Court Opinion

ID: 3923846
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:50:24.235552+00
Date Added: 2024-06-11T07:42:50.236035
License: Public Domain

I regret that I cannot agree with my associates in the disposition of this cause.
Appellants alleged that the transaction by which they obtained the money to improve their homestead was a simulated transaction. The record shows that Mrs. Cosgrove signed the notes sued on, and also signed the deed to the property from her to Jenson, but that she did not, for some unaccountable reason, acknowledge same. There is an acknowledgment on the deed, of date August 12, 1919, the same day the deed is dated and the same day that she says she signed same. Her agent, Mr. Jenson, sent the deed to Dallas to have Mr. Cosgrove sign same, presumably with the forged certificate thereon, as there was no testimony to the contrary. La Coste v. Odam, 26 Tex. 459; Armistead v. Benefield (Tex.Civ.App.) 244 S.W. 391. While the principal is not liable for the criminal acts of his agent (Mitchell v. Mims, 8 Tex. 6; Waters-Pierce Oil Co. v. State,19 Tex. Civ. App. 1, 44 S.W. 936), yet forgery and the uttering of a forged instrument have in them an element of fraud, and where such fraudulent act is committed by an agent against his principal and rights of otherwise innocent third parties come into existence on the supposition that the forged instrument is in fact genuine, I think the consequences of such fraudulent act on the part of the agent ought to be visited upon the principal, rather than upon one who did not know of the forgery and acquired rights based upon the supposition that the instrument was genuine. At the time appellee purchased the notes she was informed by Jenson, the agent of appellants, that the papers were in proper form, and that the lien was a valid first lien on the property, and I do not think all of the evil consequences of the forgery should be charged against appellee and none against appellants under the facts in this case. Since appellants' agent, Jenson, had authority to obtain the money for appellants under plan previously agreed upon, it would be within the scope of his authority to put the deed in circulation and sell the notes described therein. Where parties have obtained funds upon a forged instrument which they have authorized or permitted to be put into circulation, before they cancel same they should be required to return the consideration which they have obtained on said forged instrument. When appellee purchased the notes she had no actual knowledge that the property was being claimed by appellants as their homestead, and there was nothing to put her on notice that the property had been appellants' homestead, unless the recitations in the deed from the Cosgroves to Jenson and the deed from Jenson to the Cosgroves were sufficient. Neither of these deeds were on record, and if she had examined same and ascertained the consideration named therein, she would have found that the deed from the Cosgroves to Jenson recited $1 consideration, and that the deed from Jenson to the Cosgroves recited $2,250 consideration, and if she had then examined the property or made inquiry she would have found that a new house was built on the property after the deed from the Cosgroves to Jenson was executed, and that the difference in the consideration named in the deeds was the value of the improvements being placed thereon.
Appellants do not claim that the funds did not go into the house. Their only defense was that the lien was invalid because it was a mortgage on the homestead, and because Mrs. Cosgrove did not acknowledge same. Appellants pleaded and Mrs. Cosgrove testified that the transaction was a simulated scheme to obtain money with which to build appellants a new home. The evidence is conflicting, but was sufficient to authorize the trial court in finding that at the time the notes and deeds were signed the property was not occupied as a homestead by appellant. If it was not a homestead, the deed from Cosgrove himself would convey title without his wife's signature. If it was their homestead, the deed did not convey title without the wife's acknowledgment, unless she is estopped by having had same delivered with the forged certificate attached thereto (Yaseen v. Green [Tex. Civ. App.] 140 S.W. 824); or, if appellants were not living on the property when the notes were executed and sold to appellee, and she knew of no facts which would lead her, in the exercise of reasonable prudence, to believe the property was the homestead of appellants, appellants could not plead homestead as against appellee's lien to secure the notes. Appellants signed the deed and the notes and had same put in circulation; the deed appearing to be properly acknowledged. Appellants *Page 897 
accepted the money on the notes and used the proceeds thereof in building a house on the property in controversy, and in my opinion, by reason of said acts, they are now, as a matter of law and equity, estopped from claiming the deed was a mortgage. I recognize the rule that where instruments are recorded parties are charged with notice of their contents. Sanger Bros. v. Brooks, 101 Tex. 115, 105 S.W. 37. In this case, however, the deeds were not recorded, and Jenson, the agent of appellants, informed appellee that the notes were first vendor lien notes, and appellee relied on Jenson's statements, and did not personally inspect either of the unrecorded deeds. Martin v. Granger (Tex.Civ.App.)204 S.W. 666.
A married woman should not be permitted to avail herself of a defective acknowledgment which she has had placed in circulation when she has reaped the benefits therefrom. Moerlein v. Scottish Mortgage  Inv. Co., 9 Tex. Civ. App. 415, 29 S.W. 162, 948. The law extends its protection to the rights of married women and will protect their homes, but it will not permit them to act fraudulently to the injury of others. McKinney v. Matthews (Tex. Sup.) 6 S.W. 793; Vann v. Denson,56 Tex. Civ. App. 220, 120 S.W. 1021. To allow a married woman to profit by her own positive fraud, or to allow her to perpetrate a fraud by disputing the validity of a vendor's lien which she has caused to be placed on her property, would be to pervert the law which was passed for her benefit into an instrument of fraud. Ryan v. Maxey, 43 Tex. 192; Cravens v. Booth, 8 Tex. 243, 58 Am.Dec. 112. The legal disability of coverture carries with it no license or privilege to practice fraud or deception on innocent persons, nor will the disability be permitted to protect them in so doing. 58 Am.Dec. 114, notes. The Constitution and statutes of this state are made for protection, and not to be used as instruments to perpetrate fraud on innocent victims. Jones' Estate v. Neal, 44 Tex. Civ. App. 412, 98 S.W. 417; Clayton v. Frazier, 33 Tex. 91; Cooper v. Ford, 29 Tex. Civ. App. 253, 69 S.W. 487; Graves v. Kinney,95 Tex. 210, 66 S.W. 293; Heidenheimer v. Stewart, 65 Tex. 321; Eylar v. Eylar, 60 Tex. 315; Hurt v. Cooper, 63 Tex. 363.
It is an axiomatic principle that actual, positive fraud vitiates all transactions, and no person shall be permitted to profit by his own positive fraud, and no fraudulent instrument should be canceled until the party profiting by the actual fraud perpetrated has restored the party defrauded to his original position. 10 R.C.L. p. 688.
In my opinion, the judgment of the trial court should be affirmed.