Person v. Levenson

WALTHALL, Justice. This suit was brought by Mary Leven-son, joined pro forma by. her husband, Wolf Levenson, as plaintiffs, against Sophie Person and her husband, Jacob Person, as defendants, to recover on a series of promissory notes of date February 20, 1931, due on or before five years after date, the notes executed by Jacob Person, and payable to Mary Levenson, or order, each of said notes in the principal sum of $500, and bearing interest at the rate of eight per cent per annum from date, with interest from maturity at the rate of ten per cent per annum, [420] and providing for the payment of attorney’s fees in the event of suit on the notes. The consideration, in part, for said notes was the conveyance by said Wolf Levenson of .all of his right, title and interest in and to Lots 8 and 9 and east ten feet of Lot 7, in Block 1, of Franklin Heights Addition to the City of El Paso, El Paso County, Texas, which property theretofore had been jointly owned by plaintiffs and defendants. Thereafter, on March 10, 1931, both defendants executed and delivered to M. V. Ward, trustee, a deed of trust to secure said notes, giving in said deed of trust a deed of trust lien on the property above described. The above deed of trust lien was made inferior to certain other liens on said property, among which we note $25,000 lien held by the City Mortgage Company; $5,000 held by J. C. Worthington & Sons, and transferred to the City Mortgage Company, and a lien of the Pronto Plumbers of $3,655. The above liens, to which the Levenson lien was made -inferior, were given by the Persons and Levensons to secure the indebtedness by them, and which indebtedness and liens were assigned to and held by the City Mortgage Company. The above deed of trust to the Leven-sons contained and expressed a general warranty of title to the premises conveyed unto the trustee in the deed of trust to secure the payment of the notes to Mrs. Levenson. No payment of interest or principal was made on the Levenson notes. The City Mortgage Company brought' suit in the District Court of El Paso County, Texas, on the above mentioned indebtedness of the Persons and Leven-sons and to foreclose the liens securing sáme. Service was had and judgment rendered foreclosing the liens on the property; a sale of the property was duly made, the Levensons notified, and the City Mortgage Company became the purchaser at the foreclosure sale. The property did not bring enough to liquidate the indebtedness due the City Mortgage Company judgment. On January 22, 1937, the City Mortgage Company, by warranty deed, conveyed the property to Sophie Person, the deed reciting “as her sole and separate” estate, and for a stated consideration of ten dollars cash and notes totaling $6,-700, due on or before ten years, retaining a lien on the property to secure the payment of the notes, the lien retained made subject to a first lien in favor of the R. F. C. Mortgage Company in the expressed sum of $20,250.00. Mrs. Sophie Person went into possession of the premises, an apartment house, and has operated and managed same since February, 1931; she and her husband occupied one of the apartments as their home and place of residence, neither having any other place of residence. The property is an apartment house consisting of thirty-six apartments. Twenty-six hundred dollars was paid by the Persons on existing liens other than those sued on here, from rents of the apartments. Opinion. Appellants submit that the deed of trust given by them to the trustee, M. V. Ward, to secure the Levenson notes in 1931, sued on here, was void for the reason that prior to and at the time of the execution of the deed of trust the property was appellants’ homestead. The trial court gave judgment in favor of Mary Levenson and against Jacob Person for the amount due on the notes, and in the judgment established a lien against the property herein described, subject, however, to a first lien in favor of the R. F. C. Mortgage Company, and subject to a second lien in favor of the City Mortgage Company, as the same- appears of record, and that Mary Levenson have foreclosure of her lien, subject to the first and second liens as above. The first question presented, then, is the validity of the Mary Levenson lien. If the property on which the lien was given was the home of the Persons, it was not a valid lien. The Persons, on March 10, 1931, gave the deed of trust to M. V. Ward, trustee, on the property to secure the notes sued on, and with a warranty of their title to the apartment property. In 1936, in cause No. 43839, when the City Mortgage Company . foreclosed its liens, the Levensons were made parties as junior lien holders, and in the judgment rendered in that proceeding the trial court held, “that the property above described was on March 10, 1931, the homestead of Jacob Person and Sophie Person, and is now their homestead.” [421] In cause No. 45136, the Levensons versus the Persons, tried in the District Court of El Paso County, in a suit on the notes involved here and to foreclose the deed of trust lien on the property involved here, the trial court found that Mrs. Person went into possession of the apartment house consisting of thirty-six apartments and operated and managed same with the assistance of her husband; that since February, 1931, the Persons occupied one of the apartments as their home and place of residence, and had no other home and place of residence; and neither had any other occupation than the operation of this apartment house; that Mrs. Person collected the rents from the apartments, paid the expenses, and from the rents applied $2,600 to the lien of the R. F. C. Mortgage Company, and the interest on the debt due the City Mortgage Company. On the above findings the trial court concluded as matters of law that the property was not the business homestead of the Persons, because the business therein was carried on by Mrs. Person, who was not the head of the family, and that the residence homestead in the property is limited to the apartment occupied by the Persons as their home, and made other conclusions which we will notice later. The judgment was based on the above findings and conclusions from which there was no appeal. We have sufficiently stated the facts found by the court from which the court concluded that the apartment house was neither the business place nor the residence place of the Persons. The question of whether the apartment house was the homestead of the Persons must be determined by the facts as they existed at the time of the execution of the deed of trust. The facts as stated above are not in any manner disputed or controverted. The only business of the Persons, or either of them, was renting the apartments, collecting the rents and otherwise caring for the property generally. We have not found the value of the property stated in the record, but the value does not enter into the definition of a homestead — it is merely a limitation upon the exemption when established. Hargadine v. Whitfield, 71 Tex. 482, 9 S.W. 475. Nor is there any exception that the value is not alleged and shown. Gallagher v. Keller, 4 Tex.Civ.App. 454, 23 S.W. 296. The property involved is one piece of property. Both of the Persons were equally in possession and making use of the entire building. It is the place of the homestead that gives character to it, not the business of the head of the family. The property may be homestead of the family whether the title be the separate property of either the husband or the wife, or community property. Wheatly v. Griffin, 60 Tex. 209, 211. Without discussing the homestead feature of the property further, we might say, in conclusion, that the business or calling of Person was that of using the property as an apartment house; the building was erected and adapted to such use; the property.was occupied by the-Persons and used by them for such purpose. We have concluded that the property was the homestead of the Persons at the time of the making of the deed of trust. White v. Hebberd, Tex.Civ.App., 89 S.W.2d 482; Postal Savings & Loan Ass’n v. Powell, Tex.Civ.App., 47 S.W.2d 343. Appellee does not discuss the homestead feature of the property. The City Mortgage Company having foreclosed its liens and sold the property under its judgment, bought the property at such sale, and thereafter conveyed the property to Mrs. Person, the appellee now asserts the proposition that, the Persons having conveyed the property to M. V. Ward, trustee, by deed of trust to secure the notes sued on, and in such conveyance warranted the title to the trustee, appellants, by reason of such warranty, received not only the title the grantor had at that time, but received any after acquired title of the Persons, regardless of how their title is acquired. We now consider that question. We think that in considering this part of the case it is well to refer to such portions of an agreement between Jacob Person and Wolf Levenson executed by them on March 10, 1931, the day on which the deed of trust was executed, as may be pertinent to the question to be discussed. The parties agreed in writing (briefly stated) : Wolf Levenson “shall convey by good and sufficient deed to the said Jacob Person his interest in the above described property (the apartment property) subject to the outstanding liens as .more fully hereinafter set forth.” Jacob Person agrees to execute to Mrs. Mary Levenson the five notes sued on herein; agreed to have a lien422 of Celia Sabsay released; then, continuing, “which lien (apparently, and we think, the deed of trust lien) is to be inferior to the $25,000.00 lien held by the City Mortgage Company” (then mentions and describes the liens held by the City Mortgage Company). The agreement refers to the settlement of other matters not necessary to state, and concludes the agreement with the statement that “upon the final execution and delivery of the papers, deeds, contracts and notes herein mentioned,” Levenson “agrees to vacate said premises, and all income from the property from this date shall belong to said Jacob Person.” The above agreement and the deed of trust were executed the same day, refer to the same subject matter, fully express the intention of the parties on the issue now under consideration, and we think must be taken and considered as one instrument in determining just what the contracting parties had in mind in executing the deed of trust and the covenants therein contained. The principle sought to be applied by ap-pellee to the facts in this cáse is expressed in their proposition as follows: “When a grantor conveys land with warranty of title, the grantee' not only receives the title of the grantor at the time of the transfer but any title subsequently acquired by the grantor, regardless of how that title is acquired.” The doctrine of after acquired title, whether by statutory provision or by contract lien, may be invoked in the absence of express warranty, based on implied cpvenants in the grant, or by express covenants by contract to the effect that previous to the execution of the conveyance the grantor has not conveyed the same estate, nor any right, title or interest therein to any person other than the grantee, as provided by Art. 1297, R.C.S.1925. There are many exceptions to the rule that a grantor may not be estopped to set up an after acquired title. We need not discuss them, but will refer, as applicable here, to covenants in the contract which, we think, make applicable the rule of after acquired title. There were a number of enforceable and established liens on the apartment property prior to the execution of the agreement and deed of trust in this • case. The parties expressly contracted with reference, thereto, and agreed that such liens were prior to the deed of trust lien in this case. The prior liens were specifically mentioned with the several amounts secured by the prior liens, and the parties in writing covenanted that the deed of trust contract expressing the lien sought here to be enforced was subsequent thereto. The question that confronts us is: What l was the effect of the foreclosure sale to satisfy the prior liens on the second or subsequent lien? Did the sale have the effect to destroy the subsequent lien under the facts stated, and especially, as here, where both Jacob Person and Wolf Leven-son were jointly liable for the debt for which the prior lien was given to secure? The record does not show that Levenson had paid any part of that debt or judgment. We have concluded that Levenson had no lien to foreclose; that the legal and regular sale of the property granted the owner of the prior lien extinguished the junior or inferior lien of Levenson. It seems to us the conveyance by the City Mortgage Company to Mrs. Person, at most, was a contract of reconveyance. Roach v. Grant, 134 Tex. 10, 130 S.W.2d 1019. The case is reversed and here rendered that plaintiffs take no judgment of foreclosure by reason of their suit, but a judgment for the amount of their debt only.