Court Opinion

ID: 9826981
Source: CourtListenerOpinion
Date Created: 2023-09-01 17:01:40.072882+00
Date Added: 2024-06-11T07:42:20.266798
License: Public Domain

On Motion for Rehearing.
In its motion for rehearing, appellee Cook Paint & Varnish Company has cited many authorities to support its contention that the mortgage in favor of H. W. Williams & Co. was insufficient to secure its open account, as well as the notes therein described. We have carefully considered those authorities, and appellee’s argument in- connection therewith, but we shall not undertake to review them, since, for the most part, at least, the test applied to the instruments discussed was whether or not they were sufficient as legal mortgages, rather than whether or not they were sufficient in equity to constitute valid *749liens as between tbe parties thereto and. their privies in estate.
As pointed out in the opinion on original hearing, appellant’s claim of a lien for future advances was established, if the instrument was sufficient to show an equitabíe lien to secure the open account, even though it should be held that it was insufficient to constitute a mortgage under the strict letter of the law. In 41 Corpus Juris, 303, the following is said:
“Where parties intend and attempt to create a mortgage on real property, but the instrument as drawn up cannot be recognized or enforced at law as a mortgage, because it is imperfect, or lacks some formality, form of words, or other requisites prescribed by the common law or a statute, or because it includes provisions foreign to a mortgage, it will be regarded nevertheless as an equitable mortgage and enforced as such by the courts of chancery, provided it shows the intention to charge a particular property as security for a' debt, and contains nothing impossible or contrary to law, and it is immaterial whether the defect in the instrument arose from a mistake of law or fact.”
And on page 305 the following is said:
“As a general rule, any written contract entered into for the purpose of pledging property or some interest therein as security for a debt, which is informal or insufficient as a common-law or statutory mortgage, but which shows that it was the intention of the parties that it should operate as a charge on the property, will constitute an equitable mortgage and be enforced as such in a court of equity.”
Indeed, there would be no occasion or necessity for the equity rule, if the instrument is sufficient as a legal mortgage. The equity rule is designed for the purpose of carrying out the intention of the parties, when that intention has not been expressed in terms sufficient to constitute a legal mortgage, and thus do justice between the parties.
We believe it to be manifest, from the face of the mortgage to appellant, that the parties intended that it should operate as a lien upon the property described to secure the open account, and that the instruments should be given that effect, even though it should be held to lack some of the essential elements of a legal mortgage.
 Criticism is made of the statement in the original opinion, to the effect that the contingency provided in the mortgage, upon which appellant would have the right to apply the balance of the proceeds of the sale of the property after páyment of the notes secured to the open account, did happen. The gist of that criticism is that, "since there was never a foreclosure sale by appellant, its right to apply any part of the proceeds to the open account never arose. It is true that there was never a foreclosure sale within the strict terms of the instrument. However, the property was sold by a trustee under another instrument executed by the mortgagor, and, since equity regards substance rather than form, we believe that appellant had the right to claim the lien upon the proceeds of sale to secure its open account to the same extent as if the sale had been made under foreclosure proceedings instituted by appellant itself.
It is further insisted that the decision in Coleman National Bank v. Cathey (Tex. Civ. App.) 185 S. W. 661, is distinguishable from . the present suit in other respects than those pointed out in our original opinion, in that the language used in the mortgage ther.e described expressly created a lien for future advances, in addition to the note specifically described. Be that as it may, we adhere to the conclusion already expressed that the mortgage in favor of appellant was sufficient in equity to secure the open account, and that it was effective as such, both against the mortgagor and the Cook Paint & Yarnish Company, who had due notice thereof at the time it took the mortgage under which it claims.
The record shows an agreement of the parties to the suit that $109.37 of the amount deposited in court by O. H. Bel], Jr., trustee, was realized from the sale of property in his hands that was covered by a chattel mortgage in favor of the Cook Paint & Varnish Company, on which appellant H. W. Williams & Co. had no lien. The parties to the suit further agreed, upon the trial of the case in the lower court, that, in the event appellant H. W. Williams & Co. should finally establish its lien for its open account on the property described in its mortgage, then the fee of $125 allowed to the trustee’s attorneys for filing the interpleader, should be taxed as costs of .suit against the Cook Paint & Varnish Company, together with all other court costs.
Those two agreements of facts were overlooked by us upon original hearing, and the judgment rendered in this court will now be corrected, in order to give effect to those agreements in the following respects: $109.37 out of the total of $1,074.07 deposited in court is set aside to the Cook Paint & Varnish Company, to be applied up on its claim against the mortgagor W. E. Vermillion. The balance of $964.70 is set apart to appellant H. W. Williams & Co., to be applied upon the amounts decreed to be due it, as shown in original opinion, and it is ordered that that amount be paid over to appellant by the clerk of the trial court. The fee of $125 allowed Samuels & Brown for representing the trustee is taxed as costs of suit against the Cook Paint & Varnish Company, and the $109.37 set apart to that company, as above shown, is ordered to be paid over to said attorneys. For the balance of said fee of $15.63, Samuels & Brown shall have their execution against appellee Cook Paint & Varnish Company. All other costs of suit are taxed against the Cook Paint *750& Varnish. Campany, for which let execution issue.
As so reformed and corrected, the judgment heretofore rendered by this court is finally decreed, and the motions for rehearing by appellant and appellee are overruled.