Donahoe v. Allen, 8519

• Decision Date: 23 October 1980
• Docket Number: No. 8519,8519
• Parties: Ervin Edward DONAHOE et al., Appellants, v. Douglas P. ALLEN, Appellee.
• Court: Texas Court of Appeals

Page 745

608 S.W.2d 745

Ervin Edward DONAHOE et al., Appellants, v. Douglas P. ALLEN, Appellee.

No. 8519.

Court of Civil Appeals of Texas, Beaumont.

Oct. 23, 1980.

Weldon H. Berry, Houston, for appellants.

Don Taylor, Liberty, for appellee.

KEITH, Justice.

This appeal is from a judgment of the trial court rendered after argument of counsel, awarding specific performance of a contract of sale contained in a deed from Jim and Mary Donahoe, now deceased, to A. H. Duncan and his heirs and assigns. For the reasons stated below, we affirm the judgment of the trial court.

In 1965, Jim and Mary Donahoe conveyed to A. H. Duncan a tract of about 45 acres of land, reserving to themselves a 1.5 acre portion and providing for conveyance to Duncan of the excepted portion for the sum of $2,400 on expiration of the grantors' homestead interest therein. After the death of Jim Donahoe his devisee, James Vernon Donahoe, conveyed his interest in the 1.5 acre tract to Douglas P. Allen, the assignee of A. H. Duncan. Upon notice of the subsequent death of Mary Donahoe, Allen tendered payment of $1,200 for the remaining interest in the property to her devisee, Ervin Edward Donahoe (hereinafter "defendant"). ^* The latter maintains that the agreement contained in the original deed constituted a mere option which the grantors had never exercised during their lives by communicating their intent to abandon the homestead. Therefore, he argues, he "inherited a fee interest in said property with the concurrent right to exercise the option to sell if he desired to do so."

The disputed language in the original deed is as follows:

"Grantors herein agree, when the said 1.5 acre tract has been abandoned by them, or the survivor of them, as a homestead, or at any time prior thereto, at their option, to convey unto Grantee, said 1.5 acre tract of land, above described, for a total purchase price of TWENTY FOUR HUNDRED & no/100 ($2400.00) DOLLARS cash, and grantors agree to furnish a general warranty deed to said property, which shall be conveyed free and clear of any and all encumbrances, said moneys to be paid to them within ten days from the date grantee is notified by registered mail that said property has been abandoned as a homestead, or that Grantors have decided to sell prior to that time, and the Grantee, upon the acceptance of this deed hereby agrees to the terms of this contract of sale covering said 1.5 acre tract, and this contract shall be binding upon the parties hereto, their heirs, assigns, executors and administrators, and Grantors and/or Grantee may enforce specific performance of same."

Although no formal conclusions of law appear in the record before us, we are authorized to recognize findings which are necessary legal implications of the judgment entered. Tex.R.Civ.P. 296; Bishop v. Bishop, 359 S.W.2d 869, 871 (Tex.1962); Sentry Development Corp. v. Norman, 553 S.W.2d 664, 665 (Tex.Civ.App.-Tyler 1977, writ ref'd n. r. e.). Defendant challenges the implied conclusions of the trial court as follows:

1) By points of error nos. 1, 5 and 7, that the death of the survivor of the grantors constituted abandonment of the homestead within the meaning of the agreement; and

2) By points of error nos. 2, 3, 4 and 6, that the original deed created a valid and binding contract of sale enforceable by specific performance.

It is well settled in Texas that where the buyer is bound by the terms of an agreement, it is a contract of sale and not a mere option. Collier v. Robinson, 129 S.W. 389, 391 (Tex.Civ.App.-Fort Worth 1910, writ ref'd). In Paramount Fire Ins. Co. v. Aetna Cas. & Sur. Co., 353 S.W.2d 841, 843 (Tex.1962), the purchasers of a tract of land contended that a contract containing a provision for forfeiture, as rent, of amounts paid on the contract in event of default, created a rental agreement with option to purchase rather than a contract of sale. The Court held that where the instrument itself is designated a contract of sale and its language throughout is of sale and purchase, and where it does not provide that the vendor must accept the sum forfeited in full settlement of the buyer's liabilities for default, the contract is one of purchase and sale rather than a mere option.

The Paramount test was relied upon in Gala Homes, Inc. v. Fritz, 393 S.W.2d 409, 411 (Tex.Civ.App.-Waco 1965, writ ref'd n. r. e.), a suit for specific performance of a contract providing for forfeiture of down payment in event of default. Both cases held that the contract at issue was a contract of sale and not a mere option, so that specific performance was available. See also Tabor v. Ragle, 526 S.W.2d 670, 675 (Tex.Civ.App.-Fort Worth 1975, writ ref'd n. r. e.); see and cf. Broady v. Mitchell, 572 S.W.2d 36 (Tex.Civ.App.-Houston (1st Dist.) 1978, writ ref'd n. r. e.).

The Paramount test is controlling in the case at bar. The disputed language provides that specific performance is available to both the grantor and the grantee and states that grantee "upon the acceptance of this (original deed conveying the 45 acre tract) hereby agrees to the terms of this contract of sale...