Leisure Estates of America, Inc. v. CARMEL DEVELOP. CO.

• Decision Date: 24 January 1974
• Docket Number: Civ. A. No. 73-C-70.
• Citation: 371 F. Supp. 556
• Parties: LEISURE ESTATES OF AMERICA, INC. v. CARMEL DEVELOPMENT COMPANY et al.
• Court: U.S. District Court — Southern District of Texas

371 F. Supp. 556

LEISURE ESTATES OF AMERICA, INC. v. CARMEL DEVELOPMENT COMPANY et al.

Civ. A. No. 73-C-70.

United States District Court, S. D. Texas, Corpus Christi Division.

January 24, 1974.

G. Phil Berryman, Stone & Berryman, Inc., Corpus Christi, Tex., for plaintiff.

Allen Wood, Wood, Burney, Nesbitt & Ryan, Corpus Christi, Tex., for defendants Carmel Development Co., Addie E. Sanguinet, and Bonita C. Miller.

S. E. Dyer, Dyer, Redford, Burnett, Wray & Woolsey, Corpus Christi, Tex., for defendant Harry J. Schulz.

Sam A. Westergren, Jr., Corpus Christi, Tex., for defendant Carroll G. Miller.

MEMORANDUM AND ORDER

OWEN D. COX, District Judge.

Leisure Estates of America, Inc. (Leisure Estates), the Plaintiff in this action, is a Texas corporation with its principal place of business in Corpus Christi, Texas. Defendant Carmel Development Company (Carmel) is also a Texas corporation, with its registered office in Mathis, Texas, and the several officers and/or directors of the Defendant corporation, who are sued individually, reside in Bexar and Live Oak Counties, Texas.

Plaintiff seeks damages and declaratory relief on the ground that the foreclosure sale of real property by the Defendants, as permitted by Article 3810, Vernon's Ann.Tex.Civ.St., constitutes a taking and deprivation of property without due process of law, in violation of the Fourteenth Amendment of the United States.¹ Alternatively, Plaintiff claims that the particular foreclosure violated Texas law in several respects. Jurisdiction of this Court is asserted pursuant to 42 U.S.C., § 1983, and 28 U.S.C., § 1343(3), (4), as well as 28 U.S.C., § 1331(a), 28 U.S.C., §§ 2201, 2202, and Rule 57, F.R.C.P.

The origin of this action can be traced to a conveyance of real property, evidenced by warranty deed dated the 1st day of April, 1970, from Defendant Carmel to Hemisphere Energy, Inc. (Hemisphere), a Delaware corporation. As part payment for said property, Hemisphere delivered to Carmel two vendor's lien notes, each dated April 1, 1970, for $30,000.00 and $418,734.49. These two notes were additionally secured by deed of trust liens created by one certain deed of trust for the benefit of Carmel and naming Defendant Schulz as Trustee. Plaintiff acquired title to said real property by deed dated July 30, 1970, and, as a part of the purchase price, Plaintiff assumed payment of the indebtedness evidenced by the two vendor's lien notes above described. On April 23, 1971, Defendant Carmel, claiming Plaintiff defaulted in the payment of the $418,734.49 note, accelerated the maturity of the unpaid installments, and demanded payment of principal and accrued interest in full. Plaintiff defends against this action by alleging, in effect, it was not in default because it had been willing and able to make the payments required.

Payment of said note was not made and, on August 31, 1971, Defendant Harry J. Schulz, as Trustee of said deed of trust, upon the request of Defendant Carmel, did proceed to enforce such deed of trust by posting notices of a Trustee's sale, as provided for under the terms of the deed of trust. Thereafter, a public sale was held on September 7, 1971, as provided for in the notice, and all in accordance with the terms of the deed of trust. The property was sold by the Trustee to Defendant Carmel for $150,000.00.

The parties are in accord that this United States District Court may entertain this action only if the Trustee's sale constitutes state involvement and thus gives rise to a federal question. Plaintiff's claims for relief do not become material unless this Court has jurisdiction of this controversy.

At this point, we need to determine if an individual, acting pursuant to contract provisions contained in a deed of trust, becomes a representative of the State of Texas, or a political subdivision thereof, by posting notices and thereafter standing on the courthouse steps and following procedures which the Texas statute, Article 3810, permits. Such a situation is easily distinguished from Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), and Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969), in which the use of judicial process by the creditors provided the requisite state action. So, we need not discuss those two cases.

In Hall v. Garson, 468 F.2d 845 (5th Cir. 1972), the Court held unconstitutional the Texas Landlord's Lien Act, which gave landlords a lien on the personal goods of tenants and authorized them to enforce the lien by peremptory seizure of the tenant's property, without affording the tenant a prior hearing. The Fifth Circuit noted that the statutory authorization for the landlord to enter another's home and seize his property made the landlord's "actions those of the state." The procedure followed in Hall v. Garson, supra, was solely one created by statute. The action taken was not pursuant to any agreement between the parties involved.

In contrast to the statute in Hall v. Garson, supra, Article 3810 relates to land and confers no power or authority upon anyone to do anything, as may be seen from the opening sentence of the statute:

"All sales of real estate made under powers conferred by any deed of trust or other contract lien shall be made in the county in which such real estate is situated. . . ." (Emphasis added.)

This sale under said deed of trust statute further provides for notice and for all sales to be made at public vendue between the hours of 10 o'clock a. m. and 4 o'clock p. m. on the first Tuesday in any month. But, these provisions are not self enacting. They mean nothing unless the persons involved contract to use them. No sale can be made unless the contract so provides. Further, it is worth noting that dealing with land is much different than with movable personal chattels which can be secreted, damaged or destroyed. The land will not go away and the sale...