No. 7725. [fn*] | Tex. App. | Mar 16, 1927
In the year 1920 Cow. M. Thompson executed a deed of trust, in which he conveyed certain lands owned by him in Medina county to a trustee, to secure his obligation to another. This instrument was duly recorded. On November 7, 1922, the deed of trust lien was foreclosed in a district court of Bexar county, and the land ordered sold under that foreclosure. On December 1, three weeks after the rendition of the judgment of foreclosure, Thompson, the owner and mortgagor, leased the land to Robert Foster for the coming crop year of 1923. Foster went into possession and made a crop on the land under the terms of that lease, in which it was provided that he should farm the place on shares and appropriate the proceeds of Thompson's share towards the satisfaction of certain obligations the latter owed to him. The crops grown on the place during the year were harvested in November and December, 1923, and Foster, the tenant, appropriated the proceeds from the sale of the entire crop, including the landlord's share, to his own use, in accordance with his prior agreement with Thompson, the landlord. In the meantime, on May 1, 1923, however, the land was sold in accordance with the judgment of foreclosure rendered in November, 1922, and at this forced sale was purchased by D.C. Millingar. In December, 1925, Millingar brought this action against Foster, the tenant, to recover the rental value of the land for the year in question, 1923, alleged to be $2.50 per acre. The trial court rendered judgment against Millingar, the purchaser at the foreclosure sale, holding that the rental agreement between Thompson and Foster was binding, and created between them the relation of landlord and tenant, that Millingar purchased the land with knowledge of Foster's possession as a tenant, and that with this knowledge was put upon inquiry to ascertain Foster's equities, and, having failed to pursue the inquiry, he is now without remedy. Millingar has appealed. From this statement it will be seen that the appeal raises the question of the rights of a lien-holder in land which had been leased to others by the mortgagor during the existence of the lien. *250
It is a matter of course that the owner of land which is subject to an outstanding lien can convey no estate therein free of the lien. He may sell the land, or lease it, or burden it with any character of incumbrance, but he cannot by such acts impair the rights of the holder of the existing lien. And any person who purchases or leases the land, or procures an incumbrance thereon, with actual or constructive notice of the lien, takes subject thereto as a matter of course. When a third party leases the land with notice of the lien, as in this case, he takes the lease subject to the lien, and with the knowledge that his tenure terminates with the foreclosure of the lien and sale thereunder to another, at the option of the purchaser; and in the absence of some agreement to the contrary, which is not present in this case, he must attorn to the purchaser if he would hold the benefits and rights accruing to him under his lease with the prior owner.
In this case the tenant entered into the lease with at least constructive notice of the lien, which had actually been foreclosed when he obtained his lease with the owner. He knew, before he planted or gathered his crops, that the lien could be foreclosed, the land sold, and the title placed in another freed of his lease; that in any event his grantor's interest in the property and relation of landlord would terminate and that of another intervene. And when he gathered his crops he should have utilized this knowledge and accounted to the purchaser at the foreclosure sale, and not to the former owner, whose interest in the land had been long since fully terminated. These conclusions require the reversal of the judgment, which was based upon the assumption that the purchaser obtained no right to such accounting, but as the pleadings below present the question of estoppel, and other questions which may in a trial upon those theories defeat recovery by appellant, the cause will be remanded for another trial.
Reversed and remanded.