Outlaw v. Settegast

338 S.W.2d 291, 1960 Tex. App. LEXIS 2485
CourtCourt of Appeals of Texas
DecidedAugust 4, 1960
DocketNo. 3742
StatusPublished
Cited by4 cases

This text of 338 S.W.2d 291 (Outlaw v. Settegast) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Outlaw v. Settegast, 338 S.W.2d 291, 1960 Tex. App. LEXIS 2485 (Tex. Ct. App. 1960).

Opinion

WILSON, Justice.

The action is to recover sums alleged to have been paid under business compulsion and duress. It does not yield to brief statement.

Plaintiffs alleged a written contract for sale of two lots, under which they agreed to pay $45,775 purchase price; that they paid to defendant Outlaw,, all but $35,000, which was evidenced by a vendor’s lien note due on or before July 12, 1955, secured by deed of trust; that after delivery of deed to them, they began and completed con[292]*292struction of improvements on the property, a portion of which they sold; that from the proceeds they paid to Outlaw $25,000 on principal, and interest which would have been due on the note to July 12, 1955, leaving: a $10,000 principal balance, less overpayment of interest; that a partial release of lien as to the portion sold was thereupon executed, leaving the lien unreleased as to a tract we will refer to as the remainder.

Plaintiffs pleaded they had engaged in negotiations with Outlaw for pitrchase of a narrow strip adjoining the remainder (which will be called the street) ; that the street was involved in litigation by which Outlaw was seeking to clear his title to it; that when this litigation was settled, plaintiffs advised Outlaw they were willing to purchase the street for $10,000, provided a title policy issued by a specified title guaranty company was furnished. They alleged that in the course of negotiations, Outlaw was advised they desired release of the lien on the remainder in order to refinance indebtedness for construction of buildings on it, and that, although they could discharge the $10,000 principal balance on the existing note, they preferred to substitute security, obtain release of the original lien, and consolidate the existing debt with that for the purchase price of the street, to be evidenced by a new note for $20,000 secured by lien on other property; that this procedure was agreed upon.

The petition alleges the agreement was carried out by delivering a new $20,000 note dated July 15, 1955 to the specified title guaranty company, as “escrow agent,” together with the release of lien, a deed to the street and the original $35,000 note; that plaintiffs and Outlaw agreed no further payment would be due on the latter note, and no payment would be due on the new note until a title policy was issued by the company; or until it finally refused to issue a title policy, in which .event the instruments deposited would be withdrawn,.and. they “would then revert to the original trade.”

Defendant, Outlaw, it was claimed, without notice to plaintiffs, and notwithstanding the escrow agreement, purported to sell the remainder under power of sale in the deed of trust; purchased it at the trustee’s sale, and then conveyed it to Terra Firma, Inc., a corporation which was his alter ego. In the meanwhile, plaintiffs alleged they had borrowed a large sum from a Houston bank, due in December, 1955, for interim financing, and had arranged refinancing contingent on their furnishing evidence of marketable title; that with their title clouded by the purported foreclosure, they could not meet their obligation to the bank and bankruptcy would have ensued; that Outlaw thereupon demanded a total cash payment of $27,000 ($7,000 additional) and acceptance of a title policy from a different company in return for a reconveyance; that under protest, and to avoid financial ruin, and solely by reason of business compulsion and duress, they acceded to the demands and paid the additional $7,000 for which they asked judgment. Defendants pleaded waiver, estop-pel, and that the additional payment was a compromise.

The jury found (1) there was an agreement to extend payment of the balance of the $35,000 note to a definite time in the future; (2) that such time was after November 1, 1955 (the foreclosure date); (3) and (4) that the additional payment was made under duress. Other issues were answered favorably to plaintiffs. Judgment for plaintiffs was rendered in the amount found by the jury to have been paid under duress.

Defendants say there is no evidence to support the second finding, and insufficient evidence to support the first and second.

There was no written escrow agreement under which the original $35,000 note, the new $20,000 note, the release, the deed to the street and new deed of trust were deposited with the designated title guaranty company. The agreement under which the deposit was made was oral. Appellant [293]*293states the fact issue as being “whether the parties made a definite agreement to extend the due date of the $10,000 balance of the $35,000 note.”

Appellant’s position was not that there was no agreement to extend payment to a “definite time in the future”; his testimony was that “I never agreed to extend at all.” The evidence shows that immediately after the “escrow” deposit on July 12, Outlaw left the city for several weeks. When he returned he inquired of a clerk at the title company’s office whether the title policy had been issued, and upon being informed it had not, obtained the release, deed, deed of trust and $35,000 note from the clerk. Such delivery was without knowledge or consent of the president of the title company, in whose keeping the documents were deposited. There was evidence this removal of documents was without plaintiffs’ knowledge, and that they assumed that efforts were continuing to clear title and have the policy issued. There was evidence Outlaw’s attorneys did continue efforts to clear title and cure objections made by the title company; that Outlaw obtained a building permit for plaintiffs; and that they had no knowledge the title policy would not be issued, until after foreclosure. The evidence showed the designated title company had made a requirement that the City of Houston officially vacate and abandon the street and that a quitclaim deed be obtained, and that plaintiffs were not informed the curative requirements could not be met until subsequent to the foreclosure.

As to the agreement with defendant Outlaw, plaintiff testified, “We agreed that.he would extend the note from the closing [escrow deposit] date of July 12th until we could get the papers drawn up on this transaction, which he assumed would be three or four days, which was until July 15th, and during that time we agreed to pay interest on” the $35,000 note balance. “He said, ‘That’s fine. We will extend the note and carry it on until you get the title policy and all of the papers are signed’”; that interest would be paid to July: 15th, and if the policy was not then issued, interest would not be paid, but would accrue until the policy was issued and the transaction consummated; that the new $20,000 note would be paid in three years; that the instruments would be “held in escrow” until the policy was issued, or the company finally refused to issue it; that time of payment was extended “until the new note took over; up until three years” from July 15, 1955.

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Bluebook (online)
338 S.W.2d 291, 1960 Tex. App. LEXIS 2485, Counsel Stack Legal Research, https://law.counselstack.com/opinion/outlaw-v-settegast-texapp-1960.