Case Name: FITCH v. KENNARD et al.
Court: Texas Courts of Civil Appeals
Jurisdiction: Texas
Decision Date: 1911-01-05
Citations: 133 S.W. 738
Docket Number: 
Parties: FITCH v. KENNARD et al.
Judges: 
Reporter: South Western Reporter
Volume: 133
Pages: 738–740

Head Matter:
FITCH v. KENNARD et al.
(Court of Civil Appeals of Texas.
Jan. 5, 1911.
Rehearing Denied Jan. 26, 1911.)
ALsndob and Purchaser (§ 261 ) — Vendor’s Lien — Notes—Priority of Indorsee without Recourse.
AVhere a vendor sold land, taking as part consideration four notes secured by a vendor’s lien, and for a valuable consideration assigned without recourse the note first maturing, the assignee of that note was not, in case of foreclosure, entitled to priority, in distribution of the proceeds over the notes retained by the vendor, as he expressly repudiated all responsibility for payment of the note transferred.
[Ed. Note. — For other cases, see Vendor and Purchaser, Cent. Dig. §§ 674H395; Dec. Dig. § 261. ]
Appeal from District Court, Fannin County; Ben H. Denton, Judge.
Action by J. H. Fitch against J. E. Ken-nard and A. Kennard. From a judgment for A. Kennard, plaintiff appeals.
Judgment modified.
C. A. AVheeler and McGrady & McMahon, for appellant. J. AV. Gross and J. I. AVarren, for appellee.
For other cases see same topic and section NUMBER in Dec. Dig. & Am. Dig. Key No. Series & Rep’r Indexes
Writ of error denied by Supreme Court.

Opinion:
WILLSON, C. J.
It appears from the findings in the record that appellant sold and conveyed to appellee' J. E. Kennard a tract of land, in consideration, among other things, of the execution and delivery to him by said Kennard of bis four promissory notes — one for $325, payable January 1, 1908, and tbe others for $500 each, payable at later specified dates. Tbe payment of tbe notes was secured by a vendor's lien expressly retained on the land by appellant. The note for $325 afterwards, for a valuable consideration paid to him, was assigned by appellant to appellee A. Kennard. The assignment was by an indorsement "without recourse" made on tbe back of tbe note by the former. Appellant did not in any manner undertake to pay or guarantee the payment of the note, nor did be agree that, in the event of a foreclosure sale, it should be entitled to priority of payment over tbe other notes, still held by him, out of the proceeds of sucb a sale. On these facts the trial court concluded as matter of law that tbe note held by said A. Kennard was entitled as against the notes held by appellant to priority of payment out of tbe proceeds of a sale of the land ordered to satisfy judgments rendered against said J. E. Kennard in favor, respectively, of appellant and said A. Kennard as tbe holders of the notes. AVe do not agree that tbe law is as tbe trial court determined it to be; nor do we agree that tbe authorities cited by appel-lee support tbe conclusion reached by said court. AVhile it has been held by tbe Court of Civil Appeals of tbe Fourth District that a note secured by a vendor's lien on land, while in the hands of an assignee of tbe ven dor, is entitled to priority of payment over other notes of the same series still held by the vendor, in the event the proceeds of a sale of the land are not sufficient to pay all the notes (Douglass v. Blount, 22 Tex. Civ. App. 493, 55 S. W. 526; Perry v. Dowdell, 38 Tex. Civ. App. 96, 84 S. W. 833), we think it has never been held by any court in this state that such a note in the hands of an as-signee is entitled to such priority, when the vendor of the land, as he did in this case, in assigning the note, not only did not assume responsibility for its payment, but expressly negatived and repudiated an intention on his part to become liable for its payment; for such was the effect of appellant's in-dorsement of the note "without recourse." Youngberg v. Nelson, 51 Minn. 172, 53 N. W. 629, 38 Am. St. Rep. 497; Watson v. Chesire, 18 Iowa, 202, 87 Am. Dec. 382; Bankhead v. Owen, 60 Ala. 461. It may well be doubted whether on the facts of the cases decided by the Court of Civil Appeals of the Fourth District the rule is not to the contrary of the .conclusion there reached; for in Salmon v. Downs, 55 Tex. 246, the court, after stating the question before it to be "whether, when a vendor of land takes notes for the purchase money, and holds a vendor's lien as security, and afterwards indorses and assigns one of the notes and retains the others, and the land is sold to pay the purchase money, has such indorser and assignor a right to share in the proceeds of sale before the note assigned by him is fully paid and satisfied?" said: "Whatever uncertainty may have attended the solution of this question hitherto, it is believed that the mater is now settled by the decisions of our court, and that with us the rule is that where several notes áre given for the same land, having a lien upon it for their payment, and are assigned to different parties, all have equal rights to have satisfaction out of the land, and this without reference to the order in which they may have been assigned or which first matured. Delespine v. Campbell, 52 Tex. 12; Paris Exchange Bank v. Beard, 49 Tex. 363; Robertson v. Guerin, 50 Tex. 317; McDonough v. Cross, 40 Tex. 251; Delespine v. Campbell, 45 Tex. 628. Nor do we think the case is different when the vendor himself may retain one of the notes. There is no presumption arising from the transfer of one or more of them that he intends to waive his right to share pro rata in the common fund for that which he has retained. Of course, he may waive his privilege, but that he has done so shall be made to appear by the proof." The ruling in Salmon v. Downs afterwards was approved by the Supreme Court in Wooters v. Hollingsworth, 58 Tex. 374 (and see McMichael v. Jarvis, 78 Tex. 671, 15 S. W. 111), and followed by the Court of Civil Appeals of the Third District in Lewis v. Ross, 65 S. W. 505, after noting the decision of the court in Douglass v. Blount, supra. In the case last cited (Lewis v. Ross) the court said that in such a case something more than the mere assignment of one of the notes was necessary before it could be held that the note assigned was entitled to priority over those retained by the assignor — that to have such an effect "it was necessary to make another contract in reference to priority of lien." The cases referred to as decided by the Court of Civil Appeals of the Fourth District, and as indicating a departure from the rule stated in Salmon v. Downs, were decided on the authority of Whitehead v. Fisher, 64 Tex. 638, and their value as precedents is weakened by the fact pointed out by the Supreme Court in dismissing an application for a writ of error in one of them (Douglass v. Blount) that in Whitehead v. Fisher there was an express agreement between the parties for the priority allowed (Douglass v. Rlount, 93 Tex. 499, 56 S. W. 334); and is further weakened by the fact that the Supreme Court in refusing a writ of error in the other of the two cases (Perry v. Dowdell) was careful to say that it thought the priority given the as-signee in that case was authorized because the assignor, while retaining the other notes, had guaranteed the payment of the one he had assigned. Anderson v. Perry, 98 Tex. 493, 85 S. W. 1138. For a like reason, this court in Walcott v. Carpenter, 132 S. W. 981, recently decided, and not yet officially reported, in an opinion by Justice Levy, held that the note in the hands of the assignee was entitled to priority of payment out of the proceeds of a sale over notes of the same series held by the assignor, the vendor of the land. But whether the rule should finally be settled to be in this state as indicated in Salmon v. Downs and Wooters v. Hollingsworth, or as stated in the cases decided by the Court of Civil Appeals of the Fourth District, cited above, it is clear, we think, that on the facts of this case the note held by appellee A. Kennard was not entitled to the priority given to it by the judgment of the court below. And we do not understand that appel-lees are in the attitude of seriously insisting that on the facts as found by the trial court it was entitled to such priority. The contention they seem most to rely upon is presented by a cross-assignment, and is that there was an agreement between the parties that the note assigned to A. Kennard should be paid in full out of the proceeds of a sale of the security before any of such proceeds should be applied to the payment of the notes retained by appellant, and that the finding by the trial court to the contrary is not sustained by the evidence. This contention cannot be sustained. As we view it, the evidence in the record not only sustains the finding, but demanded it.
The judgment will be so reformed as to direct the application of the' proceeds of the sale of the land to be applied to the payment pro rata of the notes held by appellant and the note held by appellee A. Kennard, in the event same should not be sufficient to pay same in full, and, as so reformed, tbe .judgment will be affirmed.