Opinion
No. 3893.
November 23, 1939. Rehearing Denied January 4, 1940.
Appeal from District Court, El Paso County; P. R. Price, Judge.
Action by Home Owners' Loan Corporation against John Thomas Gough and wife involving title to an undivided one-fourth interest in two lots. From a judgment for plaintiff, defendants appeal.
Affirmed.
John T. Hill, of El Paso, for appellants.
Isaacks Lattner, of El Paso (S. J. Isaacks, of El Paso, of counsel), for appellee.
This action involves the title to an undivided one-fourth interest in two lots in the City of El Paso. Upon trial without a jury judgment was rendered in favor of Home Owners' Loan Corporation, the plaintiff, against the defendants, John T. Gough and wife. For many years prior to July 19, 1912, Thomas J. Gough and Jannie Gough were husband and wife. On the date mentioned the husband died. February 15, 1913, the owners of the lots conveyed same to Jannie Gough. The property was paid for with funds belonging to the community estate of the said Jannie Gough and her deceased husband. On December 11, 1931, Jannie Gough conveyed the lots, in trust, to a trustee to secure the City Mortgage Company in the payment of a certain note in its favor executed by the said Jannie Gough for borrowed money. In May, 1934, said Company assigned said indebtedness and lien to the Home Owners' Loan Corporation, and on May 11, 1934, Jannie Gough executed a deed of trust upon the lots securing the payment of her note to said Corporation, which note was a renewal of the indebtedness of Jannie Gough to the City Mortgage Company theretofore assigned to said Corporation. On July 6, 1937, Jannie Gough conveyed the lots to her son Pat F. Gough, who assumed the payment of the indebtedness to the Home Owners' Loan Corporation. Thereafter Mrs. Gough died. Thereafter the deed of trust in favor of the Home Owners' Loan Corporation was foreclosed by a sale made by the substitute trustee, as authorized by the terms of the deed of trust. At the foreclosure sale the property was purchased by said Corporation and the trustee conveyed the same to it.
From the trial court's findings we quote as follows:
"For some time prior to the 15th day of February, 1913, Mrs. Jannie Gough and her husband actually lived on said property as a home, and after her husband's death she continued to occupy same as her home until her death, which was prior to the execution of the power of sale in said deed of trust given for the benefit of the Home Owners' Loan Corporation. * * * Neither the Home Owners' Loan Corporation at the time it advanced the money to take over the indebtedness due the City Mortgage Company, nor the City Mortgage Company at the time it loaned the money to Mrs. Jannie Gough, had notice that the property in controversy was paid for with community funds. The possession of Mr. and Mrs. Gough of the property prior to Mr. Gough's death in 1912 was insufficient to charge the City Mortgage Company with notice that community funds had been used in acquiring the property. The mere fact that at the time Mrs. Gough acquired the property, she was a widow, is insufficient to charge the City Mortgage Company or the plaintiff with notice that community funds had been used in acquiring same. The possession and use of the property at the time the loan was made by the City Mortgage Company was entirely consistent with Mrs. Gough having the complete legal and equitable title in and to the property. * * *
"The plaintiff is a holder in good faith, in that it acquired its title from a bona fide holder and, further, that it advanced the money without notice of the equities of the defendant Gough."
The defendant in the suit, John T. Gough, claims an undivided one-fourth interest in the lots as one of the two children and heirs at law of his deceased father.
Jannie Gough acquired the legal title to the lots. The appellee holds under her. The title of the defendant is an equitable one. Bona fide purchasers and lienholders for value, acquiring the title to realty or a lien thereon from the owner of the legal title, are protected against equitable titles such as here asserted by John T. Gough. In order for a holder of such equitable title to prevail against such a purchaser or lienholder, it must be shown the latter acquired their rights with notice, actual or constructive, of the outstanding equitable title. The record here is wholly insufficient to show actual notice of the outstanding equitable title. Nor is the evidence sufficient to put either the City Mortgage or the Home Owners' Loan Corporation upon inquiry which would charge either of them with constructive notice of the outstanding equitable title asserted by John T. Gough. The quotations from the trial court's findings disclose the facts upon which appellants rely as sufficient to constitute constructive notice of the outstanding equitable title. We concur in the ruling of the trial court that such facts were insufficient for the purpose indicated. Johnson v. Bingham, Tex. Civ. App. 251 S.W. 529, affirmed, Tex.Com.App., 265 S.W. 130 and Tex.Com.App., 265 S.W. 884; Strong v. Strong, Tex.Civ.App. 66 S.W.2d 751, affirmed 128 Tex. 470, 98 S.W.2d 346, 109 A.L.R. 739. In this connection it should be further stated the evidence shows that at times the plaintiff and his wife lived in the house upon the property with Mrs. Jannie Gough, but at the time the loan was made by the City Mortgage Company and the deed of trust executed securing the same, Gough was not living in the home, though he was there for three or four weeks at that time on a visit from Ranger, Texas, where he resided. Under the authorities cited above the casual residence at times upon the property with Mrs. Jannie Gough was not inconsistent with Mrs. Gough having complete legal and equitable title to the lots. In any event, it cannot be said that as a matter of law it charged the City Mortgage Company or the Home Owners' Loan Corporation with constructive notice of the outstanding equitable title. Viewed in its aspect most favorable to the appellants, it raised but an issue of fact as to whether or not, under all of the circumstances reflected by the record, it was sufficient to place the City Mortgage Company or the Home Owners' Loan Corporation upon inquiry, and thus affect them with constructive notice.
This issue the trial court found against appellants and its findings upon the issue should not be set aside.
The judgment is affirmed.
PRICE, C. J., did not participate in the disposition of this appeal.