Farmers Royalty Holding v. Kulow , 186 S.W.2d 318 ( 1945 )

After further investigation upon rehearing, the original dissent is reiterated, with this added reference to what are considered to be some of the essential facts underlying the controlling holding then made as being supported by the authorities cited thereunder:

(1) It goes without the saying that, unless the original warranties given appellants by the Kulows in the mineral deeds were still extant, and, as such, inured to the benefit of appellants at the time the Kulows re-acquired the title from Buchtien on December 4 of 1936, the rule of after-acquired title did not apply;

(2) It seems demonstrable from the undisputed facts in the record that such warranties had not so persisted, and did not then exist, because they had been put to death by the original parties thereto themselves, in the judgment they procured from the Federal court by the all-pervading character of the agreement they induced that court to approve; that suit was not one in trespass to try title — it was anything but that, being one wholly in equity and on the equity side of that court's docket, in which these parties, the appellants and the appellees, through their respective pleadings and supporting testimony, sought a judicial determination by that court upon the single controversy between them of whether such original mineral-deeds of the appellees to appellants should, in toto, be cancelled and held for naught ab initio; or whether they should be validated — in accordance with their tenor and effect — and a consequent cloud cast upon the title to the land by their claimed existence removed.

Appellees had sought the cancellation on the ground that the execution and delivery of such deeds had been induced by fraudulent misrepresentations of appellants as to the value of their own corporation-stock, which, undisputedly, had constituted the sole consideration therefor, together with a further count that there had been no legal acknowledgment by Mrs. Kulow of the execution thereof; whereas, the appellants, in turn, had denied the fraud, asserted the validity of the deeds in all respects, including the covenants-of-warranty therein, and, becoming actors over against appellants by cross-action, had sought — and sought alone — the validation at the court's hands of the deeds as written, and the removal of the alleged cloud upon their claimed title thereto resulting from appellee's claim to such invalidity;

(3) Wherefore, the conclusion seems to follow, inevitably, not only that the covenants-of-warranty were so in issue in the Federal court, and that such validity of the mineral-deeds in toto, including these covenants as integral parts thereof, were not only so involved, but that they in fact constituted the sole over-all controversy before that court;

(4) The parties themselves, by their acts then taken, likewise indubitably seem to have so construed the two court-proceedings in which they jointly and severally participated, to-wit, the Federal court's agreed-judgment, and the Buchtien foreclosure decree in the state court;

(5) Such mutual construction was, among many other recitations, evidenced by this provision in the Federal court suit, to-wit:

"* * * and for and in consideration of the promise by all of the parties hereto to forego any and all suits and causes of action, as well as choses in action, one against the other and one to the other that may now exist in disparagement and in derogation of this settlement and agreement, have and by these presents do fix, and establish all of our rights, interests, titles, claims, and demands in and to the mineral estate in the property hereinabove described."

With the issue or issues so joined between them as to pre-existing relations, and a stalemate — so to speak — having been reached thereon, the parties thus decided to wipe the slate clean of them all, and to start all over again by each side taking what they agreed to in their two judgments, and no more — in the most comprehensive terms therein providing that there should be no residuum nor residue whatever — necessarily including the original warranties — left over for either. To that end, after apportioning the new allocations of the lands to each, it was thus specifically provided that the Kulows were to turn back to appellants the stock that had so formed the sole consideration for the old mineral-deeds, to-wit: "and the redelivery by the said Charles Kulow and wife to the Farmers Royalty Holding Company of any and all stock issued by it to the said Charles Kulow and wife as a consideration for the mineral deeds heretofore executed by the said Charles Kulow and wife to the Farmers Royalty Holding Company and the said G. T. Blankenship."

Likewise, the Buchtien judgment, to which the appellants became participating privies, in consideration of an agreement between the parties thereto that no judgment therein would be taken against them for money or court costs, decreed as follows:

"It is therefore the judgment of the court and so ordered, adjudged and decreed by the court that the plaintiff, Herman Buchtien, have his judgment against the defendants, Farmers Royalty Holding Company and Farmers Mutual Royalty Syndicate, removing cloud cast upon the title to the said two tracts of land by the said asserted claims of defendants, Farmers Royalty Holding Company and Farmers Mutual Royalty Syndicate, and that title and all semblance of title asserted by the said defendants, Farmers Royalty Holding Company and Farmers Mutual Royalty Syndicate, to the royalties, minerals, etc., in and to the above designated and described two tracts of land be divested absolutely out of the said defendants, Farmers Holding Company and Farmers Mutual Royalty Syndicate, and that the title to the two tracts of land vest absolutely in the purchaser at the sheriff's sale thereof. * * *."

(6) The terms of these two agreed-judgments, dealing thus directly with the question at issue between themselves as to whether or not the original covenants-of-warranty from the Kulows to the corporations, were valid and still subsisting, were thus in unmistakable terms disposed of by agreement with such judicial sanction between them, and both sides were not only bound thereby, but also estopped to now contend otherwise. Those solemn judgments are, therefore, considered to be determinative of this lawsuit.

(7) The authorities cited in the original dissent are still thought to support it, as well as this addendum thereto.

It further seems clear, too, that the case of Cherry v. Farmers Royalty, 138 Tex. 576, 160 S.W.2d 908, 909, upon which appellants strongly relied, should be construed as supporting the appellees instead, it being readily distinguishable upon its facts from those here. This one determination of the Supreme Court therein seems to disclose a distinctive differentiation between this case and it, to-wit:

"It does not appear that any of the defendants in that suit sought any adjudication of rights as between themselves. Webel and wife did not follow up their suit which was transferred to the Federal Court and same was dismissed for want of prosecution."

Contrarily to that status in the Cherry suit, which was left, by reason of it, plainly subject to the application of the after-acquired title rule, these parties in the suit at bar, as indicated, not only so sought adjudications of the several rights as between themselves in the continued existence or not of the warranties as affected each of them, but so directly and officially procured the stated adjudications of every right, actual and potential, that might or could exist between them with reference thereto.

Under these conclusions, appellees' motion for rehearing should have been granted, and the trial court's judgment affirmed.