Case ID: sw_142/html/0871-01.html
Source: Caselaw Access Project
Author: {"author": "DIBRELL, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

HILL v. HOELDTKE et al.
    (Supreme Court of Texas.
    Jan. 24, 1912.)
    1. Trial (§ 365) — Special Finding — Elimination op Issue from Case.
    A finding upon a special issue submitted to the jury becomes immaterial, where other findings of fact eliminate from the case the issue embodied in such finding.
    [Ed. Note. — For other cases, see Trial, Dec. Dig. § 365.]
    2. Vendor and Purchaser (§ 112) — Rescission op Contract — Fraud.
    Where a vendor represented to the purchaser that a note which was a charge on the land had been paid and the purchaser agreed to assume the payment of another note which was a charge on the land, the fact that the note was not paid was not ground for rescission, where, before the purchaser discovered that fact, the note was paid and the property relieved from the lien for its security.
    [Ed. Note. — For other cases, see Vendor and Purchaser, Dec. Dig. § 112.]
    3. Frauds, Statute op (§ 18) — Promise to Pat Debt op Another.
    The promise of a purchaser of land to pay a debt of the vendor as part payment of the purchase price is not within the statute of frauds.
    [Ed. Note. — For other cases, see Frauds, Statute of, Cent. Dig. § 29; Dec. Dig. § 18.]
    4. Vendor and Purchaser (§ 265) — Vendor’s Lien — Liability of Subsequent Purchaser.
    Where the holder of a vendor’s lien accepts the promise of a subsequent purchaser to pay the indebtedness as a part of the price of the land, but does not notify the purchaser of his acceptance, the contract was as binding on the purchaser as if he had executed and delivered his written obligation, promising to pay, and could not be revoked by any subsequent agreement between the vendor and the purchaser without the consent of the holder of the vendor’s lien.
    [Ed. Note. — For other cases, see Vendor and Purchaser, Dee. Dig. § 265.]
    Error to Court of Civil Appeals of Sixth Supreme Judicial District.
    Action by H. C. Hoeldtke against B. S. Me-Leary and L. C. Hill to foreclose a vendor’s lien, and recover on a note given for a part of the purchase price. J. M. Leach was made a defendant on the ground that he held a note which was also a lien on the same land. From a judgment of the Court of Civil Appeals (128 S. W. 642) reversing a judgment for plaintiff and defendant Leach, defendant 1-Iill brings error.
    Affirmed.
    McGrady & McMahon, for plaintiff in error. J. W. Gross and G. W. Wells, for defendants in error.
    
      
       For other cases see same topic and section NUMBER in Dee. Dig. & Am. Dig. Key No. Series & Rep’r Indexes
    
   DIBRELL, J.

H. C. Hoeldtke filed suit January 20, 1908, in the district court of Fannin county against F. W. Horstman, B. S. McLeary, L. C. Hill, and J. M. Leach, and -alleged that on or about March 13, 1905, the said F. W. Horstman executed and delivered to plaintiff a note for $690, payable January 1, 1909, with interest at 8 per cent., payable annually, and providing for maturity of principal upon failure to pay the annual interest. The note sued on was given by the defendant Horstman to plaintiff in lieu of four notes aggregating $690, including $40 interest, two of which notes for $175 each had been previously given by one J. J. Dutton to D. E. Taylor and two for $150 each by F. W. Horstman to J. J. Dutton for the purchase price of 57 acres of land in Fannin county, against which the vendor’s lien was retained to secure the payment of said notes. J. J. Dutton conveyed the 57 acres of land to the defendant Horstman on or about December 9, 1902, and Horstman, as indicated above, assumed the payment of the two notes for $175 each due by Dutton to Taylor, which were a charge upon the 57 acres of land, and, in addition to assuming the payment of said two notes, executed to Dutton two other notes for $150 each, the assumed payment, and the two notes executed aggregated $650 principal. On November 6, 1905, Horstman conveyed the 57 acres of land to B. S. Me-Leary and wife, and B. S. MeLeary assumed the payment of the S. W. Horstman note for $690, which was due on or before January 1, 1909. MeLeary also gave'to Horstman as a part of the consideration for said land his two certain notes to operate as a second lien on the land, one for $140 due December 1, 1907, and one for $195, due December 1, 1908. By regular transfer the note for $195 given by MeLeary to Horstman became the property of the defendant J. M. Leach, who filed his cross-action setting up the ownership of such note. On October 16, 1906, the defendant B. S. MeLeary conveyed the 57 acres of land to the defendant L. O. Hill, and, as a part of the consideration for the land, Hill assumed the payment to plaintiff of the note for $690 that had been given plaintiff by F. W. Horstman and the payment of which had been assumed by B. S. Me-Leary. Hill also assumed the payment of the note given by MeLeary to Horstman for $195 afterwards owned by the defendant Leach. Shortly after MeLeary sold the 57 acres of land to Hill, and Hill assumed the payment of plaintiff’s note, plaintiff accepted such assumption, which fact, however, was not known to the defendant Hill. On or about July 11, 1907, the defendants B. S. MeLeary and L. O. Hill entered into an agreement whereby the sale of the 57 acres of land by MeLeary to Hill on October 16, 1906, was rescinded and a deed was made by Hill to Me-Leary, a part of the consideration for such conveyance being the assumption of the payment of the $690 note to plaintiff by said B. S. MeLeary. To this contract and agreement plaintiff was not in any manner privy.

At the time the defendant Hill purchased the land of the defendant MeLeary, there was outstanding against the land in addition to the note for $690 due plaintiff and the note for $195 due the defendant Leach a note for $140 due December 1, 1907, and which was a second lien on the land. Mc-Leary represented at the time the trade was made with Hill that this note had been paid. As a matter of fact, however, said note had not been paid at the time the trade was made, and was then a subsisting lien against the land, but was within a week or ten days thereafter returned to B. S. McLeary by his brother' Eamst McLeary, the owner thereof, for cancellation, and has ever since been in the possession of the defendant McLeary. At the time the defendant Hill reconveyed the land to McLeary he was not aware of the facts in regard to the status of the $140 note on the day of said purchase, and hence his reconveyance to McLeary of the land was not because of any fraud supposed to have been practiced upon him by McLeary. The plea of fraud on the part of the defendant Hill was not made until February 14, 1908, a short time after he learned the facts in regard to the $140 note.

The plaintiff on the trial sought judgment against both McLeary and Hill on the note for $690, and a foreclosure of the vendor’s lien on the 57 acres of land which had been retained in all the notes, and defendant Leach sought to recover against the same parties on his note for $195 with foreclosure of vendor’s lien. The defendant Hill sought relief against a personal judgment upon two grounds: First, because he claimed that by agreement with McLeary, his vendor, the land was reconveyed to McLeary, and Mc-Leary assumed the payment of said notes and released him; and, second, if he was not released by such agreement and recon-veyance, he was released on account of fraud-which was practiced on him by McLeary at the time he purchased the land on October 16, 1906, in that McLeary represented that the note for $140 which was a charge on the land in addition to those assumed by Hill had been paid, when, as a matter of fact, at that time it had not been paid, which fact was not known to defendant Hill until a short time before February 14, 1908.

Judgment was rendered in favor of plaintiff Hoeldtke and the defendant Leach for their notes, interest, and attorney’s fees against the defendants I-Iorstman and Mc-Leary with foreclosure of the vendor’s lien on the land as against all the defendants. No personal judgment was rendered against the defendant Hill. Upon appeal the Court of Civil Appeals reversed and rendered judgment against Horstman, McLeary, and Hill on the notes with foreclosure of vendor’s lien.

The statement of the case as made by the pleadings and the findings of fact by the Court of Civil Appeals present but one issuable question of law for determination by this court. That question is whether the promise of a vendee of land to his vendor to pay the debt of such vendor to his creditor who holds a lien on the land to secure such debt can be revoked by the vendee and vendor by an agreement to which the creditor or mortgagee is not privy after the creditor or mortgagee has accepted the assumption and promise of such vendee to pay his debt.

Before entering upon a discussion of this question, we will dispose of the question of fraud so earnestly and ably presented by counsel as affording the defendant Hill a defense against a personal judgment in favor of plaintiff and defendant Leach.

The finding of the jury upon special issues submitted to them by the court is to the effect that at the time the defendant Hill purchased the 57 acres of land of McLeary he was made to believe that the note for $140, a charge upon the land purchased, had been paid, and that Hill was influenced by that statement in making the purchase. We agree with the Court of Civil Appeals in its conclusion that a finding upon that issue is immaterial, as the other findings of fact eliminate from the case the question of fraud.

There was no rescission or attempted rescission of the purchase by Hill of the 57 acres of land from McLeary on account of the fraud or misrepresentation that had been made him by McLeary in respect to the payment of the $140 note. The pleadings of Hill disclose that he agreed with McLeary on July 11, 1907, to convey back the land and revoke his obligation to pay the debt of McLeary theretofore assumed by Hill, and that he knew nothing of the status of the $140 note at the date of his conveyance to McLeary, and only learned in February, 1908, the note was unpaid at the time he made his purchase. Hence he could not have possibly been influenced in July, 1907, by any fraud that McLeary had practiced upon him at the time of his purchase of the land, for he had not then discovered such fraud. His rescission of the contract of sale and attempted revocation of his obligation to pay plaintiff the debt due by McLeary to plaintiff was' superinduced by other causes than MeLeary’s fraud.

It was shown practically without contradiction that within a few days after Hill purchased the land of McLeary the note for $140, the subject of the fraud, was delivered to McLeary for cancellation, and at the time of trial was tendered into court, together with a formal release of the lien on the land securing the payment of the note. If Hill had discovered the misrepresentation made him by McLeary before McLeary secured the note for cancellation, and had then manifested his intention to rescind the contract, we are not prepared to say that he could not have done so and relieve himself of his obligation to plaintiff arising out of the assumption to pay the debt of McLeary. But, in view of the facts of this case, in what respect was Hill injured or any right of his impaired? He had, as shown by his pleading, reconveyed the land to McLeary, and thereby rendered it impossible for him to be affected in any particular by the $140 note, whether paid or unpaid. He had never assumed its payment, and rested under no obligation by reason of said note after he had conveyed the land to McLeary. If the note was unpaid, so far as he was concerned, it was a charge only against the land in which he had no further interest. The mere fact that there might have been a misrepresentation amounting to fraud on the part of McLeary at the time of the purchase of the land by Hill would be no ground for revoking the obligation of Hill on the assumption and promise to pay plaintiff’s, note, unless such fraud was an inducing cause of Hill’s purchase of the land, or in some way caused him to seek and obtain the rescission of his purchase from McLeary. Where a fraud has been committed in the procurement of the sale of land, and before its discovery by the defrauded party full reparation of all injury has been made, or the probable consequential injury or prejudice to the rights of the party defrauded have been fully arrested, we do not understand the law to be that such an act of fraud will vitiate and revoke the purchase. At the time the fraud was discovered the intended or probable consequential injury had been cured and averted, and no right of Hill’s had been impaired or could suffer by reason of the fraud that may have been practiced by McLeary. The writ of error seems to have been granted in this ease under the impression that the fraud was discovered and contract rescinded by Hill before the $140 note was secured by McLeary for cancellation, but the record does not support such conclusion. The fact is there was never any rescission or attempted rescission of the contract of purchase by Hill on account of the alleged fraud. So that we think the question whether the obligation of Hill to pay the note due plaintiff could be revoked by Hill and McLeary in a transaction between them to which plaintiff was not a party is to be determined independent of the question of fraud. This was the view taken by the majority opinion of the Court of Civil Appeals. Hoeldtke v. Horstman, 128 S. W. 642.

The promise of Hill, being to pay a debt he had incurred to McLeary to plaintiff in discharge of the debt due plaintiff by McLeary, was not within the statute of frauds. The plaintiff accepted the promise of Hill to pay said note, although Hill seems to have had no notice of this acceptance. When these facts concurred, the obligation of Hill to pay plaintiff his note was as binding as if Hill had executed and delivered plaintiff his written obligation promising to pay same, and could no more be revoked by any subsequent agreement between Hill and McLeary without the consent of plaintiff than could any other obligation of Hill be revoked independent of the assent of the payee whose rights had been established by the concurrence of a promise to pay, a moving consideration and an acceptance of such obligation. The relation thus established is purely contractual. McLeary was indebted to Hoeldtke upon the note he had assumed, and Hill was indebted to McLeary in a like sum as a part consideration for the land, and in obligating himself to pay Hoeldtke he was not obligating himself to pay a debt he owed to McLeary, but to McLeary’s creditor, Hoeldtke, and, when Hoeldtke agreed with McLeary to accept Hill’s promise, Hill became the principal debtor to Hoeldtke and McLeary surety for the debt. This arrangement embraced all the elements of a binding contract. There was a valuable consideration and mutuality of obligation. Hill was no longer a debtor of McLeary, but of Hoeldtke. McLeary had no cause of action against Hill, except in the event that Hill failed to pay Hoeldt-ke, and then only upon the principle that the surety may recover from the debtor whose debt he has been compelled to pay. “It is not necessary that the holder of the mortgage should notify the purchaser who has assumed the mortgage of his acceptance of the promise to pay the debt.” 1 Jones on Mortgages, § 752. The theory that the assumption of the debt of the grantor’s creditor by the grantee is nothing more than an agreement of indemnity against the mortgage debt and may be revoked by a recon-veyance of the land does not seem to have ever been recognized by any ruling of any court in this state that we are aware of. We doubt if such a rule obtains in any jurisdiction in the United States, where the creditor has accepted the substituted obligor as in this case. This question seems to have been determined by the Supreme Court of this state in the case of Spann v. Cochran & Ewing, 63 Tex. 240. In that case Cochran & Ewing bought of Watson & Lu-rue a printing press outfit, and assumed the payment of a note for $800 due Spann, which was secured by a chattel mortgage on the property so purchased. Payment seems to have been resisted upon the theory that the promise was to pay the debt of another and therefore within the statute of frauds, and because there was no privity of contract, and because there was an abandonment of the property by Cochran & Ewing. It appears from the brief statement of the case that Spann was not a party to the contract between Cochran & Ewing on the one hand and Watson & Lurue on the other, from which it may be inferred there was no acceptance on the part of Spann, except as may be inferred from his suit against both parties. The trial court refused to enter a personal judgment against Cochran & Ewing, but the Supreme Court in reversing that case directed that a personal judgment should be rendered against both parties, and further directed that, in the event that Watson & Lurue paid the judgment, they ¡should haye execution over against Cochran & Ewing for such an amount. From this ruling it clearly appears that the Supreme Court held and regarded Cochran & Ewing, who had assumed to pay the debt of Watson & Lurue to Spann, became the principal debtors by their assumption, and their grantors became the sureties of the vendees. Brandt on Suretyship & Guaranty, § 208. The opinion was rendered by Judge Stayton, and he has established a principle of law applicable to the case at bar, which case is analogous to that case. With reference to the nature of the contract he said: “It is believed, however, that such an agreement between a debtor and a third person, made upon valuable consideration, gives to the creditor a cause of action on which he may sue and recover from the person who has so contracted to pay him a debt originally due only by the person to whom the promise is made. * * * We are of the opinion that, under the facts of this case, the action may be maintained against Cochran & Ewing, not only for the purpose of foreclosing the •chattel mortgage, but also for the purpose •of enforcing from them the payment of the debt due to Spann; and this as a personal obligation.”

In the Spann Case, supra, there does not appear to have been an acceptance of the assumpsit of the grantees to pay the creditor’s debt, and, notwithstanding the grantees had abandoned the property, they were held to be personally responsible on their promise. In this respect the case at bar is much stronger as the findings show an acceptance by Hoeldtke of the grantee’s promise to pay, and upon greater reason should an ¡abandonment or reconveyance of the property not defeat the right of plaintiff to -a personal judgment.

As bearing upon the question under discussion we refer to the following cases from which numerous authorities may be gathered and the subject pursued without limit: Spann v. Cochran & Ewing, 63 Tex. 240, and cases there cited; Huffman et al. v. Western Mtg. & Invest. Co., 13 Tex. Civ. App. 169, 36 S. W. 306; Morrison v. Barry, 10 Tex. Civ. App. 22, 30 S. W. 376; Hoeldtke et al. v. Horstman et al., 128 S. W. 642, and cases there cited; Gifford v. Corrigan, 117 N. Y. 257, 22 N. E. 756, 6 L. R. A. 610, 15 Am. St. Rep. 508; Keller v. Ashford, 133 U. S. 610, 10 Sup. Ct. 494, 33 L. Ed. 667. Following the case just referred to comes that of Huffman v. Mortgage & Investment Co., supra, •decided by the Court of Civil Appeals, where the doctrine discussed in this opinion is fully -sustained as follows: “Where, however, there has been an acceptance upon the partof the creditor, then a release by the original promisor does not affect the creditor’s right to recover from the party assuming ¡the debt.” To a like effect is the case of Morrison v. Barry, supra, decided by the Court of Civil Appeals, where it is distinctly held that, upon an acceptance of the assump-sit, the promise becomes irrevocable. In that case it is held that a failure of the creditor to accept the assumpsit or to take some steps to hold the promisor liable upon his promise would leave it within the power of the vendor by an act of rescission of the sale to revoke the promise of the vendee to the creditor. Since the case at bar is based upon a different state of facts, we are not called upon to decide the question whether or not an acceptance on the part of the creditor is necessary to prevent a revocation of the assumpsit, and we do not decide that question. It will not be amiss, however, to suggest that the ruling in the case of Morrison v. Barry, above referred to, se.ems to be in conflict with that in the case of Spann v. Cochran & Ewing, supra.

A question very similar to that under investigation was before the New York Court of Appeals in the case of Gifford v. Corrigan, 117 N. Y. 257, 22 N. E. 756, 6 L. R. A. 610, 15 Am. St. Rep. 508, in which Judge Finch said: “Is this release, thus executed, a defense to this action? I shall not undertake to decide, if, indeed, the question is open, whether in the interval between the making of the contract and the acceptance and adoption of it by the mortgagee it was or was not revocable without his assent. However that may be, the only inquiry now presented is whether it is so revocable after it has come to the knowledge of the creditor, and he has assented to it, and adopted it as a security, for his own benefit. My judgment leads me to answer that question in the negative.” Judge Hodges in speaking for the majority of the Court of Civil Appeals in this case has so ably and elaborately presented the issues that we desire to quote from his opinion at some length as expressive of our views, as follows: “So far as our investigation has been extended, all of the cases where this question has been involved concede that the promise of the grantee becomes irrevocable when the mortgagee has in some manner acted upon it, with the exception of two, one in California and the other in New Jersey. Bidden v. Brizzolara, 64 Cal. 354 [30 Pac. 609]; Laings v. Byrne, 34 N. J. Eq. 52. These, however, have become so isolated by the subsequent trend of American adjudication that they may now be regarded as being without weight as judicial authority upon this question. Certainly it may be said that they are at present almost, if not entirely, alone in espousing the doctrine which distinguishes them from the great body of juridical opinions. In those eases where it is held if the mortgagee has in some manner acted upon the promise of the grantee that the liability of the latter becomes fixed, it is not claimed that this action must be such as would create an es-toppel against the grantee. It seems to be sufficient if it is such as to evince an acceptance or an adoption of the promise by ¿he mortgagee. If this be the true view, then .it follows irresistibly that the grantee can-mot thereafter relieve himself of his assumed -obligation without the consent of the creditor whose assent fixed his status. This would seem to be in accord with the general principles governing the right of contracting ,.parties. When Hill purchased this land from MeLeary, he, in effect, held back that portion of the consideration which was due .to Hoeldtke and Leach from the purchase •price. This he undertook to pay to them, or to the holders of the notes, not to benefit MeLeary, but in order to discharge an in-cumbrance against the property which he had purchased, and as a part of the consideration. We do not think it was essential in order to fix the liability of Hill that he -.should have received actual notice of the plaintiffs’ assent to or acceptance of his -promise made for their benefit. When he accepted the deed from MeLeary containing ■the recitation of his assumption of those outstanding obligations, it was an unconditional promise upon his part to pay those notes according to their terms. It was not a mere ■offer by him to make a contract, but an absolute contractual undertaking.”

Upon a careful consideration of the questions presented, we find no reason why the ruling of the Court of Civil Appeals in this •case, as expressed in the opinion of the majority of that court, should be disturbed, and the judgment of the Court of Civil Appeals will be affirmed, and it is so ordered.