Court Opinion

ID: 9829042
Source: CourtListenerOpinion
Date Created: 2023-09-01 18:56:54.200212+00
Date Added: 2024-06-11T07:42:56.709237
License: Public Domain

On Motion for Rehearing.
After mature reconsideration, under able oral and written arguments for the parties, we have become convinced of error in the original disposition through our failure to sustain appellant Brooks’ plea of estoppel. The matter was not then pressed as of controlling importance, the major contention being that the O’Connors, by failing to expressly reserve in their written assignment of the second lien to Brooks the right to rely upon the superior title accruing to them as holders of the vendor’s lien, lost that right in so far as concerned him and could not by virtue thereof recover the land from him.
But this defense of estoppel was properly interposed below both by pleading and proof, was broader than this, and amounted, in substance, to the claim that the appellees, by 'accepting Brooks’ money on September 19, 1921, and thereafter, in furtherance of the understanding then and thereby reached,' on 21st day of September, 1921, delivering and assigning to him the $4,500 note, and the lien securing it, in the circumstances shown to have attended the transaction as a whole, estopped themselves from thereafter asserting as against .him any right to recover the land as an incident to ownership of the original vendor’s lien indebtedness; in other words, that they thereby in effect agreed with him that henceforth he and they would mutually sustain toward the lands the strict relation of lienholders or mortgagees only, with distinct specification that their indebtedness, so shorn of what might otherwise carry with it the rescission and recovery of the title right, would be first in time and his second.
That position is now sustained. In doing so, however, it is not thought this court before indulged in any illusions concerning the present state of the law with reference to whether or not the dominating right or title over that going to the vendee and his privies remains with the vendor, as an incident of the express lien he reserves to secure the purchase money, until that is paid. When there has been nothing done to impair it, we think that right always subsists, term it what you will, and that, the decisions appellants cite in this connection merely reflect that there has been a confusion in nomenclature only, not in substance.
A misapprehension of the purport of the undisputed evidence attending appellant Brooks’ purchase of the $4,500 note and'accompanying lien led to the former holding. A reconsideration of the record compels the finding that something did then and thereby pass between him and the appellees, which in equity and good conscience should prevent the latter from cutting out his lien entirely and recovering the land against him. It is this: There had been considerable introductory correspondence between them, and, after the O’Connors had by ultimatum demanded of Booty, with reference to all his indebtedness to them, that he (1) pay all taxes due against the land mortgaged; (2) pay off the second lien indebtedness in full, that is, the $4,500 note and interest; (3) pay all interest then past due and all interest on past-due interest to that date on the first mortgage indebtedness, Brooks by letter of September 17, 1921, wrote O’Connor as follows:
“I wrote you on September 8, 1921, in regard to Mr. Booty’s indebtedness. In this letter I wrote you that Mr. Booty had accepted your proposition as set out in your letter to him dated August 29, 1921, and as confirmed in your letter of September 27, 1921, to me. In my letter of the Sth inst. I told you that Mr. Booty would use every effort and make every sacrifice to meet the conditions of your letter of August 29, 1921, and that I would notify you prior to October 5, 1921, whether or not he could meet the conditions of your letter. This is to inform you that Mr. Booty has made his arrangements and is now ready to comply with your requirements. I have assisted Mr. Booty in securing the money you demanded. The interference of mails by high water has delayed us. Mr. Booty and I have secured this money on the basis of my letter to you. of the 8th inst., and to which I have had no reply, but which I presume is satisfactory to you. Upon that assumption I herewith inclose you cashier’s check of the Farmers’ State Bank of Géorgetown, Tex., for $9,316.77.
“I want the amount of this exchange applied first .to the interest due by Mr. Booty on his notes from October 5, 1918, to October 5, 1919, and from October 5, 1919, to October 5, 1920, and to the interest on this past-due interest from its maturity to the date of receipt of this payment. Any surplus left out of this exchange after payment of the above I want applied to the note for $4,500 dated January 20, 1920. One day next week I will be in Victoria with Mr. Booty, and will pay you the balance due on the $4,500 note and interest, and will also pay you all past-due taxes due on the land. When I pay the balance due on the $4,500 note, I will want you to assign and transfer it to me without recourse for my protection. This will pay up all of Mr. Booty’s indebtedness to you that is now due. The interest on the note for one year from October 5, 1920, will be due on October 5, 1921. Mr. Booty will not be in position to pay this interest at this time, and will expect you to indulge him in the payment of this interest until October 5, 1922. Now I understand from your letter of August 29, 1921, to Mr. Booty and from his statements that all the above is satisfactory to you. If so, you are authorized to use the inclosed exchange as above set out, but, if you are not satisfied, for any reason, *290then do not use this exchange, hut hold it until I see you.
“Kindly write me immediately upon receipt of this letter if this is satisfactory to you, and, if so, go ahead and apply the exchange as above set out, and I will wire you in the next day or so what day next week X will be in Victoria to meet you and pay you the balance due under this arrangement.”
To this, on September 19, 1921, O’Connor replied:
“We are in receipt of your letter of- the 17th instant inclosing cashier’s draft on the Farmers’ State Bank of Georgetown, Tex., for $9,-816.77 indorsed to me as managing executor.
“We have credited on account of this draft interest on the E. F. Booty note to 1920 interest maturity dates and interest on such interest to September T9, 1921, from such 1920 maturity dates. .All the interest so credited aggregates the sum of $7,819.14. This leaves a balance on account of said draft of $1,497.63 to apply on the principal of the $4,500 note as of this date, and which when applied will leave due on said $4,500 as of this date $3,-002.37. Because you expect a transfer of the note when you have paid the whole, we have marked thereon ‘received on this note on account of principal from R. E. Brooks $1,497.63.’
“I am likely to be absent all this week after to-day, and am unable to say on what day, if any, I will be here. Should you come over you will find Mr. McDonald here.”
“We thank you for your remittance in yours of the 17th.”
Brooks went to Victoria on September 21st, saw the transfer and assignment of the $4,500 note and lien to himself bearing that date, and then paid the balance due on that note, as well as the taxes due on the land, receiving the instrument itself at Houston two days later by mail. The material recitals in this document have been copied in our former opinion, and need not be* repeated here.
Appellant Brooks, in addition to the declarations originally quoted from him, testified that, in return for this $9,316.77, he so paid them on Mr. Booty’s indebtedness (the latter being then in further large sums in debt to him for prior outlays on the same property), he understood and thought the O’Connors were giving him a lien on the lands subordinate to their own outstanding vendor’s lien only with respect to priority of payment, that this was what the entire correspondence showed and what the recital in his letter of September 17th, “for my protection,” meant, and that, had he then known or suspected that they would' thereafter claim the right as against him, and especially without notice to him, on Booty’s failure to pay this first lien indebtedness, to rescind the sale and recover back the land, he would not have paid them $1 of it. Mr. O’Conner at the time thought their transaction meant the same thing, because he plainly said so in the testimony from him, quoted and misconstrued in the original opinion. Without reiterating the full text, among other details, he there stated that he had never claimed to have anything but a valid first lien on this land, did not know or suspect that he had any such right as rescinding the contract and claiming the land when he made the deal with Brooks and took his money — only learning of it from his own attorney in January, • 1924, over two years later, and not then notifying either of the appellants of his intention to rescind. He did know, however, at the time he accepted the money just what Brooks would understand from the consummation of the negotiations, because he accepted without qualification the specifications as to what it was for the latter laid down, inclusive of this one: “When I pay the balance due on the $4,500 note, I want you to assign and transfer it to me without recourse, for my protection.” The italics are our own, indicating our conclusion that the recipient of this letter, in possession as he was shown to then be of all the facts about the matter, must have known and realized, as did its author, that the only protection Brooks could obtain in such circumstances —the O’Connors holding both liens — was the right to redeem the land from foreclosure under the first mortgage, and thereby save his investment in the second one against it; in other words, that this is what the parties knowingly contracted for at the time. It seems scarcely conceivable that Brooks would have so parted with his money without that understanding, especially as the second lien deed of trust he was getting expressly provided that its holder might pay the taxes on all the lands and be secured under it for that outlay, too, in addition to the $4,500 note therein described, and part of what he paid was for such taxes. The correspondence between the parties, as an entirety, we think requires the same interpretation.
When, therefore, they came to embody their mutual understanding thus arrived at in the formal assignment, they affirmatively provided that Brooks’ debt and mortgage should constitute a lien on the land alongside that of the appellees; the only limitation or reservation expressed being that his lien should be secondary to theirs “to the extent of the principal and interest” on their debt. In the light of the undisputed evidence referred to, it becomes plain that the purpose and effect of these provisions was to merely postpone appellant’s note and lien to the first lien the appellees held, thereby preventing any possibility of his participating ratably with them in any foreclosure under their debt, and not to still preserve to themselves an originally existing right to rescind the sale and recover the land, as we before concluded.
*291In the case of Edwards v. Dickson, 66 Tex. 617, 2 S. W. 720, the Supreme Court, in quoting 2 Pomeroy on Equity, § 804, say:
“Equitable estoppel is the effect of the voluntary conduct of a party whereby he is precluded, both at law and in equity, from asserting the rights which might perhaps have otherwise existed, either of property, of contract, or of remedy, as against another person, who has, in good faith, relied upon such conduct, and has been led thereby to change his position for the worse, and who on his part acquires some corresponding right either of property, of contract, or of remedy.”
The Supreme Court of the United States, in Dickerson v. Colgrove, 100 U. S. 578, 25 L. Ed. 618, thus states the ground upon which equitable estoppel rests:
“The vital principle is that he who by his language or conduct leads another to do what he would not otherwise have done, shall not subject such person to loss or injury by disappointing the expectations upon which he acted.”
We think this principle rules the case at bar. Prom the uneontroverted proof it now seems to us to conclusively appear that the language and conduct of the appellees with reference to the relative status of the two liens they held led the appellant to buy the second one in reliance upon an understanding that it would be subordinate to theirs only in respect to priority of payment, and that, knowing then that he so acted, they should not now be permitted to disappoint his expectation.
It follows from these conclusions that the motion below of appellant Brooks for peremptory instruction in his behalf should have been granted, and that both courts have heretofore erred in not so holding. His motion for rehearing will therefore be granted, and, in so far as concerns him, the prior judgments of both courts will be reversed, and judgment will here be entered that appellees take nothing against him on their suit to recover the land. No motion for rehearing having been filed by the other appellant, our former judgment as to her remains undisturbed. This judgment shall in nowise affect the O’Connors’ right as against Brooks to foreclose their prior lien.
Motion of appellant Brooks for rehearing granted, and trial court’s judgment as to him reversed and rendered.