Lund v. Emerson

• Decision Date: 15 September 1947
• Docket Number: No. 5811.,5811.
• Citation: 204 S.W.2d 639
• Parties: LUND et al. v. EMERSON.
• Court: Texas Court of Appeals

Page 639

204 S.W.2d 639

LUND et al. v. EMERSON.

No. 5811.

Court of Civil Appeals of Texas. Amarillo.

September 15, 1947.

Appeal from District Court, Hutchinson County; Jack Allen, Judge.

Suit in trespass to try title to realty and for damages and a rescission of contract of sale of the realty by L. G. Lund and another against Wyle Emerson. From an adverse judgment plaintiffs appeal.

Judgment reversed and judgment rendered for plaintiffs.

K. H. Dally and Leigh Fischer, both of Borger, for appellants.

J. O. Ward, of Borger, for appellee.

LUMPKIN, Justice.

On this appeal the principal law question involved is whether the abstract of title furnished by the appellants, L. G. Lund and J. L. Peebles, to the appellee, Wyle Emerson, shows a marketable title to certain property located at Borger, Texas.

On August 17, 1946, the parties to this suit entered into a contract whereby the appellants were to sell appellee the east 40 feet of lot 11 in block 24 of the Isom Addition of Borger, Hutchinson County, Texas, on which was located a three-room house and a garage. The total consideration was $1800. The contract provided that the appellee was to place $300 in escrow in the Panhandle State Bank of Borger, until the appellants furnished to the appellee a good and merchantable title with abstract of the same up to and including the date of the contract; and, that upon being furnished a good and merchantable title, the appellee agreed to pay the remaining $1500 of the purchase price to the appellants; that appellants were to deliver to the Panhandle State Bank of Borger their general warranty deed, excepting the gas, oil, and mineral rights. The appellants further agreed to deliver to the appellee or his attorney at the earliest date practical their abstract of title; and if the abstract of title was approved by the appellee or his attorney, the Panhandle State Bank was authorized to deliver the $300, together with the $1500, to the appellant; and, at the same time, the bank was to deliver to the appellee the appellants' general warranty deed.

From the record it appears the appellants delivered an abstract of title to H. M. Hood, the appellee's attorney. In a title opinion dated August 20, 1946, Mr. Hood made the following objection to the title:

"On pages 19 and 20, George T. Bailey and wife [former owners of the property] executed and delivered to the Guaranty Construction Company of Amarillo, Texas, a materialman's lien agreement in which they pledged the entire lot number eleven (11), to secure the payment of $800, and which agreement provided for 10% attorney fees. There is nothing in the record to show that this has been paid, and a release showing the payment of the lien should be obtained from the Guaranty Construction Company and filed of record and brought down in a supplemental abstract to date."

The materialman's lien of which Mr. Hood speaks was dated March 1, 1931, and payable in sixteen monthly installments.

Soon after the contract of sale was signed, the appellee moved onto the property where he remained for a little less than two months.

Further, the record reveals that on September 6, 1946, Mr. Hood wrote a second title opinion in which he quoted Article 5520, as amended, Vernon's Annotated Civil Statutes, and stated as follows:

"Of course, this lien having been barred by the ten, four, and two year Statutes of Limitations under our general statute of limitation and this specific statute of limitation with respect to the first paragraph and other paragraphs, will make the lien as of this date ineffective, insofar as it did effect any claim that the construction company might attempt or try to assert against them.

"I approve the title as good and merchantable vested in the sellers to you, with the exception of the oil, gas, and mineral rights which are reserved on all the townsite property * * *"

Upon the appellee's refusal to pay for the property, suit was brought by the appellants against the appellee in two counts: First, in trespass to try title on the above described property; second, the appellants asked for damages and a rescission of the contract of sale.

Trial was before the court without a jury, at the conclusion of which judgment was entered for the appellee awarding him the $300 in escrow. The court found that the appellants were entitled to recover from the appellee $50 for rent while the appellee was in possession of the property. To this judgment the appellants excepted and gave notice of appeal to this court.

The trial court filed its findings of fact and conclusions of law. It found, in part, that the contract of sale provided that the appellants furnish the appellee with a marketable title subject to the approval of the appellee's attorney; that as earnest money the appellee placed $300 in escrow in the Panhandle State Bank, Borger; that during the title examination the appellee moved onto the premises and resided there with his family for a period of a little less than two months; that in a written opinion delivered to the appellee, his attorney objected to the title, declaring that an unreleased materialman's lien, shown in the abstract of title, constituted an incumbrance on the land; that this lien was shown to be barred by the statute of limitations; that later the appellee's attorney informed the appellants' attorney that he approved the title, but did not so inform the appellee; and that the appellee refused to purchase the land and vacated the premises.

In its conclusions of law the court stated that because the approval of the title by the appellee's attorney was a condition of the contract, and since an objection was made as to the marketable character of the title, the appellee was not obligated to purchase the property; that Article 5520 of the Revised Civil Statutes of Texas, 1925, Vernon's Ann.Civ.St. art. 5520, was a limitations statute which did not eliminate the possibility of a suit against the owner of the land; that an unreleased contract lien, though barred by the limitations statute, is an incumbrance rendering a land title unmarketable; that the appellee did not waive his attorney's objections to the title by moving onto the land, but the appellee was obligated to pay rent in the sum of $50; and that the appellants did not fulfill the terms of the contract; therefore the earnest money should be returned to the appellee.

In attacking the court's judgment, the appellants first contend that in view of Article 5520, as amended, Vernon's Annotated Civil Statutes, the trial court erred in holding that the lien of the Guaranty Construction Company constituted a cloud upon the title to the property involved and prevented the title from being merchantable.

While our courts have held there is some small distinction between the terms merchantable title and marketable title, as a rule, and for the purpose of this opinion, the two terms are regarded as synonymous. Alling v. Vander Stucken, Tex.Civ.App., 194 S.W. 443. A marketable title means a title free from reasonable doubt as to matters of law and fact, such a title as a prudent man, advised of the facts and their legal...