Henderson v. Hall
1943 Tex. App. LEXIS 584, 174 S.W.2d 985 (1943)
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Rule of Law:
The mere assignment of a vendor's lien note, without an express assignment of the superior title, does not convey the superior title to the assignee. The assignee's sole remedy for non-payment is to foreclose the lien; they cannot recover the land itself in a trespass to try title action.
Facts:
- On March 20, 1928, W.H. Morrison conveyed 162.5 acres to Lang Smith, retaining a vendor's lien to secure a purchase money note payable to W.H. Collins.
- On March 30, 1928, Lang Smith conveyed the land to M.R. Driskell, with the deed reserving liens for the original note and a new note, both payable to Collins. The Driskells also gave a deed of trust on a separate 46.2-acre tract as additional security.
- Through a series of assignments, J.F. Hall became the owner of the notes secured by the vendor's lien and deed of trust, but he did not receive an express assignment of the vendor's superior title.
- On April 25, 1930, the Driskells conveyed a 7/8 mineral interest in the lands to George H. Henderson.
- On January 2, 1932, the Driskells, in exchange for the cancellation of the notes they owed, conveyed the property to J.F. Hall.
- The last installment on the notes secured by the lien was due on October 15, 1932.
Procedural Posture:
- J. F. Hall and his transferees sued George H. Henderson in a Texas district court (trial court) in a trespass to try title action.
- Henderson answered, claiming a 7/8 mineral interest and asserting the four-year statute of limitations as a defense.
- Following a trial before the court, judgment was rendered in favor of Hall, awarding him title to and possession of all the land in controversy.
- Henderson, as appellant, appealed the trial court's judgment to the Texas Court of Civil Appeals.
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Issue:
Can an assignee of vendor's lien notes, who does not hold the superior legal title, recover title to land in a trespass to try title action from a third-party purchaser of a mineral interest, after the original vendee conveyed the land to the assignee in cancellation of the debt?
Opinions:
Majority - Chief Justice Monteith
No. An assignee of vendor's lien notes who does not also hold the vendor's superior title cannot recover title to the land in a trespass to try title action. The court reasoned that under Texas law, the assignment of a purchase money note transfers the debt and the lien, but not the vendor's superior title, unless expressly conveyed. The assignee's right is limited to collecting the debt and foreclosing the lien; they have no right to rescind the sale or recover the land itself. When Henderson purchased the mineral interest, he acquired title subject to Hall's lien, but Hall could not extinguish Henderson's vested title by simply accepting a deed from the Driskells in lieu of foreclosure. Furthermore, Hall's right to foreclose the lien was barred by the four-year statute of limitations, as the suit was filed nearly ten years after the cause of action accrued. The expiration of the limitations period creates a conclusive presumption that the debt was paid, which extinguishes both the lien and the superior title. On rehearing, the court modified its judgment to award the surface estate to Hall and his transferees, while awarding the 7/8 mineral interest to Henderson.
Analysis:
This case reinforces the critical distinction in Texas property law between a vendor's lien and the vendor's superior title. It establishes that these are separate interests and that the transfer of the debt (the note) does not automatically transfer the superior title. This decision serves as a significant precedent for creditors and assignees, clarifying that their primary remedy is a timely judicial foreclosure, not a suit for title. Accepting a deed in lieu of foreclosure is an insufficient method to defeat the rights of intervening purchasers who acquired their interest subject to the lien.
