Lyons v. Montgomery
| Decision Date | 13 November 1985 |
| Docket Number | No. C-3980,C-3980 |
| Citation | 701 S.W.2d 641 |
| Parties | Jan Bean LYONS, Petitioner, v. Neal MONTGOMERY et al, Respondents. |
| Court | Texas Supreme Court |
Jan Lyons sued Neal Montgomery, Ben O'Neal, Rio Grande, and U.S. Life Title Insurance Company for breach of contract, failure to disclose, and deceptive trade practices in a real estate transaction. After granting U.S. Title a summary judgment, the trial court rendered a judgment on the verdict for Lyons against Rio Grande for $30,907.61, but rendered a take-nothing judgment for Montgomery and O'Neal. The court of appeals affirmed the summary judgment as to U.S. Title and the take-nothing judgment as to Montgomery and O'Neal, but reversed the trial court's judgment as to Rio Grande. 685 S.W.2d 390 (Tex.App. 4 Dist.1985). We reverse the judgment of the court of appeals in part and render judgment for Lyons on her breach of contract action against Montgomery and O'Neal. The judgment of the court of appeals is otherwise affirmed.
In October 1980, Lyons contracted with Neal Montgomery and Ben O'Neal to buy a townhouse. The townhouse was subject to a deed of trust securing a note previously executed by Montgomery to Amistad Savings Association. This deed of trust contained a due-on-sale clause. In the contract for sale, Lyons agreed to pay Montgomery and O'Neal an initial downpayment of $19,907.61 and $281.52 monthly. Montgomery agreed to make the monthly payments on his separate note to Amistad Savings.
The warranty deed executed by Montgomery and O'Neal to Lyons was to be held in escrow by Rio Grande as agent. U.S. Title issued an owner's title policy to Lyons. In February 1981, the warranty deed to Lyons was recorded by Rio Grande before Montgomery's note with Amistad Savings had been completely paid. Discovering for the first time that a sale of the townhouse had taken place, Amistad Savings subsequently exercised its undisputed right under the due-on-sale clause and demanded immediate payment of the outstanding indebtedness on Montgomery's note. Both Montgomery and Lyons refused to pay Amistad Savings the accelerated amount, and Amistad Savings sold the property pursuant to their deed of trust with Montgomery.
Jan Lyons subsequently brought this action against Montgomery, O'Neal, Rio Grande, and U.S. Title seeking damages for breach of contract, failure to disclose, and deceptive trade practices. The trial court granted summary judgment as to U.S. Title. In the breach of contract action, the trial court refused to instruct a verdict for Lyons on her contention that Montgomery and O'Neal had a contractual duty to pay the accelerated indebtedness as a matter of law, opting instead to submit the case to the jury upon the theories of failure to disclose and deceptive trade practices. Based on those two theories, the trial court rendered judgment for Lyons against Rio Grande, but rendered a take-nothing judgment for Montgomery and O'Neal. This appeal ensued. We granted Lyon's writ of error primarily to consider the correctness of the court of appeals' holding as to Lyons' breach of contract action against Montgomery and O'Neal.
Section 9(f) of the contract for sale sets forth Lyons' responsibility for Montgomery's note and deed of trust to Amistad Savings as follows:
Buyer [Lyons] shall perform and observe all of the obligations, covenants, conditions and stipulations on the part of the Borrower [Montgomery] to be performed in the said Deed of Trust, excepting the covenant for the payment of the note secured thereby. (emphasis added).
Based on this contractual language, Lyons has contended throughout these proceedings...
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