Jones v. Lynch

It is assigned that the court erred in rendering a personal judgment against defendant C. H. Alexander, because it appears from the evidence that said C. H. Alexander was merely an indorser or surety for George Phillips Jones, and that plaintiff has failed and refused to comply with his contract, which was the consideration for Alexander assuming liability on the notes sued upon. This contention is not sustained. If there had been a breach of the contract by Lynch is pleaded by appellant Jones, such breach would not release Alexander as indorser, but would, at most, only reduce the indebtedness by the amount of damages shown, and lone were shown; nor was any attempt made to defend on this theory.

Again, it seems that Alexander was not a mere indorser, but was an original promisor, who placed his name on the paper sued on before its delivery, to subserve purposes of his own, and is not entitled to the strict rights of a mere indorser, or surety. It appears that the notes sued on in this case, and the Dees notes, also, were given in lien of other notes that were a lien on a ranch that Jones was trying to obtain, and trade for a system of waterworks at Cleburne. Alexander testified, in substance, that he indorsed the notes sued on in consideration of Jones' agreement to give him an option on the stock of the Cleburne Water Company which Jones was trying to trade for. He says, speaking of this trade, "I agreed to help Jones through, provided Jones would give me an option on the Cleburne Waterworks for a given length of time." On cross-examination he says: "I first became interested in this transaction when I reached an agreement with Jones that I was to get an option on some stock in that Cleburne property. * * * That was the result sought, to consummate this deal in order that I might get an option on the stock in the Cleburne property."

It is assigned that the court erred in rendering a personal judgment against the defendant George Phillips Jones, because it appears from the evidence that the wrongful conduct of the plaintiff was the direct and proximate cause of damages to defendant Jones equaling or exceeding the amount of the notes sued upon. The proposition presented is that a creditor who wrongfully caused the sacrifice of securities is responsible to the debtor for the damages thus incurred, and when such damages exceed the amount of the debt the creditor cannot recover. This contention is not tenable. Lynch did not breach his agreement because neither Jones nor Alexander ever sold the mortgage lands, or traded them for other lands, and Lynch, who lived at Port Arthur, was under no obligation to act until there had been a sale or trade of the mortgaged lands. The nearest to a sale of the mortgaged land shown by the record is that one Blum made Alexander a proposition to give Dallas property and Gas Company stock for the Henderson county land, which he refused, but which he says he would have accepted if he could not have done better, had Lynch agreed to it. He claims to have written Lynch of this proposition, but the correspondence shows that he was claiming a general right to pay the debt in land. The contract did not require Lynch to take payment in land, or to shift his liens to Gas Company stock.

It is contended that the court "erred in holding and decreeing that the sale of the Van Zandt county land under trust deed canceled and satisfied the notes held by the Bond Guaranty Company and originally held by T. M. Dees." It is insisted that the judgment in this respect is without pleading or evidence to support it. We do not concur in this insistence. The evidence shows such fraud was committed on the rights of appellee Lynch by appellant Alexander and the attorney for the Bond Guaranty Company, which the court in the exercise of the equitable powers should not sanction, and which the trial court properly refused to sanction. There was a judgment by default in this case at the fall term in 1908 of the trial court, and afterwards counsel for appellants filed a motion to set this default aside because, among other reasons, it was claimed that the Bond Guaranty Company, as the holder of the "Dees notes," was an indispensable party to the suit. This motion was supported by the affidavit of appellant Alexander, and was sustained December 3, 1908. On December 10, 1908, the attorney for the Bond Guaranty Company wrote the sheriff of Van Zandt county, who was trustee in the deed of trust securing the notes sued on, inclosing notices of sale, and requesting a sale of the mortgaged lands on next legal sale day, to wit, the first Tuesday in January, 1909, which was the 5th day of January. On January 4, 1909, the attorney for the Bond Guaranty Company wrote the sheriff of Van Zandt county, giving directions about the sale, the letter to be delivered by the person to be sent to look after the matter for the Guaranty Company, who was C. H. Alexander. Alexander attended the sale. He says he was familiar with the mortgaged land, and that the Van Zandt land was worth $30,000 and the Henderson land $6,000 or $6,500. The Van Zandt county land was subject to a prior lien for $14,000. Alexander bought in the Henderson county land for $750 and the Van Zandt tract for $500 and had deeds made for the Henderson county tract to the Bond Guaranty Company and the Van Zandt county land to one Mary Brown, wife of the president of the Guaranty Company. Alexander testified he practically owned the Bond Guaranty Company at the time the sale was made. There is no pretense that Lynch had any notice of this foreclosure. He says he had none. Gentry, the trustee, said that he sold the land at the request of the Bond Guaranty Company, acting through Alexander, and that if he ever gave Lynch any notice of the sale he had no recollection of it. He had not paid Lynch anything, and did not have any recollection of knowing Lynch in the sale of the land. The rights of Lynch under the trust deed were not discussed even when the sale was being closed up by the deeds; his name was not mentioned, so far as the trustee remembered. Alexander told the trustee to sell the land; told him how to make the deeds; told him to come to Dallas, which he did, and in all these particulars his (Alexander's) directions were followed. The sale having been made at the request of the Bond Guaranty Company, and of Alexander, and each having knowledge of the fact that the sale was being made without the knowledge of Lynch, their conduct in the matter of the sale was a fraud upon Lynch.

It was the duty of the trustee to inform Lynch of his intended sale, and his failure to do so was a fraud upon Lynch's rights, whether done advisedly or negligently.

Whenever the title to property has been acquired by fraud, concealment, or under other circumstances which render it unconscientious for the holder of the legal title to retain and enjoy the beneficial interest, equity impresses a constructive trust upon the property in favor of the one equitably entitled to it. This principle applies whenever it is necessary to obtain complete justice. Schneider v. Sellers, 98 Tex. 390,84 S.W. 417; Pomeroy's Eq. (3d Ed.) vol. 3, § 1053.

Where there are several beneficiaries, and one takes part in a breach of trust, whereby loss is occasioned, his interest in the trust property may be reached to make good the loss of the other beneficiaries. Pomeroy's Eq. (3d Ed.) vol. 3, note 2 to section 1083. Whether the Bond Guaranty Company or Alexander took title to the trust property as shown by the record in this case, it, or he, held such property in trust for Lynch to the extent of his interest, and when the title to the Van Zandt property, the equity in which was worth more than the Guaranty Company's debt, was put in another party, the value of such property was chargeable to the Guaranty Company, and extinguished the debt in so far as Lynch is concerned. Schneider v. Sellers, supra. Under the allegations of plaintiff's petition, and the broad prayer for relief contained therein, and the facts found, the judgment rendered was authorized and proper.

It is contended that the court erred "in holding that the Van Zandt county land was bought at trustee's sale for the benefit of the Bond Guaranty Company, or C. H. Alexander, for the benefit of any one other than the purchaser, Mrs. Mary M. Brown." This contention cannot be sustained. Alexander's evidence shows that this land was bought in for the Guaranty Company, which he practically owned, and the deed to it was ordered made to Mrs. Brown to subserve purposes of his own.

Nor did the court err "in rendering judgment without disposing of the cash shown to be in the hands of the trustee who made the sale in question in this case, and without adjudicating the rights of the parties to said funds in the hands of said trustee."

As to the money in the hands of the trustee, no issue as to it was made in the pleadings, and appellee has never claimed any interest in it.

Finding no reversible error in the record, the judgment is affirmed.