Court Opinion

ID: 9831537
Source: CourtListenerOpinion
Date Created: 2023-09-01 21:10:18.054678+00
Date Added: 2024-06-11T07:43:35.648670
License: Public Domain

On Motion for Rehearing.
As shown by our original opinion, we affirmed the judgment of the trial court upon two theories, to wit: First, holding that there-was no provision in the notes or deed of trust which authorizes the holder of the notes sued on to accelerate the maturity thereof upon the failure of Isaacs, the maker, to keep the property conveyed and covered by the deed of' trust insured, or to pay the taxes assessed against such property when due, nor was it shown that there was any covenant or agreement between the parties that the holder of' the notes might, at his option and without notice to Isaacs, the payor, accelerate the maturity of the notes; second, holding that the-undisputed evidence shows that on or about the 1st day of July, 1930, the taxes assessed against the property covered by the deed of' trust for the year 1929 were past due and unpaid, John Ross, the holder of the notes, agreed with Isaacs that he might have until the 1st of September, 1930, to pay such taxes,. *185and that Isaacs, relying upon such agreement, did not pay such taxes until the 16th day of August, 1930; that, relying upon such agreement, Isaacs did not pay such taxes sooner, as he could have done had such agreement not been had, and, therefore, Ross was estopped to exercise his option to accelerate the maturity of the notes by reason of Isaacs’ failure to promptly pay said taxes, if it be admitted that he ever had such option.
Appellant has filed his motion for rehearing and attacks our holding last mentioned as not •being supported by the record, insisting that the evidence on the issue was conflicting.
After more careful inspection of the statement of facts, we find that we were in ■error in holding that the undisputed evidence on the issue as to whether John Ross, the holder of the notes, had agreed with Isaacs, the maker, that he would be permitted to pay ■the taxes involved at any time before September 1,1930. We now find that the question as to whether such agreement was made, is, as a fact, a disputed issue, and, as the judgment was upon an instructed verdict for the defendant Isaacs, it cannot be sustained upon conflicting evidence as to an alleged agreement as to the payment of taxes. We, however, adhere to our conclusion that there is no provision in the deed of trust, nor in the notes sued on, authorizing either the holder of the notes or the trustee named therein to declare the notes due by reason of default being made in the payment of taxes, or to keep the property insured.
By the terms of the deed of trust Isaacs contracted and agreed with John Ross to insure and keep insured the improvements on the land covered by such deed of trust and cause the loss, if any, to be paid to the trustee, John B. Warren, for the benefit of John Ross; that by such deed of trust Isaacs also agreed to pay all taxes assessed against said property as it accrued, until all the notes mentioned in such deed of trust were paid. By the terms of the deed of trust it is provided that, if default should be made in the payment of the notes secured, or any of them, or any installment of interest thereon when due, or in case of the breach of any of the agreements or covenants therein mentioned, the trustee is authorized, when requested to do so by the holder of the notes, or any of them, after such default, to sell the property for ■cash and to apply the proceeds of such salé, first, to the payment of all necessary costs incident to the execution of the trust, including a commission of 2 per cent, on the amount of such proceeds as the compensation of the ■trustee; second, to the payment of notes then unpaid, principal, interest, and the attorney’s fees provided in the notes, as shall have then accrued, and all taxes assessed, and all taxes .assessed against the property, the insurance premiums or other advances made by John Ross, as provided in the deed of trust, with interest thereon. It is then recited as follows: “It being understood and agreed that when default shall be made in the payment of said notes, or any of them, or any part thereof, when due, or of any installment of interest thereon, said notes shall become at once due and payable at the option of the holders thereof.”
Such deed of trust contains the following recital by Isaacs: “If I shall fail to pay said insurance premium, or said taxes and assessments when due, the Trustee or the holder of said notes may pay the same, and such payment shall be considered as part of the expenses of the execution of this trust and paid as such out of the proceeds of the sale of said premises hereby conveyed, together with interest thereon at 10 per cent per annum from the time of payment by such trustee or holder; provided, however, that the exercise of the right of advancement herein provided for shall in no wise be considered or constitute a waiver of the right of the holder of said notes to declare same, and all other indebtedness hereunder, to be at once due and payable.”
No one can reasonably contend that there is anything in either the notes sued on or the deed, of trust which expressly or otherwise authorized the trustee; to bring suit on the notes because of the failure of Isaacs to pay the taxes on the property covered by the deed of trust or to keep such property insured. By such deed of trust the trustee was authorized only upon the failure of Isaacs to pay such taxes and keep up such insurance, and then only at the request of the holder of the notes, to sell the property covered by the deed of trust. Neither by the notes nor the deed of trust is the holder of the notes authorized to accelerate the maturity of the notes by reason of the failure to pay taxes or keep up insurance by Isaacs. The only power conferred upon the trustee by the provisions of the deed of trust is to sell the property, under the terms of the deed of trust, and to apply the proceeds of such sale to the payment of the items mentioned, including 2 per cent, on the amount of such proceeds as his compensation. No authority by the terms of the deed of trust was conferred upon either the trustee or the holder of the notes to accelerate the maturity of the notes by reason of the failure of Isaacs to pay taxes and to insure the property.
The authority for the acceleration of the maturity of the notes, as set out in the deed of trust, is as follows: “It being understood and agreed that when default shall be made in the payment of said notes, or any of them, or any part thereof, when due, or of any installment of interest thereon, said notes shall become at once due and payable at the op<tion of the holders thereof.”
It is shown by the undisputed evidence that at the time this suit was filed no default had been made in the payment of any of the notes, or of any part thereof, or of any installment of interest thereon.
*186Upon these undisputed facts shown by the record, it is clear from the authorities that appellant cannot maintain this suit for the recovery of his entire loan. Even if the notes had contained a provision for acceleration 'of the payment of all upon the failure to pay accrued interest, and there had been ■default in the payment of any interest due thereon, the holder of the notes, which contain no waiver of presentment, could not declare all of them due without formal demand for payment of the interest, and notice of the exercise of his option to accelerate the payment of all of the notes. Article 5937, § 82, Revised Statutes 1925; Beckham v. Scott (Tex. Civ. App.) 142 S. W. 80; Griffin v. Reilly (Tex. Civ. App.) 275 S. W. 242; Parker v. Mazur (Tex. Civ. App.) 13 S.W.(2d) 174.
 It is also clear to us that, if the deed of trust had authorized the appellant at his option to accelerate the payment of all of the notes upon default of the appellee in payment of taxes or obtaining insurance upon the property, he could not exercise such option without demand and notice to appellee. Such options of acceleration are not self-executing. The exercise of such power is harsh in any case, and, upon the facts of this case, every principle of equity would forbid the exercise of such power without notice, if the option for acceleration was contained in the contract sued upon.
The motion for rehearing is refused.
Refused.