Drye v. Eagle Rock Ranch, Inc.

• Decision Date: 21 November 1962
• Docket Number: No. A-8517,A-8517
• Citation: 364 S.W.2d 196
• Parties: Robert W. DRYE et al., Petitioners, v. EAGLE ROCK RANCH, INC., et al., Respondents.
• Court: Texas Supreme Court

Page 196

364 S.W.2d 196

Robert W. DRYE et al., Petitioners, v. EAGLE ROCK RANCH, INC., et al., Respondents.

No. A-8517.

Supreme Court of Texas.

Nov. 21, 1962.

On Rehearing Jan. 30, 1963.

L. Alvis Vandygriff, Austin, W. T. Barber, San Marcos, O'Quinn, McDaniel & Randle, Austin, Howell Finch, Austin, with above firm, for petitioners.

Sam W. Mintz, DeLange, Hudspeth & Pitman, Houston, for respondent Eagle Rock Ranch, Inc.

John C. Foshee and Arthur P. Bagby, Bagby & Foshee, Austin, for respondent C. B. Smith.

Patterson, McDaniel & Moore, Houston, Mark V. Fuchs, New Braunfels, Edward M. Cape, Terry L. Jacks, San Marcos, Elmer S. Browder, of Patterson, McDaniel & Moore, Houston, for respondents Conso Realty Co., Eagle Rock Corp. and Edward C. James.

GREENHILL, Justice.

Robert Drye and others purchased lots in the subdivisions of the Eagle Rock Ranch area in Wimberley, Hays County, Texas. Several testified that they purchased the lots in the belief that they would have recreation privileges over the entire 1000-acre Eagle Rock Ranch. The deeds to the lots described them by lot and block number with reference to recorded plats of the subdivisions. The major portion of the ranch outside the subdivisions is not shown on the recorded plats. The deeds contain no reference to easements or rights for pleasure and recreation in the 1000 acres of which the subdivisions are a part. There is no contention that there was fraud or mistake in the execution of the deeds, and there was no prayer for reformation of the deeds. The broad questions are whether the lot purchasers got and have such rights for pleasure and recreation in the 1000-acre ranch by private dedication, by implied easements appurtenant, or by estoppel. After a jury trial, the trial court held that the lot owners did acquire such rights. The Austin Court of Civil Appeals reversed, holding that they did not. Tex.Civ.App., 347 S.W.2d 730. This Court granted writ of error to review those holdings.

This is the third round in this litigation. The first appeal is found in James v. Eagle Rock Ranch, Tex.Civ.App., 304 S.W.2d 471. The second involved the question as to where the case should be tried. In that venue action, the Court of Civil Appeals held that it should be tried in the county where the land was located, Hays County. James v. Drye, Tex.Civ.App., 314 S.W.2d 417. That action was affirmed by this Court. 159 Tex. 321, 320 S.W.2d 319 (1959).

The facts are many and highly complex. They may be gathered more fully from the previous opinions. Because of their great length, only those facts pertinent to our holdings will be set out here. Maps of the areas and subdivisions here in question are set out in the opinion of the Court of Civil Appeals on pages 735-737 of 347 S.W.2d. Reference to them may be helpful in the understanding of this opinion. Those plats, however, were inserted for illustrative purposes and were taken from exhibits prepared for trial. As pertinent here, the plats put of record and referred to in the deeds were separate plats of the 23-, 31-, and 98-acre Ranchito subdivisions and not of the entire ranch.

The basic facts are these: Edward James purchased approximately 1000 acres near Wimberley in 1947. He thereafter transferred or leased the property to various corporations in which he had a controlling interest. In 1949, for purposes of subdividing and selling lots, he conveyed two small tracts (23 and 31 acres) to the Eagle Rock Corporation. These tracts became known as Eagle Rock Ranchitos, Sections 1 and 2. The stock of the Eagle Rock Corporation was owned entirely by the Consolidated Venetian Blind Company, of which Edward James was president and majority stockholder.

Adjacent to Section 1 and near Section 2 was a 19-acre tract which bordered on Cypress Creek. James leased this 19 acres to another corporation, the Eagle Rock Ranch Club. It was a nonprofit organization with no stockholders. The incorporators were James's son, one of James's employees and another person. The tract contained a lodge which had a kitchen, dining area, and rooms for recreation. Also on the 19-acre tract there were placed tennis courts, a pitch-and-putt golf course, a playground, and other recreational facilities. Cypress Creek was dammed at the 19 acres for swimming and fishing. An airplane landing strip was built on another part of the 1000 acres, outside the subdivisions and the 19-acre club tract.

The lease from James to the incorporated club in 1949 provided that the land and the facilities of the club were to be available to the members of the club for swimming, tennis, fishing, and other privileges. It included the rights to 'the airplane landing field,' roads, bridle paths, and other facilities (not located on the 19-acre club tract or in the subdivided tracts). It provided that the lease to the club could be terminated upon certain contingencies including the failure to make a stated profit. And, as will be developed, the lease was terminated later for that reason. At that time, the club members lost the pleasure and recreational privileges they had as club members.

Originally, in 1949, only lot owners could be members of the club, and no one was sold a lot unless he was accepted to membership in the club. Later in 1949, before many of the lot owners purchased their land, the lease was amended to permit others, who were not lot owners, to have the privileges of the club, including those of pleasure and recreation. Thus the rights in the 1000 acres took on characteristics of a license or an easement in gross; i. e., at least as to the non-lot owners, the rights attached to individuals rather than to one or more tracts of land as easements appurtenant to land.

The lease states that the reason for this enlargement of club membership was that 'the members of Lessee (club) have not been patronizing the facilities of the Club to a sufficient extent to pay the expenses of operating * * * such Club.'

The facilities of the club and the use of the 1000 acres were used as selling devices to promote sales of the lots in the subdivisions. Advertisements were placed in newspapers and handsome brochures were printed to point out the advantages to be gained by owning a lot in the area and gaining access to the many facilities of the ranch.

As stated, lots were sold only to persons who made application for membership in the club and who were accepted. The application for membership, signed by the lot purchaser, contained this statement:

'This application is made with the distinct understanding that * * * I acquire no interest whatsoever of any kind or character in or to club property * * *.'

The members agreed to pay a monthly fee to the club.

The brochure entitled 'Bountiful Relaxation' which showed the beauty of the whole ranch and its many facilities stated:

'Eagle Rock Ranch Club is an incorporated club. Members have the usual voting privileges for electing officers and directors. Every Ranchitoowner has one vote * * *.

'While the property outside your own Ranchito is owned by a separate corporation, Eagle Rock Ranch members have an easement over the entire ranch. In other words, members of the club have all the pleasure rights over the entire ranch property. These rights are legally beinging against any owner of the property for 25 years, and are subject to renewal after that time.' (Emphasis is ours throughout the opinion.)

The lot owners say that 'members' means lot owners and not club members; that the 'lot owners' thus get easements for 25 years by these unsigned representations. Taken in context, we think 'members' means 'club members.' The sentence, 'In other words, members of the club' have certain rights, explains the word 'members.'

For purposes of this opinion it will be assumed that James in 1950 conveyed the 1000-acre ranch, and the lessor's interest in the club tract, to the Consolidated Venetian Blind Company, a private corporation. Excepted from this conveyance were the two tracts of 23 and 31 acres: the Eagle Rock Ranchitos, Sections 1 and 2. ¹ In 1952, the Venetian Blind Company conveyed all its interest to Conso Realty Company, another private corporation of which James was president, manager, and majority stockholder. ²

Up to this point then, the 23- and 31-acre Ranchito Subdivision tracts were owned by Eagle Rock Corporation, and the balance of the 1000 acres by Conso Realty Company. The 19-acre club tract, owned by Conso Realty, was subject to the lease to the Eagle Rock Ranch Club Corporation.

In 1952, a tract to the south of the 1000 acres, the Scudder tract, was acquired by the Eagle Rock Corporation. On it was located a third subdivision, Eagle Rock Ranchitos, Section 3.

The sale of lots in the various subdivisions was begun in 1949. James employed Duncan, a real estate agent, to sell the lots on a commission basis. The plan of lot ownership coupled with the right to use the 1000-acre ranch was advertised in newspapers and by brochures. The idea was conveyed that the purchaser was to get the use of a 1000-acre ranch on which many thousand dollars had been invested. But no one could purchase a lot unless he first joined the Eagle Rock Ranch Club. Interlaced through the advertising and brochures were the benefits to be derived by the 'members of the club.'

Between 1949 and 1955, approximately 75 lots were sold in the three subdivisions. As will be set out below, C. B. Smith purchased the interests of James et al. in 1955, and other lots were sold between 1955 and the time of suit. It is significant, however that none of the deeds purported to grant the purchaser any rights or easement over the ranch or over any property outside of the purchaser's own lot. Of approximately 100 lot owners, only 9 are plaintiffs in this suit. They sue on their own behalf and on behalf of 'unnamed plaintiffs' similarly situated. They say they represent the class of persons who purchased lots.

In 1955, Eagle Rock Corporation and Conso...