author: DUNKLIN, J.

text:
    WILKIRSON v. BRADFORD.
    (No. 8732.)
    (Court of Civil Appeals of Texas. Ft. Worth.
    Nov. 17, 1917.
    On Rehearing, Dec. 22, 1917.)
    1. Pleading <§=^>8(21) — Conclusions — Knowledge.
    In action for conversion of notes, where plaintiff alleged that he never parted with title to the notes, and that defendant knew such fact, and also knew plaintiff’s purpose in transferring the notes to a third person, and that defendant in collecting the notes knowingly perpetrated a fraud upon plaintiff, the allegations were mere conclusions of the pleader.
    2. Trover and Conversion <®=»11 — Purchase from Person Other Than Owner.
    Where notes were delivered to a contractor in consideration of his agreement to build a house and pay the owner a certain sum and to buy the material of a lumberman who knew of the agreement and who signed the contractor’s bond in the absence of allegation that the lumberman did not intend to perform his contract, and that he executed it with the fraudulent purpose of inducing plaintiff to transfer the notes, plaintiff could not recover from the lumberman after he converted the notes.
    3. Bills and Notes <®=j337 — -Innocent Purchasers — Liability.
    Where plaintiff absolutely transferred notes to contractor, who agreed to build a house for plaintiff, and the contractor transferred them to a lumberman before maturity, and the notes were negotiable, and plaintiff’s transfer was oy written indorsement, and the lumberman purchased the notes believing in good faith that the contractor had title and converted the notes after having taken initial steps to fix a mate-rialman’s lien on the property from which he desisted after taking the notes, he was an innocent purchaser, and not liable to the owner.
    On Rehearing.
    4. Appeal and Error cg=^1039(l) — -Harmless Error.
    Though the court erroneously held that the pleadings were insufficient, the error was harmless, where the evidence failed to support the theory upon which the pleadings were based.
    Appeal from District Court, Nolan County; W. W. Biall, Judge.
    Suit by J. A. J. Bradford against S. H. Thomas and O. L. Wilkirson. Judgment for plaintiff, and defendant Wilkirson appeals. Reversed and rendered. On rehearing.
    Motion for rehearing overruled.
    See, also, 154 S. W. 601.
    Oeo. T. Wilson and Ed J. I-Iamner, both of Sweetwater, for appellant. Beall & Douthit, of Sweetwater, for appellee.
   DUNKLIN, J.

J. A. J. Bradford employed L. H. Thomas, a contractor, to erect a building on a lot owned by Bradford. Thomas agreed to furnish the labor and materials necessary to complete the building. Bradford agreed to transfer to Thomas four vendor’s lien notes for the principal sum of $1,000 each, and, as the agreed value of those notes was $350 in excess of the contract price to be paid for the building, Thomas agreed to pay to Bradford the amount of such excess in money. At the time the building contract was entered into the vendor’s lien notes were transferred to Thomas by Bradford’s written indorsement thereon; in other words, the agreed consideration for the building and $350 in excess thereof was paid to Thomas in advance of the work to be performed. Contemporaneously with the execution of that contract, O. L. Wilkirson, who was the owner of a lumber yard, contracted and agreed with Thomas to sell to him the material necessary t.o construct the building, in consideration of the transfer to him of the notes which Bradford assigned to Thomas, and after Thomas received the notes from Bradford he did transfer the same to Wilkirson in accordance with the terms of that agreement, and later Wilkirson collected the notes in full and appropriated the proceeds thereof to his own use. Thomas proceeded with the work of construction, and, after using building material purchased from Wilkirson of the aggregate value of $1,335.25, breached his contract with Bradford, who thereupon was compelled to finish the building under other arrangements.

Bradford instituted this suit against Thomas and Wilkirson to recover the title and possession of the vendor’s lien notes so transferred to Thomas, and, in the alternative, to recover a judgment for their value. A judgment was rendered in plaintiff’s favor for the value of the notes less the value of the material that was furnished by Wilkirson, and Wilkirson has appealed. The decision of this court on a former appeal of the same case is reported in 154 S. W. 091.

The theory upon which plaintiff sought a recovery was that the title to the notes which were transferred to Thomas never passed, but remained in plaintiff, and that Wilkirson was liable for the value thereof because he had converted them to his own use with knowledge that the title thereto remained in plaintiff. But there is neither pleading nor proof that there was any understanding between plaintiff and Thomas that there was any reservation of title in plaintiff at the time the notes were transferred by him to Thomas. On the contrary, according to the allegations and uncontroverted proof, it was understood and agreed between plaintiff and Thomas that such transfer would vest in Thomas the full and complete title to the notes. There ■was also a total absence of any allegation of proof that plaintiff was induced to transfer the notes to Thomas by any misrepresentation of fact, either by Thomas or Wilkirson.

The allegations contained in plaintiff’s pleadings as a basis for a recovery against Wilkirson were substantially - that prior to the transfer of the notes to -Thomas Wilkir-son had agreed with Thomas to furnish all the material necessary to construct the building, in consideration of a transfer to him of the notes in controversy whenever Thomas should acquire the same from plaintiff; that Wilkirson, through his agent, then informed plaintiff of such agreement with Thomas; that such representations by Wilkirson’s agent were made to induce, and did induce, plaintiff to transfer the notes to Thomas, and after such transfer, and after Thomas in turn had transferred them to Wilkirson, the latter failed and refused to furnish to Thomas material sufficient to construct the building in accordance with the terms of his contract with Thomas, and that by reason of such failure Thomas had been unable to comply with his contract for the construction of the building.

After alleging a history of the transactions between all the parties, plaintiff further alleged that he had never really parted with his title to the notes, hut at all times had been the truei and legal owner thereof, and that that fact was known to Wilkirson, who also knew plaintiff’s purpose in transferring the notes to Thomas, and that in collecting the notes and appropriating the proceeds thereof to his own use Wilkirson had knowingly perpetrated a fraud upon the plaintiff. Such allegations were mere conclusions of the pleader from the facts already alleged which did not warrant, nor was there any proo,f to warrant, either the conclusion that plaintiff had never parted with title to the notes, nor the further conclusion that Wil-kirson had practiced a fraud upon plaintiff which would authorize a recovery from him for the value of the notes.

At the time plaintiff executed the contract with Thomas, the latter also gave to him a bond conditioned that Thomas would perform his obligations expressed in the building contract. Wilkirson’s name was signed to the bond as a surety, by Bolling, one of his employés. Wilkirson furnished to Bradford lumber in an amount exceeding the amount realized from the collection of the notes, but all of it, except $1,335.25 worth, was used by Thomas in the construction of another building owned by persons other than Bradford. After such sales, Wilkirson, in a letter to Bradford, notified him of such sales, and inquired whether or not Bradford claimed any title to the notes which he had transferred to Thomas, and further stated, in effect, that unless Thomas owned the notes he (Wil-kirson) would take steps to fix a statutory furnisher’s lien on the property in which the material had been used. Bradford replied by letter saying, in effect, that he had paid Thomas the full contract price for the building, and owned no interest in the notes and forbidding Wilkirson to place any lien on his property and "thereby clouding his title, stating further that he would look to Wilkirson as surety on the bond given by Thomas, for the faithful performance by Thomas of his building contract. Immediately upon receipt of that letter Wilkirson again wrote Bradford, saying that Bolling had no authority to sign his name to the bond, and that he repudiated the same. Wilkirson, who up to that time was holding the notes in controversy as collateral security only for the amount owing to him by Thomas for the lumber furnished him, procured an absolute transfer of the notes to him, and thereafter took no steps to fix his statutory lien for the material so sold, but relied on the collection of the notes for payment of the debt of Thomas to him.

In further support of his contention that title to the notes still remained in him, plaintiff pleaded the execution of the bond, that the same was relied on by him, and was an inducing cause of the transfer of the notes to Thomas, in the absence of which bond his transfer of the notes would not have been made. But in the same connection plaintiff further alleged that Wilkirson had repudiated the bond, and no recovery was sought thereon.

Furthermore, plaintiff’s petition contained no allegation that Wilkirson did not intend to perform his contract with Thomas nor the obligations expressed in the bond when those instruments were executed and that he executed the same and informed plaintiff of said contract with Thomas, all with the fraudulent purpose thereby to deceive plaintiff and induce him to transfer the notes to Thomas and later to acquire the notes himself and appropriate them to his own use, and thus to defraud plaintiff of their value.

In the absence of such allegations and proof to sustain them, and in the absence of allegations and proof of misrepresentation of facts inducing plaintiff to transfer tire notes to Thomas, plaintiff failed to show any right of recovery against Wilkirson, and for that reason the court erred in refusing Wilkirson’s request for an instructed verdict in his favor. C., T. & M. Ry. Co. v. Titterington, 84 Tex. 218, 19 S. W. 472, 31 Am. St. Rep. 39; Wilkirson v. Bradford, 154 S. W. 691; 12 R. C. L. p. 254. § 21.

The court should have instructed a verdict in Wilkirson’s favor for the further reason that his pleas of estoppel and innocent purchaser of the notes were conclusively established in this: The uncontroverted proof showed an absolute transfer of the notes by Bradford to Thomas and by Thomas to Wilkirson before their maturity; that the notes were negotiable in form, and that the transfer by Bradford was by written indorsement; that when Wilkirson purchased the notes he believed in good faith that Thomas held title thereto, and at the time he purchased them he had taken the initial steps towards the fixing of a statutory furnisher’s lien on both the buildings in which the lumber sold by him to Thomas had been used, the value of which was in excess of the amount of the notes, and would have performed all acts necessary to so fix his lien, but was induced in good faith to desist therefrom and relinquish all claims for such liens, and in lieu thereof to accept from Thomas a transfer of the notes in payment of his debt for the lumber sold to him, all by reason of the assurance given by Bradford at the time that he had transferred all his interest in the notes to Thomas and that Thomas then owned them, in connection with the written transfer of the notes indorsed thereon by Bradford. Finks v. Buck, 27 S. W. 1095; Avery & Sons v. Collins, 62 Tex. Civ. App. 313, 131 S. W. 426; Walker v. Erwin, 47 Tex. Civ. App. 637, 106 S. W. 168; Westbrook v. Guderian, 3 Tex. Civ. App. 406, 22 S. W. 59; 10 R. C. L. pp. 777, 778, §§ 91, 92.

The fact that at the" time Bradford gave such assurances he was relying upon the bond that had been signed and delivered by Bolling, as the purported agent for Wilkirson, for the faithful performance of Thomas’s building contract, could make no difference, since that fact could not be construed as being in any sense a denial that Bradford had in fact transferred all his interest in the notes to Thomas, but rather as a statement merely of his reason why he had done so.

Accordingly the judgment of the trial court is reversed, and here rendered for appellant.

CONNER, C. X, not sitting, serving on writ of error committee at Austin.

On Rehearing.

In the letter from Wilkirson to Bradford referred to in the original opinion notifying Bradford of his intention to take steps necessary to fix a statutory furnisher’s lien on the lot and building which Thomas has contracted to erect there was no mention made of the notes in controversy, and to that extent the recital in the original opinion was erroneous. But the record does show that prior to the date of the said letter from WIilkirson to Bradford the notes were sent by Wilkir-son from Grandview to one of his employés at Sweetwater with instructions, in effect, not to furnish any more lumber to Thomas on the strength of them as collateral. Upon receipt of that letter appellee; Bradford, was interviewed with reference to the notes, and he then claimed as he did later in his letter to Wilkirson, in effect, that he had made an absolute transfer of the notes to Thomas, and looked to Thomas and Wilkirson, for a completion of the house in accordance with the terms of the contract for its construction.

Appellee had filed an extended motion and argument for a rehearing, which has been carefully considered, and in which he earnestly insists that we erroneously interpreted his pleadings. He insists that his petition alleges facts showing that he transferred the notes to Thomas under and by virtue of an agreement between himself and Thomas and Wil-kirson that Wilkirson should hold the same in trust only to secure the completion of the I building in accordance with the contract of Thomas therefor.

We do not think that contention is correct. But, even though we are mistaken in that conclusion, the error is harmless, since, as held in our original opinion, the evidence fails to support that theory of recovery, but conclusively establishes the fact that the transfer of the notes to Thomas was intended to and did convey the absolute legal title thereto, and thus completely refutes any possible claim that such title passed to Wilkirson in trust only.

The motion for rehearing is overruled.

CONNER, C. J., not sitting, serving on writ of error committee at Austin.
      dfcAFor other cases see same topic and KVY-NUMBER in all Key-Numbered Digests and Indexes

      @=>For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


source: Caselaw Access Project

author: FLY, C. J.

license: Public Domain

text:
    ROBERTS et al. v. DREYER.
    (No. 5955.)
    (Court of Civil Appeals of Texas. San Antonio.
    Jan. 16, 1918.
    Rehearing Denied Feb. 20, 1918.)
    1.Deeds i©=»112(1) — Construction—Descriptions.
    AVhere a deed described land by metes and bounds, chain of title, and reference to prior deeds, and by a name which was erroneous, the nominal description could not control, so as to make those purchasing at execution sale of the land described by name innocent purchasers, since they must have known the actual description in the recorded deed.
    2. Evidence <S=o4G0(6) — Parol— Oonstruction oe Deed.
    Where a deed described land by metes and bounds, chain of title, and reference to prior deeds, and by name which was erroneous, the testimony of the grantee therein was admissible to explain the deed.
    3. Deeds <@=»111 — Construction — Evidence —Materiality.
    Where the land named was sold under execution against the grantee, it was immaterial what were the intentions of tho grantors and grantee, since the land sold under execution was not in fact included in the deed.
    4. Deeds <§=M12(1) — Constbuction—Descrip-tions — Control.
    Where a deed specifically described land by giving the chain of title and reference to records, a general description by name could not control.
    5. Estoppel <®=>19 — Paeties Not in Fault.
    Since the deed was not calculated to deceive, the grantor was not estopped to deny title of persons who purchased on execution sale under levy against the grantee of the land described by name, and not in fact conveyed.
    6. Evidence <§=^237 — Admissibility—Admissions op Third Persons.
    In trespass to try title, acts, admissions, or 'statements of plaintiff’s son pending suit could not be used against her.
    7. Bis Pendens @=^24(4) — “Innocent Purchasers.”
    One purchasing land pending suit in trespass to try title was not an “innocent purchaser.”
    [Ed. Note. — For other definitions, see Words and Phrases, First and Second Series, Innocent Purchaser.]
    Error from District Court, Nueces County; W. B. Hopkins, Judge.
    Action by Wilhelmina Dreyer against Fred Roberts and others. To review the judgment, defendants bring error.
    Affirmed.
    G. R. Scott and Boone & Pope, all of Corpus Christi, for plaintiffs in error. Dawson & Anderson, of Corpus Christi, and Don A. Bliss, of San Antonio, for defendant in error.
   FLY, C. J.

This is an action of trespass to try title instituted by Wilhelmina Dreyer, a feme sole, against H. L. Dreyer, L. Sum-rail, W. C. Knacker, Fred Roberts, T. H. Clark, H. N. Stamper, Hart Mussey, Sr., and C. J. Gray. The land sued for was described as being situated in Corpus Christi, Tex., and as being known as the “old Dreyer homestead,” described by metes and bounds as follows:

“Beginning at the southwest corner of what is known as the Vineyard or Van Loan tract, for the extreme northern corner of tract; thence in an eastern direction with the south boundary line of said Vineyard or Van Loan tract, to the intersection of the western boundary line of Sam Rankin street; thence in a southern direction with the boundary line of Sam Rankin street to the intersection of the middle line of the street between blocks 54 and 55 of the bluff portion of the city of Corpus Christi; thence in a western direction along the north boundary line of the Clarkson addition to the said city of Corpus Christi to the southeast corner of what is shown on the official map of said city, as the Justina Bluntzer tract lying north of said Clarkson addition; thence in a northern direction with the east boundary line of said Bluntzer tract to the northeast corner of the same; thence, in a western direction, with the north boundary line of said Bluntzer tract to the northeast corner of the same; thence in a northern direction with the meanders on the eastern bank of Salt Lake to the place of beginning.”

The plaintiff in the court below claimed the land not only by a regular chain of conveyances from the sovereignty of the soil, but by limitation of three, five, and ten years. Gray disclaimed any interest, H. L. Dreyer failed to appear and answer, and Sumrall, Roberts, Clark, Stamper, and Mus-sey answered by a plea of not guilty and pleas of three, five, and ten years’ limitation. Tbe cause was beard by the court without a jury, and judgment rendered in favor of Wilhelmina Dreyer for tlie land.

Wilhelmina Dreyer showed title to the land. Plaintiffs in error claim the land through a sheriff’s deed made by virtue of an execution issued in a suit instituted by I. T. Cayce against C. J. Gray on June 2, 1914, the property being sold as the property of C. J. Gray, the claim being based on a deed executed by Mrs. Dreyer to Gray which describes tbe land as five acres more or less situated in precinct No. 1 of Nueces county “which was sold by the sheriff of Nueces county, Tex., to make the amount of taxes and costs duo by Robert Adams to the said county and state as shown by deed of Thomas Ryan, sheriff, dated June 5, 1877, to J. McKew,” giving the page of its record. A further description is that it was sold by McICew to H. D. Dreyer and by the latter conveyed to Mrs. Dreyer. It was further described as the “old M. M. Dreyer place.” The evidence showed that the land described was not known as the “old Dreyer home,” but was a separate and distinct parcel of land from the “old Dreyer homestead.” The land described in the deed to Gray is not tbe land for which Mrs. Dreyer sued. The land she sued for did not come to her through a tax deed, and was not the land sold by McKew to H. L. Dreyer. Mrs. Dreyer never executed a deed to Gray to tbe “old Dreyer homestead.” She executed a deed to Gray to the certain five acres that had been sold for taxes under the impression that she was conveying the “old Dreyer homestead,” but when it was ascertained that the wrong piece of land had been conveyed the trade between her and Gray was not consummated, and it was agreed that he should hold the McKew laud in her behalf. He did not convey to her the land that he had agreed to: convey as the consideration for her land. The land in controversy, the “old Dreyer home,” was levied on. and sold as the property of O. J. Gray, and was bought by L. Sumrall and W. G. Knacker. Fred Roberts secured a deed to the land from Sumrall and Knacker while the suit was pending. Roberts and wife aft-erwards executed a deed of trust on the land to secure a debt due to H. N. Stamper and Hart Mussey, Sr.; T. H. Clark being tbe trustee.

Gray never had a deed to the land in controversy, and intending purchasers could not have been innocent purchasers, because the records disclosed to them that the land had never been sold to Gray. It may be, as stated, tbat the deed from Mrs. Dreyer to Gray conveyed her right, title and interest to him, but tbat is a different tract of land from tbe one sued for by Mrs. Dreyer. That deed certainly did not convey land not described therein. The land in controversy consisted of three parcels, known as tbe “old Dreyer homestead” or the “old Dreyer home place.” The first parcel was conveyed to PI. L. Dreyer on May 4, 1869, the second on January 26, 1874, and the third on January 18, 1878. He was married, when, he bought the land, to Wilhelmina Dreyer, and they lived on the land for over ten years, using it as a home. The three tracts contained four acres. The five acres of land, a deed to which was held by O. J. Gray, was sold by J. A. Vernon in 1854 to Robert Adams, was sold by the sheriff, for taxes owed by Adams, to Joseph McKew, and on'December IS, 1878, Joseph McKew sold the land to PI. L. Dreyer. The deed given by Mrs. Dreyer to Gray recited tbe fact that tbe land was sold for taxes to McKew by tbe sheriff and was sold by McKew to I-I. L. Dreyer, and tbat it was known as the “old M. M. Dreyer place.” The land in controversy was never so known. The deed also recited that the land had been conveyed on-a certain date by H. L. Dreyer to Wilhelmina Dreyer. The terms of the deed put every one upon notice that the land sold to Gray was not the “old Dreyer homestead.” The description of the land by giving name “old M. M. Dreyer place” could not lead any one to believe tbat tbe “old Dreyer homestead” was meant, but, if it did, beiug clearly erroneous, and clearly shown so by tbe other description, it could not control. Devlin, Real Estate, §§ 1038-1040. There was in existence no land known as the “old M. M. Dreyer place.” The testimony amply sustained this fact.

We are of the opinion that the testimony of Gray in explanation of the deed was admissible, but if it were not it could not have injured plaintiffs in error, because the deed did not -purport to convey the land in controversy. What the secret intentions of Mrs. Dreyer and Gray were would be of no importance, because tbe put chasers of the land at the constable’s sale were not influ-, enced by those intentions, for the reason tbat they were not acquainted with such intentions. They acted on the deed which did not convey the land in controversy to Gray and the constable did not levy upon and sell the land held by Gray, but another and different tract. The first, second, third, and fourth assignments of error are overruled.

It would not matter what Mrs. Dreyer intended to do; she did not convey the land in controversy to Gray, and the deed she executed could not have possibly led purchasers to believe that she intended to convey land other than that described in the deed. In fact it appeared that the parties to the deed did not claim that it conveyed the land sued for, but, on the other hand, acted upon the conclusion that it did not.

The land was specifically described by giving the chain of title, reference to deeds with dates and pages of the records of deeds on which they were recorded, and the general description could not control that description. Cullers v. Platt, 81 Tex. 258, 10 S. W. 1003. The description in the deed could not possibly have contained the land in controversy, and the words “old M. M. Dreyer place” could not control the particular description. Any one reading the deed would know that the deeds referred to could not and did not describe the land sued for, but a different tract of land, and the general description should not have deceived any one. Nelson v. Butler, 190 S. W. 811.

The doctrine of estoppel does not apply to Mrs. Dreyer in this case. Her deed to Gray was not calculated to mislead any one. No one was deceived by the deed, but it was plain and clear. Of course, the actions, admissions, or statements of Ilenry Dreyer, her son, made while the suit was ponding, could not be used against her if they had been pertinent or important. Roberts purchased pendente lite, and could not become an innocent purchaser by reason of what some one may have told him as to the intentions of the plaintiff in the suit.

There is no merit in any of the assignments of error, and the judgment is affirmed.
      <S=»For other oases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


author: HIGGINS, J. HIGGINS, J.

text:
    SUTHERLAND v. FRIEDENBLOOM.
    (No. 788.)
    (Court of Civil Appeals of Texas. El Paso.
    Jan. 31, 1918.
    On Rehearing, Feb. 22, 1918.)
    1.Appeal and Error @=>1194(2) — Remand— Effect of Decision — Dictum.
    When an appellate court reverses the judgment of the court below and remands the cause for further proceedings, stating in its opinion the rules and principles of law which are to be applied to the questions likely to arise upon new trial, those statements are not to be regarded as dictum, although additional to the determination ; hence in a suit to compel an accounting of partnership affairs and a partition of assets, a determination by the Court of Civil Appeals, on appeal from a judgment sustaining defendant’s plea of res judicata, that the fact plaintiff was insolvent when he entered the firm and contributed to its assets, and intended, by having' the business conducted in the name of his co-partner, to hinder, delay, and defraud his creditors, would not prevent an accounting, cannot he treated as dictum; for a determination of that question, which was raised by the parties, was an essential to any recovery by plaintiff.
    2. Appeal and Error @=>1097(1) — Subsequent Appeal — Effect of Decision.
    Defendant, on a later appeal, cannot urge that a question which he presented for determination on the first appeal was not before the court.
    3. Appeal and Error @=31097(1) — Subsequent Appeal — Law of Case.
    A former decision of the Court of Civil Appeals in the same case constitutes no bar to a further consideration of the same question upon a subsequent appeal.
    4. Appeal and Error @=>1097(5) — Precedence-Matters Decided.
    In a suit for an accounting and partition of partnership assets, defendant’s plea of res judicata was sustained. On appeal the judgment was reversed, and the Court of Civil Appeals, the matter having boon raised as a ground for affirmance, determined that the fact that plaintiff, when he entered the partnership and contributed to its assets, was insolvent, and had the business conducted under the name of his copartner for the purpose of hindering, delaying, and defrauding his creditors, was no bar to an accounting. The Supreme Court denied an application for writ of error, although that determination was pointed out as error. Held, that the denial of the writ of error must be treated as an affirmance by the Supreme Court of the judgment of the Court of Civil Appeals, and hence that matter is not open to review on appeal from a subsequent judgment.
    Appeal from District Court, El Paso County; P. jEt. Price, Judge.
    Action by J. A. Friedenbloom against J. D. McAfee, in which S. H. Sutherland, executor, was substituted as defendant, the original defendant having died. From a judgment for plaintiff, defendant appeals.
    Affirmed.
    S. P. -Weisiger, T. A. Falvey, and Bates McFarland, all of EÍ Paso, for appellant. F. G. Morris and Geo. E. Wallace, both of El Paso, for appellee.
   HIGGINS, J.

Appellee, Friedenbloom, and J. L. McAfee entered into an oral agreement of partnership for the purpose of buying and selling real estate, building houses, and renting same. The partnership was formed about June, 1899, and, unless sooner dissolved by mutual consent, was to continue for a period of not exceeding 10 to 12 years. Each of the partners' contributed originally $1,500 in cash to the enterprise. Subsequently Friedenbloom contributed to the partnership funds the additional sum of $15,000 out of his individual funds and estate. The business was conducted in the name of McAfee, and the title to all property acquired was taken and held in his name. The contributed capital and profits from time to time were reinvested, and in course of time a large amount of real and personal property was acquired belonging to the partnership. At the time the partnership was formed Fried-enbloom was insolvent, and there is evidence to show that his interest in placing the $1,500 cash originally contributed in the name of McAfee, and in. Raving the partnership conducted in McAfee’s name, and the title to the partnership property taken in his name, was to delay, hinder, and defraud his creditors. Subsequent to the expiration of the partnership agreement McAfee repudiated the partnership, and Eriedenbloom sued to compel an accounting of the partnership affairs and partition of its assets. The original suit was dismissed upon a plea in abatement. The present suit was then filed, and in bar thereof defendant pleaded the judgment rendered upon the plea in abatement as res judicata; a general denial; a special plea denying under oath that he had ever entered into a partnership with plaintiff or that plaintiff had ever contributed any sum to any such enterprise; a further plea that if such partnership was entered into, and any sum contributed thereto by plaintiff, which was denied, that at the time plaintiff was insolvent, and the same was done by plaintiff with the intent and for the purpose of placing his property beyond the reach of his creditors, and to hinder, delay, and defraud them. Upon trial the plea of res judicata was sustained, and upon appeal the judgment rendered was reversed and the cause remanded, this court holding that such plea was not well taken. Friedenbloom v. McAfee, 167 S. W. 28. Prior to retrial Mc-Afee died, and appellant Sutherland was appointed executor of his estate and guardian of the estate of Lucreüa McAfee, the heir at law and sole devisee under the will of Mc-Afee. Sutherland, in his representative capacity, became party to the suit. The case was then tried and submitted to a jury upon special issues. All issues submitted were answered in Eriedenbloom’s favor. The court thereupon rendered judgment in his favor, and Sutherland prosecutes this appeal therefrom.

Error is assigned to the refusal of a peremptory instruction in defendant’s favor, requested upon the theory that if a partnership was entered into by the parties, and money contributed thereto as claimed by Priedenbloom, that Eriedenbloom was then insolvent, and the same was done for the purpose and with the intention of hindering, delaying, and defrauding his creditors, and the contributing of said money and formation of the partnership did in fact hinder, delay, and defraud his creditors, for which reason the contract of partnership was contrary to public policy, illegal, and unenforceable.

This assignment presents the question underlying all of the assignments, and the one upon which the rights of the parties depend. The question may be succinctly stated as follows: Conceding that Friedenbloom was insolvent at the date the partnership was formed, and that his purpose and intent in forming the same, contributing $1,500 in cash to its assets, and having the partnership conducted in the name of McAfee, was to hinder, delay, and defraud his creditors, and that it had that effect, do such facts preclude him from demanding an accounting of the partnership affairs and recovery of his share of its assets? Upon the former appeal this question was answered in Eried-enbloom’s favor, in an opinion rendered by Justice McKenzie. But appellant insists that the only question then before this court was the correctness of the trial court’s action in sustaining the plea of res judicata, and therefore the expression of its opinion upon a question not presented was dictum. It is true that the question of res judicata was the only one upon the former appeal this court must necessarily have passed upon, but, when this was answered in Friedenblooin’s favor, it became apparent upon the face of the record that the rights of the parties depended upon the question which is now presented. And McAfee upon that appeal, in support of an affirmance, was urging the illegality of the transaction upon the same grounds here presented, and contending that by reason of such illegality Eriedenbloom could not recover. In this state of the record it was deemed proper to consider the question, and indicate to the trial court the view of this court, so that the former could be governed thereby upon retrial, and prevent the possibility of the case being tried upon a theory which this court could not approve. It has been a constant custom of our courts to pursue this practice. The Reports are full of instances where cases have been reversed upon issues collateral to the controlling one, and, for the guidance of the lower court upon retrial, the opinion of the appellate court has been expressed upon such controlling question, though such holding was not necessary to the disposition of the appeal. If, in such cases, such holdings are to be regarded as mere dictum, then our courts from their very inception have beeti pursuing a very improper practice. We cannot give our assent to the proposition that such holdings are mere dictum. They serve a most useful purpose by preventing unnecessary appeals to invoke a ruling upon controlling question, and, when made in a proper case, they should be regarded as authoritative. In Blaekfs Law of Judicial Precedents, p. 180, § 58, it is said:

“When an appellate court reverses the judgment of the court below and remands the case for further proceedings, and in its opinion states the rules and principles of law which are to be applied to the questions likely to arise upon the new trial, these statements are not to be regarded as dicta, although they are additional to the determination of the judgment.”

See, also, Adams v. Fisher, 75 Tex. 657, 6 S. W. 772; also Hall v. White, 94 Tex. 452, 61 S. W. 385; Chancey v. State, 84 Tex. 529, 19 S. W. 706.

Upon the former appeal McAfee urged the alleged illegality of the transaction in support of the affirmance of the judgment, and, the question having been by him presented for consideration, he cannot now be permitted to say that this court had no right to consider it. His action presented the question in such manner as to authorize this court to authoritatively pass upon it.

But appellant insists, further, that if the former holding was not dictum, it was nevertheless wrong and should be now corrected. It is true that a former decision of this court in the same case constitutes no bar to a further consideration of the same question upon a subsequent appeal, but this court has no such discretion with respect to rulings of the Supreme Court. Upon the former appeal McAfee applied for a writ of error to the Supreme Court to reverse the judgment of this court. An inspection of this application discloses that the first two assignments therein attacked the holding of this court upon the question now presented. The application was refused. Appellant insists that such action does not foreclose the question, because it was only necessary for the Supreme Court to sustain the holding of this court upon the plea of res judicata in order to warrant the refusal of the writ. The Supreme Court had this court’s opinion before it in passing upon the application. It was fully advised of the ruling of this court upon the question now presented, and that such ruling, if erroneous, would necessarily inject an error into the retrial. McAfee, in his application, vigorously attacked the ruling, and made it the main basis of his application for the writ. With this state of facts before it, it cannot be assumed that the Supreme Court failed to approve the ruling. It would hardly have permitted such ruling to pass unnoticed; for, if erroneous, it must necessarily produce error which eventually that court would be called upon to correct.. The former ruling is therefore regarded as having received the approval of the Supreme Court.

However, in view of the earnest insistence that the former ruling was wrong, the question has been again examined and the conclusion reached that it was correct. It is deemed unnecessary to further discuss the same and present additional reasons which occur to us in support thereof. But these additional authorities are cited: Harcrow v. Gardiner, 69 Ark. 6, 58 S. W. 553, 64 S. W. 881; The Laws of England, by Earl of Halsbury, vol. 22, p. 18, § 25; Sharp v. Taylor, 22 Eng. Ch. 801.

All of the cases cited by appellant are upon a different state of facts and are not regarded as in point. In so far as they are partnership cases they treat only of contracts forming partnerships to do something in violation of law or public policy, and in no one of them was there a partnership contract to carry on a lawful business in a lawful manner wherein one of the partners had the motive incidentally of concealing his property from his creditors. Others are cases holding the well-established doctrine that one who transfers property for the purpose of defrauding his creditors, but to be recon-veyed to him, cannot recover the property; others that he cannot recover on a note executed to him for property transferred in fraud of creditors. The remaining cases dealt with sundry unlawful contracts, other than partnership contracts or contracts made to defraud creditors, and have no bearing on the question of partnership law involved in this case. No case is cited wherein the right of a silent partner to an accounting and recovery of his share of the partnership assets in a partnership formed to conduct a lawful business in a lawful way is denied, merely because such partners’ motive in becoming a silent rather than an open partner was to protect his property from his creditors. Such motive was an incident merely to the partnership contract, and does not affect his status and rights as against his copartner. All of the authorities called to our attention upon such a state of facts support the ruling of this court.

The second and third assignments are without merit. These complain of the failure to submit certain issues. From what has been said it follows that, if such issues had been submitted and answered as contended by appellant, it would not have affected Friedenbloom’s right to the relief which he sought and was granted by the judgment rendered.

Affirmed.

WALTHALL, J., did not sit, being absent on committee of Judges assisting the Supreme Court.

On Rehearing.

HIGGINS, J.

In the opinion it was stated:

“Subsequently Friedenbloom contributed to the partnership funds the additional sum of $15,000 out of his individual funds and estate.”

This statement is incorrect. It was Mc-Afee instead of Friedenbloom who made the subsequent contribution of $15,000. With this correction, the motion for rehearing is overruled.

WALTHALL, J., did not sit, being absent on committee of Judges assisting the Supreme Court.
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text:
    DARRAH v. LION BONDING & SURETY CO.
    (No. 8768.)
    (Court of Civil Appeals of Texas. Ft. Worth.
    Jan. 19, 1918.)
    1. PBINCIPAL AND SUEETY @=>136 — CONTRACTS —Extent of Liability — Remedy.
    Where three different persons, injured in the same accident, sued a jitney bus owner and his surety for personal injuries, securing judgments, which, when paid, exhausted the amount of the surety bond, the benefit of the policy was for fourth claimant as well, and he could have intervened in each suit to secure his share.
    2. Principal and Surety <§=>136 — Pebsons Entitled to Sue.
    Where several persons were injured in an accident due to the negligence of a jitney driver, whose surety each notified, and the judgments of three exhausted the amount of the bond, the fourth was still entitled to hold the surety for his pro rata, unless he was guilty of laches in suing surety therefor.
    3. Principal and Surety <§=^149 — Actions— Reliance of Claimant on Being Inter-pleaded by Surety.
    While a surety could have interpleaded a fourth claimant on the ground of occupying the position of a stakeholder for all injured, when it became apparent that the claims of the other three might exhaust the bond, yet such claimant, with knowledge of other claims, had no right to assume such would be done, and delay enforcement of his claim until surety was bound by other judgments exhausting the bond.
    4. Principal and Surety <§=>125 — Equitable Estoppel — Failure to Assert Claim.
    Where a claimant against the surety of a jitney bus driver knew others injured in the same accident were asserting their claims, and failed to act diligently, leaving the surety to act in the belief that he had abandoned his claim, and pay other claims, exhausting the bond, he was estonped from holding the surety.
    5. Principal and Surety <@=>156 — Pleading —Claimants to Fund.
    A plea by bonding company that claimant had waived his rights to share in the indemnity paid to other claimants by permitting their judgments to be collected for the maximum amount of the insurance is sufficient to include negligence of claimant in delaying his suit until after such judgments.
    6. Principal and Surety <@=>162(2) — Questions for Jury — Claimant’s Right to Fund.
    Evidence, under a plea by surety that claimant had waived his right to share in indemnity paid to ’other litigants, examined, and held not such as to warrant the court in refusing to submit the same to the jury.
    Appeal from District Court, Tarrant County; Ben M. Terrell, Judge.
    ■ Action by H. W. Darrah against S. D. Haire and the- Lion Bonding & Surety Company. From a judgment in favor of the Lion Bonding & Surety Company, plaintiff appeals.
    Reversed and remanded in part.
    Samuels & Brown, of Ft. Worth, for appellant. H. T. Cooper, of Et. Worth, for appellee.
   DUNKLIN, J.

A collision occurred on one of the public streets in the city of Ft. Worth between two jitney motor busses, one of which was owned and operated by H. W. Darrah and the other by.S. D. Haire. Dar-rah was driving his machine with several passengers and was headed north. He was near the east side of the street when Haire approached from the rear at a rapid rate of speed, and in attempting- to pass Darrah’s vehicle, between it and the east side of the street, his machine became entangled with Darrah’s machine, and, being a heavier machine, shoved Darrah’s machine upon or so near the street car track running along the center of the street that it collided with ¿ passing street car, and as a result of the impact Darrah’s machine was practically demolished and three of his passengers severely injured, one of them being killed.

As required by an ordinance of the city, and as a condition precedent to his' right to operate his machine in the city, S. D. Haire executed a bond, with the Lion Bonding & Surety Company as surety thereon, in the principal sum of $2,500, payable to E. T. Tyra, mayor of the city of Et. Worth, and his successors in office:

“Conditioned that the aforesaid S. D. Haire, the principal herein, shall well and -truly pay ali legal damages for injury to property of, and all legal damages for injuries sustained by, any person, including injuries resulting in death, on account of the negligence or willful act of the aforesaid S. D. Haire, or of any agent, representative, or servant of said S. D. Haire, in the operation of said motor bus, accruing, occurring, or occasioned during the period for which the aforesaid license may be (or has been) issued. This bond is executed in compliance with and under Ordinance No. 470 of the city of Ft. Worth, passed June 1, 1915, is and shall be a continuing obligation, and successive recoveries may be had hereon until the entire amount hereof shall have been exhausted, and it is expressly stipulated that suit may be brought and recovery had hereon by any person damaged, in his own name, against the principal and sureties hereon and hereof in the same action.”

The accident happened on July 27, 1915. On September 8, 1915, three suits were filed against Haire and the Lion Bonding & Surety Company, plaintiff in each case claiming a judgment against Haire for negligence in operating his machine in such a manner as to cause a collision which resulted in personal injuries to each of two of the plaintiffs and in the death of the husband of the plaintiff in another suit, and in each suit judgment was also sought against the Lion Bonding & Surety Company upon the bond it had' signed as surety for Haire.

An answer was filed by the Surety Company in each of those suits, and evidence was heard on behalf of the plaintiff, but none was offered in rebuttal of that proof, and the cases Were all tried by the court without a jury on the same day they were filed. In one of the suits judgment was rendered for plaintiff for $100, in another for the sum of $300, and in the third for the sum of $2,100, making an aggregate of $2,500, which was the full amount of the penalty named in the bond.

Soon after the accident occurred the agent of the Surety Company, whose office was in the city of Ft. Worth, was notified of the claims of different persons, including the plaintiffs in the other suits and also H. W. Darrah, plaintiff in this suit The attorney for the Surety Company began negotiations with the attorney representing the three plaintiffs who instituted the suits mentioned above relative to the claims of the respective plaintiffs for damages, and after a thorough investigation of the facts, continuing for one month and a half, the attorney for the Surety Company reached the conclusion, that under the terms of the bond there was no escape from liability on the part of his company, but the judgments rendered were not agreed judgments, but were upon proof heard, as stated above. Two or three days after the rendition of the judgments they were paid off by the Surety Company. No judgment was taken against Haire because of his insolvency.

Prior to the institution of those suits, Dar-rah employed attorneys to institute a suit for him to recover damages for personal injuries to himself and also for the loss of his machine, but no suit was instituted for him prior to the rendition of the judgments above mentioned. After the rendition of those judgments and before they were paid, Darrah’s counsel instituted this suit, and notified the attorney of the Surety Company thereof.

This suit was instituted by Darrah against Haire and the Surety Company to recover damages for personal injuries to himself and for injury to his motor bus as a result of the accident. Both Haire and the Surety Company filed answers. In the answer of the Surety Company the rendition of the judgments in the three other suits and the payment thereof by the Surety Company was specially pleaded as a full satisfaction and discharge of any and all liabilities under and by virtue of the surety bond executed by the company. This plea by the Surety Company was sustained by the trial court, and judgment was rendered in favor of that defendant, from which judgment the plaintiff has prosecuted this appeal. Judgment was also rendered in plaintiff’s favor against Haire for the sum of $750, from which no appeal was taken.

In the present suit Darrah sought a recovery against the bonding company for a pro rata of the $2,500, the amount of the insurance for which the policy was issued, and all of which was paid out on the three judgments mentioned above; the claim being , predicated upon the theory that the insurance was for the benefit of all the persons injured in the same accident, and that, as the amount was insufficient to satisfy all those claims, it should be prorated among them in proportion to the amount of damages sustained by each person having a cause of action therefor.

Of course, the insurance was for the benefit of Darrah as well as the other claimants, and, if he had intervened in the three suits, he would have been entitled to share in the amount of insurance, if the insurance company was liable to any of them; and that such liability existed is conclusively established by the judgments in the three former suits against the company and the judgment in the present suit against Haire, the validity of none of which was questioned.

We have been cited to no decision involving the question now under discussion and have found none; but upon general equity principles we are of the opinion that Darrah did not lose his right to participate in the amount of such insurance unless he was guilty of laches in failing to institute his suit against the bonding company prior to the rendition of the three judgments mentioned. No doubt the bonding company could have interpleaded him in those suits upon the theory that it occupied the position of a stakeholder for the benefit of all persons injured in the accident; but, in the absence of any collusion between it and the other claimants for the purpose of precluding Darrah from a share in the indemnity, we do not think it can be said that Darrah, with full knowledge of the claims of other parties injured, had the right to rely upon the assumption that such action would be taken by the bonding company, and to negligently delay the institution of his suit against the company until after it had been cast in judgments in favor of the other claimants for the full amount of the bond. Under the surrounding circumstances, which were within his knowledge, he owed the duty to prosecute his claim with'reasonable diligence, to the end that the bonding company might not be required to pay more than the maximum indemnity by reason of his delay in suing.

With knowledge that the other persons injured were asserting their claims, he owed the duty to exercise ordinary diligence to press his own claim, and thereby avoid misleading the bonding company into the belief that he had abandoned it, and, acting upon that belief, to pay the full amount of insurance to the other claimants. We see no escape from the conclusion that the principles of estoppel would apply in favor of the company under the circumstances instanced.

The bonding company specially pleaded that Darrah waived his right to share in the amount of indemnity paid to the other litigants by permitting judgments to be rendered in their favor and to be collected by them for the maximum amount of such insurance. In the absence of an exception thereto, that plea was broad enough in its terms to include the issue of negligence on the part of Darrah in delaying the institution of his suit until after the rendition of the judgments in the other suits, -which judgments were final and valid and binding upon the company.

And while there was evidence to support the plea, it was not of such conclusive force as to sustain the plea as a matter of law, and to warrant the action of the court in so holding, and in refusing to submit the plea to the jury for their determination. And for that error the judgment denying plaintiff any recovery against the bonding company must he reversed, and the cause remanded for another trial of the issues as between those parties, but the judgment in favor of plaintiff against Haire will not be disturbed.

Reversed and remanded in part and undisturbed in part.

CONNER, O. J., not. sitting. Serving on Writ of Error Committee at Austin.
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author: BOYCE, J. BOYCE, J.

text:
    LONE STAR LIFE INS. CO. v. PIERCE et ux.
    (No. 1258.)
    (Court of Civil Appeals of Texas. Amarillo.
    Jan. 23, 1918.
    On Motion for Rehearing, Feb. 20, 1918.)
    1. CORPORATIONS <©=5380(12) — STOCK SUBSCRIPTIONS — VALIDITY—PAYMENT by Note.
    Whether plaintiffs’ subscription to corporation stock, and a loan from the corporation to them secured by mortgage on land enabling purchase of the stock, were valid and bona fide, held, for the jury.
    2. Corporations <@=>80(2) — Stock Subscriptions — Fraud oe Agent — Ratification.
    Where an unauthorized agent, by fraud and false representations, secured a subscription to stock, and the directors, knowing he had assumed to act, and without disclosing true facts to the subscriber, sent notice requiring payment for the stock, and accepted a note therefor, the subscriber could have his contract and note canceled for the fraud and misrepresentations of the agent.
    3. Corporations <@=38o(12'i — Acts oe Agent-Ratification — Questions for Jury.
    Whether officers of corporation ratified a subscription to stock obtained by an unauthorized agent, held for the jury.
    4. Corporations <@=380(12) — Stock Subscriptions — Fraud—Estoppel.
    Whether a subscriber to corporation stock was estopped by delay to set up fraud in securing his subscription, held, for the jury.
    5. Limitation of actions <@==3199 (2) — Questions for Jury.
    Whether a stock subscription contract alleged to have been secured by fraud was barred by the statute of limitations applying to contracts, held for the jury.
    On Motion for Rehearing.
    6. Corporations <@==3100 — Contracts—Ratification — Void Contract.
    If a subscriber to corporation stock gave his note and deed of trust, which the corporation accepted, in violation of statute and Constitution, they were void, and there could be no ratification, and he could have defended a suit at any time brought to collect on such instruments.
    7. Limitation of Actions <@=337(4) — Cancellation of Instruments.
    Where a subscriber to corporation stock set up fraud inducing his subscription, his action would be barred by the statutes applicable to rescission and cancellation, and not those applicable to suits to remove clouds from titles.
    Appeal from District Court, Potter County; Hugh L. Umphres, Judge.
    Suit by L. A. Pierce and wife against the Lone Star Life Insurance Company. Judgment upon peremptory instruction for plaintiffs, and defendant appeals.
    Reversed and remanded. On motion for rehearing. Motion overruled.
    Coke & Coke, of Dallas, and Madden, Tru-love, Ryburn & Pipkin, of Amarillo, for appellant. Reeder & Reeder and J. B. Dooley, all of Amarillo, for appellees.
   BOYCE, J.

This suit was brought by L. A. Pierce and wife against the Lone Star Life Insurance Company to cancel a promissory note for the sum of $3,000, executed by the said L. A. Pierce, payable to said insurance company, and to cancel a deed of trust executed by the said Pierce and his wife on certain land, given to secure the payment of said note. The plaintiffs alleged that said note was given in payment of the balance due on a contract of subscription for stock in the insurance company; that the said subscription contract was procured by certain false and fraudulent representations as to material matters hereinafter more fully stated, made by agents of the defendant insurance company; and also that said note is illegal and void, because given in consideration of the issuance and delivery to Pierce of 20 shares, of the par value of $100, of the capital stock of said corporation, in violation of the Constitution and statutes of this state prohibiting the issuance of stock to a corporation except for money paid, property received, etc. Appellant defended on the ground, first, that the note and deed of trust evidenced an indebtedness to appellant as a result of a loan of said amount of money made by appellant company to Pierce; second, that plaintiff could not maintain his action against defendant for rescission of said contract on account of said fraudulent representations, because (a) said fraudulent representations, if made, were not made by any one authorized to represent the defendant, and were not known to it nor ratified by it when it accepted said subscription contract; (b) that after plaintiff learned of the said alleged fraudulent representations he failed to act with reasonable promptness to secure a rescission of such contract, but ratified and confirmed the - same by his conduct and is estopped; (c) that plaintiff’s right of action, if any he had, to rescind said contract and cancel said note, was barred by the two and four years’ statutes of limitation, prior to the filing of this suit, on August 10, 1915.

The evidence shows that the charter of the appellant insurance company subscribed by E. H. R. Green, C. G. Slaughter, G. A. Keat-ing, I-I. L. Edwards, Henry Hamilton, E. M. Reardon, M. N. Baker, E. J. Cameron, and W. B. Worsham, providing for an authorized capital of $1,000,000, approved by the Attorney General, was filed in the office of the Commissioner of Banking and Insurance on May 27, 1909. The said incorporators, thereafter having become convinced that sufficient capital could not be procured to justify the undertaking, decided to abandon the enterprise, but, on solicitation of L. H. Morgan, who expressed a desire of himself undertaking to secure the subscription of the necessary capital and organization of said company, on June 7, 1909, executed and delivered to said L. H. Morgan a written instrument, by the terms of which they assigned to the said L. H. Morgan all their interest in and to said company and its charter, and their right to receive stock in said corporation, on condition that on or about June 13,1909, such legal proceedings be taken as would legally release said subscribers to said charter from any liability in respect thereto and on their subscriptions for stock in said company. On June 11, 1909, L. H. Morgan, together with W. O. Swain, J. M. Dawson, Frank B. Clarke, A. J. Anderson, and C. R. Hannah, met as purported stockholders of said company, and at this meeting the following proceedings were had: A resolution was adopted to the effect that the subscribers to said articles of incorporation be released from their subscription contract and all prior-subscriptions for stock be rejected and canceled. All of said parties, except the said L. H. Morgan, were elected directors. It was resolved that the stock of the company should be sold at such price as to produce a surplus equal to one-half of the capital stock, and the president was authorized to make a contract with proper persons to procure subscriptions to such stock on such terms. Thereafter, on June 15, 1909, W. C. Swain, as president, and J. M. Dawson, as secretary, of the said company, made a written contract with L. H. Morgan & Co., by which said Morgan & Co. were employed sole agents to solicit and obtain subscriptions to the capital stock of said company on such terms as that the company should receive net for the stock $150 for a share of the par value of $100, and that any excess over such amount received for such stock should be used as a fund to pay organization expenses, including compensation to the said L. H. Morgan & Co., their agents and assigns, for their services and expenses, said fiscal agents being authorized to retain any payments made for stock in excess of such amount. As the result of solicitation on the part of one Knight, who Pierce understood to be some sort of a local agent of the insurance company, and J. M. Dawson, who Pierce understood to be a 'promoter, plaintiff, on the 6th day of November, 1909, executed and delivered to said parties the following subscription contract:

“Whereas, L. H. Morgan & Co., of Dallas, Texas, are promoting the organization of a life insurance company, which has been chartered under the laws of the state of Texas, under the name of the Lone Star Life Insurance Company, with an authorized capital stock of one million dollars and a paid-up capital of at least one hundred thousand dollars, and a net surplus of at least fifty thousand dollars, paid up and free from promotion and organization expenses; and whereas, by their acceptance of this subscription said L. H. Morgan & Co. agree to endeavor with all reasonable diligence to accomplish, on or before December 31, 1910, the organization of said corporation with capital stock and surplus fully paid as aforesaid, they defraying all expenses of promotion and incorporation: Now, therefore, I do hereby subscribe for 200 one-tenth shares, of the par value of ten dollars each, of the capital stock of said Lone Star Life Insurance Company; and I do hereby agree with the said company, and with the said L. H. Morgan & Co., to pay therefor the sum of $4,000, as follows: The sum of $3,000 I agree to pay, in money or in securities satisfactory to the Insurance Department of Texas, to said Lone Star Life Insurance Company at any time after January 1, 1910, immediately upon receipt of notice from said L. H. Morgan & Co., that its capital stock has been subscribed in good faith and at rates netting the company at least one houndred thousand dollars of capital, and at least fifty thousand dollars of surplus in the aggregate when paid. The remaining sum of $1,000 I agree to pay, and do pay concurrently with this subscription, to the said L. H. Morgan & Co., in consideration of their agreement hereinbefore recited, and in lieu of any further or other contribution to the expense of promoting and incorporating said company. No conditions, representations, or agreements other than those printed herein shall be binding on L. H. Morgan & Co. or the Lone Star Life Insurance Company.”

As a matter of fact, said Dawson and Knight were employed by Morgan & Co. to solicit subscriptions for stock. The evidence would justify the finding that either one or both of these parties, in order to induce the subscription, represented to Pierce that the incorporators hereinbefore named, who were all well known successful business men, some of them at least being known to plaintiff as men of large wealth, had organized said company with a capital stock of $1,000,000, and had themselves subscribed for one-half of the capital stock at $200 per share, and paid the money into the company to enable them to control its affairs; that if plaintiff would take 20 shares, at $200 per share, he could pay $1,000 in cash at the time if the insurance company would take his notes with a lien on land for the other $3,000, plaintiff understanding that the representation with reference to the execution of his note was covered by the provisions of the subscription contract, providing for payment in securities, etc. The original incorporators had nothing to do with the affairs of said corporation after the execution of the assignment in June, 1909, until some time in December, 1909, or January, 1910, when they heard something of the proceedings of Morgan and his associates in their efforts to organize said corporation, and on investigation they were furnished with a copy of the minutes of the proceedings had at the attempted organization hereinbefore referred to. They learned also of the contract executed with Morgan, whereby he was employed to secure subscriptions, and that Morgan had been using their names and selling the stock at a high promotion fee. They decided to put a stop to this, and to themselves subscribe the amount necessary to organize and start the company on a paid-up capital of $100,000. At a meeting of said incorpora-tors, ’ and perhaps others, held in Dallas on March 5,1910, it not appearing, however, that plaintiff had any notice of such meeting, proceedings were taken to organize the said company. The subscription contracts procured by Morgan, including the plaintiff’s were accepted, only certain of such subscription contracts having conditions attached being rejected; directors were elected, which included all of the incorporators before named; by-laws were adopted, etc. The record does not disclose how much of the stock said incorporators took under this arrangement, nor whether they paid the same promotion fees as were paid by those subscribing for stock through L. H. Morgan & Co. Shortly after this plaintiff was notified that the organization of the company had been perfected, and he was requested to pay the balance due on his subscription' to the capital stock of the company, and thereafter continuous notices were mailed him, asking him to remit, and he was finally notified that unless payment was made by a stated date his stock and all payments made thereon would be forfeited. During the course of this correspondence Pierce suggested that the company make him a loan of some $7,000 or $8,000 on two sections of land in Randall county. The company expressed a willingness to lend the amount due on the subscription, provided the title was good and the value more than double such amount, which would be determined by its inspector. Considerable correspondence ensued, the effect of which was that Pierce was expressing a desire to secure a loan in excess of the amount of the subscription, and the company apparently expressing a willingness to lend him a larger amount at two different rates — the $3,000 due on the subscription at 6 per cent., and the excess at 8 per cent. Pierce finally sent to the company an abstract of title to the section of land described in the deed of trust sought to be canceled, with a request that a loan of $4,000 be made him thereon. The executive committee approved a loan on the section for $3,000, and, without referring to Pierce’s proposition for a $4,000 loan, prepared and sent to Pierce for signature the note and deed of trust in question. Upon the return of this note and deed of trust the company, on August 10, 1910, acknowledged receipt thereof, concluding the letter, “Therefore we beg to hand you herewith stock certificate No. 79, for twenty full shares of the capital stock of this company, issued to you and fully paid for.” The evidence on the question of ratification, estoppel, and limitations will be- referred to later.

The trial court instructed the jury peremptorily to return a verdict for the plaintiff on the express ground that the testimony was “uncontroverted that the defendant, Lone Star Life Insurance Company, issued a certain stock certificate for twenty shares of the capital stock of said company and delivered same to the plaintiff D. A. Pierce, and received in exchange therefor the note and deed of trust offered in evidence before you. Wherefore said certificate of stock is void, and there was no valid consideration for said note and deed of trust.” The first question for our decision is whether the peremptory instruction can be sustained on this ground.

It must be remembered in the consideration of the case that the original articles of incorporation were filed prior to the taking-effect of the act of March 22, 1909 (Acts 31st Leg. c. 108), and the incorporators were proceeding under the Acts of the 24th Legislature, c. 73 (Gammell’s Laws, vol. 10, pp. 827-882). This act provides for incorporation in a way different in many respects from the present law, and from the general method of incorporation of other classes of corporations. It provides that no such company shall do business with a less capital stock paid in than $100,000; that the incorpora-tors of a proposed incorporation to be created under such act should sign and acknowledge a charter, which charter, after approval by the Attorney General, should be filed by the Insurance Commissioner. Sections 8, 9, 10, and a portion of section 12, of said act are as follows:

“Sec. 8. The Commissioner shall, upon receipt of such charter, approved by the Attorney General, record the said charter and certificate of the Attorney General, in a book kept for that purpose, and shall, upon receipt of fee for certified copy of charter, of one dollar, furnish a certified copy of such charter and certificate of Attorney General to the corporators, upon receipt of which they shall be a body politic and corporate, and may proceed to complete organization of the company. The corporators shall have the direction of the affairs and the perfecting the organization of the company until they shall call a special meeting of the stockholders, and until such meeting has been held for the purpose of adopting by-laws, electing directors, officers, and transacting general business.
“Sec. 9. Upon being notified that at least one hundred thousand dollars of the capital stock named in the charter of the company has been paid in, the Commissioner shall make an examination, and if it shall be found that such amount of the paid-in capital stock has been invested in securities authorized by this chapter, he shall so certify. The corporators, or two officers of such company, shall be required to certify under oath to the Commissioner that the money, notes, stocks, bonds, mortgages; deeds of trust or other property exhibited to him are bona fide property of the company, and are worth in cash the amounts which they represent.
“Sec. 10. When the corporators have fully complied with the requirements of this act the Commissioner shall, upon the receipt of the certificate of authority fee of one dollar, furnish the company authority to commence business and issue policies as proposed in its charter.”
“Sec. 12. The paid-in capital stock of a home company shall consist in lawful money or bonds of the United States, or in bonds of this state, or any county or incorporated town or city thereof, or the stock of any national bank, or in first mortgages upon unincumbered real estate in this state, the title to which is valid, and the market value of which is double the amount loaned thereon, exclusive of buildings, unless such buildings are insured in some responsible company, and the policy or policies transferred to the company taking such mortgage. * * *

It will be observed that the law does not require any showing that any of the capital stock of the proposed corporation has been either subscribed or paid at the time of the filing of the charter, though from such time the corporation is a “body politic and corporate.” The incorporators prior to organization, and thereafter the directors elected at such organization, are given the power to act for the corporation in handling its business preliminary to the securing of a permit to transact its principal business— that of writing insurance. Evidently such persons during such time have authority to represent the corporation in securing subscriptions to its capital and making investments thereof. This latter authority would seem to follow necessarily from the provisions of section 9 quoted above. Exline-Reimers Co. v. Lone Star Life Ins. Co., 171 S. W. 1063. Were, it not for the inhibition of the Constitution, it would seem that under such circumstances mortgages such as are provided by section 12 of the act might be received in payment for the capital stock; but the right to do this, we assume, would be precluded by the provisions of the Constitution on the subject' as construed by our courts. It appears from the statement we have made above, however, that the stockholders regularly organized, electing directors and officers in the early part of March, 1910, and that, as stated, such officers would appear to have authority to invest the paid-in capital of the company in such securities' as the law authorizes. If the directors at that time had the power to invest the capital of the company in securities of such character, we see no reason why a valid loan might not be made to the plaintiff, notwithstanding he* was a subscriber for stock, and notwithstanding the fact that he would in this way be enabled to secure the money with which to pay his subscription. Of course, if the intent of the parties was to evade the la\w by hiding the real transaction under such form, it would not be allowed to stand. All of the negotiations with plaintiff for a “loan” were had after the organization meeting in March, 1910. Such negotiations proceeded as if a loan was being negotiated in the regular course. The fact that the stock was issued and sent to plaintiff upon receipt of the note and deed of trust is not conclusive of the character of the transaction, as it might be a bona fide loan and be still handled in this way. The evidence is, we think, of such character that this question was one of fact to be submitted to the jury, and the court was in error in giving the peiv emptory instruction referred to.

The appellant, by various propositions and assignments, asserts that the rights of the company under the subscription contract could not be in any manner affected by the alleged misrepresentations of the said Dawson and Knight in securing said contract, because such parties had no authority to represent the company, and no managing officer of the company had any knowledge of such alleged misrepresentations when said subscription contract was accepted. In the first place, we do not think it conclusively appears that the directors and organizers of the corporation did not have knowledge of such facts as might bind the corporation with notice of the representations that had been made by Morgan & Co., in securing the subscription. While the said original incorpora-tors, who afterwards became directors, testified that they did not know what representations had been made to Pierce, it does appear that they knew that Morgan was using their names in his transactions, and their testimony and actions indicate that they had some reason to believe that the proceedings taken to organize said company were not altogether proper; and it occurs to us that, if they in fact had such knowledge, good faith on their part would require that a full disclosure of all the facts be made to the subscribers procured by Morgan, so that they might be given a real opportunity of deciding whether they cared to abide by their subscription under the circumstances. The appellant here claims that all Morgan’s acts in securing subscriptions were without authority, and that the pretended organization of the company and subscription contract secured by him were void. The original incor-porators, who were afterwards on the board of directors, knew of the facts that would render such transactions void; but the plaintiff was apparently ignorant of such facts, and his subscription contract was accepted by the board of directors, without information to the paintiff as to such matters. But, if there were no facts that would tend to show that such parties had notice that Morgan had been making unwarranted representations in the sale of the stock, we think, subscription contracts secured by him and accepted by the corporation could, nevertheless, be set aside for material misrepresentations made in inducement thereof. This court held, in the case of Commonwealth Bonding & Casualty Co. v. Cator, 175 S. W. 1077, that a subscription contract might not be set aside after its acceptance by the corporation, when procured by fraudulent representations of a promoter which were not known to the managing officers of the. corporation in .accepting the subscription. The authorities on this question are conflicting, and a writ of error has been granted in that case, so that the question there decided may not be said to be settled. But, whatever may be the conclusion in that case, we do not think the decision is controlling here. In that case the representations were made at a time when the corporation had no corporate existence, and no one could legally purport to act for it in such matter. Here the corporation acquired a legal existence upon the . filing of the charter, and had the power, through its incorporators, prior to organization of the stockholders, and it directors thereafter, to appoint agents to solicit subscriptions to its stock. Morgan & Co. were ostensibly acting under authority from the corporation, and while it may be true that the attempted assignment of the incor-porators of their rights to Morgan, and the attempted organization and the contract of the company made thereafter with L. H. Morgan & Co., authorizing said company to solicit subscriptions for stock, may have been void, and the corporation upon its subsequent organization might for this reason have repudiated the subscription contracts thus secured, the corporation in this instance did not repudiate the contract as it did in the Exline-Reimers Case, supra, but, on the contrary, knowing that Morgan & Co. had purported to act under authority from the corporation in securing the subscription contract, proceeded, without informing the subscribers that such party was without authority in such matter, to accept the subscription contract and notify such subscribers to pay up. In the case of American Nat. Bank v. Cruger, 91 Tex. 446, 44 S. W. 278, the question arose as to whether, in a suit by the bank on a note payable to the bank, secured by the efforts of one Hunter and Miss Eottie Cruger, to cover a shortage of one of its employes, the maker of the note could defend on the ground that the note was procured by misrepresentations which were made without the bank’s knowledge, and the court stated the law applicable to this question as follows:

“Contracts made for the benefit of another, but without his privity or direction, may be rejected or affirmed, at his election. But by making the election to affirm it he adopts the agency altogether, as well that which is detrimental as that which is for his benefit. But in seeking to enforce contracts entered into by agents,the principal is subject to have them impeached by any conduct of his agent which would have had that effect if proceeding from himself. Every species of fraud, misrepresentation, or concealment, therefore, in the agent, affects the principal’s right to recover. Under the principle here announced, if Hunter and Miss Lottie Cruger, without authority from the bank, undertook in its behalf to secure the shortage by procuring the note of P. B. Cruger and Miss Fannie Cruger, the acceptance of the note by the bank, with the knowledge that they had thus assumed to act for it, would be a ratification or adoption of their assumed agency, and the bank would be chargeable with the fraudulent representations made by them to Miss Fannie Cruger to the same extent as if they had been, in fact, its, agents at the time of making such representations. This is upon the plain proposition that the subsequent ratification or adoption would relate back, so as to make them agents to the same extent as if they had been previously appointed.”

We think the application of this language to the facts of this case leads to the conclusion that the corporation, when it accepted the subscription contracts procured by Morgan & Co., while purporting to act under authority from the corporation, took them subject to any defenses based on the conduct of the said Morgan & Co. in procuring such contracts.

The evidence shows that in September, 1910, the plaintiff received notice of a resolution of the board of directors calling a special meeting of the stockholders for the purpose of considering the matter of reducing the authorized capital stock of the corporation |from $1,000',000> to $100,000 with a surplus of $50,000, it being stated in said notice that it was thought by the time such meeting was held the said $100,000 capital and surplus would be fully paid in, so that if the reduction of the capital was authorized the company might then secure a permit to proceed to business, and the plaintiff testified that at this time he began to be dissatisfied and suspicious. There is also testimony that some time later he heard rumors to the effect, that the “big men” had not paid in anything on their stock, and had simply allowed their names to be used, etc., though he testifies that he was not fully informed of the transactions with reference to the incorporation of the company until the trial of the case. It is not necessary, we believe, to make a fuller statement of the facts on the issue of ratification, waiver, estoppel and limitations relied upon by appellant in defense of the suit, as we believe the evidence is such that all of these issues become issues of fact for the determination of the jury. Neither do we think it necessary to discuss at length the principles of law applicable to these questions; they are well settled, and full discussion thereof may be found in the following authorities: Evans v. Goggan, 5 Tex. Civ. App. 129, 23 S. W. 854; Cooper v. Lee, 75 Tex. 114, 12 S. W. 483; T. & P. Ry. Co. v. Jowers, 110 S. W. 946; G. H. & S. A. Ry. Co. v. Cade, 100 Tex. 37, 94 S. W. 219; St. Louis & San Francisco Ry. Co. v. Gorman, 79 Kan. 643, 100 Pac. 647, 28 L. R. A. (N. S.) 637; 6 Cyc. 301.

For the reasons stated, the judgment is reversed and remanded.

HUFF, C. J., not sitting, being absent in Austin with committee of judges passing on applications for writs of error.

On Motion for Rehearing.

BOYCE, J.

In order to prevent any misapprehension, which appellee seems to anticipate, as to the meaning of our opinion, we will say that the issues of ratification and limitation discussed are applicable only to that part of the cause of action which seeks to set aside and cancel the contract for fraud. If the deed of trust and note were given in violation of the provisions of the Constitution and (statute, they would be, as between the parties, void; a ratification thereof would be subject to the same Tice. The plaintiff could have defended a suit brought at any time to enforce them, and a suit to have the deed of trust declared void might be truly classed as a suit to remove cloud from title. But if this issue should be determined against the plaintiff, and he relies on the alleged fraud in inducing the subsci'iption to secure a cancellation, a different situation is presented. The contract then would not he void, but merely voidable, and would be the subject of ratification. A judgment removing cloud from the title in such case would be a mere incident to the cancellation of the deed of trust, which would he a valid instrument until set aside for the fraud. The primary purpose of the suit in such event would be rescission and cancellation, and limitation 'applicable to that character of suit would apply and not the law of limitation of suits to remove cloud from title. Kennon v. Miller, 143 S. W. 988; McCampbell v. Durst, 15 Tex. Civ. App. 522, 40 S. W. 320; Ry. Co. v. Titterington, 84 Tex. 218, 19 S. W. 472, 31 Am. St. Rep. 39.

With this additional statement the motion for rehearing is overruled.

HUFF, C. J., not sitting.
      <@s3For other oases see sanie topic and KEY-NUMBER in all Key-Numbered Digests and Indexes


text:
    L. C. DENMAN CO. et al. v. STANDARD SAVINGS & LOAN ASS’N.
    (No. 8744.)
    (Court of Civil Appeals of Texas. Ft. Worth.
    Dec. 8, 1917.
    Rehearing Denied Jan. 19, 1918.)
    1. Vendor and Purchaser <@=278 — 'Vendor’s Lien — Limitations.
    Where the maker of a note representing a vendor’s lien sold the property to another, who assumed the indebtedness, the payee could. not have personal judgment against the maker in a suit brought more than four years after the note was due, where he had not executed extension contract provided for in Rev. St. 1911, art. 5695, as amended by Acts 33d Leg. c. 123, and Acts Sp. Sess. 33d Leg. c. 27 (Vernon’s Sayles’ Ann. Civ. St. 1914, art. 5695).
    2. Vendor and Purchaser <@=254(1) — Rights oe Vendor — Lien.
    A vendor’s lien exists to secure the payment of the purchase money on real estate sold on a credit, even though no such lien is expressly retained.
    3. Vendor and Purchaser @=264(1) — Rights oe Vendor as to Purchasers erom Vendee.
    The vendor who retained the lien became entitled on the principle of subrogation, to an implied vendor’s lien springing out of the contracts of purchase and assumption by defendants from the original vendee and his assignee.
    4. Vendor and Purchaser <@=278 — Vendor’s Lien — Limitations.
    Where maker of note representing vendor’s lien sold the property to defendants, who assumed payment of the note, but executed no new note, their contracts of assumption being for plaintiff’s benefit, were as binding as if new notes had been executed, and were not barred until the expiration of four years from date of assumption contracts, though suit thereon was brought more than four years after the note became due, in view of Rev. St. 1911, art. 5695, as amended by Acts 33d Leg. c. 123, and Acts Sp. Sess. 33d Leg. c. 27, relating to limitation of actions to enforce vendor’s liens.
    Appeal from District Court, Tarrant County ; Bruce Young, Judge.
    Action by the Standard Savings & Loan Association against L. C. Denman and the L. C. Denman Company. Judgment for plaintiff, and defendants appeal.
    Affirmed.
    A. H. Kirby and Chas. H. Clark, both of F't. Worth, for appellants. Flournoy, Smith & Storer, of Ft. Worth, for appellee.
   DUNKLIN, J.

L. C. Denman and L. C. Denman Company have appealed from a judgment rendered against them in favor of the Standard Savings & Loan Association for the sum of $1,989,98. with foreclosure of vendor’s lien on certain real estate situated in the town of Jacksboro. The suit was instituted upon a promissory note dated November 28, 1902, due 106 months after date, and providing for interest and attorney’s fees. The note was executed by A. J. Birdsong in favor of the plaintiff, Standard Savings & Loan Association, and at the time of its execution Birdsong also executed a deed of trust upon the property mentioned above to secure payment of the note.

On July 12, 1906, Birdsong sold the property to L. C. Denman for the consideration of $2,500, $285.45 of which was paid in cash, and the balance of said purchase price was the assumption by Denman to pay $2,214.55, the amount then due by Birdsong upon the note mentioned. The contract of assumption was expressed in the deed from Birdsong to Denman. On July 5,1909, L. C. Denman soid the property to L. C. Denman Company for the consideration of $8,500, $6,000 of which was paid in cash, and the balance of the consideration, to wit, $2,500, consisted in the assumption by L. C. Denman Company to pay the note so given by Birdsong. That assumption was also expressed in the deed to L. C. Denman Company. In neither the deed to L. C. Denman nor the deed to L. C. Denman Company was there any express reservation of a vendor’s lien nor was there any language to show that such lien was waived by the plaintiff.

Birdsong was also made party defendant, and a foreclosure of the lien was decreed against him also, but upon his plea of limitation no personal judgment was rendered against him, and no complaint is made of the judgment as to him; but L. C. Denman and L. C. Denman Company, appellants in this ease, have assigned error to the action of the trial court in overruling their plea of the statute of four-year limitation. The suit was instituted on June 29, 1916, four years, nine months, and one day after the date the note sued on stipulates .that it would mature.

At the regular session of the Thirty-Third Legislature (Acts 33d Leg. c. 123), which convened in the year 1913, articles 5693,- 5694, and 5695 of the Revised Statutes of 1911, which were statutes of limitations, were all amended, and at a special session of the same Legislature (Acts Sp. Sess. 33d Leg. c- 27), article 5695, as amended at the regular session, was again amended. We shall not undertake to set out those articles of the statutes in full. It is sufficient to say that as last amended they provide that liens upon real estate executed prior to July 14, 1905, are barred by limitation, unless suit should be instituted thereon or recorded extensions thereof procured within four years from date of maturity. But by article 5695 as last amended it is expressly provided that:

“Th'o owners of all notes secured by deeds of trust or other liens and the owners of all vendors’ lien notes reserved in deeds of convejmnce which were executed subsequent to July 14, 1905, shall have four years after this act takes effect within which they may obtain such recorded extension as herein provided for, or bring suit to enforce the liens securing them if same are valid obligations and not already barred by the four years statutes of limitation when this act takes effect, and if such debt is not extended of record, or suit is not brought within such four years or four years after they mature, they shall be forever barred from the right to extend such debt of record, or bring suit to enforce the lien securing the same.”

When those amendments took effect four years had not elapsed since the maturity of the note. But it is quite clear that the demand for a personal judgment against Birdsong in this case was barred, as the note was four years past due when the suit was instituted, and he had never executed any contract to extend the time of its payment. The suit was also barred as against Denman and the Denman Company, unless it can be said that the provision of article 5695 quoted prevents that result. Those defendants insist that as they did not execute any new note, but only assumed the payment of the note previously given by Birdsong, they stand in his shoes, and have the right to invoke the statute of limitation to the same extent as he can invoke it. ■ Among others the following authorities are cited to support that contention: Newman v. San Antonio Trac. Co., 155 S. W. 6SS; Pickett v. Jackson, 42 S. W. 568; Peterson v. Kef bey, 151 S. W. 321. While those authorities announce the proposition in general terms that one who assumes the payment of a debt becomes obligated to the same extent as the original debtor, we do not believe that they go to the extent of holding that the one who assumes the debt is in all cases entitled to the same defenses as the original debtor. In Southern Home Bldg. & Loan Ass’n v. Winans, 24 Tex. Civ. App. 544, 60 S. W. 825, this court used the following language:

“It is well settled that the usury in the original contract, if any, cannot be pleaded by a subsequent purchaser of the security, who, as part of the consideration for the purchase, promised absolutely to pay the full amount of the usurious debt, because, as it has been said, his liability arises from his assumption—a new contract—and not upon the original usurious one, and he is supposed to have received a consideration, in the value of the property received by him, for all that he promises to pay. See Association v. Sellars [19 Tex. Civ. App. 201] 46 S. W. 370, and authorities there cited; Association v. Price [18 Tex. Civ. App. 370] 46 S. W. 92; Vaughn v. Association, 36 S. W. 1013.”

And in Spann v. Cochran, 63 Tex. 240, and Beitel v. Dobbin, 44 S. W. 299, it was held in effect that one buying property which is covered by a lien who assumes payment of the debt outstanding against it gives to the creditor a cause of action against him, and as between him and the original debtor he is in legal effect the principal and the original debtor the surety.

It is also well settled by the decisions of this state that a vendor’s lien exists to secure the payment of the purchase money on real estate sold on a credit, even though no such lien is expressly retained. In Joiner v. Perkins, 59 Tex. 302, our Supreme Court said:

“Without any contract or agreement, by operation of law this lien springs at once out of the contract of purchase, and exists and survives until waived or extinguished by payment, as between the original parties to the notes, wholly independent of any agreement, verbal or written.”

To the same effect are Cecil v. Henry, 93 S. W. 217, Clark v. Collins, 76 Tex. 36, 13 S. W. 44, and many other authorities which might be cited.

In addition to the lien provided in the deed of trust, plaintiff, upon the principle of subrogation, became entitled also to the implied vendors’ liens springing out of the contracts of purchase by Denman and the Den-man Company in favor of the vendors in the deeds of conveyance to them respectively; and those vendors’ liens were claimed and alleged by plaintiff in its petition. First Nat. Bank of Bellville v. Wheeler, 33 S. W. 1093; Catskill Nat. Bank v. Dumary, 206 N. Y. 550, 100 N. E. 422; 37 Cyc. 437.

Neither Denman nor the Denman Company was a party to the note and deed of trust as originally executed. Neither of them in any manner became a party to those obligations prior to July 14, 1905, but each expressly assumed them in the respective deeds of purchase which were executed subsequently to that date. Those contracts of assumption were for -plaintiff’s benefit, and were as binding as if they were executed in the form of new notes and new deeds of trust directly in favor of plaintiff, instead of contracts of assumption of obligations theretofore executed by Birdsong, and as they were executed subsequently to July 14, 1905, they come squarely within the proviso quoted from article 5695 of our Statutes, and were not barred by limitation.

As all of appellants’ assignments of error present tlie same question discussed above, they are overruled, and the judgment of the trial court against appellants is affirmed. The further judgment as between plaintiff and defendant Birdsong, of which- no complaint is made, is undisturbed.

CONKER, C. X, not sitting, serving on writ of error committee at Austin.
      <§s»For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes