Mattlage v. Mattlage

• Decision Date: 07 November 2007
• Docket Number: No. 10-06-00260-CV.,10-06-00260-CV.
• Citation: 243 S.W.3d 763
• Parties: Karl Paul MATTLAGE, Appellant, v. Celeste MATTLAGE, Individually and as Executrix of the Estate of Marvin Mattlage, Mark Mattlage, and Robert Snowden, Appellees.
• Court: Texas Court of Appeals

243 S.W.3d 763

Karl Paul MATTLAGE, Appellant, v. Celeste MATTLAGE, Individually and as Executrix of the Estate of Marvin Mattlage, Mark Mattlage, and Robert Snowden, Appellees.

No. 10-06-00260-CV.

Court of Appeals of Texas, Waco.

November 7, 2007.

Dissent to Order Denying Rehearing December 12, 2007.

Greg White, Naman, Howell, Smith & Lee LLP, Waco, TX, for Appellant/Relator.

Andy McSwain, Fulbright Winniford PC, John Malone, Attorney At Law, Waco, TX, for Appellee/Respondent.

Before Chief Justice GRAY, Justice VANCE, and Justice REYNA.

OPINION

FELIPE REYNA, Justice.

This appeal involves a dispute among Karl Mattlage, Celeste Mattlage, Mark Mattlage, and Robert Snowden regarding the devise of a specific piece of property, known as "Home Place," in the will of Marvin Mattlage. Marvin's will devised Home Place to Karl. After executing his will, Marvin and his wife Celeste entered a contract to sell Home Place to Mark and Robert. After Marvin died and Celeste refused to honor the will, Karl sued Celeste seeking a declaratory judgment that the will prevails over the contract. Celeste sued Karl seeking a declaratory judgment that the contract prevails over the will and Mark and Robert for specific performance of the contract. These two suits were eventually consolidated and the issue in this appeal was severed into a separate proceeding. Karl and Celeste filed competing summary judgment motions. The trial court granted Celeste's motion, denied Karl's, and rendered judgment that the devise was adeemed and that Celeste was entitled to specific performance of the contract. In two issues, Karl contends that the trial court erred by granting Celeste's motion because the devise was not adeerned. We affirm.

STANDARD OF REVIEW

We review a trial court's summary judgment de novo. See Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex.2005). When, as here, competing motions for summary judgment are filed and one is granted and one denied, the appellate court should "determine all questions presented and should render the judgment the trial court should have rendered." Tex. Workers' Comp. Com'n. v. Patient Advocates of Tex., 136 S.W.3d 643, 648 (Tex.2004); Am. Hous. Found. v. Brazos County Appraisal Dist., 166 S.W.3d 885, 887 (Tex.App.Waco 2005, pet. denied). To prevail on a traditional summary judgment motion, the movant must demonstrate that there are no genuine issues of material fact and that it is entitled to judgment as a matter of law. See Diversicare Gen. Partner, Inc. v. Rubio, 185 S.W.3d 842, 846 (Tex.2005). We will "consider all the evidence in the light most favorable to the nonmovant, indulging every reasonable inference in favor of the nonmovant and resolving any doubts against the motion." Goodyear Tire Rubber Co. v. Mayes, 236 S.W.3d 754 (Tex., 2007) (citing Sudan v. Sudan, 199 S.W.3d 291,292 (Tex.2006) and Wal-Mart Stores, Inc. v. Spates, 186 S.W.3d 566, 568 (Tex.2006)). We must determine "whether reasonable and fairminded jurors could differ in their conclusions in light of all of the evidence presented." Mayes, 236 S.W.3d at 755 (citing Spates, 186 S.W.3d at 568 and City of Keller v. Wilson, 168 S.W.3d 802, 822-24 (Tex.2005)).

THE DOCTRINE OF ADEMPTION

"Ademption describes the extinction of a specific bequest or devise because of the disappearance of or disposition of the subject matter given from the estate of the testator in his lifetime." San Antonio Area Found. v. Lang, 35 S.W.3d 636, 641-42 (Tex.2000) (quoting Shriner's Hosp. for Crippled Children of Tex. v. Stahl, 610 S.W.2d 147, 148 (Tex.1980)). Absent a contrary provision in the will, the "sale or removal of a specific bequest from the estate adeems the devise or bequest." Id. at 642. Because the will speaks at the time of the testator's death, "only the estate the testatrix then possessed passes under the terms of the will." Id. "When a specific devise of realty is adeemed because the testatrix sold it before her death, absent a contrary intent expressed in the will, the beneficiaries of the realty under the will are not entitled to the sale proceeds; instead, the proceeds pass under the residuary clause." Id.

When a specific devise of realty is subject to a contract for sale executed by the testator before his death, the doctrine of equitable conversion applies. Equitable conversion is "that change in the nature of property by which, for certain purposes, realty is considered as personalty or personalty is considered as realty, and the property is transmissible as so considered." Sebesta v. Daniels, 812 S.W.2d 641, 644 (Tex.App.-Houston [14th Dist.] 1991, writ denied); Parson v. Wolfe, 676 S.W.2d 689, 691 (Tex.App.-Amarillo 1984, no writ). Equitable conversion may occur by will or by contract. Sebesta, 812 S.W.2d at 644; Parson, 676 S.W.2d at 691. In equitable conversion by will, "the doctrine is used to carry out the intent of the testator who directs that certain realty be sold or purchased." Parson, 676 S.W.2d at 691. In equitable conversion by contract, the doctrine is used to determine the "status of the parties' interests during the period between the execution of the contract of sale and actual transfer of legal title" and "how the realty or personalty passes upon the death of either the vendor or vendee." Sebesta, 812 S.W.2d at 644; Parson, 676 S.W.2d at 691. In equitable conversion by contract, "the purchaser of land is regarded in equity as owner of the land and debtor for the purchase money, and the vendor is a secured creditor `having a legal position not unlike that of a mortgagee.'" Parson, 676 S.W.2d at 691.

Generally, "a contract by a testator, made after his will, for the sale of land devised in the will, is in equity a revocation of the devise and converts the realty into personalty, even though the contract is not actually consummated until after the death of the testator." Lampman v. Sledge, 502 S.W.2d 957, 959 (Tex. Civ.App.-Waco 1973, writ ref'd n.r.e.) (citing Hardcastle v. Sibley, 107 S.W.2d 432, 438 (Tex.Civ.App.El Paso 1937, writ refd)). The contract "will not effect an equitable conversion of the realty into personalty unless the contract can be specifically enforced by the testator and the purchaser at the time of the testator's death." Lampman, 502 S.W.2d at 959 (citing Willie v. Waggoner, 181 S.W.2d 319, 322 (Tex.Civ.App.Austin 1944, writ ref.)). The "pivotal question, when determining whether an equitable conversion by contract has occurred, is whether the contract is specifically enforceable." Parson, 676 S.W.2d at 692.

Texas cases are not entirely clear as to whether this inquiry depends on the contract's status at the time of death or whether events transpiring after death may also be considered. We believe the better practice is to examine the contract's status at the time of the testator's death. See Lampman, 502 S.W.2d at 959 (question is whether contract can be specifically enforced "at the time of the testator's death"); see also. Lang, 35 S.W.3d at 642 (will speaks at time of testator's death).

ANALYSIS

In two issues, Karl contends that the trial court erred by denying his motion for summary judgment and granting Celeste's motion. In support of this challenge, Karl argues that: (1) the contract is not specifically enforceable and the devise was not adeemed because the contract contains contingencies, the parties failed to close on the contract, and the parties entered a subsequent Rule 11 agreement to fill in contingencies in the original contract; and (2) fact issues exist as to whether the contract is a sham. Because Karl discusses his two issues collectively, we will do likewise.

Specific Performance

A contract is subject to specific performance if it "contain[s] the essential terms of a contract, expressed with such certainty and clarity that it may be understood without recourse to parol evidence." Rue-Ann Dev. v. ECGC, Inc., 222 S.W.3d 921, 927 (Tex.App.-Tyler 2007, no pet.); see Johnson v. Snell, 504 S.W.2d 397, 398 (Tex.1973) ("Specific performance will be decreed only if the essential terms of the contract are expressed with reasonable certainty"). Parties may agree upon some contractual terms, understanding them to be an agreement, and leave other contract terms to be made later. Oakrock Exploration Co. v. Killam, 87 S.W.3d 685, 690 (Tex.App.-San Antonio 2002, pet. denied). If an essential term is left open for future negotiation, "there is nothing more than an unenforceable agreement to agree," and the contract is void. Id. "[A] party cannot accept an offer to form a contract unless the terms of that contract are reasonably certain." Id. "In certain situations, a court may uphold an agreement by supplying missing terms." Id. "To that end, Texas courts prefer to validate transactions rather than void them; but, courts may not create a contract where none exists and they generally may not interpolate or eliminate essential terms." Id. Whether an agreement is legally enforceable or binding is a question of law. Id.

Contingencies

Karl argues that the contract contains three contingencies that render it incapable of specific performance. Celeste, Mark, and Robert contend that Karl did not expressly raise this issue in his summary judgment motion.¹ See TEX.R. Civ. P. 166a(c).

In his motion, Karl argued that the contract was not specifically enforceable as a matter of law. Celeste, Mark, and Robert argued that the contract was valid, enforceable, and "clear enough that all parties know their obligations." The parties clearly understood Karl's argument to address the contract's enforceability and whether its terms are clearly defined such that it could be specifically enforced. Whether contingencies exist in the contract bears on this issue. See Lampman, 502 S.W.2d at 959 ("[a] contract that is not to become binding except on certain conditions cannot be specifically enforced until the conditions have been complied with"). Thus, we may consider the existence of certain...