Lawler v. Lomas & Nettleton Financial Corp.

• Citation: 583 S.W.2d 810
• Decision Date: 03 May 1979
• Docket Number: No. 19820,19820
• Parties: William R. LAWLER, Jr., as Trustee of the Lawler Family Trust, Appellant, v. LOMAS & NETTLETON FINANCIAL CORPORATION et al., Appellees.
• Court: Court of Appeals of Texas. Court of Civil Appeals of Texas

Page 810

583 S.W.2d 810

William R. LAWLER, Jr., as Trustee of the Lawler Family Trust, Appellant, v. LOMAS & NETTLETON FINANCIAL CORPORATION et al., Appellees.

No. 19820.

Court of Civil Appeals of Texas, Dallas.

May 3, 1979.

Rehearing Denied June 27, 1979.

C. Thomas Wesner, Jr., Wesner, Wylie & Pleasant, Dallas, for appellant.

Larry M. Lesh, Locke, Purnell, Boren, Laney & Neely, Dallas, for appellees.

Before GUITTARD, C. J., and STOREY and HUMPHREYS, JJ.

HUMPHREYS, Justice.

George Nicoladze, intervenor below, sued Lomas & Nettleton Financial Corporation and Ken Klaveness, trustee, appellees, to enjoin the foreclosure sale of land under a deed of trust and for damages. From a dissolution of a temporary restraining order, the denial of a permanent injunction prohibiting the foreclosure and a take nothing judgment, this appeal was perfected by William R. Lawler, Jr., who after judgment, replaced Nicoladze not only in this case but also as trustee of the Lawler Family Trusts. We affirm.

The subject land is owned by the Lawler Family Trusts which include several trusts incorporated into one trust instrument. Under this instrument, Nicoladze, its then trustee, executed this deed of trust covering 18.89 acres of land and reciting that it secures a loan made by Lomas & Nettleton to a corporation named "121 Preston Corporation," owned by Roger Lawler and Horace Ainsworth. Subsequently, this loan was increased. Ainsworth brought the original suit for damages and an injunction restraining Lomas & Nettleton from foreclosure on different collateral securing the 121 Preston Corporation loan and Nicoladze intervened prior to Ainsworth's non-suit.

Appellant attacks the trial court's findings of fact as first being unsupported by the evidence and second, as being so against the great weight and preponderance of the evidence as to be manifestly wrong and unjust. In considering the no evidence point we must view the record for all the evidence and legitimate inferences supporting the findings and disregard all evidence to the contrary. If there is any probative evidence to support the court's findings we must overrule this point of error. In considering the second point, we must view the entire record for all the evidence and set aside the findings only if they are so contrary to the overwhelming weight of all the evidence as to be clearly wrong or manifestly unjust. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1952). After examining the evidence, we overrule such points of error.

We consider appellant's thirty points of error in four segments: (1) does the instrument creating the Family Trusts authorize its trustee to execute this deed of trust; (2) was there valid consideration for the deed of trust obligation and liens; (3) was the interest rate usurious to the trustee; and, (4) was the modification and extension agreement of this loan admitted in evidence or even admissible.

In considering the trustee's authority to execute the deed of trust, we examine the trust instrument itself and find several provisions granting the trustee authority to act for the trust. Under "POWERS, DUTIES, AND RIGHTS OF TRUSTEE" we find the following:

(6) Borrowing Money. To borrow money and to execute promissory notes therefor, and to secure such obligations by mortgages or other liens or pledges of any property of the trust estate.

(13) Desirable Powers Not Enumerated; Powers Under Changed Conditions. To exercise such other powers as may be necessary or desirable in the management and control of the trust estate, whether the same be of like kind or character to those herein enumerated or not, in particular to enable the Trustee to act under changed conditions, the exact nature of which cannot now be foreseen.

Paragraph (16) section (i) specifically provides:

No purchaser from or other person dealing with the Trustee shall be responsible for the application of any purchase money or other things of value paid or delivered to the Trustee, but the receipt of the trustee shall be a full discharge; and No purchaser from or other person dealing with the Trustee and no issuer or transfer agent or other agent of any issuer, of any securities to which any transaction with and Trustee shall relate, Shall be under any obligation to ascertain or inquire into the power of the Trustee to purchase, sell, exchange, transfer, Mortgage, pledge, lease, distribute, or otherwise in any manner dispose of or deal with Any securities or other property held by any trustee or comprising part of the trust estate. (Emphasis added.)

We recognize the general rule of law in Texas that a power to sell trust property does not include the power to mortgage unless the terms of the trust expressly grant a mortgaging power or it can be implied from the terms of the trust. Jackson v. Templin, 66 S.W.2d 666, 670 (Tex.Comm'n App.1933, jdgmt. adopted). We hold, however, that the terms of the Lawler Family Trusts authorize the mortgage of the trust property and relieve a reasonably prudent lender from the duty of further inquiry as to the power of the trustee to execute this deed of trust. In Eisel v. Miller, 84 F.2d 174 (8th Cir. 1936), the court reached the same result in construing language in a trust instrument similar to paragraph 16 section (i) of the Lawler Trust instrument.

Appellant insists that because paragraph 16 is headed "Apportionment of Income and Expenses," section (i) of this paragraph should not be considered as a general statement of the trustee's authority. We disagree. We must construe the trust to uphold the settlor's intent, Aberg v. First National Bank in Dallas, 450 S.W.2d 403 (Tex.Civ.App. Dallas 1970,...