Hurst v. Knight

The appellant, Mary Hurst, filed this suit in the district court of Lubbock county, to recover a judgment against defendants, L. A. Knight, J. R. De Lay, and R. E. Burch, for the amount of three vendor's lien notes for $1,000 each and sought to foreclose the vendor's lien on a certain section of land in Lubbock county, patented to N. H. Mill. The petition alleges the execution and delivery of the deed by appellant, Mary Hurst, and by Anist Hurst and Guy Hurst, to R. E. Burch, who executed the three notes sued upon. It is further alleged that Burch had conveyed the land to the defendants Knight and De Lay, who assumed the payment of said notes. The defendants allege that in the original transaction Mary Hurst, Anist Hurst, and Guy Hurst were represented by G. E. Mayes as their duly authorized agent; that James R. De Lay represented himself and the defendant Burch and closed the deal in Burch's name, purchasing the land for both; that Mayes, the agent of plaintiff, and Guy Hurst, represented to De Lay that the land belonged to Mary Hurst and that she had a good and perfect title thereto, and that De Lay communicated these statements to Burch and also to Knight when he purchased Burch's undivided interest in the land; that defendants were not lawyers and did not examine the title, but had great confidence in Mayes and accepted in full faith the representations of Guy Hurst and Mayes that the title was perfect, and, relying thereon, paid part of the purchase price in cash and, still relying thereon, paid the first three notes as they became due; that after the payment of the first note they applied for a loan on the land, which was refused because the title to the property was not good; that after discovering these defects they called upon the plaintiff, Mary Hurst, to correct the defects in the title and offered to pay the remaining notes if she would remove the defects, and even proposed to pay two of the notes if she would agree to extend the third to a time when the defects could be remedied; that she refused to make any attempt to do so and refused to extend the notes.

The defects in the title are set out, in substance, as follows: (1) A deed of trust executed by Paris Cox to A. Pruitt, trustee, to secure Burns-Walker Co. in the payment of a note for $286.68, dated August 13, 1886, due December 1, 1886, and recorded in Lubbock county, August 13, 1886; that no release of the lien is shown by the records of Lubbock county or has been made. (2) Deed from Paris Cox and wife to E. Z. Derbyshire, and a deed from Edmund Derbyshire and wife to Willets M. and Gurney G. Derbyshire, dated January 7, 1898. This instrument is signed "Derdyshire" and in the certificate of acknowledgment the name appears as "Derbyshire." (3) Deed from Gurney and Willets M. Derbyshire to C. E. Spath, dated January 16, 1902, conveying the premises in question and reserving the vendor's lien to secure the payment of five notes for $100 each, and a release executed by G. G. and W. M. Derbyshire to C. E. Spath, dated March 21, 1905, reciting the payment of four of the notes described in the deed and the release of the vendor's lien securing the payment of said notes. (4) Deed from Dude Hurst to Mary Hurst, Guy Hurst, and Anist Hurst, conveying a life interest to Mary Hurst, with remainder to Guy Hurst and Anist Hurst, for a consideration of $1,000 paid and the assumption of all debts of the grantor by Mary Hurst.

Deeds were introduced in evidence tending to show the defects complained of. The judgment of the court decreed the cancellation of the deeds and notes, and judgment is rendered in favor of James R. De Lay and L. A. Knight, against Mary Hurst, in the sum of $5,160, the amount paid upon the purchase price of the land, with 6 per cent. thereon from date of judgment, with a lien against the land to secure its payment. For some reason unexplained in the record, a nonsuit was taken by plaintiff as to the defendant Burch. The court has filed findings of fact and conclusions of law as follows:

"First. I find as a fact that the defendant R. E. Burch executed the notes herein sued on as a part consideration for the land described in plaintiffs petition, on June 24, A.D. 1909.

"Second. I find as a fact that Mary Hurst, Guy Hurst, and Anist Hurst, by deed dated June 24, 1909, conveyed the land described in plaintiff's petition, to R. E. Burch, and received as a part consideration therefor from said Burch the notes included in the first finding herein.

"Third. I find as a fact that James R. De Lay was in truth and in fact a joint owner with said R. E. Burch of an undivided onehalf interest in said land described in plaintiff's petition, and that the said James R. De Lay paid one-half of the cash consideration named in said deed and has paid onehalf of the amount of the three first notes and interest as set forth in plaintiff's petition.

"Fourth. I find as a fact that said notes last described in plaintiff's petition have not been paid.

"Fifth. I further find that the said R. E. Burch conveyed his one-half interest in said land to L. A. Knight, and that said Knight assumed the payment of the indebtedness due on the land, including the three notes herein sued on.

"Sixth. I find that the plaintiff employed A. H. Mount, who is a practicing attorney at law, to bring this suit against the defendants.

"Seventh. I find that George E. Mayes was the agent of the vendors, acting in the sale of the land of plaintiff, Anist Hurst, and Guy Hurst to R. E. Burch and James R. De Lay.

"Eighth. I find that the said George E. Mayes represented to James R. De Lay, one of the purchasers of the land here in controversy, that the plaintiff, Anist Hurst, and Guy Hurst had good title to said land in controversy.

"Ninth. I find that James R. De Lay was acting for himself and the said R. E. Burch in the purchase of said land in the transaction in which the notes sued on were given.

"Tenth. I find that the said James R. De Lay relied upon the representations made by said Mayes as the agent of plaintiff, Anist Hurst, and Guy Hurst, that they had good title to said land, and that said De Lay would not have closed the deal for same if he had not relied upon said representations.

"Eleventh. I find that said James R. De Lay repeated said representations to said R. E. Burch, prior to the closing of said deal, and that the said Burch acted on said representations, relying upon said De Lay as joint purchaser to close said deal.

"Twelfth. I find that James R. De Lay, prior to the purchase of the undivided interest of R. E. Burch by L. A. Knight, informed said L. A. Knight of the representations made by said Mayes as such agent, and that said Knight relied upon said representations being true and purchased said undivided interest.

"Thirteenth. I find that one of the then owners of said land, Guy Hurst, met the said James R. De Lay personally prior to the closing of said deal and represented that the title was absolutely good, and that the said Burch and said De Lay, also relying upon the representations made for himself and his co-owners, closed said deal and purchased said land and signed the notes herein sued upon.

"Fourteenth. I find that the said defendants, De Lay and Knight, had no actual notice of the defect in title to the land here in controversy until said notes were made known to them by Mr. Heard, the agent of C. W. Post, when he turned the said defendants' title down and refused to make a loan on the same.

"Fifteenth. I find that the deed of trust given by Paris Cox to A. Pruitt, trustee, to secure Burns-Walker Co. in the payment of a note for $286.68, has not been released.

"Sixteenth. I find that the land was deeded to Edmund Z. Derbyshire, and that said Edmund Z. Derbyshire never conveyed the same as shown by the records; but I find on the record a deed from Edmund Z. Derdyshire to Willets M. Derbyshire and Gurney G. Derbyshire.

"Seventeenth. I find that only four of the five notes mentioned in the deed from G. G. Derbyshire and W. M. Derbyshire to C. E. Spath have been released, leaving five notes unreleased.

"Nineteenth. I find that the consideration in the deed from Dude Hurst to Mary Hurst is $1,000, cash, and the further consideration that the said Mary Hurst shall assume and pay the outstanding indebtedness of the said Dude Hurst of every kind and character whatever, which deed is dated September 25, 1907, and duly recorded in Lubbock county.

"Twentieth. I find that said outstanding indebtedness of the said Dude Hurst has never been paid."

As heretofore stated, Guy Hurst and Anist Hurst are not parties to this suit, and the final judgment dismisses the right of action by plaintiff, Mary Hurst, as against R. E. Burch. It seems to be well settled by the weight of authority that in a suit to cancel conveyances, instituted by the vendee, the grantors are necessary parties. 6 Cyc. 322; Malone v. Kelley, 101 Ga. 194, 28 S.E. 689; Hannibal, etc., R. R. v. Nortoni,154 Mo. 142, 55 S.W. 220; Fairchild v. Fairchild (N.J.) 44 A. 944; Harding v. Handy, 11 Wheat. 103, 6 L. Ed. 429; 18 Enc. Pl. Pr. 799; Douglas County v. Walbridge, 38 Wis. 179; Constant v. Lehman, 52 Kan. 227,34 P. 745; Freeman's Bank v. Vose, 23 Me. 98; Hill v. Lewis, 45 Kan. 162,25 P. 589; Monday v. Vance, 11 Tex. Civ. App. 374, 32 S.W. 559; McNeill v. Cage, 38 Tex. Civ. App. 45, 85 S.W. 57. Guy Hurst was not only part owner of the premises and a grantor in the deed sought to be canceled, but the action is founded in part upon representations alleged to have been made by him to De Lay with reference to the condition of the title. On the face of the record both Guy and Anist Hurst were entitled to a portion of the consideration paid for the land. As remaindermen and grantors in the deed, reserving the vendor's lien upon the property, Guy and Anist Hurst, together with their mother, held the superior title to the section of land, and therefore had such an interest in the subjectmatter of the contract as made them necessary parties. 8 Stand.Proc. 456, 457; Brinker v. Haydon, 33 Ky. (3 Dana) 156. The contract is entire and must therefore be rescinded in whole, both as to parties and subjectmatter. De Perez v. Everitt, 73 Tex. 431, 11 S.W. 388; Culberson v. Blanchard, 79 Tex. 486,15 S.W. 700. One condition upon which the remedy of rescission is granted, if at all, is that the parties must be restored to their original status. This cannot be done in this case unless all parties to the deed and interested in the subject-matter have been made parties to the action. The court could cancel the notes in the hands of the plaintiff, Mary Hurst, because she is the sole payee named in them, but could not properly enter a judgment canceling the deed, without the appearance of all the parties thereto in the suit

It is insisted by appellant that the appellees cannot remain on the land and defeat recovery thereon without establishing beyond a doubt that the title is a failure; that there is danger of eviction, and also such circumstances as will prima facie repel the presumption that at the time of the purchase the vendees knew of and intended to run the risk of the defects in the title. We do not so understand this suit. The appellees are not endeavoring to defeat recovery and hold the land, but have filed a cross-complaint, praying for cancellation of the deeds and rescission of the contract because of the fraudulent representations made by the vendors as to the title. Misrepresentation as to the title of a vendor to the property contracted for is material and avoids the contract and entitles the purchaser to rescind, even though he has received a deed with covenants of warranty, and although there has been no eviction by paramount title. So the rule announced in Haralson v. Langford, 66 Tex. 113,18 S.W. 339, and similar cases, does not apply. The rights of the appellees in so far as they seek to cancel the deeds, rescind the contract, and recover the consideration paid, are governed by the rules announced in Buchanan v. Burnett, 102 Tex. 492, 119 S.W. 1141, 132 Am. St. Rep. 900; Brown v. Montgomery, 89 Tex. 250, 34 S.W. 443; Altgelt v. Merwitz, 37 Tex. Civ. App. 397, 83 S.W. 891; Rancho Bonito L. L. S. Co. v. North, 92 Tex. 72, 45 S.W. 994; Moreland v. Atchison,19 Tex. 303. Appellant's first and second assignments are therefore overruled.

We think the court did not err in overruling the general demurrer to the defendants' cross-petition, in so far as defendants' pleadings allege the facts showing the condition of the title to the land. We think the allegations are sufficient, and the evidence sustains the court's findings that the title was not as it had been represented by Mayes and Guy Hurst.

Under the fourth assignment, appellant contends that a vendor is not liable to a subvendee on account of statements as to the condition of the title made by a third party purporting to act as the seller's agent, and insists that the court erred in overruling her exceptions to the answer of appellees alleging that Mayes, as the agent of plaintiff, had represented to them that the title sold was a good legal title, without defects or flaws, because the petition did not further allege that such statements were made by the authority and with the knowledge of plaintiff. These allegations were not made as a defense to the notes, but were set up as a basis for the relief sought by the appellees, and the exception of the appellant that the facts alleged did not constitute a defense was properly overruled.

The fifth assignment is without merit, and is overruled by what we have heretofore said.

Appellant urges the proposition that in a suit on purchase-money notes, where defendant seeks affirmative relief before a right to rescind is shown, the cross-complaint must show the value of the rents and profits as well as the value of the improvements, and must offer to do equity by refunding the value of the rents. The rule as announced in Cecil v. Henry, 93 S.W. 216, and authorities there cited, is that a vendee seeking to rescind is required to do nothing more by his pleadings than to offer generally to do equity, and it is then the province of the court to enter such a specific decree as will adjust the rights of the parties.

Appellant's tenth assignment asserts that in the absence of an allegation of fraud, inducing the execution of a written contract for the sale of land, parol evidence is inadmissible to prove verbal statements and representations made by either party before its execution. Reference to the pleadings shows that the allegation of fraud was duly made.

By the twelfth assignment of error appellant insists that the court erred in rendering a judgment rescinding the sale to Burch and requiring the plaintiff to repay all consideration paid for said land, for the undisputed evidence showed that Guy Hurst and Anist Hurst received part of the cash consideration from said Burch, and that the judgment requires the plaintiff to repay more than she received. We have searched the record in an effort to find some evidence sustaining this proposition. The statement of facts fails to show to whom the consideration was actually paid; but, as between the appellees and the grantors in the deed, the latter would be jointly and severally liable for any sums paid by appellees.

It is further contended by appellant that Knight, being a subvendee, cannot insist upon a rescission of the contract because of fraudulent representations made to his vendor or to De Lay. There are authorities sustaining the proposition that the original vendee only is entitled to cancellation and rescission upon the ground of fraud and that such right does not descend to subsequent purchasers. We think, however, the rule is not applicable in this case. Knight having assumed to pay the outstanding notes as part consideration for the transfer from Burch to him of an undivided interest in the premises is with De Lay primarily, jointly, and severally liable for the unpaid purchase money. De Lay, being one of the original vendees, is liable to the grantors for the whole debt and has the right to pay it off at its maturity, and we think as the correlative of this right he can maintain an action for the rescission of the contract as a whole. It is true that his right to rescind might be defeated by the refusal of Knight to join in the action, since such refusal would deprive De Lay of the power of placing the grantors in status quo; but Knight having joined in the action and placed it within the power of De Lay to make complete restitution, we think, gives a court of equity full authority to apply the remedies sought.

The remaining assignments of error are either without merit or present questions not presented in the trial court in the motion for new trial, and will therefore not be considered.

Reversed and remanded.