Case Name: PAYNE v. MILLER
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1941-07-10
Citations: 153 S.W.2d 514
Docket Number: No. 11226
Parties: PAYNE v. MILLER.
Judges: 
Reporter: South Western Reporter Second Series
Volume: 153
Pages: 514–518

Head Matter:
PAYNE v. MILLER.
No. 11226.
Court of Civil Appeals of Texas. Galveston.
July 10, 1941.
Rehearing Denied July 31, 1941.
Ward, Kimbrough & Kirkman, of Corpus Christi, for appellant.
Russel A. Bonham and Mary Nan Bon-ham, both of Houston, for appellee.

Opinion:
CODY, Justice.
This was a suit in the usual form to recover on a promissory note brought by appellee against appellant. Appellee and appellant will be designated as they were in the trial court, plaintiff and defendant, respectively. The note was dated November 14, 1934, and was for the principal sum of $671.46. It was executed by defendant and made payable to the order of plaintiff.
Defendant pled by way of defense that the note was obtained from him by plaintiff by duress; that it was obtained from him by plaintiff in fraud of the Land Bank commission ; also, that plaintiff had made such representations and warranties to the Land Bank Commissioner, in connection with .a loan obtained by defendant from said Commissioner, that she, plaintiff, was estopped to enforce the note against defendant by reason of said warranties and representations made to the Land Bank Commissioner; also, that the note was executed in violation of the purpose, spirit and policy of the Act of Congress creating the Federal Farm Mortgage Corporation; also, that the note is without consideration. The facts upon which defendant based and supported said defense pleas he pled at length.
The case was tried without the aid of a jury, and judgment was rendered for plaintiff. Defendant first requested, and then withdrew his request, for findings of fact and conclusions of law. The question on appeal therefore is whether or not, viewed in their most favorable light, the facts proved sustain the judgment.
The facts are: In 1931, defendant and wife gave their note, payable to plaintiff, for $2,300 secured by a mechanic's and materialman's lien on a farm in Hidalgo County, due two years after date. This note was inferior to a prior $600 vendor's lien note. Both plaintiff's note for $2,300, and the prior vendor's lien note for $600, became past due in 1933, as did also taxes against the farm property. And then, at -a time when plaintiff was visiting defendant and his wife, she told defendant she was in need of her pastidue money. Defendant thereupon suggested that he might be able to get a loan from the Federal Land Bank and told how much he could get on the farm property, and said amount was less than enough to pay off the first lien note, and plaintiff's note in the sum of $2,300; plaintiff declined to accept the amount proffered her for her note which was $1, 926.54 in bonds (payment of which was guaranteed by the Government under the Emergency Farm Mortgage Act of 1933, 48 Stat. 41). Defendant thereupon suggested to plaintiff the plan which was followed, and which he now complains of as being illegal, namely, that if she (plaintiff) would transfer her note and lien to the Land Bank Commissioner, that he, defendant, would pay plaintiff, as he was able, the difference between the bonds she would receive (in the amount of $1,926.54), and the total amount of her note, in the sum of $2,300. Plaintiff replied to defendant that she would take a secured note for the said difference. Defendant testified in this connection : "I told her (plaintiff) that I could not give her security or a lien on the property for the note because the Land Bank Commissioner making the loan would not permit me to do so. And it was finally agreed that I would give (her) an unsecured note
The full amount of the indebtedness against the property was $3,200. The Commissioner approved the loan only for $2,-800, and under the loan of $2,800, which was to be obtained from the Commissioner, plaintiff was entitled to get bonds in the amount of $1,926.54.
By letter of November 14, 1934, plaintiff through her then attorney wrote the following letter to defendant which is self-explanatory:
"Enclosed find two copies of the agreement of Mrs. Doris Miller (plaintiff) to accept payment in bonds of the Federal Farm Mortgage Corporation in the sum of $1926.54 on your $3200.00 note.
"There is also enclosed note in the sum of $671.46 payable to Mrs. Doris Miller, to be signed by you. As soon as this note is received Mrs. Miller stands ready to execute the necessary papers to conclude this matter."
Plaintiff signed the following under date of November 14, 1934:
"The following is a true and correct statement of the indebtedness which is owing the imdersigned by the Applicant (i. e., defendant) whose name appears above.
"Amount of unpaid principal. $2300.00
"The above indebtedness is secured by a materialman's and mechanic's lien mortgages.
"The undersigned agrees to accept $1926.54 in full satisfaction of the here-inabove described indebtedness, payable in accordance with the provisions set out herein."
Plaintiff executed a transfer and assignment under date of February 25, 1935, which reads, so far as here material, as follows:
"The State of Texas "County of Hidalgo.
"Know all men by these presents:
"That Mrs. Doris Miller, a feme sole, hereinafter called Grantor, whether there be one or more parties executing this instrument, for and in consideration of the sum of $1,926.54 in hand paid by the Land Bank Commissioner, acting pursuant to Part 3 of the Emergency Farm Mortgage Act of 1933, 12 U.S.C.A. § 1016 et seq., the receipt of which is hereby acknowledged, has this day bargained, sold and conveyed, and by these presents does bargain, sell, convey and assign, without recourse unto said Commissioner, the unpaid balance of $1,926.54, principal and interest owing on that certain mechanic's and ma-terialman's lien note for the principal sum of $2300.00 dated August 27, 1931, executed by Will N. Payne and wife, Julia Payne, payable to the order of Mrs. Doris Miller due two years after date, secured by and more fully described in a certain Mechanic's and Materialman's contract executed by Mrs. Doris Miller to Will N. Payne, et ux., filed for record November 24, 1934, and now shown of record in Vol.-, page-, Mechanic's Lien Records of Hidalgo County, Texas, to which instrument and its record reference is here made for a better description of said note or notes and the land securing the payment thereof.
"And the Grantor hereby bargains, sells and conveys unto the said Land Bank Commissioner all of the right, title and interest now owned or held by Grantor in and to said land by virtue of said note or notes and the lien securing same, in so far only as said lien rests upon and against the lands described in Deed of Trust dated January 3, 1935, executed by Will N. Payne, et ux., Julia Payne, to A. C. Williams, Trustee, for the use and benefit of said Commissioner.

"As part of the consideration far the execution of this instrument, grantor, warrants to the said Land Bank Commissioner acting as aforesaid, that any umpaid portion of the debt and lien hereinbefore described which is not hereby specifically transferred is fully, completely and irrevocably released, and grantor has not and will not require or, accept directly or indirectly any payment, renewal, extension or any other evidence of indebtedness for the unpaid portion of said debt.
"This 25th day of February, A. D. 1925.
"Mrs. Doris Miller."
The assignment just referred to shows that plaintiff was acting under, and receiving the benefits of, the Emergency Farm Mortgage Act. The very law under which she received and accepted the bonds compelled her to cancel the remainder of the $2,300 indebtedness. McCrory v. Smeltzer, 132 Tex. 383, 124 S.W.2d 336. Under the foregoing instruments which we have copied, plaintiff was charged with the knowledge that in taking the note sued on she was taking a note to cover a portion of the debt which she bound herself to cancel and which, like a gambling debt, cannot be enforced in a court of law. We are constrained to hold that the judgment of the trial court must be reversed and here rendered in favor of defendants. It will be so ordered. Justice GRAVES dissents.
Reversed and rendered.