Hill v. Preston , 119 Tex. 522 ( 1931 )

ON MOTION FOR REHEARING.

It may be said that on the default of Hill, LaRoe and Parker and Scott Woodward to pay the interest on their debt to Lloyd, that if they were without equities, Lloyd had the right, without notice to them, and if with equities, after notice to sell the land to another party and convey the superior title: Kennedy v. Embry, 72 Texas, 387, 10 S. W., 88; Lipscomb v. Fuqua, 103 Texas, 585, 131 S. W. 1061; Thompson v. Westbrook, 56 Texas, 225; Morrison v. Barry, 30 S. W., 376 (writ refused).

On the other hand where a vendor elects to sue for the debt and the establishment of his lien, he thereby loses his right to sue for the land and his only remedy is to foreclose his lien—the superior title passing out of him to his vendee: Von Roeder v. Robson, 20 Texas, 754; Roberts v. Lovejoy, 25 Texas Sup., 437, 28 Texas, 641; Bartley v. Harris, 70 Texas, 181, 7 S. W., 797; Gunst v. Pelham, 74 Texas, 586, 12 S. W., 233; Pierce v. Moreman, 84 Texas, 596, 20 S. W., 821; Gardner v. Griffiths, 93 Texas, 355, 55 S. W., 314; Mozoch v. Sugg, 254 S. W., (Com. App.) 770; Wiseman v. Cottingham (Civ. App.), 141 S. W., 817; Moon v. Sherwood (Civ. App.), 180 S. W., 296.

When Judge Hill sold to LaRoe and Parker, who assumed the debt to Judge Hill, LaRoe and Parker became the principal obligors and Judge Hill became only their surety: Spann v. Cochran & Ewing, 63 Texas, 240; Hill v. Hoeldtke, 104 Texas, 594, 142 S. W., 871; Brannin v. Richardson, 108 Texas, 112, 185 S. W. 562; Allen v. Traylor, 212 S. W., (Com. App.) 945; Carraway v. Fowler, 267 S. W., (Com. App.) 672; Clemmens v. McDowell, 5 S. W., (2d) 224, affirmed 12 S. W., ( Com. App.) 955; Snyder v. Slaughter, 208 S. W., 974; Strickland v. Higginbotham, 220 S. W., 433; Pickett v. Jackson, 42 S. W., 568; Clayton v. Watkins, 47 S. W., 810; Smith v. Farmers’ Loan & Trust Co., 51 S. W., 515; Fox v. Robbins, 70 S. W., 597.

After the sale of the land by Hill to Parker and LaRoe, Hill had no further interest in the land other than to require in event Lloyd sought to hold Hill personally on the notes, that the land be sold first as a primary fund and exhausted before any such personal recourse could be had against him: Harris v. Masterson, 91 Texas, 171, 41 S. W., 482; Ellis v. Scarborough, 289 S. W., (Com. App.) 1002, affirming 279 S. W., 859; Farmers & Merchants State Bank v. Cameron, 203 S. W. (El Paso) 1167; affirmed 231 S. W., (Com. App.) 738; Newby v. Harbison, 185 S. W., (Amarillo) 642; Doolen v. Hulsey, 192 S. W., (Amarillo) 364; Campbell v. Jones, 230 S. W., (El Paso) 710; Note 46 A. L. R., 322.

As such surety Judge Hill would have no cause of action against LaRoe and Parker and would not be entitled to sue them as his principals until he had paid off the notes to Richard Lloyd: 50 C. J. Sec. 408, p. 250; Ennis v. Cocke, 2 Texas, 592.

And a court of equity would not interfere on Judge Hill’s behalf as surety to compel his principals, LaRoe and Parker, to pay the debt before it had been ascertained that the land, primarily liable,, was insufficient to discharge it: 50 C. J. 244, Sec. 396, Note 35, p. 245; Slawson v. Watkins, 86 N. Y., 597.

All this is in analogy to the fact that one’s surety cannot maintain a cause of action for contribution against a co-surety until such surety has paid the creditor more than his share of the debt: 50 C. J. 294, Sec. 491; Jackson v. Murray, 77 Texas, 644, 14 S. W., 235; Langley v. Godwin, 264 S. W., 323, affirmed on other grounds, 276 S. W., (Com. App.) 659.

This surety relationship is not changed by the fact that Hill in his deed to LaRoe and Parker reserved a vendor’s lien to secure him against his liability on the notes which he had executed to Lloyd: Harris v. Masterson, 91 Texas, 171, 41 S. W., 842; Strickland v. Higginbotham Bros. & Co., 220 S. W., 433.

The rights of a subsequent vendee are protected against contracts between the original vendor and his immediate vendee: Huffman v. Mulkey, 78 Texas, 556, 14 S. W., 1029, 22 Am. St., 71; Bonner v. Mem. Home Bank, 122 S. W., 430; Levy v. Persons, 131 S. W., 446; McDonald v. Miller, 90 Texas, 309, 39 S. W., 89.

When the legal title went out of Lloyd by his suit to foreclose, it went through Hill and LaRoe and Parker into Scott Woodward, and was not subject to divestiture by oral agreement. Sanborn v. Murphy, 86 Texas, 43, 25 S. W., 610; Dial v. Crain, 10 Texas, 444; McDonald v. Whaley, 244 S. W., (Com. App.) 596.

It is a non-sequitur as held by this court that under the facts based on Woodward’s abandonment and LaRoe and Parker’s inability to pay the rents, that “under this state of facts Hill, as vendee of Lloyd, had the right of possession without accounting to Lloyd for the rent.” Mozoch v. Sugg, supra.

Lloyd clearly had the right on reacquiring the equity of redemption from Scott Woodward, to elect either a merger or not as he saw proper. If he elected a merger, all adverse claims against the mortgaged premises (except, of course, any intervening liens held by third parties) are extinguished. If he elected to treat the outstanding obligation as evidenced by Hill’s vendor lien notes as in existence, then he had a right to hold Hill and LaRoe and Parker personally, but when he did so, Hill and LaRoe and Parker had the correlative right (and that only) to require the land to be sold as a primary fund before recourse could be had against them personally. Neither Hill nor LaRoe and Parker would be entitled to any excess which the premises might bring, as that would go to Lloyd as the holder of Scott Woodward’s equity of redemption. This Court will find Harris v. Masterson followed and approved by the following authorities:

Ellis v. Scarborough, 289 S. W., (Com. App.) 1002, affirming, 279 S. W., 859; Newby v. Harbison, 185 S. W., (Amarillo) 642; Dooley v. Hulsey, 192 S. W., (Amarillo) 364; Farmers & Merchants State Bank v. Cameron, 231 S. W., (Com. App.) 738; Campbell v. Jones, 230 S. W., (El Paso) 710, 718.

If Hill was to obtain any additional rights to that right which he possessed as a surety for LaRoe and Parker, he must obtain the same in some legal manner, and since the subject matter of the contract is real estate, it would have to be in writing and obviously would have to be for a valid consideration. Foster v. Ross, 77 S. W., 990 (writ of error refused) ; Wade v. Cohen, 173 S. W., 1168; Thorp v. Gordon, 43 S. W., 323; Workman v. Ray, 180 S. W., 291, 293; Newsom v. Minton, 250 S. W., 768; Friedsam v. Rose, 271 S. W., 417; Oviett (Northwestern Fire & Marine Ins. Co. et al.) v. Warner, 288 S. W., (Com. App.) 434; Davis v. Holloway, 295 S. W., (Mo. Sup.) 105; Seward v. N. Y. Life Ins. Co., 152 S. E., (Va. Sup.) 346; Downing v. Brennan, 232 Mass., 525, 122 N. E., 729; Shriner v. Craft, 166 Ala., 146, 51 So., 884, 139 A. L. R., 918; 13 C. J., Sec. 209, p. 352 et seq.