Reeves v. San Antonio Building Materials Co.

Chief Justice FLY having entered his disqualification in this case, Honorable MARSHALL ESKRIDGE was appointed, and he writes the opinion of the court.

Appellants sued appellees to remove cloud from title to lot 13, block 14, new city block 3282, in the city of San Antonio, Tex. Appellees agree that the facts stated by appellants, in their brief, are correct in every particular except that the allegation that the purchase money was "to be paid when deed was delivered" is incorrect, and the language should be, as contained in the petition, "to be delivered to plaintiffs upon payment by plaintiffs of said purchase price."

In their original petition, appellants alleged that they are husband and wife and have several children and occupied the status of a family long before and at the times specifically mentioned, and that in the year 1928 they purchased the land described from one Helene Korff, a feme sole, under the agreement that the latter would deliver deed to appellants "upon payment by them of said purchase price" of $1,750, and that with the knowledge and acquiescence of the seller they immediately entered upon and took possession of said lot and began the construction of permanent and valuable improvements thereon, which were afterwards substantially completed, consisting of a dwelling house, garage, etc., of the value of $8,000, and that, as soon as the building had progressed sufficiently to permit it, appellants and their family moved into same, using and occupying same as their home and homestead, for which purpose the lot had been originally purchased and improvements erected, all of which was known to all of the appellees, and that Helene Korff executed a deed which she placed in the hands of her agent for delivery to appellants upon payment of the purchase price, and was at all times willing to carry out her part of said oral contract; that appellant A. C. Reeves bought certain lumber and material and borrowed certain moneys from the San Antonio Building Materials Company, for which no mechanic's liens or other securities against said lot had been given, and that, after said improvements were nearing completion, the said appellee requested that it be given security for said indebtednesses, and proposed that, inasmuch as the deed from said Korff to appellants had not been recorded, such deed be ignored, and that said Korff make a deed direct to said appellee, conveying said lot, and that said appellee would then deed said lot to appellants, retaining in the deed the vendor's lien to secure a note payable to it for $6,500; that said scheme was accomplished, and, at the time of executing said note for $6,500, the appellants were also induced to execute said deed of trust to William Seipel, trustee; that the real consideration for said vendor's lien note was not the purchase money of said lot; that thereafter said building materials company, claiming to be the owner of said liens, directed the said Seipel to sell said homestead under said deed of trust, which he was threatening to do when this suit was instituted; that the said Commercial Loan Trust Company is claiming some interest in the property, and is made party defendant for the purpose of adjudicating its interest, if any.

The appellants alleged that said pretended vendor's lien was given and secured in an attempt to evade the provisions of the Constitution of Texas prohibiting liens on homesteads, except for specified purposes, and that the liens asserted by said appellee building materials company were not within the purview of such exceptions, and that such purported liens constituted a cloud upon the title of appellants to said lot.

Appellants prayed that the pretended liens claimed by appellees, or some of them, against the homestead of appellants be canceled and annulled, and that the cloud cast thereby on appellants' title be removed, and that appellants be quieted in their title and possession of said homestead as against any claims or purported rights of any of the appellees, for costs, and for general, special, legal, and equitable relief, and also prayed for a writ of injunction restraining the appellees from selling said lot under said deed of trust; said petition being verified.

We copy this language because it was as to that the demurrer was sustained and the cause was dismissed. The point at issue is as to whether the facts show an equitable title in appellants so as to set up a homestead right.

It is appellants' contention that the land was purchased by the head of a family under a parol contract with the intention of making said land his family homestead, and prior to the payment of the purchase price and delivery of the deed appellants entered into actual and physical possession of the land in good faith, making valuable and permanent improvements for the purpose of a home for himself and family, with the knowledge and acquiescence of the seller. A vested homestead right in the land was thereby established, subject only to the purchase price, which was understood and agreed upon, to wit, $1,750, but not subject to the balance of the claim of $6,500.

The appellants' original petition alleges that appellant A. C. Reeves, being indebted to appellee San Antonio Building Materials Company for materials purchased and moneys loaned, which debts were unsecured, the said appellee demanded security for said preexisting debt, and persuaded appellants to give it a lien on their homestead; that, in order to attempt to evade the provisions of the Constitution prohibiting liens on homesteads, said appellee proposed that, inasmuch as the deed from Korff had not been recorded, same should be ignored, and said Korff convey said lot to appellee, who would then reconvey to appellants, retaining the vendor's lien to secure a note for $6,500, executed by appellants, payable to said appellee; that said scheme was accomplished, the said Korff conveying to appellee, and appellee conveying to appellants, retaining said lien to secure said note for $6,500, which was executed by appellants, and, at request of appellee, appellants executed a deed of trust on said lot to William Seipel, trustee, additionally securing said note; that said note did not represent the purchase money of said property, but was given to secure an unsecured indebtedness of A. C. Reeves to said company; that said lien is void under the Constitution, and a cloud on the title.

Did the title to the property under the parol agreement and the subsequent acts of appellants create a purchase and sale? We think under the terms of the oral sale and purchase, when the appellants went into possession and made permanent improvements they took title thereto, subject to the original purchase price of $1,750. Especially is that true because the deed was executed and delivered to the agent, to be delivered when the purchase price was paid.

The lien was not given or fixed as required by law for materials contracted for in advance of delivery or work done. It did not cover taxes nor the actual purchase price of the property, but was given to secure a preexisting debt for material bought on open account and money borrowed by appellant A. C. Reeves from the appellee San Antonio Building Materials Company. These facts neither constituted nor created an enforceable lien that could or did in any manner affect the homestead right or title.

The Constitution, art. 16, § 50, provides that the homestead of a family shall be protected from forced sale for the payment of all debts, "except for the purchase money thereof, or a part of such purchase money, the taxes due thereon, or for work and material used in constructing improvements thereon, and in this last case only when the work and material are contracted for in writing, with the consent of the wife given in the same manner as is required in making a sale and conveyance of the homestead," and all liens, except those expressly provided for, are null and void. The instrument was given to secure a pre-existing debt for materials bought on an open account and money borrowed by appellant A. C. Reeves from the appellee San Antonio Building Materials Company, and in whatever form it was presented it did not expunge itself of the vice in it.

It is too plain for argument, therefore, that, if the allegations in the petition are true, the claim for $6,500, evidenced by the note of A. C. Reeves, does not create a lien on the homestead of appellants, and that the court erred in sustaining the demurrer.

It must not be overlooked that the petition alleges that, at the instance of the said San Antonio Building Materials Company, Helene Korff, the original owner, though she had already executed her deed, in pursuance of the original contract, bearing date August 23, 1928, filed for record September 4, 1928, executed the other deed in question, and appellants executed their note for $6,500 as agreed upon, payable to the order of defendant in monthly installments of $70 or more, with 8 per cent. interest, then executed a deed of trust to William Seipel, trustee, who, in pursuance thereof, is threatening to make a sale of the property thereunder. This merged the original agreement in the second agreement, which was substituted therefor.

It is distinctly and clearly alleged in plaintiffs' petition "that they did not in fact purchase said lot from said defendant, San Antonio Building Materials Company, and that said note for $6,500.00 was not made for the purchase price of said lot, but was given to pay the indebtedness of A. C. Reeves to said defendant for lumber, building material and monies advanced to him by said defendant; and that the said vendor's lien retained in said deed and said deed of trust to said William Seipel, trustee, were not retained or given to secure the purchase price of said lot, but were given at the instance of the said defendants to secure the payment of a note given to cover indebtedness of A. C. Reeves to said building materials company for lumber and materials and monies loaned and advanced; and that said vendor's lien and deed of trust were a part of a scheme and subterfuge suggested by the defendants in an attempt to secure a lien and mortgage on the homestead of these plaintiffs to secure certain indebtedness, as aforesaid, in violation of the Constitution and Statutes of Texas; and that said transaction was simulated and conceived for the sole purpose of attempting to place a lien on plaintiffs' homestead in violation of law, and that said liens are invalid and of no force and effect; and same constitute a cloud on plaintiffs' title to said lot."

Now let me recapitulate: The land was purchased from Helene Korff in the year 1928 for $1,750, to be paid for when deed was delivered. The deed was delivered by her to her agent, to be delivered to the purchasers when paid for. Helene Korff put the purchasers in possession and permitted them to make valuable permanent improvements thereon and to move thereupon as their home, and thereafter changed the nature of such transaction so as to make a new deed "in which said San Antonio Building Materials Company, instead of plaintiffs should be named as grantee, and that said defendant would thereupon take a note of these plaintiffs for $6,500.00, and then execute a deed to plaintiffs conveying said lot to plaintiffs and retaining in said deed the vendor's lien to secure payment of the said note for $6,500.00." This merger and change was made and the purchasers were permitted to remain on said premises, using and enjoying same, until the institution of this suit, which was on April 25, 1929, and the former transaction was as completely changed as possible to make this new agreement, whereby the homestead rights could be avoided.

While there was no purchase money paid, there was none necessary, as the homestead right was acquired by the seller placing the purchaser in possession, and by his making valuable improvements on the land. Bringhurst v. Texas Co., 39 Tex. Civ. App. 500, 87 S.W. 893; Page v. Vaughan (Tex.Civ.App.) 173 S.W. 541; Wells v. Foreman (Tex.Civ.App.)199 S.W. 1174; Hofheinz v. Wilson (Tex.Civ.App.) 286 S.W. 958; Hickman v. Talley (Tex.Civ.App.) 8 S.W.2d 267; Mondragon v. Mondragon (Tex.Civ.App.) 239 S.W. 650.

In the well-considered case of Dixon v. McNeese (Tex.Civ.App.)152 S.W. 675, 676, which I quote with approval, Chief Justice Fly said: "It is well settled in Texas that a parol sale of land will be upheld where the vendee has been put in possession of the land, and, relying on the parol sale, has made valuable improvements thereon. Such circumstances create an equitable title in the vendee, and courts of equity will enforce his rights. To constitute a valuable consideration, it is not necessary that the purchase money should have been paid, but, if money has been expended in improvements on the property on the faith of the verbal contract, it constitutes a valuable consideration."

As much as the writer hates not to concur in the disposition of this case, he feels it his duty to file this his dissent.