61 Tex. Civ. App. 148 | Tex. App. | 1910
Lead Opinion
— This is the second appeal in this litigation; the former is reported in 117 S. W., 217. The suit was originally instituted by Hoeldtke, one of the plaintiffs in error, against B. S. McCleary and L. C. Hill, seeking a recovery on a promissory note and the foreclosure of a vendor’s lien against a tract of 57 acres of land, for which the note was a part of the purchase price. Leach, the other plaintiff in error, was made a party defendant upon the ground that he held a note for $175 which was also a lien against the same tract of land. In the course of this opinion Hoeldtke and Leach will be referred to as plaintiffs, and Hill and McCleary as defendants.
The facts show that some time prior to 1905 the land in controversy was sold to B. S. McCleary, one of the defendants, by Horstman.
The case was submitted to a jury upon special issues, and in response to the questions propounded they found the following facts: That Hoeldtke and Leach accepted the promise of Hill to pay the notes held by them, as shown by McCleary’s deed to Hill of October 16, 1906, that Hill did not know of this acceptance prior to July 11,
The first assignment of error complains of the refusal of the court to enter a personal judgment against Hill in favor of the plaintiffs, upon the answers returned by the jury. Inasmuch as we think the case should be disposed of upon this assignment, it will be necessary for us to refer to the pleadings of Hill and review at some length the facts upon which his defense rests. Hill claims exemption from personal liability on the two notes sued on, upon two grounds: (1) That he was ignorant of the acceptance by the plaintiffs of his promised assumption of these notes till after he had reconveyed the land to Mc-Cleary on July 13, 1907, in accordance with an agreement made two days before that time, and had obtained a release by McCleary’s re-assumption of these debts; (2) that if he was not relieved of personal liability by that transaction,-he was entitled to a rescission of the original contract on account of a fraud perpetrated by McCleary in representing to him that the note for $140, in which a vendor’s lien was reserved against the land, had been paid, when in truth and in fact it had not, but was still an outstanding encumbrance on the property purchased by him. The foregoing, though less specific than the pleadings, contains the substance of Hill’s special defenses. Considering these in their order, the first inquiry will be as to the status occupied by Hill when he assumed the payment of the notes held by the plaintiffs, when he accepted the conveyance from McCleary. That he thereby became primarily liable as an original promisor, had his status remained unchanged by any reassumption of the payment of the same debts by McCleary, in the second contract, is a proposition about which there is practically no dispute, and one which is abundantly sustained by authorities. Huffman v. Western Mortgage Co., 13 Texas Civ. App., 169, 36 S. W., 306; Keller v. Ashford, 133 U. S., 610; Union, etc., Co. v. Handford, 143 U. S., 187; Johns v. Wilson, 180 U. S., 440; 1 Jones on Mortgages, secs. 763-764; 2 Warvelle on Vendors, sec. 644 et seq. See also this case on former appeal, 117 S. W., 217. But the fact that McCleary in the deed to him' from Hill, of date. July 13, 1907, did reassume the payment of the same debts, is relied upon as exonerating Hill from his personal liability. While there is some question as to the sufficiency of the evidence to sustain the finding of the jury that McCleary accepted this deed from Hill, and that there was such a delivery as completed the transfer of title.
. . . My judgment leads me to answer that question in the negative. Of course it is difficult, if not impossible, to reason about it without recurring to Lawrence v. Fox, 20 N. Y. 268, and ascertaining the principle upon which its doctrine is founded. That is a difficult task, especially for one whose doubts are only dissipated by its authority, and becomes more difficult when the number and variety of its alleged foundations are considered. But whichever of them may ultimately prevail, I am convinced that they all involve, as a logical consequence, the irrevocable character of the contract after the creditor has accepted and adopted it, and in some manner acted upon it. The prevailing opinion in that case rested the creditor’s right upon the broad proposition that the promise was made for his benefit, and therefore he might sue upon it, although privy neither to the contract nor its consideration. That. view of it necessarily involves an acquisition at some moment of' time of the right of action which he is permitted to enforce. If it be possible to say that he does not acquire it at the moment when the promise for his benefit is made, it must be that he obtains it when it has come to his knowledge, and he has assented to and acted upon it; for he may sue. That is decided, and is conceded. If he may sue, he must at that moment have a vested right of action. If it was not obtained earlier, it must have vested in him at the moment when his action was commenced; so that the right and the remedy were born at the same instant. But there is no especial magic in a lawsuit. If it serves for the first time -to originate the right which it seeks to enforce, it can only be because the act of bringing it shows unequivocally, that the promise of the grantee has come to the knowledge of the plaintiff; that the latter has accepted. and adopted it; that he intends to enforce it for his own benefit, and gives notice of that intention to the adversary. From that moment he must be assumed to act or omit to act, in reliance upon it. But, if all these things occur before a suit commenced, why do they not equally vest the right of action in the assignee? What more does the mere lawsuit accomplish ? And so the contract between grantor and grantee, if revocable earlier, ceases to be so when by his assent to it, and adoption of it, the creditor brings himself into privity with it, and elects to avail himself of it, and must be assumed to have governed his conduct accordingly. I see no escape from that conclusion.” In a still later case, Bank v. Chalmers, supra, the same tribunal says: “Wherever th.e facts show that the debtor has transferred or delivered to the promisor, for his own use and benefit, money or property in consideration of the latter’s agreement to assume and pay the outstanding debt,
But it was not necessary to call in the aid of the principle discussed unless it appears from the contract between McCleary and Hill, that the latter was to be released from his assumption of the notes sued on. We do not think it clear, by any means, that the contract is susceptible of that construction. In their negotiations, in the contract itself, and in the testimony relating to it, the interest of McCleary in the land is referred to as an “equity” of the estimated value of $615, and it is this equity which was conveyed to Hill. In the contract for the reconveyance from Hill to McCleary in July, 1907, made at the time he claims to have been released, Hill “agrees to surrender two of the notes against McCleary, amounting, with interest, to $512; also assumes rent now due (on house occupied by McCleary), and to give McCleary an equity of $307 in the land deeded him by McCleary last fall, at which time a $650 equity was traded to Hill.” etc. The language of the deed which followed this contract is consistent with the foregoing expressions, and shows that Hill was to get from McCleary a note, for $307.50, representing the difference between the value of the equity which he (Hill) had purchased, and that which McCleary was to get back, - as a part of the consideration for the second exchange of property. The deed from Hill also retains a vendor’s lien in his favor to secure the payment of the notes mentioned, all of which McCleary thereby agreed to pay, and among which are the notes here sued on. The contract and deed do not support the contention that they compose a transaction amounting to a mere rescission of the first contract, and in legal effect operate as a release of Hill from his assumed obligation. The last conveyance puts Hill in the attitude of a vendor selling the property back to McCleary, not merely returning it as a cancellation of a former contract. He also seeks to protect himself by the reservation of a lien, not only against default in the payment of the portion of the consideration which he was to get, but that also which he had formerly assumed to pay to Hoeldtke and Leach. He binds himself by a clause of general warranty. These provisions
The next question is, was Hill- entitled to immunity on account of any fraud perpetrated by McCleary in representing to him that the note for $140 outstanding as a lien against the land had been paid? This note was offered in evidence on the trial by the defendant Hill, and shows upon its face that it was not due till December, 1907,— more than a year after his purchase from McCleary. To give full effect to the findings of the jury we must accept as proved the following facts. That McCleary represented to Hill that this note had been satisfied; that Hill knew nothing to the contrary till after the institution of this suit, and relied upon those representations in making his purchase of the land. The jury also returned a single negative answer to the following: “Did McCleary take up the $140 note according to his promise to Hill, if he made any such promise, and did said McCleary cause to be executed a release of said note according t.o his promise and agreement with Hill?” The materiality of the misrepresentations, and the question of fraud on the part of McCleary in making them, were not submitted to the jury. If the state of the evidence was such as to justify it, we would be compelled to assume that the court himself determined those issues in a manner to support the judgment rendered. The burden of proof is upon the party seeking to rescind a contract, or relieve himself of some contractual liability, on account of the fraud of another, to clearly prove the fraud relied upon or the circumstances from it should be presumed. 2 Warvelle on Vendors, see. 843. The testimony relative to this note for $140 shows that J. E. McCleary, a brother of the defendant B. S. McCleary, residing in the state of Oklahoma, owned it at the time of the conveyance to Hill, in October, 1906; that he purchased it in 1901 or 1902 and turned it over to the defendant, B. S. McCleary, or sent it to him by mail, about 1906, when the latter was on the trade with Hill; that J. E. McCleary never placed the note with any one for collection. J. E. McCleary also stated that he sent the note to his brother, B. S. Mc-Cleary, in response to a request, but did not know whether the trade had been made with Hill at that time or not. He took up the note to help his brother, and did not expect to get his money out of the land. B. S. McCleary wrote to him to send the note, and he did so for the purpose of its being canceled. The defendant, B. S. McCleary, testified that he did not tell Hill that the note had been paid off at the time they made their trade, hut that it was outstanding and he would take it up; that his brother, J. E. McCleary, owned the note; that in a few days after making the trade with Hill he wrote to his
The foregoing are the facts relied upon to show the fraud charged as the ground of Hill’s release of personal liability on his contract assuming the Hoeldtke and Leach notes. In our opinion they are insufficient. At most, the note for $140, if it was not paid as represented by McCleary, could affect Hill only as an encumbrance upon the land while he owned it. According to Hill’s contention, and the finding of the jury which he insists is supported by the evidence, his title to the land has passed back to McCleary, the man upon whom rested the duty of "paying the note in the first instance; and in this suit, where the rights of the different lienholders are to be adjusted, no claim has been urged in behalf of any holder of that note. On the contrary, it is conclusively shown that it has been released, so that it can no longer be an encumbrance on the land. Redfearn v. Craig, 57 S. C., 534, 35 S. E., 1024. We think the court should have rendered judgment against Hill in favor of the plaintiffs upon the answers returned, and that for this refusal the judgment must be reversed.
This is the second appeal of this case, and there is nothing in the record to indicate the necessity for going through another trial in order to settle any issue of fact essential to a proper disposition of the case. Judgment will therefore be here rendered for the plaintiffs against Hill, personally, for the amount sued for.
Reversed and rendered.
Dissenting Opinion
Dissenting. — It was not claimed that as a result of the transactions between Hill and McCleary the latter had been released from liability to Hoeldtke, and that the former had become liable to him. The contention was that as a result of those transactions McCleary continued to be and Hill became liable to Hoeldtke. Under such circumstances, the effect of the last transaction between McCleary and Hill -having been to release the latter from the obligation he had incurred to the former to pay his debt to Hoeldtke, I do not agree that Hill nevertheless was liable to Hoeldtke.
There are authorities which fully support the position taken by the majority of this court. But those cited by Judge Hodges as having been decided by the Supreme Court of the "United States, I think, do not in the least, support it. As a matter of fact, the question presented by the record on this appeal was not before that court in either of the cases cited. In neither of them did it appear that the mortgagor had released his grantee from his undertaking to pay the debt due to the mortgagee. Those cases can be said to be applicable here only so far as the principles they discuss and apply, can be said to be applicable to the facts of this case. Applied so far, instead of supporting the position they have been cited as supporting, I think they strongly assail it as untenable. For, in one of them — Union Mutual Life Insurance Co. v. Hanford, 143 U. S., 192, 36 L. ed. 120, — Mr. Justice Gray declared if to be the settled law of that court that “the
Entertaining the opinion expressed, I do not agree that the judgment of the trial court should be reversed. I think it should be affirmed.
Rehearing
ON MOTION FOR REHEARING.
— In their motion for rehearing counsel for defendant Hill complain -of our conclusions of fact with reference to B. S. Me Cleary’s representations as to the existence of the note for $140 and its having been canceled. It is claimed that we did this defendant an injustice in concluding that the evidence was insufficient to show fraud on the part of B. S. McCleary, in deceiving Hill with reference to that note. Our attention is also called to some inaccuracies regarding the dates. This, however, is of no material consequence, and can not affect the result. The whole of the very elaborate argument presented by counsel is devoted to a discussion of the right of Hill to now escape liability upon his promise to pay the notes held by the plaintiffs in error, because B. S. McCleary falsely and fraudulently represented that the note for $140 had been paid at the time Hill purchased the land. We did not intend to rest our disposition of that particular question upon the insufficiency of the evidence to show that McCleary had made such representations, and that
In the case of Delaine v. James, supra, the court used this language: “Cancelling an executed contract is an exertion of the most extraordinary power of a court of equity. The power ought not to be exercised except in a clear case, and never for an alleged fraud unless the fraud be made clearly to appear, never for alleged false representations unless their falsity is certainly proven, and unless the complainant has been deceived and injured by. them.” This language is quoted approvingly in a later case by the same court. Mr. Pomeroy in his Equity Jurisprudence, in treating of the right to have instruments canceled and contracts rescinded on account of fraudulent misrepresentations, says: “The statement of facts of which it consists must not only be relied upon as an inducement to some action, but it must also be one material to the interest of the party thus relying and acting upon it that he is pecuniarily prejudiced by its falsity, is placed in a worse position than he otherwise would have been. The party must suffer some pecuniary loss or injury as the natural consequence
Even if we admit that McCleary fraudulently induced. Hill to enter into the contract for the purchase of the land in the first instance, and that Hill might, while the owner of the land, have sustained some damage from an assertion of the lien by the holder, that danger has all passed away and that situation now no longer confronts him. In speaking of the effect of McCleary’s statement about the note, Hill says he did not think he would have taken the land had he known the truth.
It also appears that the rule permitting a cancellation for fraud will not be enforced where the rights of third parties have intervened. 2 Pomeroy, Eq. Jur., sec. 918; Navarro Pub. Co. v. Fishburn, 2 Posey, U. C., 596. If the conclusion reached in the original opinion, that Hoeldtke and Leach became creditors of Hill’s during the time he owned the land, be correct, then his obligation to pay them is absolute. It is not claimed that they were parties to the fraud, hence, they cannot be prejudiced by any right of rescission which Hill might have against McCleary on account of fraud. We therefore conclude that under the circumstances as they now exist, however fraudulent the transaction may have been originally, and however clearly the facts upon which they rely to show fraud may have been proved, Hill cannot now avail himself of the right of rescission i,n order to escape liability for the debts which he assumed. The motion is accordingly overruled.
Overruled.
Writ of error granted; reversed and remanded.