First American Title Ins. Co. v. Adams

• Decision Date: 16 April 1992
• Docket Number: No. 13-91-150-CV,13-91-150-CV
• Citation: 829 S.W.2d 356
• Parties: FIRST AMERICAN TITLE INSURANCE COMPANY, Appellant, v. John H. ADAMS, Jr., Joe E. Karne, Charles T. Malone, Lewis E. Dillon, Jean Polakoff, and Nancy Rae Kissman, Appellees.
• Court: Texas Court of Appeals

Page 356

829 S.W.2d 356

FIRST AMERICAN TITLE INSURANCE COMPANY, Appellant, v. John H. ADAMS, Jr., Joe E. Karne, Charles T. Malone, Lewis

E. Dillon, Jean Polakoff, and Nancy Rae Kissman, Appellees.

No. 13-91-150-CV.

Court of Appeals of Texas,

Corpus Christi.

April 16, 1992.

Rehearing Overruled May 14, 1992.

Paul Gabriel, William M. Mills, Atlas & Hall, McAllen, for appellant.

Michael E. Hearn, Ruben R. Pena, Jones, Galligan, Key & Pena, Weslaco, for appellees.

Before NYE, C.J., and SEERDEN, J., and GERALD T. BISSETT ¹, Assigned Justice.

OPINION

NYE, Chief Justice.

This is an action for breach of contract involving title insurance policies. Appellees, John Adams, Jr., and other property owners, sued appellant, First American Title Insurance Company, an insurance underwriter. They alleged that a spoil disposal and right-of-way easement which the Arroyo Colorado Navigation District conveyed to the United States in 1947 was an encumbrance on their property and that First American did not except to this easement in their title policies. The case was presented to the jury on issues of breach of contract and damages. The jury found that the 1947 easement affected and was on appellees' property and awarded them $347,300 in damages. The trial court entered judgment for that amount. First American appeals by seven points of error, and appellees bring one cross-point of error. We reverse and render that appellees take nothing by their suit.

In 1931, the Texas Legislature ² authorized the sale of 1,172 acres of certain submerged lands around the City of Port Isabel, Texas, for the purpose of building wharves, warehouses, and other improvements. This enabling legislation contained a metes and bounds description of the property. That same year, the State of Texas issued Patent 333. By this patent, the State conveyed to the City of Port Isabel the 1,172 acres of land described in the enabling legislation. Thereafter, the City of Port Isabel sold all of the land which it received out of Patent 333 to the Port Isabel Channel, Dock & Wharf Company (the Wharf Company). In 1934, a Cameron County district court entered a judgment, dividing the land which the City of Port Isabel received out of Patent 333. The City of Port Isabel obtained title to 346.04 acres of land, and the Wharf Company obtained title to the remaining acreage. In September, 1945, the Wharf Company issued a deed conveying all of its right, title and interest in and to all its land described in Patent 333 to the Port Isabel-San Benito Navigation District.

In October, 1945, the Port Isabel-San Benito Navigation District granted an easement (the 1945 easement) within Patent 333 to the United States for construction of the Intracoastal Waterway (Intracoastal) from Corpus Christi, Texas, to the Mexican Border. The 1945 easement gave the United States the perpetual right to: (1) remove all of the tract of land needed for the Intracoastal's construction and maintenance; (2) use any part of the tract of land for the deposit of dredge material; and (3) deposit water and material dug from the Intracoastal onto the Port Isabel-San Benito Navigation District's land, adjoining the tract of land upon which the easement was granted.

In 1947, the Texas Legislature, ³ pursuant to Senate Bill No. 318, gave any navigation district, created under State law and composed of parts of one or more counties having one or more boundaries coincident with any part of the international border between the United States and Mexico (emphasis supplied):

[T]he free and uninterrupted use, liberty and easement in and to all the rivers, streams, bayous, arroyos, resacas, lakes, lagoons, bays, arms of the sea, beds, banks, or shores thereof, mud flats or other lands covered or partly covered by the waters of any of the bays or other arms of the sea, and any other submerged land or lands owned by the State of Texas within the county or counties in which such district or districts are located and within the adjoining counties thereto, and along the route of any waterway, a part of which lies within such district, in order to connect such waterway with the Louisiana and Texas Intra-Coastal Canal Waterway now completed to Corpus Christi, Texas, for the purpose of navigation, conservation, reclamation, and flood control, in aid of navigation. Provided, nevertheless, that nothing in this Act shall be construed to affect or impair any vested rights heretofore granted by the State of Texas in and to such lands and waters; provided, further, that nothing in this Act shall be construed to affect or impair private vested rights.

Later that year, the Arroyo Colorado Navigation District, pursuant to Senate Bill No. 318, conveyed to the United States Army Corps of Engineers a "SPOIL DISPOSAL AND RIGHT-OF-WAY EASEMENT DEED" (the 1947 easement). The 1947 easement stated, in relevant part (emphasis supplied):

WHEREAS ... [pursuant to Senate Bill No. 318] the free and uninterrupted use, liberty, and easement in and to all the rivers, streams, bayous, arroyos, resacas, lakes, lagoons, bays, arms of the sea, beds, banks, or shores thereof, mud flats or other lands covered or partly covered by the waters of any of the bays or other arms of the sea and any other submerged land or lands owned by the State of Texas within Cameron County, Willacy County, Kenedy County, Kleberg County, and Nueces County, Texas[,] was granted and conveyed to the said Arroyo Colorado Navigation District of Cameron and Willacy Counties, Texas. The said counties are either counties in which the said district is located, or adjoining counties thereto along the route of the Louisiana-Texas Intracoastal Waterway between Corpus Christi, Texas, and the Mexican Border. A part of said waterway is in said Arroyo Colorado Navigation District within Cameron and Willacy Counties, Texas....

WHEREAS, the above rights, use and interest in said lands is desired by the United States of America to enable the Corps of Engineers of the United States Army to carry out the provisions of the said Acts of Congress in aid of navigation....

The 1947 easement covered two tracts of land. It described Tract 1 as a "strip of land nine hundred (900) feet wide, being four hundred and fifty (450) foot on each side of the center line of the Louisiana-Texas Intracoastal Waterway as it is to be surveyed and constructed in Corpus Christi Bay and Laguna Madre from a point on the corporate limits of the City of Corpus Christi, Texas, extending southerly through Nueces County, Kleberg County, Kenedy County, Willacy County, and Cameron County to a point near the mouth of the Rio Grande on the Mexican Border...." It described Tract 2 as a "strip of land five thousand (5,000) feet wide parallel and contiguous to the eastern boundary line of said Tract No. 1 and extending from the corporate limits of the City of Corpus Christi to the Mexican Border." This easement did not include a metes and bounds description of these land tracts.

The 1947 easement gave the Corps of Engineers the perpetual right to remove all of Tract 1 as needed for the Intracoastal's construction and maintenance, and to use any part of Tracts 1 and 2 for the deposit of dredge material and for such other purposes as needed in the Intracoastal's maintenance, together with the perpetual right and easement to flow water from spoil areas over Tracts 1 and 2.

In 1972, the United States Army Corps of Engineers quitclaimed to the Port Isabel-San Benito Navigation District all of its spoil-disposal rights in a tract of land located in Cameron County, Texas, containing 661.51 acres of land, more or less, out of Patents Nos. 6, 333 and 468, issued by the State of Texas in 1931. In January, 1985, the State of Texas conveyed a tract of land to Mark Freeland. This tract contained 670.25 acres out of the Patent 333. The instrument stated, in relevant part:

Insofar as this conveyance includes land heretofore patented by the State of Texas, it is the intent of the grantor to convey any remaining interest in the form of reversion, reverter or future right that grantor may have retained in the patent or by law and it is not the intent of the grantor to cloud or cancel any patent previously issued on any property described herein.

In the early 1980s, Sun Harbor Condominiums were built on Long Island in Port Isabel, Cameron County, Texas. Long Island was made of dredge material from the Intracoastal's construction. Appellees bought condos at Sun Harbor, and they also bought title insurance policies in connection with their condo purchases. First American underwrote the insurance on their policies. First American excepted to the 1945 easement from appellees' title policies, but it did not except to the 1947 easement from the Arroyo Colorado Navigation District which purported to give to the Army Corps of Engineers a spoil disposal and right-of-way easement over the subject property.

In December, 1988, appellees sent First American a demand letter. They alleged that: (1) the 1947 easement, which existed over their property, was not listed as an exception in their title policies; (2) this easement would continue as a detriment to their property's market value; and (3) the 1972 quitclaim from the Corps of Engineers to the Port Isabel-San Benito Navigation District did not release all of the rights which the Arroyo Colorado Navigation District granted to the Corps of Engineers in the 1947 easement, such as the perpetual right to flow water from spoil areas over Tracts 1 and 2 and the right to use this property for other purposes needed in the Intracoastal's preservation and maintenance. First American investigated the state of title at the time surrounding the 1947 easement grant. It concluded that the 1947 easement had no affect on appellees' property because the Port Isabel-San Benito Navigation District owned that property at the time the Arroyo Colorado Navigation District, a stranger to the property, purportedly...