Bonner, Associate Justice.
The second and third errors assigned are, that the court erred in permitting the defendant to-open and conclude in the introduction of evidence and in the argument before the jury, and in not giving to the admis- • sion of the defendant its proper legal effect.
Bule 31 of this court, for the government of District Courts, (47 Tex., 623,) was intended to give to the defendant the privilege to open and conclude in cases only where he admitted all the material issues tendered by the plaintiff' in support of his cause of action. If these issues are properly admitted by the defendant, and he in reply, in the nature of a plea in confession and avoidance, takes upon himself the burden of proof to defeat the demand of plaintiff", then, having this affirmative burden, he should justly have the right to open and conclude.
Although the rule, in general terms, gives to the defendant the privilege to open and conclude if he admits the plaintiff’s cause of action as set forth in the petition, except so far as it may be defeated in whole or in part by the facts of the answer, yet, in practice, the admission should not, as in this case, be in the general terms of the rule, but should be so specific that the jury, who are not presumed to he judges of the legal effect of the pleadings,' will fully understand the facts admitted, and upon which they are to decide.
The admission here was relied upon and introduced in evidence by the plaintiff himself, and its general terms were so modified by the learned judge presiding, in his charge, as to cast the proper burden of proof upon the defendant. The jury, doubtless, thus understood it, and hence the plaintiff was not prejudiced on the trial.
[461]*461Our construction of the rale is made in this case because appropriate and asked to be given.
The fourth error assigned is, that the court erred in that part of the charge which construed the legal effect of the deed from Cundiff and wife to Haden, and the agreement to reconvey from Haden to Cundiff, if made at the same time, to have been but a mortgage.
Although it is both the right and the duty of the court to construe the legal effect of written instruments where they are plain and unambiguous, yet this construction, as a general rule, should be based upon the terms of the instrument itself. If parol evidence must be resorted to in order to explain these terms or the intention of the parties, then the question of construction ceases tobe one of law simply, and'becomes one of mixed law and fact, to he determined by the jury under appropriate instructions from the court.
. The conveyance from Cundiff- and wife to Haden was in the ordinary form of a deed absolute, with not only the usual covenant of general warranty, but one also that they had the legal right to convey, and that the land was free from all incumbrance.
The agreement from Haden to Cundiff recites that he had purchased the land from Haden and wife, and had paid for it the consideration named in the deed, and that if the consideration should he repaid to him by the 1st day of January next thereafter, a period of less than three months, he would reconvey.
There was no recital in either instrument that a loan of money or a preexisting indebtedness to Haden was the consideration of the deed, but the transaction appeared as an ordinary conveyance of sale with privilege of repurchase.
Under the authority of Thompson v. Chumnoy, 8 Tex., 389, the court below might have been authorized to have construed the instruments as a conditional sale rather than a mortgage.
Although the courts have been inclined, particularly in cases [462]*462of loans of money at usurious interest, to construe an instrument to have been intended as a mortgage rather than a conditional sale, yet, as said by this court in Ruffier v. Womack, 30 Tex., 340, “ On the other hand, however great may have been the disposition manifested sometimes by courts to construe all agreements coupled with a stipulation for a reconveyance upon payment by a future day, as mortgages, it is now well settled that the power of individuals capable of acting for themselves to make such .contracts cannot be denied; and when the facts show that this is the character of their agreement, it must be upheld and enforced as readily as any other contract. (Conway’s Executors v. Alexander, 7 Cranch, 218.) Hor does the fact that there was an existing debt at the date of the contract repel the presumption, which may arise from "other facts, that the contract was a conditional sale. The question in such case is, Was the old debt surrendered or canceled at the time of the conveyance ?” . (Holmes v. Grant, 8 Paige, 243.)
The true test, as laid down in the above case of Ruffier v. Womack, is, that if the relation of debtor and creditor continues to exist, it is a mortgage; otherwise, it is a conditional sale. (30 Tex., 342, citing Robinson v. Cropsey, 2 Ewd. Ch., 138; Slee v. Manhattan .Co., 1 Paige, 56; Poindexter v. McCannon, 1 Dev. Eq., 377; Magee v. Catching, 33 Miss., 673.)
It may be remarked in this connection, without referring to the question of the proper legal construction of the instruments upon their face, that the testimony of Cundiff himself does not satisfactorily show but that his previous indebtedness to Haden, and which he says was the consideration of the deed, was given up and thereby discharged.
The effect of the above case of Ruffier v. Womack, and that of Hudson v. Wilkinson, 45 Tex., 444, and others, upon this and kindred questions, is, that when the true intention of the parties is not apparent upon the face of the instrument itself, then this often very embarrassing question, whether the transaction was a conditional sale or a mortgage, is to be decided [463]*463by the jury, under the charge of the court, from all the facts and circumstances of the particular case.
The only test of fact to determine this question, which was submitted to the jury, was whether the two instruments were of the same date, and not the true intention to be ascertained from all the attendant facts and circumstances. Had the dates been the only test, then perhaps it would not, upon the part of the court, have been too great an infringement upon the privileges of the jury to have assumed as a fact in the case, apparent upon the face of the instruments, that they were both of the same date, and to have charged upon their legal effect accordingly.
In the charge as given and restricted in the above particular, we think there wras error.
It is assigned as error, that the court erred in those parts of the charge in which the jury were instructed, that if the consideration for the deed from Haden to Alstin was a preexisting indebtedness due from Haden to Alstin, that this, in law, was not. a valuable consideration; also, that if the possession of the land remained in Cundiff and wife after their conveyance to Haden, such possession was notice to Alstin of the homestead rights of the wife, if this conveyance was a mortgage and not a sale.
These two alleged errors will be grouped and considered in the order named.
Free access — add to your briefcase to read the full text and ask questions with AI
Bonner, Associate Justice.
The second and third errors assigned are, that the court erred in permitting the defendant to-open and conclude in the introduction of evidence and in the argument before the jury, and in not giving to the admis- • sion of the defendant its proper legal effect.
Bule 31 of this court, for the government of District Courts, (47 Tex., 623,) was intended to give to the defendant the privilege to open and conclude in cases only where he admitted all the material issues tendered by the plaintiff' in support of his cause of action. If these issues are properly admitted by the defendant, and he in reply, in the nature of a plea in confession and avoidance, takes upon himself the burden of proof to defeat the demand of plaintiff", then, having this affirmative burden, he should justly have the right to open and conclude.
Although the rule, in general terms, gives to the defendant the privilege to open and conclude if he admits the plaintiff’s cause of action as set forth in the petition, except so far as it may be defeated in whole or in part by the facts of the answer, yet, in practice, the admission should not, as in this case, be in the general terms of the rule, but should be so specific that the jury, who are not presumed to he judges of the legal effect of the pleadings,' will fully understand the facts admitted, and upon which they are to decide.
The admission here was relied upon and introduced in evidence by the plaintiff himself, and its general terms were so modified by the learned judge presiding, in his charge, as to cast the proper burden of proof upon the defendant. The jury, doubtless, thus understood it, and hence the plaintiff was not prejudiced on the trial.
[461]*461Our construction of the rale is made in this case because appropriate and asked to be given.
The fourth error assigned is, that the court erred in that part of the charge which construed the legal effect of the deed from Cundiff and wife to Haden, and the agreement to reconvey from Haden to Cundiff, if made at the same time, to have been but a mortgage.
Although it is both the right and the duty of the court to construe the legal effect of written instruments where they are plain and unambiguous, yet this construction, as a general rule, should be based upon the terms of the instrument itself. If parol evidence must be resorted to in order to explain these terms or the intention of the parties, then the question of construction ceases tobe one of law simply, and'becomes one of mixed law and fact, to he determined by the jury under appropriate instructions from the court.
. The conveyance from Cundiff- and wife to Haden was in the ordinary form of a deed absolute, with not only the usual covenant of general warranty, but one also that they had the legal right to convey, and that the land was free from all incumbrance.
The agreement from Haden to Cundiff recites that he had purchased the land from Haden and wife, and had paid for it the consideration named in the deed, and that if the consideration should he repaid to him by the 1st day of January next thereafter, a period of less than three months, he would reconvey.
There was no recital in either instrument that a loan of money or a preexisting indebtedness to Haden was the consideration of the deed, but the transaction appeared as an ordinary conveyance of sale with privilege of repurchase.
Under the authority of Thompson v. Chumnoy, 8 Tex., 389, the court below might have been authorized to have construed the instruments as a conditional sale rather than a mortgage.
Although the courts have been inclined, particularly in cases [462]*462of loans of money at usurious interest, to construe an instrument to have been intended as a mortgage rather than a conditional sale, yet, as said by this court in Ruffier v. Womack, 30 Tex., 340, “ On the other hand, however great may have been the disposition manifested sometimes by courts to construe all agreements coupled with a stipulation for a reconveyance upon payment by a future day, as mortgages, it is now well settled that the power of individuals capable of acting for themselves to make such .contracts cannot be denied; and when the facts show that this is the character of their agreement, it must be upheld and enforced as readily as any other contract. (Conway’s Executors v. Alexander, 7 Cranch, 218.) Hor does the fact that there was an existing debt at the date of the contract repel the presumption, which may arise from "other facts, that the contract was a conditional sale. The question in such case is, Was the old debt surrendered or canceled at the time of the conveyance ?” . (Holmes v. Grant, 8 Paige, 243.)
The true test, as laid down in the above case of Ruffier v. Womack, is, that if the relation of debtor and creditor continues to exist, it is a mortgage; otherwise, it is a conditional sale. (30 Tex., 342, citing Robinson v. Cropsey, 2 Ewd. Ch., 138; Slee v. Manhattan .Co., 1 Paige, 56; Poindexter v. McCannon, 1 Dev. Eq., 377; Magee v. Catching, 33 Miss., 673.)
It may be remarked in this connection, without referring to the question of the proper legal construction of the instruments upon their face, that the testimony of Cundiff himself does not satisfactorily show but that his previous indebtedness to Haden, and which he says was the consideration of the deed, was given up and thereby discharged.
The effect of the above case of Ruffier v. Womack, and that of Hudson v. Wilkinson, 45 Tex., 444, and others, upon this and kindred questions, is, that when the true intention of the parties is not apparent upon the face of the instrument itself, then this often very embarrassing question, whether the transaction was a conditional sale or a mortgage, is to be decided [463]*463by the jury, under the charge of the court, from all the facts and circumstances of the particular case.
The only test of fact to determine this question, which was submitted to the jury, was whether the two instruments were of the same date, and not the true intention to be ascertained from all the attendant facts and circumstances. Had the dates been the only test, then perhaps it would not, upon the part of the court, have been too great an infringement upon the privileges of the jury to have assumed as a fact in the case, apparent upon the face of the instruments, that they were both of the same date, and to have charged upon their legal effect accordingly.
In the charge as given and restricted in the above particular, we think there wras error.
It is assigned as error, that the court erred in those parts of the charge in which the jury were instructed, that if the consideration for the deed from Haden to Alstin was a preexisting indebtedness due from Haden to Alstin, that this, in law, was not. a valuable consideration; also, that if the possession of the land remained in Cundiff and wife after their conveyance to Haden, such possession was notice to Alstin of the homestead rights of the wife, if this conveyance was a mortgage and not a sale.
These two alleged errors will be grouped and considered in the order named. The principle upon which is based the general rule, that a creditor who, at a judicial sale, bids in property of the debtor, and has the amount of his bid credited upon the execution, is not a purchaser for value, is, that no new consideration passes, and'that, as between himself and the judgment debtor, the bid may, for good cause, be set aside without prejudice, and the execution- be levied upon other property. That, therefore, if bis bid should fail, he does not suffer that injury which might result to a third party who had, in good laith, previously acquired rights under the judgment debtor. In accord with" this is the familiar doctrine, that if one of two parties, who otherwise have equal equities, [464]*464should have an additional security, for his debt, not available to the other, in a proper case equity would compel him to resort to this additional security, as thereby both debts might be satisfied.
As between the immediate parties, the payment of a preexisting debt due from one to the other should be as valuable a consideration to support a contract as though the amount was then for the first time advanced, and should be set aside in favor of a third party, who did not have a superior right, in the event only that otherwise his rights could not be protected; but this should not be done to the ultimate prejudice of the creditor who has otherwise equal equity.
So far as shown by the record, both the indebtedness from Cundiff to Haden and that, from Haden to Alstin, which were the considerations for the two deeds, were given up and canceled at the respective dates of these deeds. There was no oiler to refund this indebtedness, and no evidence that, in respect to their collection, the creditors, from want of the bar of limitations, insolvency of the debtors, or other good cause, particularly after so long a lapse of time, could be placed in as good condition as before the execution of the deeds.
■ In the elaborate opinion of Mr. Justice Story in Swift v. Tyson, 16 Peters, 1, it was decided, that, as against prior equities of third parties, a preexisting debt was a sufficiently valuable consideration to support the transfer of a negotiable note to one who has no notice of these prior equities. This decision was approved and followed by this court in Greneaux v. Wheeler, 6 Tex., 515.
Although there can be found many decisions against the application of this doctrine to the purchase of real estate, yet we cannot see why, upon principle, it should not bo thus applied, particularly in cases whore the original indebtedness is given up and canceled; and it is thus decided in courts of high authority. (Love v. Taylor, 26 Miss., 574; Padgett v. Lawrence, 10 Paige’s Ch., 180; Work v. Brayton, 5 Ind., 397; Babcock v. Jordan, 24 Ind., 19.)
[465]*465Alstin does not occupy the position of one who relies upon a junior title or an equity to override the legal title in Mrs. Cundid:', and consequently upon him should rest the burden of proof that he was a purchaser both for value and without notice. Mrs. Cundiif, however, herself seeks to avoid her own voluntary, absolute, recorded deed, conveying away her legal title, on the ground that she had a secret agreement to recouvey, by virtue of which she might still have the superior title.
Under these circumstances, it would seem but reasonable and equitable that, before she should prevail, it should be shown that if the deed from Haden to Alstin were set aside because the consideration was a preexisting debt due from Haden to Alstin, that Alstin would not be prejudiced in the collection, otherwise of this indebtedness.
Wé are of opinion, that, under the facts as presented by the record, there was error in that part of the charge in which the jury were, in effect, told that this previously-existing indebtedness was not sufficient to support the deed from Haden to Alstin, as against Mrs. Cundiif.
It remains to inquire whether Alstin was affected with notice of the alleged homestead claim of Mrs. Cundiif by reason of her remaining in possession of the property jointly with the husband.
The deed from Cundiif and wife conveyed the absolute legal title to the property into Haden. This deed, was duly acknowledged by them and placed upon record. The instrument of reconveyance from Haden to W. H. Cundiif was never recorded. Although Cundiif and his wife remained in possession, it appears that they did so as the tenant of Haden and his subsequent vendee, Alstin, paying; rent Cuudiff then purchased the land from Alstin, and. executed to him the notes here sued upon in payment of previously-accrued rent and for the purchase-money. Ho actual, notice of the claim of Mrs. Cundiif is given to Alstin, the subsequent purchaser, and he has no knowledge of the agreement to reconvey until it is set up in this suit. Under.-these circumstances, [466]*466the question arises, whether the implied private notice of the homestead claim' of Mrs. Cundiff—if it be admitted that the deed to Haden was intended as a mortgage and not a conditional sale—given by her possession jointly with her husband, who, as the head of the family, acknowledged, both as a tenant and purchaser, the full legal and equitable title to be in Haden and bis subsequent vendee, Alstin, should outweigh the public legal notice that she had parted with all her right to the property, given by her own voluntary deed, executed and recorded under the forms and solemnities of the law.
[Opinion .delivered January 30, 1880.]
To permit this, would, in our opinion, be contrary to sound principles of law and equity, and would make our registry laws, which were wisely intended for the protection of innocent purchasers, but a snare and a delusion.
The principle here announced is supported by the case of Ranney v. Miller, 51 Tex., 263.
We are of opinion that the court erred in the charge to the jury, that the possession of Mrs. Cundiff was notice to Alstin of her claim; and for this and the other errors above mentioned, the judgment is reversed and the cause remanded.
Reversed and remanded.
.[Chief Justice Moore declined to sit in this case.]