#### SHAW, Banking Com’r, v. DYER et al.

No. 9127.

Court of Civil Appeals of Texas. San Antonio.

June 21, 1933.

Rehearing Denied July 27, 1933.

W. B. Moss, of Sinton, and Gaines, Gaines & Roberts, of San Antonio, for appellant.

J. C. Russell, of Sinton, and M. A. Childers, of San Antonio, for appellees.

PLY, Chief Justice.

Appellant sued Pearl Emma Dyer and her husband, T. O. Dyer, to recover on three promissory notes in the sum of $500 each, due, respectively, on December 1 of 1930, 1931, and 1932. The notes were executed by appellees to Carl Boscamp as part of the purchase money of lots 53, 60, and 70, in the Hazen addition to the town of Sinton, San Patricio county, Tex.; a vendor’s lien being reserved in the deed from Boscamp to the Dyers to secure the three notes evidencing the purchase money for the lots. The notés had been transferred by Boscamp to the State Bank of Odem, Tex., which is in the hands of appellant in a state of liquidation. The foregoing facts were alleged by appellant. Those facts were denied by appellees, and a plea of non est factum was entered as to the notes and the vendor’s lien. They al-, so claimed that the lots constituted their homestead. *<*

The cause was submitted to a jury on special issues, and on the answers returned thereto judgment was rendered that appellant take nothing by his suit and pay all costs of suit. In response to the issues submitted to them, the jury found that appellees did not receive a valuable consideration for executing the notes forming the basis of the suit; that the Bank of Odem was not a purchaser in good faith of the notes for a valuable consideration; that one J. D. Holland was acting as the agent of the bank in procuring the execution of the notes; that as an inducement to the execution of the notes Holland represented to appellees that the notes would be valueless and would not be sued upon by the bank; that such representations were the sole consideration for the execution of the notes. It was represented by Holland, as agent for the bank, that the execution and delivery of the notes would add to the showing of the bank’s assets, and they were executed to Boscamp to indicate that they were given for purchase money of the land theretofore bought by appellees from Boscamp. They were not really given for any part' of the purchase money of the land.

Boscamp sold the land to appellees for $7,-000, and recited in the deed that $7,000 in cash had been paid, and six notes, each for $500, had been given for a part of the purchase money. The three notes sued on herein were part of the six notes described in the deed. After the execution of the deed and notes, appellees sold a portion of the land to J. E. Dodson; at that time the six notes had been transferred by Boscamp to the bank; and, when the land was sold to Dodson, the release of the debt on the land, as evidenced by three of the notes, was executed and delivered by the bank. The release recited that the six notes were given for the purchase money on the land, and that three of them would be paid by the money from the sale to Dodson. The release showed that three more notes were being held by the bank.

The theory of the ease held by appellant, which is sustained by ample testimony, is, T. O. Dyer owed the bank $3,000, which was past due, and, hearing of the land purchase about to be made by appellees, Holland was sent by the bank to appellees to give some security for the $3,000 note then due, and he proposed to the parties that, while the transaction was for cash, appellees agree that six notes be given to Boscamp, who agreed to include the notes in the deed as unpaid purchase money, and Boscamp would transfer the notes to the bank. By this transaction appellees substituted the six notes for the $3,000 note, and were given six years in which to pay off the notes. The six notes were described in the deed given by Boscamp to appellees, and the notes were transferred to the bank. Afterwards the appellees sold *618pai-t of the land and used the amount realized therefrom to pay off three of the sis notes described in the deed, accepting from the bank a,release of the vendor’s lien on that part of the land sold by appellees, and such release was recorded by appellees. The six notes were executed to pay a note for $3,000 due by appellees to the bank.

While it is clear that no such promises were made by the bank to appellees as claimed by them, still, if such statements were true, the acts of appellees in connection with the notes forever estop them from setting up the defense attempted, and which was successful before a jury.

The verdict and judgment have neither law, justice, nor equity to sustain them, and the judgment is reversed and the cause remanded.

On Motion'for Rehearing.

It was alleged and' proved by' appel-lee that J. D. Holland, agent of the Odem State Bank, had an agreement By which the notes given to Boscamp were to he transferred to the bank, and that the bank would not attempt a collection of the said notes, but they would be there for the purpose of giving a better'appearance to the account of appellee.

In other words, it was alleged and proved that the agent of the bank and appellee entered into an agreement by which they would deceive the bank examiner and perpetrate an injustice upon him and the public generally.

Under the authority of the Supreme Court, which is supported by reason and justice, ap-pellee should not be permitted to reap any reward from this agreement to defiaud, and it would not matter that a homestead was involved in the scheme. Mrs. Dyer signed the note with her husband," and did it with full knowledge of the conspiracy to deceive the bank examiner. Neither she nor her husband should be permitted to profit by it.

In support of this position we quote from the case of Shaw v. Borchers (Tex. Com. App.) 46 S.W.(2d) 967, 970, as follows: "We desire to make clear the effect of our holding. When any person executes a note, in connivance with the officers of a state bank, for the purpose of deceiving the hank examiner, he will not be permitted, in a suit by the bank’s receiver, to urge that his- obligation is other than what it purports to be upon its face.”.

This holding of the Supreme Court is comprehensive enough to extend to the agreement made by appellee in this case. It was a part of his defense, and it is openly admitted by him in his brief, as follows: “Knowing that there was no chance to get a valid lien on the homestead, he undertook to work out a plan that would at least make it look better on the books of the bank. The interest of his principal would at least be served to the extent that when the bank examiner came around the next time apparently the Dyer line would be in better shape.”

The motion for rehearing will be overruled.