Barker v. Coastal Builders, Inc. , 271 S.W.2d 798 ( 1954 )

GRIFFIN, Justice.

The respondent brought suit in the District Court of Brazoria County, Texas, against petitioners wherein it sought to remove a cloud from its title to a strip of land 30 ft. x 40 ft. located in the northeast corner of the east half of Lot 8, Block 161, Dow’s First Addition to the town of Free-port, Brazoria County, Texas (hereinafter designated the E. ½ of Lot 8). If was alleged that through mutual mistake this strip had been included in a warranty deed from Coastal Builders, Inc. (hereinafter called Coastal) to W. K. Martin and wife, conveying the E. ½ of Lot 8, but that Coastal had remained in possession of such strip at all times since the execution and delivery of the deed, using and enjoying the same and the improvements situated on such strip; that the Martins and their grantees had acquiesced in the use and claim of title by Coastal to such strip, and all parties had notice of the title claimed by Coastal, and no grantee was an innocent purchaser.

Petitioners were grantees under a warranty deed containing no exceptions or reservations, executed by one S. B. Grisham, et ux. The Grishams were the Martins’ grantees under warranty deed containing no reservations or exceptions. Respondent prayed for judgment removing the cloud cast upon its title by filing of the deeds containing no reservation of the strip, and further prayed for judgment correcting and reforming the deed from the Grishams to petitioners so as to give full legal effect to the alleged original agreement between respondent and the Martins and to adjudicate the legal and equitable title to the 30 ft. x40 ft. strip in respondent.

Petitioners filed an answer containing a general denial, a plea of “not guilty”, that the cause of action for reformation was barred by the four-year statute of limitation, Vernon’s Ann.Civ.St., art. 5529; a count in trespass to try title, and other pleadings not necessary to mention. Upon the trial of the case before a jury, judgment was rendered against respondent, and in favor of petitioners on their cross-action for title and possession of the strip. On rehearing that judgment has been reversed and remanded by the Court of Civil Appeals at Galveston upon the ground that the mistake was proved as a matter of law, and that the action was not barred. Tex.Civ.App., 259 S.W.2d 591.

The Barkers, in their application for writ of error, say that the Court of Civil Appeals erred in holding that the evidence established as a matter of law that there was a mutual mistake in the description of the premises contained in the deed to Martin and wife. We sustain this assignment.

Petitioners having secured a jury finding in answer to Special Issue No. One that no oral agreement was made between Coastal and the Martins to reserve the strip in question, it follows there was no mistake in the warranty deed whereby Coastal conveyed the E. ½ of Lot 8 to the Martins without any exceptions or reservations. In considering the evidence to determine whether there is evidence to support the jury’s answer to Special Issue No. One, we must consider that evidence most favorable to the Barkers, as they were the party prevailing in the trial court. Blanks v. Southland Hotel, 149 Tex. 139, 229 S.W.2d 357; Hickman v. Hickman, 149 Tex. 439, 234 S.W.2d 410; Renfro Drug Co. v. Lewis, 149 Tex. 507, 235 S.W.2d 609, 23 A.L.R.2d 1114; Schiller v. Elick, 150 Tex. 363, 240 S.W.2d 997.

The record shows that Coastal was at all times wholly owned by Mr. PI. F. Twombly who resided in Freeport, Texas and Mr. W. M. Dickey, who resided in Houston, Texas. Mr. Twombly handled the transaction for the sale of the property to the Martins, and Mr. Dickey testified that he never had any conversations with the Martins concerning the reservation in the contract, nor did he have any correspondence with either of them about this, matter prior to the execution of the deed. In fact, he liad no personal dealings with the Martins. The Martins were not present when instructions were given Mr. Kerr, an official of Gibraltar Savings & Building Association (hereinafter called Gibraltar), to reserve the plat from the conveyance of theE.' ½ of Lot 8, and Mr. Dickey could not ■ swear whether the instructions to reserve the tract were given prior to or subsequent to the signing of the purchase contract with the Martins. Mr. Twombly testified that he never had any written agreement with the Martins regarding the reservation; that all negotiations with the Martins about this were oral and were some two or three weeks prior to the sale of the lot to the Martins; that th,e last dealings he had with the Martins was when they signed the application to.Gibraltar to-be used by Gibraltar to secure the acceptance by FHA of the Martins as payee on the $3,650 loan Coastal had secured from the FHA on the E. ½ of Lot 8. He further testified that the FHA had reduced the amount loaned on this Martin tract because of the reserved strip. The correspondence with FHA shows the loan was made for $3,650 and covered the whole of-the E. ½ of Lot 8, without any reservations. He further testified that his oral agreement with, the Martins could have been changed prior to the execution of the contract of sale and the deed. The. record further shows that sometime prior to July 10, 1942, Coastal had made an application for a loan to Gibraltar on the E. ½ of Lot 8 without any reservation. Mr. Dickey testified “our agent for the financing (of these houses) was Gibraltar Savings & Building Association in Houston”, and that James H-Kerr was the official of Gibraltar with whom they did practically all the financing. Generally the business was handled in the following manner: Coastal would apply for a loan on a particular tract of land through Gibraltar. Gibraltar would apply to FHA for insurance on the loan. After' approval of the loan by FHA, Coastal would secure a purchaser for the land after' agreed improvements had been erected on the land sold. Coastal would proceed to build the desired improvements. 'At the time a purchaser was secured, he would sign an application to Gibraltár which was to be used to secure FHA’s approval of the purchaser as the borrower in place of Coastal. Gibraltar would send in the application, and as soon as FHA notified Gibraltar it would accept the proposed purchaser as its debtor upon completion of the agreed improvements, the purchaser would move in. FHA had made a final inspection prior to the purchaser moving in. When the improvements were completed and the purchaser moved in and paid a certain amount in cash (in our case $675.00), Coastal was released from liability on the loan, and the purchaser became liable.

In our case the first approval was given prior to July 10, 1942. On that date Coastal executed the necessary loan papers to Gibraltar for $3,650 on the E. ½ of Lot 8. There were no exceptions in the deed of trust securing the loan or any other papers. On that date Kerr of Gibraltar wrote FHA a letter as follows:

“It appears that at the time the application on this loan was filed there was a tool house situated on the -back thirty feet of this lot. This application was filed with a great many others in a rush here and in filing the application we made the same cover the full area of the lot, making no exception as to the back thirty feet. However, the lot plan submitted at that time did show this situation.

“The Avalon Construction Company are requesting that we write you in connection with this matter and ascertain,if the values as shown would permit you to substitute for the present commitment, which covers the full area of the lot, a commitment of like amount excepting therefrom the back thirty feet of said lot. If this cannot be done without a reduction in the commitment please advise us. Also advise us if the commitment is left as is and the loan- is closed in the name of Avalon Construction Company for the amount of the present commitment and they should sell this property to some prospective purchaser, what effect would it have on a later substitution of- this purchaser for the Avalon Construction Company if they should exclude the back thirty feet from their deed to said purchaser ? If this cannot be done, advise us if it will be possible for them to remove said tool house from the property without affecting the commitment in any manner.” (Emphasis added.)

The Avalon Construction Company referred to in the above letter was another corporation wholly owned by Dickey and Twombly and through which corporation they also built and sold houses in Dow’s First Addition to the town of Freeport, Texas. The identification number on the letter and the reply below show the correspondent had reference to the loan on the E. ½ of Lot 8. On July 13, 1942, FHA, by A. C. Ford, District Director, wrote Gibraltar:

“Reference is made to your letter of July 10, concerning the existence of a tool house at the rear of this property.

“The exclusion of a 30-foot strip at the rear of this property would not be desirable. The valuation ascribed in this case was made on a typical lot and this 30-foot strip is an integral part of the typical lot.

“In answer to the question in the second paragraph of your letter, if the builder should exclude this 30-foot strip in a sale of the property the proposal for substitution of borrower would not be acceptable. It will be necessary that this tool house be removed from this property.” (Emphasis added.)

On July 16, 1942, Coastal, acting by W. M. Dickey, and the Martins executed a contract of sale (which the evidence shows was drawn by someone working for Gibraltar) to the E. ½ of Lot 8, containing no reservations and exceptions. The Martins agreed to assume the $3,650 loan, and to pay some cash and execute a small note. On August 1, 1942, Coastal, by W. M. Dickey, president, and under its corporate seal and signature of its assistant secretary, made and executed to W. K. Martin and wife, Elizabeth, its general warranty deed conveying the E. ½ of Lot 8 without exception or reservation (save a vendor’s lien to secure payment of a note for $375). This deed also recited the cash payment of $300 the $375 note and the assumption of the $3,650 note, as described in the deed of trust securing same, and identifying this deed of trust as the one of July 10, 1942 referred to above. Coastal and other corporations owned by Dickey and Twombly continued to use the garage on the claimed reserved space. However there is evidence that the approach to the Martins’ garage was improved by Coastal and that it ran across one end of the disputed strip. This driveway has been used by the owners of the dwelling on the E. ½ of Lot 8 at all times since the Martins had moved-into their premises. W. K. Martin signed an application to Gibraltar for a loan on the E. of Lot 8, without any reservations or exceptions. The date of this application is not shown by the record, but it evidently was about July 10, 1942, or shortly thereafter— the date FHA approved Coastal’s application for the $3,650 loan and the date Coastal executed the closing papers on that loan. On the last page of this application and some inch below Martin’s signature to the application is a notation in Mr. Twombly’s handwriting “This is a short lot — Block 161”. Coastal never rendered the land for taxation or paid any taxes thereon after the sale to Martin.

Mr. Twombly testified that as a part of each transaction when there was a side note attached (the $375 note herein) he made out and filled in a mimeographed memorandum which went to Gibraltar and which stated the terms of the contract to be made between Coastal and the purchaser; that he sent in such written memorandum in the Martin transaction and that this memorandum showed the property to be the E. ½ of Lot 8, and that was the description he gave them of the property. On September 28, 1944, Coastal, acting by Harry F. Twombly, vice-president, and its secretary, executed a release to W. K. Martin, et ux. of the $375 note described in the warranty deed to the Martins. This release described the property as the E. ½ of Lot 8 and contains no reservations or exceptions. At the time of the trial of the cause there was evidence that the Martins had removed from Free-port about July 27, 1946, the date they deeded the property to S. B. Grisham. There is no evidence as to the whereabouts of the Martins, and they did not testify, either in person or by deposition. Grisham was dead at the time of the trial, but Coastal introduced (without objection) his testimony given in a forcible detainer suit brought by Barker against Twombly. By this reproduced testimony Grisham testified that he asked Martin if he owned the garage or not (the garage on the purported reservation) and “he said yes, he had a deed to it”. Also Grisham testified that Martin did not tell him Coastal or someone was claiming the title to the garage, but that Martin told him “they were using it,” and that Martin said Twombly was claiming an error in the deed.

There was introduced in evidence, without objection and quoted from by both parties in their briefs, a letter from an attorney who had been consulted by Mr. Grisham regarding his title to the property in dispute. In this letter it is stated, among other things, that Mr. Twombly had furnished the attorney with photostatic copies of correspondence between Mr. Martin and Coastal through its attorney. The first of these letters was from Martin addressed to Coastal and dated February 1, 1945, requesting that the garage on the strip be vacated and stating that Avalon Construction Company had been using this garage for storage for some time past. The reply from Coastal's attorney to Mr. Martin stated that this garage was to have been excepted and reserved, and that it was a pure oversight that the deed did not contain such reservation. This letter further stated Coastal owned the strip and garage thereon, and that it was not covered by “the contract of sale between Martin and that company” and that he was not entitled to have the garage removed. In reply, Martin wrote Coastal stating that in discussing the purchase of the property with Mr. Twombly it was mentioned that the land on which the garage was located was to be reserved but that he was not shown any plat showing any reservation to be made, and that when his (Martin's) deed and title insurance policy were delivered with no reservation he believed that no reservation was meant to be made, and that no reduction was made in the price. The originals of these letters were not introduced in evidence.

All the testimony regarding the oral agreement to reserve the plat comes from Mr. Twombly, as does the testimony as to the reduction in the purchase price. The testimony as to the reservation is contradicted by each and every written instrument in the record affecting the transaction. There is no dispute in the record that all the written instruments concerning the title were entered into at a later date than the oral discussions. Mr. Twombly is an interested party. The rule as to the testimony of an interested witness is stated in Flack v. First National Bank of Dalhart, 148 Tex. 495, 226 S.W.2d 628, 633, wherein we quote from the case of Texas Employers’ Ins. Ass’n v. Roberts, 135 Tex. 123, 139 S.W.2d 80 as follows:

“ ‘As to the testimony of interested witnesses, the general rule is that, while the jury has no right arbitrarily to disregard the positive testimony of unimpeached and uncontradicted witnesses, the mere fact that the witness is interested in the result of the suit is deemed sufficient to require the credibility of his testimony to be submitted to the jury. Stated in another form, the rule is that the uncontradicted, uncorroborated testimony of a party to a suit will not authorize or support an instructed verdict.’ Simmonds v. St. Louis B. & M. Ry. Co., 127 Tex. 23, 27, 91 S.W.2d 332, 333; Pope v. Beauchamp, 110 Tex. 271, 280, 219 S.W. 447; Sonnentheil v. Christian Moerlein Brewing Company, 172 U.S. 401, 19 S.Ct. 233, 43 L.Ed. 492, 495; Mills v. Mills, Tex.Com.App., 228 S.W. 919; Burleson v. Tinnin, Tex.Civ.App., 100 S.W. 350, application for writ of error refused; Traders & General Insurance Co. v. Milliken, Tex.Civ.App., 87 S.W.2d 503, 505.

“ ‘The plaintiff’s testimony, the substance of which has been hereinbefore stated, is not so clear, positive and unequivocal upon the point at issue and of such' nature and given under such circumstances as to bring it within the exception to the above quoted rule and authorize the trial court to give conclusive effect to it. Great Southern Life Insurance Company v. Dorough, Tex.Civ.App., 100 S.W.2d 772, 775, 776; Springfield Fire & Marine Insurance Company v. Wm. Cameron & Company, Tex.Civ.App., 96 S.W.2d 788; Simonds v. Stanolind Oil & Gas Company, 134 Tex. 332, 114 S.W.2d 226, Id., 134 Tex. 332, 136 S.W.2d 207, 208; Traders & General Insurance Co. v. Milliken, Tex.Civ.App., 87 S.W.2d 503, 505. Texas Employers’ Ins. Ass’n v. Roberts, 135 Tex. 123, 139 S.W.2d 80, 85.”

We do not believe that the testimony of Mr. Twombly comes within the exception to the above rules. McGuire v. City of Dallas, 141 Tex. 170, 170 S.W.2d 722, 728.

There being no mistake in the deed to the Martins, the respondent is met with the well-known and universal rule that prior oral agreements are merged in later written instruments. Woods v. Selby Oil & Gas Co., 2 S.W.2d 895; affirmed, Tex.Com.App., 12 S.W.2d 994; Tate v. Tate, Tex.Civ.App., 15 S.W.2d 159, (6, 7, 8), reversed on a different independent holding, Tex.Com.App., 27 S.W.2d 137; Jones v. Risley, 91 Tex. 1, 32 S.W. 1027.

The judgment of the Court of Civil Appeals is reversed and that of the trial court affirmed.

GARWOOD, J., dissenting.