Opinion
No. 4048.
June 25, 1931. Rehearing Denied July 2, 1931.
Appeal from District Court, Fannin County; Geo. P. Blackburn, Judge.
Action by Phillip Wise against the Dallas Joint-Stock Land Bank of Dallas and others. From the judgment, defendant named appeals.
Judgment reformed and, as reformed, affirmed.
When L. C. Penwell died November 22, 1928, he owned 430 acres of the J. Whittenberg survey in Fannin county and certain lots constituting his homestead in Bonham. He left a will, afterward duly probated, by which he bequeathed the homestead to his daughter Irma Johnson, who married W. O. Inglis, and to said Irma Johnson and his daughter Nellie Hairston, wife of Ernest Hairston, share and share alike, "all the balance" of his property, consisting of said 430 acres of land and personal property of small value. By the terms of the will Irma Johnson was to act as the independent executrix thereof, and she qualified as such when the will was probated. This suit by appellee Wise, as plaintiff, was against the appellant bank and appellees J. W. Peeler, H. L. Rogers Company, the Allen Memorial Hospital, Nellie Hairston, Ernest Hairston, W. O. Inglis, and Irma (Johnson) Inglis, individually and as independent executrix aforesaid, as defendants. In his petition appellee Wise alleged, and at the trial proved, that the estate of said Powell was indebted to him as an undertaker in the sum of $290 (less $23.65 paid) for a casket, etc., used in burying said Penwell's remains, and to him as assignee in the sum of $249 on account of professional services rendered by Dr. J. A. Lannius to said Penwell during the latter's last sickness. He alleged, further, that payment of said sums, aggregating $515.35, and other indebtedness specified as in favor of appellees Allen Memorial Hospital, J. W. Peeler, and H. L. Rogers Company, aggregating $37.50, was secured by a lien on the 430 acres of land; and he alleged, further, and proved, that on February 4, 1925, said Penwell executed and delivered to the appellant bank a deed conveying said 430 acres of land to a trustee to secure the payment of indebtedness he owed said bank, and that said appellee bank was the purchaser of said 430 acres of land at a sale thereof made March 9, 1929, by virtue of said trust deed. In his said petition appellee Wise alleged, further, and proved, that said Penwell at the time he died was the head of a family, consisting of himself and his said daughter Irma, then unmarried; that the only property he owned was the land and lots specified above; that the lots in Bonham constituted his homestead; and that at the time he died his estate was insolvent. He alleged, further, that he and the parties he made defendants in the suit constituted all of Penwell's creditors. And then alleged that, if he was mistaken in his claim, that he was entitled to a foreclosure of the lien he asserted, he was entitled to maintain his suit as against the appellant bank as for a conversion of the land, which he alleged to be of greater value than $10,000.
In its answer appellant alleged, and at the trial proved, that during the latter part of 1927, Penwell being indebted to it on his promissory note for $22,000, secured by a lien of said 430 acres of land, which he was unable to pay, "turned over (quoting) the security for said debt to this defendant, with the understanding and agreement that this defendant should retain possession of said land and all rents produced thereon until a sale of said land could be effected; that when and if sale of said land was effected the proceeds thereof was in like manner to be applied on the payment of the debt and loan due this defendant; that this defendant remained in possession of said land under and by virtue of said agreement with the said L. C. Penwell, from the latter part of 1927 up to and including the date of the death of said L. C. Penwell and at all times since. That in pursuance of said agreement with the said L. C. Penwell, whereby this defendant was lawfully in possession of said security, whereby said land was to be sold and the proceeds applied to the payment of the debt and loan due this defendant, this defendant conducted a foreclosure sale of said land (in conformity to a trust deed) on or about March 5, 1929; that at such foreclosure sale this defendant became the purchaser of said land and applied the proceeds thereof to the payment of its debt and loan; that this defendant bid in said land at the sum of $10,000, but has made no further demand on the estate of L. C. Penwell for the payment of any further part of its debt and loan." In its answer appellant alleged, further, that Penwell left no family when he died, and that the lots in Bonham constituting his homestead while alive were not exempt from the payment of debts of his estate. In a supplemental petition appellee alleged that, if the possession of the 430 acres of land was transferred to appellant as claimed by it, the transfer was not in writing, as required by the statute of frauds, and therefore was void. The trial was to the court without a jury. It resulted in a judgment in favor of appellees Wise, J. W. Peeler, H. L. Rogers, and Allen Memorial Hospital against appellee Irma Inglis, as independent executrix, for amounts found to be due them, respectively, by Penwell's estate, and foreclosing as against the appellant bank a statutory lien to secure said amounts, which the court determined to be entitled to priority over the lien of said trust deed; and determining that appellee Irma Inglis had a right to hold the Bonham lots as her homestead and quieting her title thereto as such. The appeal was prosecuted by the appellant bank alone.
Renfro, Ledbetter McCombs, of Dallas, for appellant.
Cunningham Lipscomb and C. A. Wheeler, all of Bonham, for appellees.
Appellant insists it appeared it was lawfully in possession of the 430 acres of land, holding same as mortgagee to secure indebtedness of L. C. Penwell to it, and therefore was within a rule stated as follows in 19 R.C.L. 330: "A mortgagee in possession, in the sense of that term as technically used, cannot be ousted by the mortgagor, or one claiming under him, by action or otherwise prior to the satisfaction of the mortgage, this being true even in jurisdictions wherein the mortgagee could not maintain a possessory action for property." And see Pomeroy Eq. Jur., § 1189, p. 2817, 4th Ed.; note to Kaylor v. Kelsey, 40 L.R.A. (N.S.) 842, note; Majors v. Strickland (Tex.Civ.App.) 6 S.W.2d 133; Hill v. Preston (Tex.Sup.) 34 S.W.2d 780; Calhoun v. Lumpkin, 60 Tex. 185.
Appellees, on the other hand, insist that, if appellant was in possession of the land before and at the time Penwell died, its possession was not lawful, because of the statute of frauds; and, further, that, if appellant was in possession of the land and its possession was lawful, its right to continue in possession thereof ceased when Penwell died, or, if such right did not then cease, same was inferior to their right to subject the land to the statutory lien which they claimed existed to secure the payment of the indebtedness of Penwell's estate to them.
We agree it appeared from the evidence heard at the trial that possession of the land was turned over to appellant by Penwell during his lifetime, and that appellant was in possession thereof at the time Penwell died. We do not understand appellees to be in the attitude of contending to the contrary. Their contention as to this phase of the case, as we understand it, is that it appeared that appellant's right to possession was not evidenced by writing, but was based exclusively on an oral agreement it had with Penwell. The view entertained by appellees seems to be that a claimed right to possession of land is within the statute of frauds. Article 3993, R.S. 1925. The evidence was that Penwell, being indebted to appellant in a sum in excess of $20,000, which he was unable to pay, but payment of which was secured by a trust deed on the 430 acres of land, in September, 1927, turned the land over to appellants with authority to rent it, collect the rents, and apply same on the indebtedness and to sell the land if a purchaser could be found.
In their brief appellees do not specify the particular part of the statute of frauds they regard as applicable in the case. We assume it was the subdivision numbered 4 of said article 3995, denying a right to maintain an action "upon any contract for the sale of real estate or the lease thereof for a longer term than one year." It is held that said provision in the statute does not apply "when the lease may be for a longer or shorter term than one year, according to whether a contingency which is to end it happens within the year or not." Betts v. Betts (Tex.Civ.App.) 220 S.W. 575; Hintze v. Krabbenschmidt (Tex.Civ.App.) 44 S.W. 38. We think it cannot be said that the contingency which would have deprived appellant of a right to possession of the land, to wit, a sale thereof, could not have happened within a year from the time possession was turned over to it. And we doubt if the lawfulness of appellant's possession in any event was dependent upon compliance with the statute. 3 Pomeroy Eq. Jur. § 1189, and notes; Barson v. Mulligan, 191 N.Y. 306, 84 N.E. 75, 81, 16 L.R.A. (N.S.) 151. In the case just cited the New York Court of Appeals, in concluding a rather full discussion of the matter, said: "Whenever it appears that the mortgagor has consented, either expressly or impliedly, by contract or conduct, to the entry of the mortgagee, for purposes, or under circumstances, not inconsistent with their relative legal rights under the mortgage, the possession of the mortgagee may properly be regarded as lawful."
If, as we think is true, it appeared that appellant as a mortgagee was lawfully in possession of the 430 acres of land, the judgment in favor of appellees was wrong, unless it ought to be said that appellant's right as such a mortgagee was inferior to the right of appellees, based as it was on the fact that the indebtedness on account of which they respectfully sought a recovery was for Penwell's funeral expenses and expenses of his last sickness. By force of the statute (articles 3531 and 3533, R.S. 1925) the executrix of Penwell's will was required to pay such expenses before paying any other claims against Penwell's estate. But she could pay only with property she had acquired a right as executrix to possess and control. By the terms of the statute (article 3314) her right as such executrix was "to the possession of the estate as it existed at the death of the testator" (Penwell). As we have seen at the time he died, Penwell (the testator) was not entitled to the possession of the 430 acres of land. Appellant was then lawfully in possession of same, and, we think, entitled to retain possession thereof so long as the indebtedness of Penwell's estate to it was unpaid.
We think the judgment should be so reformed as to deny appellees Phillip Wise, J. W. Peeler, H. L. Rogers Company, and Allen Memorial Hospital a foreclosure of the lien they claimed on the 430 acres of land to secure the payment of the sums adjudged in their favor, respectively, and that, as so reformed, the judgment should be affirmed. It will be ordered accordingly.