Opinion
No. 3619.
February 11, 1929. Rehearing Denied February 14, 1929.
Appeal from District Court, Grayson County; Silas Hare, Judge.
Suit by Louise Hudson against Lynch Davidson Co., a corporation, and others. Suit dismissed as to unnamed defendants, and judgment for plaintiff against defendant named, and said defendant appeals. Affirmed.
The suit was by appellee, Louise Hudson, against appellant, Lynch Davidson Co., a corporation, and W. H. Lucas and C. C. Mayhew. It was to specifically enforce a contract between said Lucas and Mayhew and Charles M. Hudson, at one time appellee's husband, covering the sale by the former to the latter of lots 3 and 5 in block 12, of the Christian College addition to the city of Sherman, and to recover the rental value of the lots during time appellee claimed appellant had wrongfully deprived her of possession and use thereof. Lucas and Mayhew having disclaimed any interest in the suit or in the property in controversy, same was dismissed as to them. At the trial it appeared that at a time when Charles M. Hudson and appellee. Louise Hudson, were husband and wife, to wit. April 7, 1920, said Charles M. Hudson and W. H. Lucas and C. C. Mayhew entered into a contract in writing, whereby said Lucas and Mayhew sold and agreed to convey lots 3 and 5, in block 12, of the Christian College addition to the city of Sherman to said Charles M. Hudson in consideration of $400, $25 of which was then paid and the remainder of which and 8 per cent. interest thereon was to be paid by Charles M. Hudson in installments of $25 each, the first one of which was to be made on May 10, 192_, and the others, respectively, on the 10th day of each month thereafter until the entire amount was paid. The lots were purchased for use as a homestead by Charles M. Hudson and appellee and their child, a minor; and, having constructed a dwelling house thereon, the family moved into same, and resided there until September, 1921, when Charles M. Hudson and appellee, separating, ceased to live together as man and wife. Appellee and her child continued to reside on the lot until January 22, 1922, when she (appellee) obtained a decree of the district court of Grayson county, divorcing her from said Charles M. Hudson, and awarding her the custody of their child. The decree also awarded to her as her sole property lots 3 and 5, in block 16, of the Christian College addition to the city of Sherman. The description of the lots in the decree, so far as it was that they were in block 16 of said addition, was erroneous. The lots were, instead, in block 12 of said addition.
By a deed dated May 26, 1923, correctly describing the lots and calling attention to the error in the description thereof in the divorce decree, Charles M. Hudson undertook to convey same to appellee. By the terms of the contract referred to between Lucas and Mayhew and Charles M. Hudson, the latter was to pay the taxes and assessments against the property it covered and keep same insured. The instrument evidencing the contract contained other stipulations as follows: "In case said second party (Charles M. Hudson) shall fail to make the payments aforesaid, for a period of sixty days, and likewise fail to perform and complete each of his agreements and stipulations aforesaid, strictly and literally, then this Contract, so far as it may bind said first party, (W. H. Lucas and C. C. Mayhew) shall become utterly null and void, and the whole amount of the principal and accrued interest mentioned herein remaining unpaid shall, at the option of said first party, become immediately due and payable, and all rights and interests hereby created or then existing in favor of the said second party, or derived from him, shall utterly cease and determine, and the right of possession, and all equitable and legal interests hereby contracted, shall revert to and revest in said first party, without any declaration of forfeiture, or act of re-entry, or any other act of said first party to be performed, and without any right of said second party of reclamation or compensation for moneys paid or improvements made, as absolutely, fully and perfectly as if this contract had never been made. And said party of the first part shall have the right, immediately, upon the failure of the said party of the second part to comply with the stipulations of this contract, to enter upon the land aforesaid and take immediate possession thereof, together with the improvements and appurtenances thereto belonging. All the improvements made on the premises herein described, together with all sums of money paid on this Contract by said second party, being held by said first party in full for the use and rental of said premises up to time of default in said payments, and thereafter said second party shall hold said premises as the tenant from month to month of said first party and the relation of landlord and tenant only shall exist between said parties thereafter at the rental of _____ Dollars per month, subject to termination at any time by written notice from said first party. And said party of the second part covenants and agrees that he will surrender unto the said party of the first part the said appurtenances, without delay or hindrance, and no court shall relieve the party of the second part from a failure to comply strictly and literally with this Contract. And it is further stipulated that no assignment of the premises shall be valid, unless the same shall be endorsed hereon."
The lumber used in constructing the dwelling house on the lots was purchased by Charles M. Hudson of the Southland Lumber Company, and he owed said lumber company $331.45 of the purchase price of same when that company sold its stock in trade and other property, including its claim against said Charles M. Hudson for said $331.45, to appellant. November 1, 1922, Lucas and Mayhew, in writing, on a separate piece of paper, assigned their contract with Charles M. Hudson for the sale of the lots to appellant, and by a deed of the same date conveyed the lots to appellant, in consideration of the payment to them by appellant of the amount unpaid of the purchase price of the lots, to wit, the sum of $293.53. The deed contained a covenant of general warranty, followed, however, by a stipulation that it was "made (quoting) subject to the rights of Mrs. Louise Hudson in said premises, and that as against her we make no warranty whatever." The $331.45 claim against Charles M. Hudson purchased by appellant of the Southland Lumber Company was not secured in any way, and the trial court found that appellant's purpose in purchasing the contract between Charles M. Hudson and Lucas and Mayhew and taking a conveyance of the lots was to secure the payment of that claim.
Said court found, further, as follows: (1) That at the time (November 1, 1922) Lucas and Mayhew assigned their contract with Charles M. Hudson to appellant and conveyed the lots to it, as stated, the property was worth $1,250, and that the rental value thereof was $10 a month. (2) That at once after said contract was assigned and said lots conveyed to it, as stated, appellant notified one Atterberry, to whom appellee had rented the property, that same belonged to it, and that he must pay it the rent therefor, which he accordingly did, beginning December 1, 1922. (3) That after taking over the property, as stated, appellant paid $91.50 on account taxes and $30.80 on account insurance thereon. (4) That no notice was ever given to appellee, or any one for her, either by Lucas and Mayhew or appellant, "that they intended to forfeit her rights in the property or to take it over by reason of the failure to comply with the sale contract in accordance with its terms," but that appellant, without giving such notice, and without giving appellee an opportunity to pay the $293.53 due thereon, claimed the lots as its own in fee simple under the conveyance from Lucas and Mayhew, and recognized no right in them in appellee. (5) That "Lucas and Mayhew did not insist (quoting) upon the payments as provided in the contract, but payments were made as follows by Louise Hudson: At the time of the purchase $25.00; May 8, 1920, $25.00; June 10, 1920, $25.00. The next payment was made September 3, 1921, of $10.00 on the principal of the contract and $35.51 on accrued interest. On May 2, 1922, Louise Hudson paid $15.00 on the contract and Lucas and Mayhew agreed that the payments might be reduced to $12.50: and thereafter on June 17, 1922, Frances Hudson, for Louise Hudson, paid $12.50 on the contract; on July 1, 1922, $12.50; on August 14, 1922, $12.50; on November 6, 1922, $15.00. All of these payments were accepted by Lucas and Mayhew without objection. They never in any way declared the forfeiture of the contract or notified Louise Hudson, or any one for her, that they intended to take back the property from her, but were willing she should make payments as she could." (6) That on January 11, 1923, Frances Hudson, for appellee, sent to Lucas $15, which was sent by him to appellant, who credited same on the Southland Lumber Co.'s account for $331.45 against Charles M. Hudson, which it (appellant) had purchased as stated. (7) That with "her own money" appellee paid $300 for lumber used in building the dwelling house on the lots and between $200 and $400 "on other items used in building the house." (7) That, when she was divorced from Charles M. Hudson, appellee "removed temporarily to the State of Tennessee, leaving her sister-in-law, Frances Hudson, to look after the property in controversy. Frances Hudson rented the property to one Atterberry on the 27th day of September, 1922. He occupied the property until the first day of May, 1923." (8) That the first information appellee had that appellant had purchased the contract between Charles M. Hudson and Lucas and Mayhew was received from said Lucas and Mayhew in March, 1923, when she was still in Tennessee; that she immediately thereafter "sent her personal check (quoting) to Lynch Davidson Company, marking it `on lots.' They returned her this check, telling her they owned the lots and recognized no right of Louise Hudson in them."
The trial court found, further, that the contract covering the purchase of the lots by Charles M. Hudson was in duplicate, and that one copy thereof "was left (quoting) with Louise Hudson and one copy was retained by W. H. Lucas for Lucas and Mayhew." The payments made on the contract were indorsed thereon, but the assignment of the contract from Lucas and Mayhew to appellant was not indorsed on the copy left with appellee as stated. And found, further, that the $293.53 paid to Lucas and Mayhew by appellant for the contract with Charles M. Hudson had never been repaid to appellant; but the court found, further, that appellee in her original petition alleged that "she does not know the exact amount now owing by her on said property, but she stands ready to pay into court any sum that she may be owing on said contract whenever the same may be determined by the court." And in her first amended petition, "which was placed among the papers but with no file mark on it," appellee pleaded that she desired to pay off and discharge the amount owing on her lots, but had not been able to ascertain the amount of same, and further pleaded, among other things, as follows: "Plaintiff asks that the balance owing by her on said contract be ascertained by this court, and that she be decreed the title to said lots and the improvements thereon upon the payment by her of the amount found to be due the defendant."
On the facts and findings stated the trial court concluded as matters of law: (1) That Mayhew and Lucas waived any right they had to forfeit the contract and take back the property "by reason of the failure of the Hudsons to make prompt payment of the amounts stipulated in the contract or otherwise carry out its provisions." (2) That, even if said Mayhew and Lucas were not in the attitude of having made such a waiver, they could not have taken back the property without first giving appellee "reasonable notice and an opportunity to pay the amount owing on the lots." (3) That appellant took under the contract no higher right than Lucas and Mayhew had, and could not declare the contract at an end and take over the property without giving appellee "notice of their intention to do so and a reasonable opportunity to pay the amount that was owing under the contract." (4) That, even if appellant had any higher right than Lucas and Mayhew had under the contract, "they could not have forfeited the contract and taken over the property under the terms of the contract in a period of less than 60 days after they made the purchase from Mayhew and Lucas, and without notice to plaintiff (appellee), and without giving her a reasonable opportunity to pay the amount owing under the sales contract." (5) That appellant was "entitled to recover the $293.53, together with interest on each installment to be paid on the contract, at the rate of 8% per annum, until such time as the rent at $10.00 per month would discharge said sum with interest; and further find that said sum and interest amounts to $322.30, which would be repaid within 29.53 months. I further find that Lynch Davidson Company have paid taxes on the property since taking it over amounting to $91.52, which they are entitled to recover; that they have paid insurance amounting to $30.80, so that the aggregate amount that they are entitled to recover is $405.82." (6) That appellee "is entitled to recover from Lynch Davidson Company the land in controversy, together with the value of the rents at $10.00 per month from November 1, 1922, to this date, with interest at 6% per annum on the various installments of rent, all amounting to $718.28, to be diminished by the amount owing by Lynch Davidson Company; that, therefore, Louise Hudson is entitled to recover of Lynch Davidson Company the lots in controversy, together with $312.45, with interest from this date until paid at the rate of 6% per annum."
The judgment on the facts, findings, and conclusions stated was in appellee's favor for the lots in question, and in her favor for $312.46, the difference, the court found, between the amount of the taxes and insurance paid by appellant on the property and the $293.53 and interest thereon it paid to Lucas and Mayhew for the lot, and the amount of rents ($718.28) the court found appellee was entitled to recover of appellant.
Freeman, McReynolds Hay, of Sherman, for appellant.
Head, Dillard, Smith, Maxey Head, of Sherman, for appellee.
Appellant's contention is that the trial court erred when he held it did not have a right as against appellee, at the time it assumed to exercise such a right, to treat the contract between Charles M. Hudson and Lucas and Mayhew as forfeited. The contention is on the theory (1) that appellee had no interest in the property in question; (2) that, if appellee did have an interest in It, appellant, contrary to the conclusion reached by the court, did not have to notify her of its intention to do so before treating the contract as forfeited; and (3) that, if such notice to appellee was indispensable to the exercise by appellant of such a right, appellee had such notice.
So far as the theory is that it appeared appellee had no interest in the property, we think it is plainly without merit, in view of evidence showing (1) that she was in possession of the property at the time it assumed to treat her right thereto as forfeited; (2) that she paid a part of the cost of improvements placed thereon before she was divorced, with money belonging (the finding of the trial court seems to indicate) to her separate estate; (3) that the interest of Charles M. Hudson in the property was awarded to her by the judgment granting her a divorce; (4) that the said interest of Charles M. Hudson was afterwards by him conveyed to her; and (5) that Lucas and Mayhew did not insist on payments being made as provided in the contract, but accepted same when and as tendered by her contrary to its terms after she was granted the divorce and before they assigned the contract to appellant. We think the evidence referred to furnished ample support for a finding that appellee had an equitable title in the property entitling her to demand, as against Lucas and Mayhew, a conveyance of the legal title to her on payment by her of the unpaid part of the price Lucas and Mayhew were to receive for same. 1 Pomeroy's Eq. Jur., §§ 367, 368, 372; 4 Id., § 1406.
If appellee had such a right as against Lucas and Mayhew, they could not have deprived her of it by declaring a forfeiture of the contract without first giving her such notice of their intention to do so as would have afforded her a reasonable opportunity to exercise the right; for, as stated above, it appeared that said Lucas and Mayhew did not insist on a compliance with the stipulation in the contract as to the times and amounts of payments to be made thereunder, but accepted payments tendered at other times and in other amounts, thereby, as we think, waiving the provision in the contract entitling them to treat the contract as forfeited without such notice. Buck v. De Shazo (Tex.Civ.App.) 5 S.W.2d 878; Seaboard Bank Trust Co. v. Amuny (Tex.Civ.App.) 6 S.W.2d 186; Hill v. James (Tex.Civ.App.) 7 S.W.2d 910; Phillips v. Herndon, 78 Tex. 378, 14 S.W. 857, 22 Am.St.Rep. 59; Berryman v. Schumaker, 67 Tex. 312, 3 S.W. 46; Tom v. Wollhoefer, 61 Tex. 279; Keator v. Ferguson. 20 S.D. 473, 107 N.W. 678, 129 Am.St.Rep. 947; McBride v. Stewart (Utah) 249 P. 114, 48 A.L.R. 267; Reinertson v. Grant, 140 Wn. 372, 249 P. 493; Retsloff v. Smith, 79 Cal.App. 443, 249 P. 886; Hopp v. Bergdoll, 285 Pa. 112, 131 A. 698; Boardman v. Bubert, 325 Ill. 38, 155 N.E. 784; Wisper v. Land Co., 241 Mich. 91, 216 N.W. 393; Sliwinski v. Gootstein, 234 Mich. 74, 208 N.W. 47; Pima Farms Co. v. Fowler (Ariz.) 258 P. 256. In the case first cited, which has support in the others, it was held, quoting from the syllabus that, "in a suit by purchaser to compel specific performance of land contract where payment was overdue and vendor had granted indulgence, recognizing contract by acceptance of lease money as credit on purchase price vendor had no right to rescind contract without notifying purchaser of purpose to do so and naming reasonable time in future when purchaser might perform his obligation in default of which contract would be regarded as at an end," and, further, that "where vendor had granted indulgence by recognizing existence of contract although time specified for payment had passed, that if time was the essence of the agreement same was waived by treating contract as subsisting after specified time of performance." We conclude, on the authorities cited and others we have considered, but have not cited, that Lucas and Mayhew did not have a right to treat the contract as forfeited without giving notice to appellee of an intention to do so.
It being indispensable to the exercise by Lucas and Mayhew of a right to treat the contract as forfeited by appellee that they should have given her proper notice of their intention to do so, the question is: Was it also indispensable to the exercise by appellant of such a right that it should have given appellee such notice? The question must be answered in the affirmative, we think, in view of evidence showing that after Lucas and Mayhew assigned the contract and conveyed the land to appellant it retained money sent to it by appellee to be applied as a payment under the contract, and, in view of the recital in the deed to appellant, executed by Lucas and Mayhew at the time they assigned the contract to it, that it (the deed) was "made (quoting) subject to the rights of Mrs. Louise Hudson in said premises." The effect of that recital, we think, was to put appellant on inquiry to ascertain what appellee's rights in the property were and to charge it with knowledge such inquiry would have enabled it to obtain. It cannot be doubted that such inquiry, diligently pursued by questioning Lucas and Mayhew and appellee and her tenant in actual possession of and using the property, and by an examination of the record in the divorce proceedings, would have resulted in full information to appellant as to the claim of appellee to the property. With such information appellant, as the assignee of Lucas and Mayhew, could claim and assert as against appellee no other or greater right than its assignors could have claimed and enforced against her. And it seems to us that appellant's retention and use for another purpose of the money appellee sent it to apply as a payment on the contract should be held to have operated to estop it from asserting a right to treat the contract as forfeited until it had given her proper notice of its intention to do so. Appellant had no right whatever to apply as a payment (as it did) on the account of the lumber company against Charles M. Hudson, which it had purchased, money paid to it by appellee to apply as a credit on the, contract covering the sale and purchase of the lots.
The question remaining is: Did it appear that appellee had such notice as she was entitled to of appellant's intention to treat the contract as forfeited by her? We think the question should be answered in the negative. The assignment of the contract and the deed to the property from Lucas and Mayhew to appellant, as found by the court and shown in the statement above, was made November 1, 1922. The trial court found, and the finding had support In the testimony, that promptly thereafter appellant notified appellee's tenant (one Atteberry) in possession of and using the property that it owned same, and that he must thereafter pay them rent therefor, and that he did so. In that way appellant assumed and ever thereafter exercised control of the property, obtaining the rents and revenues therefrom and denying any right in appellee to same.
The judgment is affirmed.