Court Opinion

ID: 9834230
Source: CourtListenerOpinion
Date Created: 2023-09-01 23:25:18.566706+00
Date Added: 2024-06-11T07:44:13.071981
License: Public Domain

On Rehearing.
Since the original opinion in this case, the appellant and appellee have each filed an able motion for rehearing and we have reexamined the points presented by the appeal. Originally we thought the holding of the Supreme Court, as evidenced in Bryant v. Vaughn, Tex.Sup., 33 S.W.2d 729, and Lane v. Cunningham, Tex.Com.App., 58 S.W.2d 35, to be controlling, and we set . forth the reasons impelling that conclusion. It is unnecessary to restate them here.
In our re-examination of these questions we came upon the recent opinion from the Supreme Court in the case of Nance v. McClellan et al., 126 Tex. 580, 89 S.W.2d 774, 775, 106 A.L.R. 117, by Judge Smedley, Commissioner. Our attention was not called to this authority in the briefs or in the motions for rehearing, and it escaped our notice. For reasons presently to be stated we think the principles therein stated applicable to the facts of this case, requiring a different conclusion on some of the issues deemed by us controlling in the first dispose tion of the appeal. This arises in part from the ruling we now make on the issue of ratification not before believed material.
The opinion in Nance v. McClellan, supra, discusses and, in a manner, distinguishes the opinion in the Vaughn and Lane Cases. It certainly does make some significant explanations of those opinions and, while they were not in so many words expressly overruled, it is, we think, quite apparent that those authorities are now properly confined within very narrow limits. In any event, as explained or distinguished, said opinions are'rendered substantially inapplicable to the facts of this record, at least in the sense in which we applied them in our original opinion. In other words, in that opinion we were influenced by such expressions as that to be found in the opinion in Lane v. Cunningham, supra, namely: “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.” (Italics ours.)
Believing such expressions reflected the true interpretation of the Supreme Court’s holdings in those cases, we adopted the same and proceeded upon the theory (in our original opinion in this case)'that, inasmuch as the equity of Stevens in the Erath farm was the equivalent of Helms’s equity in the Fisher county land, no pecuniary damage or injury was shown to have been sustained by Helms entitling him to the equitable remedies of rescission and cancellation in *655the purview of said authorities. The instant case was believed to he one in material respects essentially the same as the principal cases.
The opinion in the Nance Case recognizes that there are many authorities (some in Texas) holding that “pecuniary damage is not essential to fraud available as the basis for rescission of a contract,” and then reaffirms the rule in Texas (stated to have been announced in Russell v. Industrial Transportation Co., 113 Tex. 441, 251 S.W. 1034, 258 S.W. 462, 464, 51 A.L.R. 1) “that proof of pecuniary damage must be made in a suit to rescind for fraud, as well as in an action for damages.” Further pointing out what was held in the last-mentioned authority, it was also said: “The opinion in Russell v. Industrial Transportation Company, supra, recognizes that the general rule which it announces is not without qualification when it states that the word ‘damage’ should not be restricted to monetary loss, and that it is sufficient if the defrauded party has been induced to incur a legal'liability or obligation different from that represented or contracted for.’’ (Italics ours.) This reference is no doubt to that portion of the opinion in Russell v. Industrial Transportation Co., supra, reading as follows:
“ ‘False representations knowingly made with intent to deceive, or a concealment of material facts with like intent to induce one to incur an obligation which he would not otherwise have-made are grounds for rescission, although no actual damage results.’ [Barnes v. Century Savings Bank, 149 Iowa 367, 128 N.W. 541].
“The facts of the case showed that the -complaining party had by fraudulent representations been induced to incur an obligation which but for same he would not have incurred. He had not actually suffered damage, but would do so unless the contract was canceled. Therefore injury was shown.”
Applying these principles to the verdict in the instant case, we conclude that the record amply shows that the alleged fraudulent representations by Stevens to the effect that he had made arrangements with said banks to carry said notes and postpone their payment induced appellee Helms to accept the deed to the Erath farm, and assume said obligations (evidenced by Stevens’s deed to Helms) which, in the absence of such representations, he would not have incurred. The fraud, if any, imposed on Helms property covered by a debt and lien past due and pressing for payment which is quite different from property covered by a debt and lien but the payment of which has been extended. If said representations by Stevens induced Helms to convey his Fisher county land and incur or assume said obligations which he would not have otherwise incurred, fraud was just as definitely "established as if Stevens had by such means put off on Helms property differing in physical identity from that he contemplated or understood he was purchasing. Therefore, we conclude that the verdict definitely establishes the fraud alleged and that the judgment of the trial court as between Helms and Stevens should be affirmed, unless other^ assignments raise questions precluding that disposition of the case.
By various assignments and propositions the appellant, Stevens, complains that the court erred in not instructing a verdict in his behalf and in failing to render such judgment notwithstanding the verdict. One of these contentions advanced and emphasized is that, if any fraud was ever committed by Stevens, as alleged, Helms waived the same, ratified the transaction, and is not now entitled to the equitable remedy of rescission and cancellation. In other words, appellant invokes the rule of law stated in Adams v. Hill, Tex.Civ.App., 149 S.W. 349, 351, writ refused, to the effect that parties seeking relief “were not necessarily entitled to a rescission merely because they had established fraud, but the burden was upon them to show the fraud, and that they were entitled to the equitable remedy of rescission in relief.”
To the same effect is Dalton Adding Mach. Co. v. Wicks & Co., Tex.Civ.App., 283 S.W. 642; J. B. Colt Co. v. Head, Tex.Com.App. 292 S.W. 198; Powell v. Rockow, 127 Tex. 209, 92 S.W.2d 437; 7 Tex.Jur. p. 991, § 64; Black on Rescission & Cancellation, vol. 2, § 620.
With these principles and authorities in mind, how stands the appellee’s right to rescission and cancellation? The record and the testimony disclose the following undisputed facts:
The deed from Helms and wife to Stevens conveying the Fisher county land was executed and delivered November 1, 1935. That of Stevens and wife to Helms, about November 2, 1935. Immediately thereafter, and certainly before November 9, 1935, *656Helms 'wrote the Federal Land Bank of Houston the following letter:
“No. S6203, Stephenville, Texas
“Dear Sir: In regard to the note & loan you made on the old W. R. Stevens place, V’ol.Number 9 page 111 of Erath Texas,
“I have took upon myself this place, with all these past ‘due payments on it, I have given W. R. Stevens my 13th equity in 1 and ¾ sections of land in Fisher County which amounted to $2,000.00 it is clear. I have in the Bank of Rotan about $40 and will send it to you, and will meet all payments as they come and will pay some on what is behind every time. I sure hope you can help me own a home in Erath. I am sorry W. R. has done so bad on his note. I hope I may have a chance. Consider me, as a man.
“Yours truly
“[Signed] Clarence C. Helms. Stephen-ville, Texas General Delivery, (over)
“The forty dollars I have in the Bank is undivided but I will get it by the first and will gladly turn it to you. I am just a farm boy wanting a chance.”
Rubber Stamped, second sheet:
“Received Nov 9 1935.
“Federal Land Bank of Houston
“De'pts. Noticed 11-12-35 Change of address —
“Change of Ownership -- OD”
It is the appellant’s view that this letter was written by Helms after he had been informed by letters direct from the Land Bank that the indebtedness to that bank would no longer be carried or extended; that at the time he wrote it he was fully aware of the fraud, if any; and that with such knowledge he, thereafter on January 6, 1936, executed- and delivered a written lease on the Erath county farm extending from January 1, 1936, until January 1, 1937.
Concerning the writing of the above letter arid the date he first learned the Houston bank would not carry the notes, etc., Helms testified:
“Q. Now, when was the first time, Helms, that you found out that they wouldn’t carry these notes- — that the bank down here at Houston wouldn’t carry the notes? A. I guess it was somewhere around a month.
“Q. When did you finally get your deed away from those fellows ? [Agents promoting the exchange.] A. About three weeks. ⅜ ⅜ ⅜
“Q. How long after you got your deed, boy, until you heard from the Land Bank, or found out they were not going to carry these liens? A. Right around two weeks.
“Q. After you got your deed?' A. Yes, they began writing me letters telling me they were going to close it out if I wasn’t going to pay off; I didn’t know what was wrong.
“Q. Did you write a letter to the Land Bank? A. I did.
“Q. All right; there don’t seem to be any date on this letter (Counsel looks at the letter in the deposition.) Was it after you had gotten a letter from the Land Bank? A. I think I had gotten about two letters from the Land Bank.
“Q. Then you wrote them this letter, did you? A. Yes, sir.
“Q. What was your purpose in writing a letter; what was you going to do?' A. I saw that I had been beat out of everything I had — * * *
“Q. The court rules that you can answer; What was the purpose in writing this letter? A. I saw I was done beat out of everything I ever had; and everything I ever intended to have before, and that if I could get ahead and get them to carry it I could probably hold out some little something out of it.
“Q. Is why you wrote this letter to them? A. Yes, sir.
“Q. Was that land sold? * * * A. Yes, sir. * * *
“Q. Tell the jury when you decided that you couldn’t — that you had been wronged and defrauded out of your property- — when, was it — how long was it before you got this deed on the second day — this deed was written — how long was it after the second day of November that you decided that you had lost your stuff and thought you could not pay these debts if they were going to demand them now? A. Somewhere around six weeks.”
Obviously, Helms was estimating time from November 2, the date of his deed, although it is undisputed that the above undated letter was received from him by the' Houston Bank not later than November 9, 1935. Whether the information that the bank would demand the payment of its note and interest was received by Helms November 2, 1935 (as testified by Stevens and others), or he received that information on some other date prior to November 9, or received it as much as six weeks after November 2, it is clearly established by his tes*657timony that he became thoroughly cognizant of the fraud, if any, long before he executed the farm lease on the land of date January 6, 1936, for which a consideration of $138 was received, $5 of which was paid as commission to the agent instrumental in effecting that transaction, and the other $133 paid to the Federal Land Bank on past-due interest.
Concerning the rental contract which' seems to have been negotiated by Helms’s father-in-law and the land agent, Helms, testified as follows:
“Q. Well, did you sign the contract? A. I did.
“Q. Did you read it ? A. I did. Me and my wife both.
“Q. All right, well, why did you sign that contract? A. Well, I thought if I could go ahead and do anything at all with it— * * I just though if I could get anything at all out-of it; my father-in-law was an older man than I was; if I could get anything out of it at all it would be better than losing it all. I had just thrown up my hands. * * ”
The lease contract provided that the premises should be used for “farming and grazing only”; that the lessee, R. Kring, should replace all glass that was broken, etc.; and that, if the lessee failed to comply with the covenants, Helms was entitled to declare the lease forfeited and repossess the entire premises.
In this connection, it will be borne in mind that the original suit by the Farmers First National Bank of Stephenville against W. R. Stevens et ux. only was filed December 31, 1935. Thereafter, Stevens on April 14, 1936, in response to the bank’s pleading, filed what is styled his “Original Answer and Cross-Action” bringing Helms into the suit and seeking a judgment against him on the assumption evidenced by the deed from himself to Helms of the Erath county farm. This pleading was amended June 11, 1936. These pleadings upon the part of Stevens were answered by Helms in what he designated as his answer and cross-action filed May 21,1936. In this pleading he set up the fraud with which he charged Stevens, and for the first time sought the cancellation of the deed he had made Stevens to the Fisher county land. It is stated by appellant that Helms had not, prior to May 21, 1936, repudiated the deal with Stevens, and had not theretofore tendered back the Erath county land with the view of restoring the original status quo of Stevens. We have searched the record and do not find any evidence that Helms made any earlier express repudiation of the original deal between him and Stevens.
As between Stevens and Helms a trial was had, as stated in our original opinion, and judgment therein rendered in favor of Helms on October 23, 1936. This was at a time when the farm lease was in full force and effect as between Helms and the lessee, R. Kring.
On the trial below Helms merely comes in and offers for cancellation the deed which Stevens made to him of the Erath county land and asked the court to cancel in his behalf the deed to the Fisher county land which he had theretofore made to Stevens. No other effort was made to restore to Stevens the Erath county land which had, as a matter of fact, been sold by the Land Bank under a deed of trust and bought in by that bank as far back as April 7, 1936, a considerable time prior to the trial of this case in which judgment was rendered October 23, 1936.
Helms’ version of the facts leading up to and involved in this transaction was stoutly denied by Stevens and other witnesses who testified. But in our analysis of the testimony we disregard appellant’s testimony, looking solely to that tending to support the appellee’s case. In doing so, however, we conclude that the record shows as a matter of law that Helms completely failed to establish that he was entitled to the equitable relief of rescission. His own testimony demonstrates that he waived the right of action for rescission by voluntarily accepting benefits under the deed from Stevens, and wife to himself.
In legal effect, the facts of this case are quite like those in Chambers v. Grisham, Tex.Civ.App., 157 S.W. 1177, writ refused, wherein it was held, as stated in the syllabus : “In an action to rescind a contract for the exchange of property on the ground of fraud, where it appears that the plaintiff had permitted the foreclosure of the lien for notes, which he agreed to pay, against part .of the land received by him, and cannot restore the status quo, it was proper for the court to give a peremptory instruction for the defendant.”
In Koppe v. Koppe, 57 Tex.Civ.App. 204, 122 S.W. 68, it was held that the effect of giving a mortgage on the property by the purchaser, with full knowledge of the fraud' for which' rescission is asked, constituted an act upon his part, recognizing and affirming, the transaction and thereby precluding re*658scission and cancellation. The execution of a farm lease in full effect at the date of the trial and judgment should be held the equivalent, in matter of ratification, to the execution of a mortgage. 9 C.J. p. 1198, §§ 77, 78, 79.
In a manner the issue of whether or not Helms ratified the original transaction was submitted by the court to the jury, and in connection therewith there was given upon the theory of “explanation” an instruction. Both features of the issue are strenuously objected to on various grounds raised in the assignments of error, and predicated upon exceptions made to the charge. Under the disposition we find it necessary to make of this appeal, it becomes unnecessary to pass on these questions.
From what has been said it follows that the appellee’s motion for rehearing is overruled, and the appellant’s motion for rehearing, seeking a rendition of the judgment, is granted.
For the reasons assigned, the judgment of the trial court in favor of the Farmers First National Bank of Stephenville against W. R. Stevens is in all things affirmed, and the judgment in so far as it denies Stevens a recovery against Clarence Helms on his assumption of the debt in suit, as well as the judgment canceling the deed from Helms and wife to W. R. Stevens of the Fisher county land, is reversed and in each respect here rendered in favor of Stevens.
In the above respects the judgment of the trial court is affirmed in part and reversed and rendered in part.