Groschke v. Gabriel

• Decision Date: 21 November 1991
• Docket Number: Nos. 01-91-00350-C,01-91-00374-CV,s. 01-91-00350-C
• Parties: Alminta B. GROSCHKE, W.C. Groschke, Jr., and Mark A. Groschke, Appellants, v. Frank A. GABRIEL, Jr. and Cynthia Gabriel, Appellees. (1st Dist.)
• Court: Texas Court of Appeals

Page 607

824 S.W.2d 607

Alminta B. GROSCHKE, W.C. Groschke, Jr., and Mark A Groschke, Appellants, v. Frank A. GABRIEL, Jr. and Cynthia Gabriel, Appellees.

Nos. 01-91-00350-CV, 01-91-00374-CV.

Court of Appeals of Texas Houston (1st Dist.).

Nov. 21, 1991.

Rehearing Denied Jan. 2, 1992.

Karl C. Hoppess, Daniel P. Meanor, Houston, for appellants.

Annie Fabio, Houston, Kenneth Keeling, Huntsville, John R. Bankhead, Mandisonville, for appellees.

Before SAM BASS, O'CONNOR and WILSON, JJ.

OPINION

WILSON, Justice.

In an accelerated appeal, ¹ appellants contest the summary judgment rendered in favor of the appellees, and the denial of the appellants' motion for summary judgment. The parties stipulated to the facts and documents and formulated the issues presented to the trial judge for decision. The dispute in the trial court, and on appeal, relates to the legal obligations of the parties arising from the stipulations. We affirm.

In 1973, the appellees, Frank and Cynthia Gabriel (the Gabriels), husband and wife, purchased 450.234 acres of land in Grimes County, Texas, from A.B. Ingram and his wife, Mary Ann Ingram, and signed a promissory note for $430,000. On January 16, 1984, the appellants, Alminta B. Groschke and her sons, W.C. Groschke, Jr., and Mark A. Groschke (the Groschkes), entered into an agreement to purchase 295.001 acres of land from the Gabriels for $671,123.20. The agreement utilized financing known as a "wraparound" vendor's lien in a general warranty deed and deed of trust. This allowed the preexisting lien on the property (the Ingram note) to be covered by, but not subordinated to, the subsequent lien to the Gabriels.

The Gabriels executed a general warranty deed to trustee Jay Roy Atchley, for the 295.001 acres of land. Atchley, as trustee, executed a nonpersonal liability "wraparound" promissory note for the principal sum of $671,123.20 (the Gabriel note), payable to the Gabriels, as consideration for the general warranty deed. The Gabriel note was also secured by a deed of trust issued to John M. Fultz, trustee. The general warranty deed and the deed of trust expressly stated the lien was secondary and inferior to the Ingram note. The documents provided that the only recourse available to the Gabriels was repossession of the land, leaving the Groschkes without liability for any deficiency. Atchley then executed an exchange deed to the Groschkes.

The Gabriel note and lien were also made subject to partial release provisions in the deed of trust and the general warranty deed. ² The partial release provisions gave Atchley the right to obtain clear title to six acres of the land, so long as all the requirements contained in the partial release provisions were met. The requirements included no default in the Gabriel note, full payment of the Ingram note, and full and final release of the lien created by the Ingram note. There were also other restrictions as to what portions of the land would be chosen subject to the release provisions, but they are not germane to the dispute.

The Groschkes used the 295.001 acres as a homestead and ranch, but, in 1985, filed a homestead exemption for "home only." Their payments on the 295.001 acres were 10 equal, annual payments of $109,222.21, payable on or before January 16 of each year, beginning in 1985 and continuing until 1995. The note allowed for prepayment, without penalty or premium.

On January 16, 1989, the Groschkes did not make their payment. After a series of negotiations, the Gabriels agreed to accept payment of the interest only, with the principal to be paid on or before January 16, 1990. The Groschkes paid $53,062.84, the amount of the interest due plus a penalty, and $300 for the Gabriels' attorney's fees. Upon receipt of the payment, the Gabriels' attorney sent the Groschkes a letter indicating the trustee's sale would not be held as scheduled. There was no written extension agreement in the record, and nothing to indicate the default had been forgiven.

On December 22, 1989, the Groschkes' attorney, as trustee for the Groschkes, bought the Ingram note for the outstanding balance of $89,000, and received executed release of liens and transfer of liens from the Ingrams. The Ingrams indicated on the note that the Gabriels were current on their payments as of the date of the sale of the note, and that the next payment was due June 1, 1990.

On January 10, 1990, the Groschkes' attorney sent a demand letter to the Gabriels, requesting execution of the partial releases. The Gabriels refused to execute the releases claiming the conditions precedent to execution of the releases had not been fulfilled. When January 16, 1990, arrived, the Groschkes did not pay the principal due from 1989, nor make any further payments on the property. In June of 1990, the Gabriels timely paid the $20,000 due on the Ingram note into a separate, interest bearing escrow account.

In July of 1990, the Gabriels foreclosed on 289 acres of the 295.001 acres. This foreclosure was not contested by the appellants. On or about April 23, 1990, the Groschkes filed suit against the Gabriels for refusing to release the six acres, and obtained a temporary injunction against foreclosure on the six acres. The Gabriels filed counterclaims against the Groschkes and their attorney. Both sides filed motions for summary judgment claiming no material facts were in dispute. The trial court granted the Gabriels' summary judgment motion, entered a nonsuit filed by the Gabriels as to the Groschkes' attorney, and denied the Groschkes' motion for summary judgment.

The Groschkes filed an amended petition after the trial court granted the Gabriels' summary judgment, but before a final judgment was signed. The petition raised new causes of action based on fraud, constructive fraud, and tortious interference with the Groschkes' attorney's practice of law. The docket sheet indicates a telephone conversation was held between the judge and the attorneys for both sides, discussing the implications and ramifications of the amended petition. The Gabriels filed a motion to sever the new causes of action alleged in the amended petition from those before the court in the summary judgment, and the trial court granted the motion. The final judgment, entered on February 22, 1991, states "no matters exist which have not been disposed of," grants the Gabriels the right to proceed with foreclosure on the six acres, awards attorney's fees and payment of the injunction bond as part of the attorney's fees awarded, releases the June 1, 1990, payment on the Ingram note to the Groschkes, and orders the Gabriels to continue payments to the Groschkes until the Ingram note is paid in full.

To uphold a summary judgment, the reviewing court must examine the record and determine that the movant has met his burden of showing no genuine issues of material fact exist and the movant is entitled to judgment as a matter of law. Nixon v. Mr. Property Management, 690 S.W.2d 546 (Tex.1985). On review, the question is not necessarily whether the non-movant raised a material fact issue to defeat the motion, but rather to determine whether the movant proved his entitlement to summary judgment as a matter of law, i.e. by proving all elements of a cause of action or a defense. MMP Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.1986); TEX.R.CIV.P. 166-A. The burden of proof is on the movant, all doubts as to the existence of a material fact are resolved against him, and evidence which favors the movant's position will not be considered unless it is uncontroverted. Great American Reserve Ins. Co. v. San Antonio Plumbing Supply Co., 391 S.W.2d 41, 47 (Tex.1965). In viewing the evidence in the light most favorable to the non-movant, all conflicts in the evidence will be disregarded and the evidence favorable to the non-movant will be accepted as true. Montgomery v. Kennedy, 669 S.W.2d 309, 311 (Tex.1984).

The Groschkes' first point of error asserts that the trial court erred in granting the motion for summary judgment. Appellants may therefore attack all grounds set forth in the motion for summary judgment. Malooly Bros., Inc. v. Napier, 461 S.W.2d 119 (Tex.1970). The grounds set forth in the Gabriels' motion for summary judgment all indicated none of the required conditions precedent, necessary to entitle the Groschkes to the execution of the release of the six acres, had occurred. Therefore, the Groschkes were not excused from making the payments on the Gabriel note, the Groschkes had defaulted, and the Gabriels were entitled to accelerate and foreclose, according to the terms of the warranty deed, deed of trust, and the promissory note. Specifically, the Gabriels asserted that the Groschkes were in default on the Gabriel note; the Groschkes' purchase of the Ingram note did not comply with the requirement the note be paid in full in accordance with its terms; and, because the release of lien executed by the Ingrams was not recorded, and the note had not been marked "paid in full" across its face, the lien securing the Ingram note was not fully and finally released. The Groschkes contend the evidence before the trial court proved the Gabriel note was not in default or that an issue of material fact existed regarding whether the note was in default.

Where the summary judgment evidence establishes that the appellee is the holder of the promissory note, the note was in default, the appellant was the maker of the note, and the appellant does not deny the genuineness of his signature or the endorsement, and does not plead payment, the appellee is entitled to recover, unless the appellant establishes a defense. Whittenburg v. Cessna Fin. Corp., 536 S.W.2d 444, 445 (Tex.Civ.App.--Houston [14th Dist.] 1976, writ ref'd n.r.e.); Hemphill v. Greater Houston Bank, 537 S.W.2d 124, 125 (Tex.Civ.App.--Houston [14th Dist.] 1976, no writ); TEX.BUS. & COM.CODE ANN. § 3.307(a), (b) (Vernon 1968).

The evidence before the trial court included the warranty...