land in Freestone county, but title to same was in the name of W. L. Tate alone. This fact is established by an instrument in writing and not denied by any one. The evidence without dispute shows that W. L. Tate and J. C. Bland entered into an agreement by the terms of which J. C. Bland sold to W. L. Tate an interest of $7,000 in his (Bland's) one-half interest in said leases, in consideration of which W. L. Tate canceled or agreed to cancel the deferred payment of $7,000 against the hotel property, by reason of which, as contended by defendants, Bland became entitled to a deed conveying a clear title to said property to him. The record discloses further without dispute that W. L. Tate recognized Bland's right to such deed, and employed an attorney to prepare such deed, and said attorney did prepare such deed, but that W. L. Tate died suddenly without executing the same. There was evidence, and the jury so found, that J. C. Bland, after the death of W. L. Tate, claimed a half interest in said leases. While this evidence was proper to be considered, yet it was not sufficient to enable the court to say, as a matter of law, that said agreement between W. L. Tate and J. C. Bland was not made. The jury found that W. L. Tate did cancel said $7,000 against the hotel property, which was also an implied finding that said agreement was made. If this finding of the jury be construed to mean that W. L. Tate marked some instrument of writing, evidencing said indebtedness, "Canceled," then such finding is without evidence to support it, but, if said finding be construed to mean that W. L. Tate agreed to consider and did consider and treat said indebtedness as satisfied, then it is supported by the evidence. There was no written instrument evidencing said indebtedness except the contract of sale and purchase, and of course the parties would not be expected to cancel it. Under the contract of purchase, Bland was not entitled to a deed conveying the hotel property to him until he had paid all the purchase money. It seems the parties understood the whole matter would be settled between them, title to all the leases already being in W. L. Tate, by W. L. Tate executing a deed, reciting a cash consideration, conveying said hotel property to J. C. Bland, and to consummate the transaction, W. L. Tate instructed his attorney to prepare such deed, and said attorney did so, but W. L. Tate died suddenly without executing same. The jury found that W. L. Tate did not make a selection of certain specified leases owned jointly by him and J. C. Bland in full settlement of the $7,000 of deferred payment for the hotel property, and found further that J. C. Bland, after the death of W. L. Tate, did assert and claim to own a full one-half interest in said leases, and the plaintiff bank claims that on these two findings it was entitled to judgment for the $7,000 and accrued interest.

As shown by the record, the agreement between W. L. Tate and J. C. Bland was that W. L. Tate would cancel the $7,000 against the hotel property in consideration that he (W. L. Tate) be allowed to retain and become the owner of leases out of J. C. Bland's one-half interest of the value of $7,000; said leases to be of W. L. Tate's own selection. This agreement does not indicate that the selection of the leases by W. L. Tate was a condition precedent to the cancellation of said indebtedness. The parties evidently did not so understand. W. L. Tate during his lifetime had his right to select said leases, and after his death the same right vested in his legal representatives. This finding of the jury that W. L. Tate did not make selection of said leases, I think, was an immaterial finding, and was not determinative of any issue in the case. The other finding, to the effect that, after the death of W. L. Tate, J. C. Bland claimed a half interest in said leases, was purely and only evidentiary in its nature, proper to be considered by the court or jury in passing upon the controlling issues, but not determinative of any controlling issue in the case.

The bank pleaded the statute of frauds, and contends, if W. L. Tate did cancel said $7,000 indebtedness, as found by the jury, or agreed to treat same as settled, as the undisputed evidence shows, that such agreement was ineffectual because the $7,000 interest in the oil leases, being an interest in real estate, was not conveyed in writing by Bland to W. L. Tate. There are several reasons why it is thought there is no merit in this contention. The statute of frauds is not applicable. If W. L. Tate, in pursuance to the agreement he had made with Bland, had selected the leases, as he had the right to do, and Bland had refused to convey same to him, and Tate had filed suit against Bland for the recovery of said leases, then Bland could, by pleading the statute, have defeated a recovery, but would have been bound to restore what he had received; in other words, pay the $7,000 indebtedness. Ray v. Young, 13 Tex. 550; Thouvenin v. Lea, 26 Tex. 612; Brewer v. Wall, 23 Tex. 585,76 Am.Dec. 76; Allison v. Shilling, 27 Tex. 450, 86 Am.Dec. 622; Wright v. Hays, 34 Tex. 253; Bell v. Schwarz,37 Tex. 572. The statute does not render a contract thereunder absolutely void, but voidable only, and is for the benefit of, the defendant. Graham v. Kesseler (Tex.Civ.App.) 192 S.W. 299, and cases there cited. It is also true, in order for the statute to be available, it must be pleaded. League v. Davis, 53 Tex. 9; Texas Brewing Co. v. Walters (Tex.Civ.App.) 43 S.W. 548; Inter. Harvester Co. v. Campbell, 43 Tex. Civ. App. 421, 98 S.W. 93; Hendrix v. Brazzell (Tex.Civ.App.) 157 S.W. 280; Edwards v. Old Settlers' Ass'n (Tex.Civ.App.) 166 S.W. 423; Johnson v. Tindall (Tex.Civ.App.)161 S.W. 401; Larrabee v. Porter (Tex.Civ.App.) 166 S.W. 395; Savage v. Mowery (Tex.Civ.App.) 166 S.W. 905. What the bank was attempting to do, by pleading the statute in this case, was to show a want of consideration for the agreement on the part of W. L. Tate, by which he relinquished to J. C. Bland the $7,000, the balance of purchase money on the hotel property. Said plea should have been so designated and so treated by the trial court, and, when so treated, to be available in any event, it would have been necessary to show that W. L. Tate or his administrator had selected the leases of the value of $7,000, that Bland had refused to convey same, and defeated recovery thereof by pleading the statute of frauds. The court will not presume all these things in the absence of any pleading or evidence. But there is another reason why the bank was entitled to no relief by reason of the statute of frauds. At the time the parol agreement was made by W. L. Tate and J. C. Bland, whereby the $7,000 indebtedness was settled and the leases of the value of $7,000 became the property of W. L. Tate, the bank had no interest in said indebtedness nor in said leases. It was not a party to said contract. The invalidity of a parol contract within the statute cannot be set up by a stranger to it. The defense is personal to the one sought to be charged. Railway Co. v. Settegast, 79 Tex. 256, 15 S.W. 228, and cases there cited; General Bonding Casualty Ins. Co. v. McCurdy (Tex.Civ.App.) 183 S.W. 796; McManus v. Matthews (Tex.Civ.App.) 55 S.W. 589; Bell v. Beazley,18 Tex. Civ. App. 639, 45 S.W. 401. All of these assignments should be overruled. The trial court was correct in refusing to instruct a verdict for plaintiff bank for the $7,000 and was correct in refusing to render such judgment.

It is thought that the evidence was sufficient to support the finding of the jury to the effect that the $7,000 indebtedness was canceled by W. L. Tate, in the sense and only sense it could have been canceled by him, to wit, a verbal agreement or relinquishment, and that this court should not disturb said finding; but, if said finding is not supported by the evidence, or if said verbal relinquishment was not sufficient to extinguish said indebtedness, still the plaintiff bank was not entitled to recover said $7,000. The bank's suit was one in trespass to try title to the hotel property. The appellant bank in its pleading admitted the execution of the written contract of sale from W. L. Tate to J. C. Bland, and pleaded in the alternative that, if it was not entitled to recover the property on its petition of trespass to try title, then that J. C. Bland was still owing $7,000 of unpaid purchase money which was due and unpaid, and, the "bank having acquired and now being the owner of all right, title, and interest in said property, including the right to collect said purchase money, is entitled to judgment for said sum of money." Again the bank pleads in its third supplemental petition:

"This plaintiff again offers to accept from the defendants payment of the $7,000 called for in the written contract of purchase under which defendants claim * * * and to execute to defendants on said payment a deed to said property," etc.

The bank's right to recover the $7,000 is, under its own pleadings, made dependent upon its right to recover the property, and, if the bank was estopped to recover any interest in the property, it necessarily follows it could have no right to recover the $7,000 or any interest therein. The contract of sale from W. L. Tate to J. C. Bland was executory, and the legal title to the property remained in W. L. Tate until the purchase money was paid. If the $7,000 balance of the purchase money was not settled during the lifetime of W. L. Tate by the lease transaction, then on his death the beneficial interest in said executory contract vested in his legal representatives and was subject to administration for the payment of his debts. The adminstrator of the estate of W. L. Tate in his pleading asked that the bank be permitted to recover said property, but in the alternative prayed that the bank be permitted to recover said $7,000. There is no evidence in the record that would tend to show any right in the bank to such recovery. The adminstrator could not, by pleading or otherwise, short of an order of the probate court, confer such right. The plaintiff bank having failed to show any interest, either legal or equitable, in said property, it necessarily follows, in the absence of evidence showing some other right, that plaintiff bank could not be interested in the $7,000 purchase money alleged to be unpaid. If said $7,000 was not paid, and if same was not properly assigned or transferred by W. L. Tate, or his administrator in obedience to an order of the probate court, then the right of recovery of same was in said administrator. Neither S. V. Tate nor the administrator of W. L. Tate, deceased, has by pleading or evidence sought to recover the $7,000. Neither has in any way attempted to show any right to such recovery, nor by assignment or otherwise challenged the correctness of the judgment of the trial court in so far as their rights are involved. The bank, having no interest in said $7,000, has no grounds for complaint.

The writer is of the opinion the judgment of the trial court should be affirmed.