Kelley v. Guaranty Bond State Bank of Mt. Pleasant , 2 S.W.2d 572 ( 1928 )

Appellants insist the trial court erred when he refused their request that he instruct the jury to return a verdict in their favor so far as the suit was to foreclose the lien asserted on certain land. We think the contention should be sustained. It appeared without dispute in the evidence heard at the trial that at the time appellants executed the instrument purporting to be a deed conveying the land to Q. S. Loveless, and at the time appellee made the loan to appellant W. L. Kelley and accepted the Loveless notes as security therefor, they (appellants) were, and during several years immediately before that time had been, occupying and using the land as their homestead. The effect of such occupancy was to put appellee on inquiry at the time it accepted the notes to ascertain by what claim of right appellants were then occupying and using the land, and to charge it with notice of what such inquiry diligently pursued would have disclosed. Eylar v. Eylar, 60 Tex. 315; Chamberlain v. Trammell, 61 Tex. Civ. App. 650, 131 S.W. 227; Bryant v. Sons of Hermann (Tex.Civ.App.) 152 S.W. 714; King v. Lane (Tex.Civ.App.)186 S.W. 392; Brooker v. Wright (Tex.Civ.App.) 216 S.W. 196; Astin v. Martin (Tex.Civ.App.) 289 S.W. 442. In the case last cited the court said the general rule is that:

"Possession carries with it notice of the rights in the property claimed by the possessor, and requires those dealing with the property to make such inquiry to ascertain those rights as an ordinarily prudent person would make under the same or similar circumstances. The exceptions to this rule are where the party in possession has executed some conveyance, or has caused some instrument to be placed of record, which if accepted as evidence of his rights would be inconsistent with the claim he otherwise asserts."

It was undisputed in the evidence that appellee made no inquiry whatever to ascertain by what claim of right appellants were then on the land — except that its president, E. S. Lilienstern, testified that before he made the loan he inquired at the county clerk's office to ascertain if the deed to Loveless had been filed there. The fact that it had not been, then made known to Lilienstern, should have caused appellee to pursue the inquiry further instead of causing it to abandon it, as it seems it did. We think it should have been assumed that inquiry, properly pursued, would have disclosed to appellee what uncontradicted evidence heard at the trial showed to be facts, to wit, that the transaction between appellants and Loveless was in pursuance of a scheme to mortgage appellants' homestead to secure a contemplated loan of $5,400 by appellee to appellant W. L. Kelley, and further, that the transaction was incomplete at the time appellee made the loan, in that the deed to Loveless had not been delivered to him, but was in the possession of appellee Olive Kelley. If inquiry, properly pursued, would have disclosed such facts to appellee, it was not in the attitude of an innocent purchaser of the Loveless notes, and therefore was not entitled to a foreclosure of the lien it asserted on appellants' homestead. 19 C.J. 200; Collum v. Sanger Bros., 98 Tex. 162, 82 S.W. 459, 83 S.W. 184; Moore v. Chamberlain, 109 Tex. 64, 195 S.W. 1135; Steffian v. Bank, 69 Tex. 513,6 S.W. 823; Garner v. Risinger, 35 Tex. Civ. App. 378, 81 S.W. 343; Walker v. Erwin, 47 Tex. Civ. App. 637, 106 S.W. 164; Cox v. Payne,107 Tex. 115, 174 S.W. 817; Cardwell v. Shifflet (Tex.Com.App.)294 S.W. 519.

That the case was within the general rule and not within either of the exceptions thereto stated in Astin v. Martin, referred to above, was established by uncontradicted evidence showing that the deed to Loveless had not been delivered to him nor recorded or filed for record in the county clerk's office at the time appellee loaned the money to W. L. Kelley and accepted the Loveless notes as security for the repayment of the loan.

Whatever may be said about the conduct of appellant W. L. Kelley in the transaction between him and appellee, there is nothing in the record before us showing appellant Olive Kelley to have done or said anything appellee was entitled to claim excused it from making inquiry to ascertain by what claim of right she was in possession of the land. That being true, appellee was not entitled to invoke the doctrine of estoppel as against her. Simkins on Equity, 319 et seq.; Cosgrove v. Nelson (Tex.Civ.App.) 269 S.W. 891.

The judgment will be so reformed as to deny appellee a foreclosure of the lien it asserted on appellants' homestead, and as so reformed will be affirmed.