Sanger v. Warren , 91 Tex. 472 ( 1898 )

On the 12th day of August, 1887, Mrs. Martha A. Camp, who subsequently married Warren, conveyed by deed certain lands situated in Dallas County to O.P. Bowser, W.H. Lemmon, Oliver Thomas, J.D. Thomas and W.O. Thomas, in consideration of $41,589.80, $5000 of which was paid in cash and the balance evidenced by seven promissory notes, referred to in the deed executed by said grantees, payable to the order of said grantor, said notes reserving vendor's lien upon the property and stating on their face that they should not be transferred, it being unimportant to state their respective amounts and dates of maturity.

On the 15th day of March, 1888, said grantees, Bowser et al., by deed duly executed, conveyed said property to Luther Rees in consideration of the sum of $65,000, of which $17,486 was paid in cash, and for the balance Rees in said deed assumed to pay off and fully discharge the last six of the seven promissory notes referred to in said deed from Mrs. Camp to Bowser et al., and for the balance of said consideration, which was the sum of $15,000, he executed to said Bowser et al. his promissory notes, a further description of which is unnecessary, a vendor's lien being reserved in said deed to secure the payment of said notes. Rees purchased the land for the benefit of Sanger, Exall, Blankenship and Henderson, and they furnished the money to make the cash payment, but these facts were not known either to Mrs. Camp or Bowser and others until some time afterwards.

Rees subsequently conveyed the land and said Sanger and others received the considerations for conveyances made by him, the nature of such considerations not being material to state.

This suit was brought by Mrs. M.A. Warren, formerly M.A. Camp, joined by her husband J.F. Warren, against said grantees Bowser and others, said grantee Luther Rees, said Sanger and others, and one James Wathen who acquired some of the property under mesne conveyances under Rees, to recover upon certain of said promissory notes, and to foreclose the vendor's lien upon certain portions of said property.

The trial court rendered judgment in favor of Mrs. Warren for the sum of $37,791.50 against all said defendants except Rees and Wathen, and foreclosed the lien on the property against all of the defendants and ordered a sale of same in satisfaction of the judgment, and ordered execution over for any balance against O.P. Bowser, Oliver Thomas, J.D. Thomas, Alexander Sanger, Henry Exall, B. Blankenship and J.E. Henderson, and further rendered judgment in favor of O.P. Bowser, Oliver Thomas and J.D. Thomas against said Sanger, Exall, Henderson and Blakenship for any moneys they might be compelled to pay on the judgment.

From this judgment O.P. Bowser, Oliver Thomas and J.D. Thomas and Alexander Sanger appealed to the Court of Civil Appeals, which court affirmed the judgment of the trial court, except in so far as it affected O.P. Bowser, Oliver Thomas and J.D. Thomas, as to whom it reversed and remanded the cause; from which judgment of affirmance against him Alexander Sanger has brought the cause to this court upon writ of error.

We deem it unnecessary to undertake to state the numerous issues presented by the pleadings of the various parties or the facts shown by the voluminous record bearing upon same any further than they bear upon the liability of Alexander Sanger upon said notes, he being the only party complaining here of the judgment.

The first count in the petition sought to hold Sanger, Blankenship, Exall and Henderson liable upon said notes by alleging that said deed executed by Bowser and others on the 15th day of March, 1888, conveyed the property to said Sanger and others, they assuming therein as part of the consideration to pay said notes, and that said grantees, for the purpose of concealing their purchase so that plaintiffs would not know who the actual purchasers were, used the name of Luther Rees with his consent to represent their own, and while said Rees appears in the deed as the grantee, yet his name was used to represent and intended to represent Sanger, Exall, Blankenship and Henderson.

The second count sought to charge them with liability upon the notes upon the ground that Rees in buying the land was the agent of Sanger, Exall, Blankenship and Henderson, and that in purchasing same and assuming the payment of said notes he did not act for himself, but for and on behalf of Sanger and others who were his undisclosed principals, and that such course was taken for the fraudulent purpose of concealing from plaintiffs the liability of Sanger and others upon said assumption, and that upon acquiring information of the fact that they were undisclosed principals, plaintiffs accepted their assumption and demanded payment of the notes of them.

The third count seeks to charge them upon the ground that in the purchase of the property Sanger and others were partners under the firm name of Luther Rees, that name being used for the fraudulent purpose of concealing their liability upon the assumption of said notes contained in said deed.

The trial court, presumably upon the ground that there was no evidence to sustain the first and third counts, appears to have submitted the cause to the jury upon the second count only, giving a charge which, as far as it affects Sanger, is as follows:

"And if from the evidence before you, you find and believe that when Luther Rees purchased the land for which these notes were executed from Bowser and Lemmon and Thomas Brothers, he was acting for the defendants Exall, Sanger, Blankenship and Henderson, and you further find and believe that these last four defendants acted together in having Rees purchase the land, and that they paid an equal amount of the cash consideration therefor and were equally interested in the probable profits of the purchase, then in law they would be liable to the plaintiffs to the same extent that the original makers of the notes are, and in this event your verdict should be against said four defendants also for the full amount due on the notes.

"If from the evidence you find and believe that the defendants Sanger, Exall, Blankenship and Henderson were not interested in the land purchased by Rees from Bowser and Lemmon and Thomas Brothers, and that in purchasing the same Rees was not acting for them, your verdict should be in favor of said four defendants.

"If you find the defendants Sanger, Exall, Blankenship and Henderson liable in this case, then as between them and defendants Bowser and Lemmon and Thomas Brothers, the relation of principal and surety would exist and in this event you should find in favor of Bowser and Thomas Brothers over against the other four defendants for the amount found in favor of plaintiffs.

"Before the plaintiff can hold the defendants Sanger, Exall, Blankenship and Henderson liable in this case they must show by a fair preponderance of the evidence, that they were equally interested in the land purchased by Rees from Bowser and Lemmon and Thomas Brothers, and that the same was purchased for them, and that they assented to said purchase and complied with its terms, and if the plaintiffs have failed to show this, then they are not liable."

The effect of this charge is to instruct the jury that though on the face of the deed the land was conveyed to Rees and he assumed to pay the notes, still if he in making the purchase was in fact the agent of Sanger, Exall, Blankenship and Henderson, they are liable thereon as undisclosed principals.

Sanger by proper assignments questions the correctness of this charge. It has long been settled to be a general rule of law that if A. contracts with B. supposing him to be acting in his own behalf but afterwards discovers that he was acting for C., A. can thereupon elect to hold C. upon the contract. The rule is held applicable to written contracts, — and, by a process of reasoning not entirely satisfactory, even to those required by statute to be in writing. In the leading case of Higgins v. Senior, 8 M. W., 844 (1841), Parke, B., said: "The question in this case, which was argued before us in the course of the last term, may be stated to be, whether in an action on an agreement in writing, purporting on the face of it to be made by the defendant, and subscribed by him, for the sale and delivery by him of goods above the value of £10, it is competent for the defendant to discharge himself, on an issue on the plea of non assumpsit, by proving that the agreement was really made by him by the authority of and as agent for a third person, and that the plaintiff knew those facts, at the time when the agreement was made and signed. Upon consideration, we think it was not; and that the rule for a new trial must be discharged. There is no doubt, that where such an agreement is made, it is competent to show that one or both of the contracting parties were agents for other persons, and acted as such agents in making the contract, so as to give the benefit of the contract on the one hand to, and charge with liability on the other, the unnamed principals; and this, whether the agreement be or be not required to be in writing by the Statute of Frauds; and this evidence in no way contradicts the written agreement. It does not deny that it is binding on those whom, on the face of it, it purports to bind; but shows that it also binds another, by reason that the act of the agent, in signing the agreement, in pursuance of his authority, is in law the act of the principal. But, on the other hand, to allow evidence to be given that the party who appears on the face of the instrument to be personally a contracting party, is not such, would be to allow parol evidence to contradict the written agreement, which cannot be done." Beckham v. Drake, 9 M. . W., 79; Texas L. C. Co. v. Carroll Iler, 63 Tex. 48; Heffron v. Pollard, 73 Tex. 96 [73 Tex. 96].

The exceptions to the rule however are so numerous, broad and well defined, and rest upon principles of such a fundamental character, that the careful student of the law is driven to the conclusion that they are more important than the rule itself, and that the statement of the rule in such broad language has produced much confusion of thought and greatly embarrassed and probably has often misled the courts in their efforts to apply correct legal principles to particular cases.

It is well settled that the rule never had any application to negotiable instruments, no one being chargeable thereon "unless his name appears as a party to the paper in some relation." Authorities above cited.

Again it has been said that "this broad doctrine, that, when an agent makes a contract in his own name only, the known or unknown principal may sue or be sued thereon, may be applied in many cases with safety, and especially in cases of informal commercial contracts. But it is certain that it cannot be applied where exclusive credit is given to the agent, and it is intended by both parties that no resort shall be had by or against the principal (Story on Agency, sec. 160a), nor does it apply to those cases where skill, solvency or any personal quality of one of the parties to the contract is a material ingredient in it. Fry on Spec. Perf., sec. 149." Kelly v. Thuey, 102 Mo., 529. And the court refused to allow the undisclosed principal to enforce specific performance of a contract to convey land on the ground that the owner having contracted for the notes of the agent for deferred purchase money he could not be compelled to accept those of the principal.

Again it is well settled that the rule never had any application to sealed instruments, especially those which at common law must have been under seal such as conveyances of land. Briggs v. Partridge, 64 N.Y. 357; Tuthill v. Wilson,90 N.Y. 423; Walters v. Northern Coal Co., 5 DeG. M. G., 629; Borcherling v. Katz, 37 N.J. Eq. 150; Farrar v. Lee, 41 N.Y. Supp., 672; Evans v. Wells, 22 Wend., 335; Jones v. Morris,61 Ala. 518.

According to the weight of authority if the deed from Bowser and others to Rees had been sealed and delivered by the grantors to Rees at common law, his acceptance thereof would have made it his deed to the same extent that it would have been if signed and sealed by him also, and that as to him it would have been a sealed instrument. Therefore, an action of covenant could have been maintained against him but not against his principals Sanger and others on the contract of assumption therein contained. Finley v. Simpson, 2 Zab., 311, and authorities cited in briefs therein; Golden v. Knapp, 41 N.J.L. 215; Sparkman v. Gove, 44 N.J.L. 253; Atlantic Dock Co. v. Leavitt, 54 N.Y. 35; Bowen v. Beck, 94 N.Y. 86; Maynard v. Moore, 76 N.C. 165; Smith v. Pocklington, 1 Cromp. Jerv., 445; Vanmeter v. Vanmeter, 3 Gratt., 148, and authorities supra. There are cases holding that it would not at common law have been considered Rees' deed and that covenant could not have been maintained thereon against him. Maule v. Weaver, 7 Pa. St., 329; Johnson v. Muzzy, 45 Vt. 419; Trustees v. Spencer, 7 Ohio, 493; Goodwin v. Gilbert,9 Mass. 510; Martin v. Drinan, 128 Mass. 515; Hinsdale v. Humphrey,15 Conn. 431.

Therefore at common law the general rule above stated would have had no application to the conveyance to Rees, and his undisclosed principals would not have been liable. We are of opinion that the result is not affected by the following statute: "No private seal or scroll shall be necessary to the validity of any contract, bond or conveyance, whether respecting real or personal property, or any other instrument of writing, whether official, judicial or private, except such as are made by corporations, nor shall the addition or omission of a seal or scroll in any way affect the force and effect of the same." Rev. Stats., art. 4862. It is true the statute renders it unnecessary to place a seal upon a deed but it does not undertake to give one executed without a seal a different status from what it would have had before if executed with a seal. On the contrary, it provides that the addition or omission of a seal shall not "in any way affect the force and effect of the same." In order for the omission of the seal not to in any way affect its force or effect the deed must be allowed to retain the only status it had before. When we adopted the common law its settled rules relating to the construction and effect of deeds became a part of our system. To them we were compelled to resort to determine the nature and extent of the estate conveyed by the deed as well as of the covenants therein contained, and who were bound or benefitted thereby. It was not the intention of said statute to abolish them. As said in Jones v. Morris, 61 Ala. 524, in discussing a more comprehensive statute than ours, "though a seal may not now be necessary to a conveyance of a legal estate in lands, yet, the instrument, the deed of conveyance, which it must still be termed, though shorn of its dignity of a seal, retains all the operation and effect of a deed sealed at common law. Its covenants may be as comprehensive, and whatever they may be, are as obligatory, and its recitals are as incapable of being gainsaid, as if it were sealed with the greatest formality. The estoppel which a sealed instrument, or its covenants, created at common law, is now claimed by the appellee shall be attached to the conveyance by the agents of the appellant. And we can not doubt that the estoppel which at common law grew out of the covenants or the recitals of a sealed instrument, attaches now to an unsealed conveyance of the legal estate in lands. The statute is not so broad in its sweep as to blot out the common law principles which give security to conveyances of real estate. It would be fearful, indeed, if this was the operation of the statute, and the freehold in lands was not invested with greater dignity than the fleeting ownership of chattels." Devlin on Deeds, sec. 249, says: "The effect of these statutes is simply to dispense with the necessity of affixing a seal to a deed; but in other respects, as for instance with reference to the doctrine of estoppel, the deed retains the incidents it possessed as a sealed instrument at common law." The effect of the statute is different as to other contracts, for the placing of the seal thereon at common law raised them from parol to specialty contracts which cannot be done under the statute.

It follows that we are of opinion that the court erred in giving said charge. Our confidence in the correctness of the conclusion we have reached is strengthened by the fact that neither we nor counsel have been able to find any precedent for holding Sanger liable as an undisclosed principal. The judgments will be reversed and the cause remanded.

Reversed and remanded.