Vieno v. Gibson , 85 Tex. 432 ( 1893 )

One R.D. Yoakum sold a tract of land to defendant in error Gibson and one Harmon Rose, and thereupon the vendees executed to him their two promissory notes for the purchase money. These notes were made payable to the vendor or bearer, and were transferred to the plaintiff in error before maturity. The vendor's lien having been expressly retained in the deed to secure the payment of the purchase money, after the first note fell due and before the maturity of the second, the plaintiff in error brought suit upon it against the makers, alleging the facts showing the lien upon the land, and prayed a foreclosure. The execution of the second note was also alleged in the petition, but there was no prayer for any relief in regard to it. The plaintiff in error obtained a judgment upon the first note, with a decree establishing the lien and ordering a sale of the land in satisfaction of the judgment. There was no provision in the decree with reference to the note not due.

The land was sold under an order of sale issued in pursuance of the decree, and the defendants in error McKee and Harris became the purchasers. The amount of the bid was much less than the value of the land, and did not satisfy the judgment. The plaintiff's attorney was present at the sale, and gave notice that the second note was outstanding, and that the plaintiff claimed a lien upon the land for its payment.

This suit was brought by the plaintiff upon the second note for the recovery of a judgment for the debt, and to enforce the lien upon the land for which it was given. Gibson, one of the makers, and McKee and Harris, purchasers of the land at the sale under the decree, were made parties defendant to the suit. Rose, the other maker, was alleged to be insolvent and absent from the State, and was not made a party. The trial court held, that the lien was discharged, and gave judgment against Gibson only. That judgment was affirmed in the Court of Civil Appeals.

We have had grave doubts as to the correctness of that ruling, but an exhaustive examination of the authorities satisfies us that it is proper. The plaintiff being the transferree of the notes given for the purchase money of the land, his case is not essentially different from that of a mortgagor who holds two notes, maturing at different dates, secured by the same mortgage, and who has caused the land to be sold for the satisfaction of one note before the maturity of the other, without having secured in the decree any provision for the payment of the second note from the proceeds of the sale, or any express reservation of a lien upon the land for its payment. That the purchaser at a sale under such a decree takes the land discharged of the lien of the second note, is affirmed by the text-writers, and the doctrine is sustained by an almost, if not quite, unbroken line of adjudicated cases. Wiltsie on Mort. Foreclosure, sec. 494; 2 Jones on Mort., sec. 1459; 8 Am. and Eng. Encyc. of Law, note on p. 196; West Bank v. Chester, 11 Pa. St., 282; 51 Am. Dec., 547; Poweshiek County v. Riley, 36 Iowa 244; Kimmel v. Willard, 1 Darg. (Mich.), 217; Miles v. Skinner, 42 Mich. 181; Smith v. Smith, 32 Ill. 198; Standish v. Vosberg, 27 Minn. 175; Fowler v. Johnson,26 Minn. 338; McLean v. Presley, 56 Ala. 211.

The principle upon which the ruling is based seems to be, that since the decree in such a case orders the sale of the whole land, without any express reservation in favor of any encumbrance, the sale will pass all the rights of the parties in and to the property to the purchaser; that is to say, the latter will take the title of the defendant discharged of the lien of the plaintiff for his future installment. It has been announced, that in the event the purchaser money be more than sufficient to satisfy the judgment, the lien for any subsequent installment will be transferred to the surplus. If this be correct, the rule that the land is discharged is not so inequitable as upon first blush it would seem to be.

We find no error in the judgment of the Court of Civil Appeals, and it is affirmed.

Affirmed.

Delivered March 16, 1893.