Court Opinion

ID: 9829584
Source: CourtListenerOpinion
Date Created: 2023-09-01 19:27:20.469473+00
Date Added: 2024-06-11T07:43:03.234754
License: Public Domain

On Motion for Rehearing.
In their motion for rehearing, appellants vigorously and with unusual assurance contend that this and the trial court erred in holding them estopped to urge the invalidity of the mechanic’s lien contract as against Katz; their contention being that the issue was neither presented by pleading nor supported by proof.
As to the status of the pleadings, after alleging at length facts showing the simulated character of the mechanic’s lien contract, appellants made this allegation: “Plaintiffs further show, that with full knowledge of the facts above alleged, and being finally apprized of these facts by plaintiff, R. L. Garrett, the defendant M. Katz purchased $4,000.00 of the said purported mechanic’s lien, an'd that Jenkins, Cobb & Massey Lumber Company, or J. S. Cobh, own $1,000.00 of the purported mechanic’s lien, the said purported mechanic’s lien having been divided into two notes, the note held by the said Katz being designated as a first lien and the note held by Jenkins, Cobb & Massey Lumber Company, or J. S. Cobb, being designated as a second lien, and the said Jenkins, Cobb & Massey Lumber Company and M. Katz now assert their interest in the said property as evidenced by the said purported lien and the notes above described. That both of the said notes and the lien above set out are wholly void, for the reasons hereinabove set out; that defendant Jenkins, Cobb & Massey Lumber Company perpetrated the .said fraud and that the defendant Katz took the same with full knowledge of all of the facts as herein set out.”
In their second supplemental petition, touching this issue, appellants made the following allegations: “Plaintiffs specially deny that they are estopped to deny the validity of defendant’s purported lien for the reason that, as set out in their First Amended Original Petition, they put all of the defendants upon full notice of all the facts, and particularly that it was their homestead, that the purported lien was created after the improvements were finished, that the improvements did not amount to over $1,000.00 or $1,200.00, and that plaintiffs paid for them when they were completed, all of which notice was given the defendant Katz, and all of which was known to Jenkins, Cobb & Massey Lumber Company and Cobb, the said Katz being apprized of all of such facts after the Stewart Title Company declined to guarantee the title and before he finally purchased the said note and paid therefor, and that plaintiffs are not *441estopped, therefore to deny the validity of said lien, are not estopped to deny that defendant Katz is an innocent purchaser without notice of the above alleged facts. In this connection, plaintiffs reassert that all of these facts above set out were true, that defendant Katz had full knowledge of all of them and was advised before he purchased the property that the affidavit which plaintiff and his wife were signing, and complained of in defendant’s answer, was being made at defendant’s instance and request in order that said lien might be consummated and that defendant Katz, if any fraud was perpetrated upon Dallas Title & Guaranty Company, perpetrated such fraud upon them for the sole purpose of securing said mortgage policy, but these plaintiffs had fully in all things advised the defendant of all the facts set out in plaintiff’s First Amended Original Petition.”
The truth of these allegations were put in issue by the general denial of Katz, and besides he specially pleaded that, “when he purchased said $4,000 of said $5,000 note and took said notes in renewal thereof, did so in good faith, fully acting upon the record title to said property as shown by the deed to the said R. I;. Garrett and by said mechanic’s lien contract from the said R. L. Garrett and Flora Garrett, and fully relying upon all recitals of such mechanic’s lien contract, and particularly relying upon the recitals and statements as contained in said mechanic’s lien contract that same had been executed and delivered before any labor and material for the erection of said improvements had been furnished, and particularly also relying upon said written sworn statement as aforesaid, of date August 10th and 11th, 1925, of the said R. L. Garrett and Flora Garrett, and John Schmitt, and not only so, but this defendant, in order to further secure his rights in the matter, did then and there, to wit at the time he acquired said $4,000 interest in said note, and at the time that he took said new notes in renewal thereof, obtain from Dallas Title & Guaranty Company of Dallas, Texas, its mortgagee policy guaranteeing that this defendant’s said notes were secured by first lien against the aforesaid property; that he relied upon said mortgage policy in purchasing $4,000 of said mechanic’s lien note. That plaintiffs have at all times had notice and knowledge of the facts in this paragraph set forth and are estopped in law and in equity from asserting as against this defendant the claims as attempted to be set forth in this suit.”
We think the different phases of the issue of estoppel, discussed and decided by us, were clearly presented by these pleadings, and that estoppel was satisfactorily established by evidence.
The record discloses that, after the execution of the simulated mechanic’s lien contract, application was made to defendant Katz to purchase the lien note of $5,000, and, with the view of satisfying himself as to the value of the property and the propriety of making such investment, he visited the premises and was shown through the house, Garrett and wife both assisted in exhibiting the property to him, and at this time, although they knew the simulated nature of the mechanic’s lien contract, and Katz’s purpose in visiting and inspecting the premises, they failed utterly to disclose to him a single fact that would have put him upon inquiry touching the validity of the mechanic’s lien.
The testimony of appellants shows further that they knew Katz would not make the investment unless the Dallas Title & Guaranty Company issue to him a title policy. On this point Mrs. Garrett testified that Katz told them to take the papers to the Dallas Title &' Guaranty Company; that he wanted them to insure the title; that she went with her husband when the papers were carried to the Dallas Title Company; that the papers were signed at the office of the Dallas Title & Guaranty Company — that is, the notes and trust deed sued upon (which represented the $4,000 interest purchased by Katz in the original $5,000 notes), also the affidavit made by appellants at the time the papers were executed. She said: “I knew before I signed those papers, and when I signed them, that they were necessary in order to have the Title Company issue a certificate; it is necessary to sign papers to make any kind of a deal, and I supposed it was necessary to have those papers signed before the Title Company would approve the title and Mr. Katz pass the money. I knew that when I signed this.”
Referring to the affidavit dated August Iff, 1925, made by appellants as an inducement to secure the issuance of the title policy and the consummation of the loan, she stated that “this affidavit does not state the truth.” Among other things, the affidavit recites that “we, R. L. Garrett and wife, Flora Garrett, do hereby declare under oath that the improvements made for us by John Schmitt under a certain mechanic’s lien contract between ourselves and the said John Schmitt, dated the 23rd day of October, 1924 * * * on the following described property (describing same) have been completed to our entire satisfaction, and the said John Schmitt has fully completed and carried out all of the terms of said contract. This statement is made by us for the purpose of negotiating a loan of $4,000.00 with M. Katz; that said John Schmitt has fully complied with said contract, and for the further purpose of inducing Dallas Title & Guaranty Company to issue its mortgage policy on the renewal of the above note. Affiants further state, that the above mentioned contract was executed by them prior to the placing of any material or the performing of any labor upon said premises and to our best knowledge and belief all bills for labor and material have been fully paid.”
*442Mr. John 0. Oox, attorney for Dallas Title & Guaranty Company, who examined the title in question and closed the Katz loan, testified in part that he dictated the lien contract, the new notes and affidavit executed by appellants in connection with closing the loan; that the papers were explained by him to the parties, were executed by them in his presence; that he took their acknowledgments and administered the oaths to the affidavit; and that appellants assured him the facts set forth in the affidavit were true. It seems that Katz had delivered to Oox a certified check for $4,000, and Oox, after the execution of these documents by appellants, closed the loan, believing the recitals therein to be true. As stated in the original opinion, the jury found that Katz was without knowledge of any vice in the transaction at the time he accepted and paid $4,000 for an interest in the note.
On re-examination, after careful consideration, we see no reason to alter or change our original decision, and therefore the motion for rehearing is overruled.
Overruled.