F. B. Collins Inv. Co. v. Sallas

^* Writ of error refused April 30, 1924. The agreement between the parties in this case, as determined by the court, was to the effect that the appellant, fully knowing the purpose of the loan, was to presently advance appellees, the landowners, $2,000 by way of a loan, with extended time of repayment, to pay certain vendor's lien notes then subsisting on the land to enable the appellees to comply with a special agreement with the lienholder respecting payment of the notes at a stated time. The appellees, by the agreement, were to execute, as they did, a mortgage on the land to appellant to secure the money advanced, to be evidenced by their note drawing 7 per cent. interest annually, and payable to appellant on February 1, 1931. This finding operates to be a finding of fact that the agreement between the parties was not that appellant, as claimed by it, was to lend the money to appellees upon condition that appellant could "sell and assign said mortgage security" given by appellees to it and thereby procure the money. Since the court's finding of fact is warranted by the evidence, the contention to the contrary is overruled.

The further propositions stated in appellant's brief, based on assignments of error, present in effect the two questions in view, viz.: (1) That on the breach of a contract to lend money to take up vendor's lien notes then due and payable, the landowner can legally recover only nominal damages; and (2) that the award, as damages, as made by the court, of $1,450, with interest thereon from date at the rate of 6 per cent. per annum," as being "the purchase price of the land, paid in cash," is legally erroneous, as the measure of liability; and there is an insufficiency of evidence to support any recovery of that character of damages. The point made by the appellant will be considered, of course, upon the special facts of this case. As a general rule, the law allows all damages which may reasonably be presumed to have been within the contemplation of the parties when they made the contract. Accordingly, if special circumstances, out of the usual course of things, are known to both parties, and it appears as an established fact that they contracted with reference thereto, the damages which follow the breach and are occasioned by such special course of things must be awarded to the party not in default, as compensation. 1 Southerland on Damages, § 45; Equitable Mortgage Co. v. Thorn (Tex.Civ.App.) 26 S.W. 276. And as applied to liability for damages for nonpayment or failure to advance money, being under contract to do so, the rule so stated has application, but only to a limited extent, and not broadly, according to special circumstances. Generally, under ordinary circumstances, damages for nonpayment of money, or for breach of a contract to lend money to pay an incumbrance, shall not exceed nominal damages, or the difference, if any, between the interest contracted to be paid and that which the borrower was compelled to pay to procure the money elsewhere. 1 Southerland on Damages, § 76; 8 R.C.L. § 31, p. 464, and reported cases. The reason of the rule, under such ordinary circumstances, is, quoting:

"The obligation is in fact but a promise to deliver so many dollars, and money is, in contemplation of law, always in the market and procurable at the lawful rate of interest."

But, where the obligation to pay or lend the money is special, as where it is agreed to be done specially to take up and discharge liens on land, damages beyond nominal damages, according to actual injury, may be recovered. 1 Southerland on Damages, § 77; 17 C.J. § 177, p. 863; 8 R.C.L. § 31, p. 464; Equitable Mortgage Co. v. Thorn (Tex.Civ.App.)26 S.W. 276; Anderson v. Hilton Dodge Lumber Co., 121 Ga. 688,49 S.E. 725. Quoting from the case of Thorn, supra:

"Where a person agrees to make a loan to another if the title to land offered as security is perfected, and the latter, being induced thereby, complies with the requirements, he may, on breach of the agreement, recover such damages as were caused by the breach, and which might be supposed to have entered into the contemplation of the parties."

And the value of the land at the time the title was lost, with legal interest from that date, may be recovered, where the facts alleged and proven show such loss to have been occasioned solely by the refusal, or negligent conduct, of the one who was to lend the money to discharge the indebtedness and incumbrance on the land, having notice at the time of the agreement to lend the money of the immediate purpose and necessity therefor. Western Union Tel. Co. v. Hearne, 7 Tex. Civ. App. 67, 26 S.W. 478; Equitable Mortgage Co. v. Thorn (Tex.Civ.App.) 26 S.W. 276; Lowe v. Turpie, 147 Ind. 652, 44 N.E. 25,47 N.E. 150, 37 L.R.A. 233. The principle of these cases rests upon the fact that the landowner had an agreement with the lienholder to extend the time of and to wait for payment of the incumbrance until a stated time, and by the negligent conduct of the lender in refusing to lend the money and in failing to inform the landowner at the proper time that he would not provide the money the landowner was deprived of the benefit of his contract with the lienholder, causing loss of the title to the land. The principle followed and applied in the Thorn Case, supra, has application, we think, to the present appeal in the special facts. There is a special state of facts here conclusively showing that appellant by its acts and conduct is immediately responsible for the loss of the title of appellees' land, rendering appellant legally liable for the consequential damages. The special facts show that the appellees had an express agreement with the holder of the vendor's lien notes to delay foreclosure of the lien for a stated time; that the lienholder was unwilling to defer foreclosure longer than that period of time; that the appellant had knowledge of such facts; that the appellant agreed in May, 1921, to lend the money to pay on the vendor's lien notes, and the time of the actual loan was contemplated to be made presently from that date; that the appellees relied upon the promise of the appellant to make the loan, and were led to believe that it would be made and the money sent, as agreed; that the appellees had complied with all the required stipulations to perfect the loan; that the appellant, after agreement to make the loan, failed and refused to carry out the agreement, and failed and neglected to notify the appellees of its refusal, without any excuse for such failure, until September, 1921, about four months after the money should have been forwarded, which was, as a matter of law, an unreasonable delay; that the appellant, after the notification of refusal, and upon immediate request of appellees therefor, refused to execute a deed of release of the deed of trust executed and placed of record by appellees to it; that by reasons of the breach of the agreement to lend the money and the negligent acts and conduct of the appellant, together and entire, the appellees were unable to comply with their agreement with the holder of the vendor's lien notes, and thereby lost the title to their land. In such facts the acts of the appellant were the immediate, and not remote, cause of the loss of the title to the land.

There is involved in the court's findings of fact a finding of special damages suffered by appellees. The finding is that the appellees suffered the loss of "$1,450 as a cash payment on the purchase price of said land." The land was purchased, it appears, by appellees on February 9, 1920, and the title was lost to them by their reconveyance in November, 1921, more than a year and a half after the original purchase by them. Were the appellees entitled, as a matter of law, to recover the "cash payment on the purchase price of the land," made at the time of original purchase? It is to be observed in the reported cases that the full value of the land is not allowable to be recovered by the landowner in all cases, independent of the indebtedness as an incumbrance against it. It is only "the actual loss" in the given case that can be recovered by the landowner. That measures the amount of his damages. Where there is a lien indebtedness against the land the indebtedness must be taken into consideration in determining the amount of "actual loss" the landowner sustained at the time the title was lost. The landowner, owing such lien indebtedness, must pay it, and is bound to pay it. He is not legally relieved of its final payment by the mere act of the party defaulting in lending the money to discharge the lien indebtedness. Consequently, in such cases, the measure of liability is the difference in the lien indebtedness, principal and interest, and the value of the land at the time it is lost by reason of foreclosure of such lien. It is the landowner's interest in the land, represented by the value of his equity, that he would be entitled to as compensation. For legally the value of the equity is his only "actual loss." The value of the equity is not measured, as a matter of law, by the amount of the purchase price paid in cash for the land in the first instance. The value of this equity must appear and be established at the time the title is lost. For the value of the equity at the time the title is lost may or may not be the same as at the time of the original purchase by the landowner. The market value of land rises and decreases, according to conditions and circumstances. If the market value of land goes below the original purchase price paid, the value of the equity would consequently be less. And, on the other hand, the value of the equity would be greater if the market value of the land should be greater than the original purchase price paid. In either event the landowner could recover the value of his equity, and no more. Hence in this case it devolved upon the appellees to affirmatively show the value of the land at the time the title was lost in November, 1921. This they have done. The land, as appellees Sallas testified, was of the same market value at the time of the deed to J. N. Dean in November, 1921, as at the date of the purchase in February, 1920. There is evidence that the appellees cleared and fenced 12 acres of the land, renewed the other fences, and built permanent improvements. In the evidence the court's finding as to special damages should be construed as intending to fix the value of the equity at the amount of money so found by him. The assignments, we think, should be overruled.

The judgment is affirmed.

On Motion for Rehearing. The appellant urges that in overruling the third and fourth propositions in the brief the decision is in direct conflict with the ruling on the identical propositions in the companion case of F. B. Collins Investment Co. v. Mills et ux., 254 S.W. 999. Had the facts of the two cases, relative to the propositions, been the same, the case cited would have controlled and been decisive of the ruling. But the facts do not appear the same. In the Mills Case, supra, there appeared in evidence the application of Mr. Mills for the loan, and which, as the opinion recites. "the appellee Mills admitted that he signed in manner and form as given." Of course, in such facts, the terms of the written instrument could not be varied or contradicted by oral evidence in the absence of fraud, accident, or mistake. However, in the instant appeal the original application for the loan was not offered in evidence. There does not appear in the record any explanation of its absence on the trial. A form of application claimed to be a copy was exhibited in evidence, but the appellee in respect thereto testified:

"The application I made to the F. B. Collins Investment Company was dated February, 1920. It was not in February, 1921. I am sure of that. This is not my signature to this application. I do not know whose it is. It is my name; I do not know who signed it. I did not. I did sign an application for this loan in February, 1920. This is not the application that I signed. This application purports to be February 25, 1921. The facts in this application is not a true copy of the facts that I stated in the original application."

This testimony was not disputed, and the purported copy was not further proven or identified, and does not appear in the record. In the absence of the original application or legal proof of its contents, this court cannot determine, especially in the record, that the oral testimony of the appellee, as complained of, did vary or even tend to vary the original written terms of contract. Neither the bill of exception nor the statement of facts so shows.

The motion is in all things overruled.