Case Name: STEVENS v. FARMERS FIRST NAT. BANK OF STEPHENVILLE et al.
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1938-01-07
Citations: 114 S.W.2d 651
Docket Number: No. 1736
Parties: STEVENS v. FARMERS FIRST NAT. BANK OF STEPHENVILLE et al.
Judges: 
Reporter: South Western Reporter Second Series
Volume: 114
Pages: 651–658

Head Matter:
STEVENS v. FARMERS FIRST NAT. BANK OF STEPHENVILLE et al.
No. 1736.
Court of Civil Appeals of Texas. Eastland.
Jan. 7, 1938.
Rehearing Denied Feb. 25, 1938.
Chandler & Chandler and A. P. Young, all of Stephenville, for appellant.
J. A. Johnson and Oxford & McMillan, all of Stephenville, for appellees.

Opinion:
LESLIE, Chief Justice.
The Farmers First National Bank of Stephenville instituted this suit against W. R. Stevens on a note amounting to $576.71, executed to it by Stevens and to foreclose a second lien securing the same on 318.45 acres of land in Erath county. The Federal Land Bank of Houston held a first lien against the land for the balance of a $1,700 indebtedness. After the suit was filed and before it was tried, the tract of land was sold by the Land Bank and bid in by that bank at a trustee's sale for $1,000. Thereafter the plaintiff amended his petition, seeking judgment against Stevens only, and without foreclosure of any lien.
The defendant Stevens answered and made Clarence Helms a party, seeking judgment against him for any amount said plaintiff might procure judgment against Stevens. In making Helms a party, Stevens alleged that on November 2, 1935, he executed and delivered to Helms a deed conveying to him said 318.45 acres of land, and that as a part of the consideration for sitch conveyance the said Helms assumed the payment of said indebtedness of $576.71, as well as other items of indebtedness secured by a lien on said land. The right of the plaintiff to a personal judgment against Stevens was recognized and the lawsuit proceeded to trial on the issues raised by the pleadings of Stevens over against Helms and the latter's answer thereto. A trial before the court and jur.y resulted in a verdict upon which judgment was rendered in favor of Helms, and Stevens appeals.
In response to Stevens's pleading making him a party on his contract of assumption, Helms appeared and alleged that in the exchange of lands between himself and Stevens about November 2, 1935, he had been defrauded by Stevens, and that by reason thereof he was entitled to a rescission of the deal between them and the cancellation of the deed whereby he (Helms) purported to have conveyed to said Stevens his undivided one-thirteenth interest in 980 acres of land situated in Fisher county, Tex., for Stevens's 318.45 acres of land in Erath county. The transaction was in fact an exchange of lands effected by the parties in this manner: Helms and wife conveyed their Fisher county land to Stevens by deed reciting "$10.00 and other valuable consideration." And in turn Stevens and wife conveyed the Erath county land to Helms for a recited cash consideration of the sum of $2,000 and the agreement on the part of the defendant (Helms) to assume and agree to pay (1) taxes on Erath land amounting to $356.30; (2) unpaid balance on $1,700 owed by Stevens to Federal Land Bank, and (3) the balance of $576.71 (involved in this suit) owed by Stevens to plaintiff and secured by a second lien.
April 7, 1936, the Federal Land Bank foreclosed its deed of trust lien on the 318.45 acres of land and bought it in at the sale. Helms made no effort to prevent or avoid such sale, and he and Stevens both alleged 'financial inability to do so at the time.
Helms contests Stevens's right to a judgment against him for any amount for which the bank might take judgment against Stevens on the specific grounds that in the exchange of lands Stevens perpetrated a fraud on him in the manner reflected by the following excerpt from his pleading:
"This defendant (Helms) shows to the court, that sometime prior to the date of the execution of said deeds, defendant and W. R. Stevens negotiated with each other in an effort to trade the land owned by the defendant (in Fisher County) to W. R. Stevens for the lands conveyed to him located in Erath County, and that said trade was finally consummated on the dates of, said deeds. That the said Stevens, at the time and before defendant executed his deed conveying said land to said Stevens, stated to defendant that there were debts against said land owned by him (Stevens) as above enumerated.' Thát he (Stevens) had made arrangements with the Federal Land Bank and with the Farmers First Nation Bank of Stephenville to renew said notes and deeds of trust and give him all the time desired by him in order to pay the same. That said bank had agreed to extend the time of payment of its note and deed of trust, to be made in small payments, and that the Farmers First National Bank, had agreed with him, the said Stevens, to allow him all the time he desired to pay the note and deed of trust held by it against the lands conveyed to this defendant, and at the same time stated to the defendant (Helms) that he would guarantee to him that said agreement so made by said land bank and said First National Bank would be carried out by said banks, in the event said trade was completed, and further stated to the defendant, that he had talked to the Farmers First National Bank and they had agreed to carry the note and to postpone the date of payment on same to suit the convenience of this defendant, should a trade be consummated. And this defendant further says, that the above and foregoing representations made to him by said Stevens, was the consideration for the execution of the deed by him to the said Stevens conveying the land in Fisher County described above, and but for the said representations this defendant would never have parted with the title to his land.
"And this defendant further alleges, that prior to the time said trade was made between him and the said Stevens, the said Stevens stated to him and assured him that he could secure the postponement of the payment of said notes, that he knew it would be agreeable with the Land Bank and said Stephenville Bank to postpone the due dates of said notes, and assured him (Helms) that he need have no uneasiness as to being pushed on said notes; that he (Stevens) had made arrangements with said banks to extend said notes and give him time to pay for said land in small payments, and further stated to the defendant Helms that he would guarantee that he would have no trouble in securing an extension of said notes so that they could be paid by him in small payments. That said statements here-inbefore alleged, each and all were false and untrue."
Helms further alleged that he believed said statements and with faith therein closed the transaction, delivering to Stevens a deed to the Fisher county land; that said Stevens had not made arrangements for the extension of said debts either for himself or his grantee; and that, as a result of his failure to do so, the said Federal Land Bank foreclosed its first mortgage on the land, and the Stephenville bank brought suit on its debt. Upon such showing Helms seeks to rescind the deal and cancel his deed conveying the Fisher county land to Stevens.
On the trial of the case the court sub-' mitted to the jury special issues in response to which the jury found: (1) That W. R. Stevens, at the time or prior to the execution of the deed by Helms and-wife to the 80 acres of land in Fisher county, stated and represented to Helms that he (W. R. Stevens) had made arrangements with the Farmers First National Bank of Stephen-ville and the Federal Land Bank to carry the notes and to postpone the payments thereof; (2) that the statements "made by W. R. Stevens were untrue" ; and (3) "that Clarence Helms relied upon said statements in making the deed to the Fisher County land."
No other issue bearing upon fraud actually warranting rescission was submitted by the court, or requested by any one. Obviously there is no jury finding that the value of the Erath land received by Helms •was of less value than that conveyed by-him to Stevens. Such fact is .not conclusively shown by the testimony. Helms pleads and proves that the $10 recited to have been paid by the deed from -him to Stevens was not paid, and that the $2,000 recited as a cash consideration in the deed from Stevens and wife to himself was not paid in cash. Concerning the deal and the recitation of $2,000 cash paid, Helms affirmatively alleges "that as a matter of fact the whole transaction was a trade of the two tracts of land, and the said W. R. Stevens knew and understood that he was not receiving any $2,000 at said time, but that the $2,000 mentioned in said deed represented the value of the Fisher County land owned by said Helms."
From this it is logically certain that the parties estimated the equity of Stevens in his 318.45 acres of land to be the equivalent of the value of the Fisher county land admitted to be free of encumbrance, and apparently conceded by all parties to be of the value alleged. The correctness of this conclusion (warranted by the record) is emphasized by the fact that Helms in taking the transfer to himself of the Erath land expressly assumed all outstanding indebtedness and liens against that 318.45 acres of land. Further, and as above noted, the suit is predicated on the fraud, not by reason of false representations pertaining to land values or equities therein, but on Stevens's failure to have debts extended, as he is alleged to have falsely represented that he had already done. Undoubtedly the Stevens land and the Helms land had a value, and such wAs the basis of the exchange now sought to be set aside and canceled on the ground of fraud. For aught this record shows, at the date of the exchange of land the Stevens equity in the 318.45 acres of land was the equivalent of the value of the Helms land in Fisher county.
On its face no other interpretation can be given the transaction. On such state of pleading and testimony, no showing is made for rescission and cancellation as contended for by Helms.
In Bryant et al. v. Vaughn, Tex.Sup., 33 S.W.2d 729, 730 (a case passing through this court, 1 S.W.2d 667), the Supreme Court said:
"The rule in this state is settled that the equitable remedy of cancellation is not available because of fraudulent representation made to induce the execution of a contract unless it be shown in connection therewith that some injury or damage has resulted to the party claiming to be aggrieved. Russell v. Industrial Transportation Co., 113 Tex. 441, 251 S.W. 1034, 258 S.W. 462, 51 A.L.R. 1, and authorities there cited.
"The rule announced in the above case bars defendants in error's right to rescission of the trade in view of the jury's finding that the value of the property received by them was equal to that with which they parted possession."
The Supreme Court applied the same rule in deciding the case of Lane v. Cunningham, Tex.Com.App., 58 S.W.2d 35, 36, appealed from this court. It is there said: "The question of controlling importance relates to the relief sought and obtained by the Cunninghams in respect to the false' representations made by Lane. The established rule is that where the equitable relief of cancellation or rescission is sought, on account of fraud, a court of equity will not grant such relief unless the complaining party has suffered pecuniary damage as a result of the fraud."
Further on it is stated in that opinion: "The above rule of equity should not be confounded with the measure of damage in suits at law for the recovery of damages for fraud, as provided in article 4004 of the statutes. The Cunninghams, as already indicated, do not seek damages on account of the alleged false representations of Lane, but seek relief in equity by way of cancellation or rescission. They have failed to present, by either pleading or proof, a case calling for such relief. It is manifest from the record that the case was tried and decided in the trial court on the erroneous theory that, regardless of the absence of a showing of resulting injury, the alleged false representations of Lane afforded ground for cancellation as sought by the Cunninghams. Lane, in various ways, duly preserved his right to complain of the rulings of the trial court involving the application of the erroneous theory upon which the case was tried and decided. The fact that there was testimony to show, and the jury found, that the deed in question was never delivered, and therefore never became effective, does not render harmless the errors committed by the trial court in the other respect." (Italics ours.)
It was thus held in the above authorities that the parties to an exchange of lands were not entitled to get back a farm where they néither pleaded nor proved that the farm was worth more than the hotel they received, notwithstanding the fraud of the other parties. There was an absence of pleading and proof of pecuniary damages, and the rule of law has application in the instant case and controls the disposition of this appeal.
As in the Lane Case, the appellant preserves in various ways his right to complain of the correctness of the judgment. The trial appears to have been upon a mistaken theory of law. Since the pleadings will doubtless be recast upon another trial, other points presented by the appeal will doubtless not arise.
The judgment of the trial court in favor of appellees Clarence Helms and wife, Ola-lee Helms, against W. R. Stevens is in all things reversed and the cause remanded, and the judgment in favor of said Farmers First National Bank of Stephenville against said W. R. Stevens, as well as the judgment in favor of Mrs. Alice Stevens against said bank, in all things remains undisturbed. It is so ordered.