Opinion
No. 4407.
November 10, 1933. Rehearing Denied January 25, 1934.
Appeal from District Court, Gregg County; C. G. Dibrell, Judge.
Suit by Trip Elder against J. A. King and others. From an adverse judgment, plaintiff appeals.
Reversed and remanded.
The appellant brought the suit on January 21, 1932, against J. A. King, J. E. Bagwell, Otho Dickeson, Byrd-Frost, Inc., and a number of other persons named as defendants in trespass to try title to 13 1/2 acres of land in the Wm. P. Chisum Headright survey in Gregg county, and to remove cloud from the title by cancellation of the several instruments executed by J. A. King and his wife to the defendants named. The plaintiff alleged that he was the owner of the land in fee simple under an absolute and unconditional deed of conveyance from J. A. King and wife of date February 16, 1927, and duly registered on February 17, 1927; that defendant J. A. King, subsequent to the deed of conveyance and without right or lawful authority, executed an oil and gas lease, and a royalty deed to the defendants named. Several of the defendants named promptly filed a disclaimer, among them the defendant J. A. King. Defendant J. A. King on January 22, 1932, filed a verified disclaimer reading, omitting formal parts:
"Now comes J. A. King, defendant in the above styled and numbered cause and shows the Court that he neither owns, claims, nor asserts any right, title, interest or right of possession in or to the premises described in plaintiff's petition and says that as far as he is concerned the plaintiff has all right, title, interest and right of possession thereto and has had since he conveyed said land to him in February, A.D. 1927;
"Wherefore, he enters this his disclaimer and prays that no costs be adjudged against him."
The remaining defendants filed an answer pleading that the deed from J. A. King to the plaintiff was intended and understood to be a mortgage merely for the payment of a debt and, among other matters, estoppel of plaintiffs by admissions and representations that he claimed no interest in the title. The defendant Byrd-Frost, Inc., on July 18, 1932, filed an answer of similar effect, and by way of cross-action against the plaintiff, Trip Elder, and the defendant J. A. King, specially pleaded estoppel to assert any title or interest in the land, and legal acquisition and ownership in fee of 7/8 of the oil and gas produced from the land under a certain lease of the land by J. A. King, and a conspiracy existing between plaintiff and defendant J. A. King to take away and to defraud Byrd-Frost, Inc., out of their lease. The case was tried before a jury on special issues, and, in keeping with the verdict, judgment was entered that the plaintiff take nothing by his suit, and in favor of the defendants on the cross-action. The judgment provides that the defendants who disclaimed take nothing. The plaintiff has appealed from the judgment against him.
It was agreed in the trial that the common source of title was S. J. King and D. L. King. The evidence in behalf of the plaintiff is substantially as here set forth. By deed of date October 11, 1919, S. J. King and D. L. King conveyed the 13 1/2 acres in suit to J. A. King, the defendant. The deed was duly registered in the deed records on January 31, 1925. By deed of date January 13, 1925, J. A. King and wife, Katy King, conveyed the 13 1/2 acres to J. S. King, Jr. The deed was duly registered January 31, 1925. By deed of date September 22, 1925, J. S. King, Jr., conveyed the 13 1/2 acres to J. A. King, the defendant. The deed was duly registered January 16, 1926. By deed of date February 16, 1927, J. A. King and wife, Katy King, conveyed the 13 1/2 acres to Trip Elder, the plaintiff. The deed was filed for record on February 17, 1927, and recorded March 8, 1927. It also appears that J. A. King conveyed to plaintiff an adjoining tract of 20 acres. According to the evidence of the plaintiff there was an outright purchase of the 13 1/2 acres and the 20 acres for the consideration of $700 paid, and possession was taken at once. That the deed of conveyance was not nor was it intended to be a security for the payment of a debt. That in 1928 the plaintiff sold and conveyed back the 20-acre tract and rented the 13 1/2-acre tract to J. A. King. That the plaintiff paid all taxes on the 13 1/2 acres since 1927. J. A. King testified:
"Q. Have you told Mr. Elder that was your land and not his at any time since you made that deed? A. No, sir.
"Q. Do you claim any interest in this 13 1/2 acre tract at the present time? A. No, sir."
The evidence in behalf of the defendants goes to show in substance as here stated. On October 29, 1930, J. A. King executed an oil and gas lease upon the land to J. E. Bagwell. J. E. Bagwell on December 26, 1930, assigned the lease to D. H. Byrd. D. H. Byrd on March 16, 1931, assigned the lease to ByrdFrost, Inc. J. A. King on December 19, 1930, executed a mineral deed to Otho Dickeson conveying a 1/4 undivided interest in the 1/8 of the oil and gas under the land. Otho Dickeson makes assignment of part of his interest to others claiming under him in the suit. J. A. King on December 9, 1930, executes a mineral deed to Mrs. L. A. Griffin conveying an undivided one-half of the 1/8 of the gas and oil under the land. Mrs. Griffin, joined by her husband, assigns an interest to others claiming under her in the suit. All of the instruments contain a warranty of title by J. A. King. That after the execution of the deed to Trip Elder, the defendant J. A. King continued to use the land and make crops thereon, and paid in behalf of Mr. Elder all the taxes. That the plaintiff made admission after the lease and mineral deed to defendants in effect that the deed to him was a mortgage. That after the lease and mineral deed to defendants, J. A. King made an affidavit and delivered it to defendants stating in effect that the deed to plaintiff was intended to be a security for payment of a debt. That the Byrd-Frost, Inc., paid the lease rental due October 1931, to defendant J. A. King, relying upon the statement by plaintiff that the deed was a mortgage. That J. A. King made an ex parte affidavit in contradiction of the wording of his disclaimer and oral evidence in this present trial.
The plaintiff denied making the statements or admissions claimed by the defendants. It is deemed unnecessary to set out all the evidence in detail.
The following special issues were submitted to the jury:
"No. 1: Do you find from the preponderance of the evidence that the deed bearing date February 16, 1927, from J. A. King and Katy King to Trip Elder was understood and intended by the said J. A. King and Katy King and the said Trip Elder to be in fact a mortgage to secure the said Trip Elder in the payment of a debt owing him by the said J. A. King?"
Answer: "Yes."
"No. 2: Do you find from a preponderance of the evidence that when the deed of November 6, 1928, was executed and delivered by Trip Elder and wife to J. A. King, whereby for a recited consideration of $500.00 the said Trip Elder and wife deeded to the said J. A. King the 20.84 acres of land, it was understood and agreed by and between the said J. A. King and the said Trip Elder that the deed dated February 16, 1927, from King and wife, to Trip Elder for both tracts of land should thereafter become and be considered an absolute deed to Elder to the 13 1/2 acres?"
Answer: "No."
"No. 3: Do you find from a preponderance of the evidence that Trip Elder, the plaintiff, prior to October 28, 1931, told Mr. Crum, or any agent of Byrd-Frost, Incorporated, that he, Elder, only held a lien or mortgage against the 13 1/2-acre tract of land involved in this controversy?"
Answer: "Yes."
"No. 4: Do you find from a preponderance of the evidence that at the time Byrd-Frost, Incorporated, paid the $13.50 rental into the bank at Kilgore, Texas, to the credit of J. A. King it did so relying solely upon the statement made by Trip Elder to Mr. Crum, or other agent of Byrd-Frost, Incorporated, that he, Elder, only held a lien or mortgage against the 13 1/2-acre tract of land involved in this controversy?"
Answer: "Yes."
Clyde Vinson, of San Angelo, and Chauncey Chauncey, of Longview, for appellant.
J. M. Davenport, of Tyler, Geo. E. Holland and John C. Gray, both of Henderson, McEntire, James Clower, of Tyler, Slay Simon, of Fort Worth, Lacy Molhusen, of Longview, Richey Sheehy, of Waco, Sam McCorkle, of Fairfield, Chas. R. Crum, of Dallas, and Wynne Wynne, of Longview, for appellees.
In view of the evidence in the record and upon due determination of weight and sufficiency, this court does not feel justified in exercising its power to approve and adopt as a fact the answer of the jury to question No. 1. The evidence in that respect is slight and conflicting and there is room to hesitate or doubt as to the existence of such ultimate fact. In our mind the answer must be considered as being against the weight of the evidence and upon that ground alone it is here disapproved and not adopted but is set aside. The deed of conveyance of the 13 1/2 acres by J. A. King to plaintiff was absolute and unconditional upon its face and was duly recorded in the deed records of the county. It was of record and constituted full legal notice when the subsequent instruments were executed by J. A. King to the defendants. The presumption, created by the language of the deed, is that the instrument is what it purports to be, an absolute conveyance, and will operate as such, unless the evidence proves it to be something different from what it purports to be and changes its apparent character into a mortgage. The doctrine is applied that, a deed absolute in form, given to secure the payment of a debt, will be considered a mortgage, although the defeasance rests wholly in parol. 41 C.J. § 94, p. 328; Gibbs v. Penny, 43 Tex. 560; Loving v. Milliken, 59 Tex. 423; Clark v. Haney, 62 Tex. 511, 50 Am.Rep. 536, and other cases. It is well settled that such question is open to litigation, and the courts may so declare when the testimony impels to the conclusion that a deed on its face conveying the absolute title was, between the parties, but a mortgage to secure a loan. Equitable principles are applicable to such actions. In an action of the character, as here, of an action of trespass to try title by the plaintiff, it is incumbent upon the defendant whose claim or defense is that the deed is a mortgage to specifically plead such equities; otherwise no equities could be tried and he would be bound by the legal effect of the deed according to its terms. Groesbeeck v. Crow, 85 Tex. 200, 20 S.W. 49; Parks v. Worthington, 39 Tex. Civ. App. 421, 87 S.W. 720. It will be assumed in this case that the defendants in this case have specially pleaded the equities claimed. And the burden of proof manifestly lies upon the defendants claiming that the real character of the transaction is different from that which is imported by the language of the deed in question. The question is whether the defense has sustained the burden of proof. According to the evidence of the grantor, J. A. King, the circumstances leading up to the signing of the instrument were: That J. A. King and his wife, Katy King, had separated and a suit for divorce was pending. That the wife, Katy King, "didn't want the land" (referring to the land in the deed), but wanted "money" in the division of the property upon divorce. That J. A. King approached Mr. Trip Elder about the situation "in order to get the money to pay her interest out." That at the time J. A. King owed Mr. Trip Elder about $500 for advances. The property was presumptively community property as it was not shown to have been acquired prior to the marriage to Katy King. That J. A. King and Katy King both signed the deed on February 16, 1927, and acknowledged it on the same day, and that the divorce decree was granted about "a couple of months, something like that" after the date of the deed. The grantor, J. A. King, and the grantee, Trip Elder, both state that all the above preliminary talk and agreement was that the transaction would be a sale and that the instrument was executed with that intent. Both the plaintiff, Elder, and the grantor, J. A. King, affirmatively testified on the trial that the deed was intended as an absolute one. J. A. King testified that he got $450 in money and the release of his debt of $450, aggregating "about nine hundred dollars" that he got "for those two tracts." J. A. King further testified that at the time of the execution of the deed he also had the "purpose in wanting to sell the land" of "going to Oklahoma." He testified after the date of the deed and the divorce he did go to Oklahoma and after staying there a short time changed his mind and "went down in Arkansas" and there stayed "I guess about five months in all." He then came back "to Kilgore" and rented the land from Mr. Trip Elder. Considering the surrounding circumstances as appears there is none of the convincing elements to fairly show that the warranty deed was, in fact, only a mortgage. The mere fact of itself and by itself that J. A. King was owing a debt to Trip Elder at the time of the deed would not be sufficient to raise a presumption either for or against the theory that the transaction was a mortgage. Whatever presumption of this kind there may be is repelled by the evidence of J. A. King showing in effect the debt was canceled at the time of the conveyance. It is not shown that the value of the property at the time the deed was given was more than the amount testified to as being paid for the property — a material consideration when passing upon the question of whether a deed was in fact a mortgage. The affirmative factual elements of the purpose of executing the instrument of transfer, to enable the wife in a divorce proceeding "to get the money to pay her interest out," and the intention of the husband to go elsewhere in another state, are more consistent than conflicting with an absolute sale of the property to effectuate a division of the property between husband and wife. They both signed the deed. The entire circumstances tending in contradiction of absolute conveyance consists in certain purported contradictory statements and the rendition for taxes of the 13 1/2 acres of land by J. A. King, which latter act is explained apparently consistent with the deed. The character of the transaction was fixed in the beginning and the subsequent declarations of a party cannot change its character. These are nothing more than admissions which are admissible in evidence for what they are worth. Stripped of the contrary statements in evidence by J. A. King the evidence is slight as to the deed's being intended as a mortgage. To take the contrary statements of J. A. King as outweighing the other affirmative evidence would be to place great reliance on indefinite and inclusive evidence. It is the especial rule that the evidence relied upon for the purpose of affixing the character of a mortgage to an absolute deed must satisfy the high standard of probative force indicated by the expression "clear, satisfactory and convincing." Brewster v. Davis, 56 Tex. 478; Gazley v. Herring (Tex. Sup.) 17 S.W. 17; Muckelroy v. House, 21 Tex. Civ. App. 673, 52 S.W. 1038; Frazer v. Seureau, 60 Tex. Civ. App. 416, 128 S.W. 649. Other states, in annotation of rule, L.R.A. 1916B, page 192. There is authority for the rule, of necessity of sustaining the allegations of a mortgage by other testimony besides that merely of the grantor, in case that which was given conflicts in every important particular with that which was given by the other. Under such circumstances the testimony of one party is regarded as simply counterbalancing that of the other. L.R.A. 1916B, page 253.
In passing it is observed that the defendants have recovered judgment for the property as against the plaintiff. If the deed is a mortgage only, as the defendants must establish by proof, they cannot recover the land without tendering the amount of the debt and interest. Hicks v. Hicks (Tex.Civ.App.) 26 S.W. 227. And if the conveyance be only a mortgage, then the extent of the interest of the defendants, as against the plaintiff, can reach only to the interest of J. A. King. The divorced wife, Katy King, did not sign the leases or the royalty deeds in evidence, and there is no proof that she has ever conveyed her one-half community interest in the land, except in the deed to plaintiff.
The judgment is reversed and the cause remanded.