Hinds v. Madison

• Decision Date: 27 December 1967
• Docket Number: No. 14628,14628
• Citation: 424 S.W.2d 61
• Parties: Lucious HINDS, Appellant, v. Edna MADISON et al., Appellees. . San Antonio
• Court: Texas Court of Appeals

Page 61

424 S.W.2d 61

Lucious HINDS, Appellant, v. Edna MADISON et al., Appellees.

No. 14628.

Court of Civil Appeals of Texas.

San Antonio.

Dec. 27, 1967.

Rehearing Denied Feb. 14, 1968.

Montague & Thurmond, Del Rio, for appellant.

Boyle, Wheeler, Gresham, Davis & Gregory, San Antonio, for appellees.

KLINGEMAN, Justice.

This suit involves the construction of a provision in a grazing lease giving to the lessee an option or preferential right to purchase the leased premises under certain conditions therein provided. Said suit was instituted on February 6, 1967, by Lucious Hinds, appellant herein, and hereafter referred to as 'lessee,' against Edna Madison and Mabel Madison Almond, herein referred to as 'lessors,' J. R. Preston, herein referred to as 'Preston,' and the Midland National Bank, herein referred to as 'Bank,' seeking a temporay restraining order and temporary injunction enjoining the sale and purchase of a 14,818.63 acre tract owned by lessors, known as the John Almond Ranch, of which the leased premises were a part, for such time as would be reasonable for the lessee to determine whether to exercise such option or preferential right of purchase, and for a declaration by the court establishing a reasonable time within which lessee might exercise or reject such option or preferential right of purchase. Lessors answered asking that all relief asked by lessee be denied, and also filed a cross-action for a declaratory judgment determining whether lessee had an option or preferential right to purchase such property. Preston and the Bank filed a motion to dismiss in said cause. The trial court, without a jury, denied all relief sought by lessee, and declared and decreed that the option or preference right to purchase contained in the grazing lease terminated by its own terms and provisions on October 1, 1966, and is and has been of no force and effect since the first day of October, 1966.

Under date of August 29, 1962, lessors leased to lessee for grazing purposes 2,849.28 acres out of a 14,818.63 acre tract owned by lessors, for a term of five years beginning October 1, 1962, and ending October 1, 1967, which said lease provided for an annual rental payment of $1,900.00, payable in semi-annual installments of $950.00 each in advance on the first days of October and April of each year during the term of the lease. The 2,849-acre tract is separated from the rest of the 14,818-acre tract by the Devil's River. Said lease contained the following provision:

'11. This lease is subject further to the right of lessors to sell the leased premises. And in the event of a sale lessors shall have the right to terminate this lease on October 1st of any year by giving to lessee six months prior written notice of such sale and desire to terminate. In this connection, however, in the event of sale, lessee shall have a preference right to purchase the leased premises for such price and upon the same terms and conditions otherwise for which lessors are willing to sell to others.'

Said lease also contained a provision giving the lessee a preference right to again lease the premises under certain conditions. ¹

On December 29, 1966, lessors and Preston entered into a written contract for the sale and purchase of the entire 14,818-acre tract, providing for a total consideration of $592,720.00, and such contract, together with an executed deed, signed by the lessors, and executed notes and deed of trust, signed by Preston, was placed in escrow in the bank. Such contract and executed deed both specifically provided that such sale was subject to all valid and existing grazing leases. This sale was never consummated, and on February 13, 1967, the Bank returned such deed to the lessors, and the notes and deed of trust to Preston.

Lessee's first point is that the trial court erred in holding that lessee's option or preference right to purchase terminated on October 1, 1966. In order to resolve this point, it is necessary to determine whether Paragraph 11 of such lease grants to lessee an unconditional preference right to purchase the leased premises at any time during the term of the lease, if the lessors are willing to sell the same to a third person, or whether it grants to lessee such preference right of purchase only in the event such sale to another would work an early termination of the lease.

The trial court found, and it is undisputed, that the proposed sale was subject to such grazing lease. It is also undisputed and the trial court found that lessors made no effort to terminate such lease, that the lease contract was still in full force and effect at the time of the trial, and that such proposed sale was never consummated. We think that the case of De Vitt v. Kaufman County, 27 Tex.Civ.App. 332, 66 S.W. 224 (1901, writ ref'd), is directly in point and is controlling. Kaufman County leased a 960-acre tract to De Vitt and Scharbauer, which lease contained an option or preference right of purchase similar to the one in the lease before us. ² During the term of the lease the County sold such tract to a third person, and the deed of conveyance recognized the right of De Vitt to hold the land under the lease until the expiration of the full five-year term. The Court held that the option to buy applied only in...