McPhail v. Texas Architectural Aggregate, Inc.

Decision Date16 November 1978
Docket NumberNo. 5153,5153
PartiesRoyce L. McPHAIL, Appellant, v. TEXAS ARCHITECTURAL AGGREGATE, INC., et al, Appellee.
CourtTexas Court of Appeals

Rod V. Steinburg, Helm, Pletcher, Hogan & Burrow, Houston, David M. Williams, San Saba, for appellant.

Gary R. Price and W. Stephen Ellis, Brownwood, for appellee.

DICKENSON, Justice.

The issue is whether an option to purchase land is void. Legal title to two tracts of land is in the Veteran's Land Board, and the lands in question are being purchased by two veterans who granted an option to a third party. The trial court held the option void. Based upon our reading of Article 5421m, Section 17, and Section 161.224 of the Texas Natural Resources Code, 1 we will modify the judgment to provide that the option is not void but that it was unenforceable until three years after the date of the veterans' purchase of the property from the Veteran's Land Board and that it was not thereafter, and is not presently, enforceable without the approval of the sale by the Veteran's Land Board.

W. E. Curtis and Billy Curtis (veterans) purchased adjacent tracts of land from the Veteran's Land Board (Board) on November 5, 1972. 2 The veterans joined in the execution of one lease agreement (with an option to purchase) covering both tracts, in favor of Royce L. McPhail on May 1, 1974. 3 The Board neither joined in, nor approved of, the execution of this lease agreement.

Each of the veterans and their wives executed separate coal mining leases to Texas Architectural Aggregate, Inc. (mining lessee) in 1975. These mining leases were approved by the Veteran's Land Board. The mining lessee attempted to exercise its right to explore for coal, and McPhail objected. Litigation resulted between the mining lessee and McPhail. The veterans and the Board later became plaintiffs, along with the mining lessee, in the lawsuit when amended pleadings were filed to assert a cause of action against McPhail for trespass to try title, for a declaratory judgment, and for an injunction. After a nonjury trial, judgment was rendered for plaintiffs, holding McPhail's option to purchase the land void. He appeals. We will modify the judgment and affirm.

The first point of error claims the trial court erred in declaring the purchase option void since the suit was in trespass to try title. We disagree.

Frost v. Mischer, 463 S.W.2d 166 (Tex.1971), cites Article 7364, Tex.Rev.Civ.Stat.Ann (1960), which provides that: "The method of trying titles to lands, tenements or other real property shall be by action of trespass to try title." Frost holds that a suit for injunction may not be substituted for an action in trespass to try title.

Rule 48, T.R.C.P., provides that a party may make two or more claims or defenses in the alternative, regardless of consistency and whether based upon legal or equitable grounds or both.

The second point of error contends that the trial court did not have jurisdiction to enter a judgment declaring the option to be void, that such decision was merely advisory, and that there was no justiciable controversy between the parties. We disagree. We hold that the Declaratory Judgments Act 4 authorized the trial court to declare the rights of the parties and to construe the contract between the veterans and McPhail.

McPhail contends that the judgment declaring the option void is based upon the hypothetical proposition that the option will be exercised. McPhail relies upon Reuter v. Cordes-Hendreks Coiffures, Inc., 422 S.W.2d 193 (Tex.Civ.App. Houston (14th Dist.) 1967, no writ). That case is distinguishable. The parties in that case had signed an agreement with a covenant against competition. The plaintiffs in that case were not happy with the agreement which they had made, and they thought it was unreasonable; however, the record in that case did not reflect any present intention on the part of those plaintiffs to engage in the practice of cosmetology within the prohibited area. The court stated: "A mere difference of opinion, not involving the assertion of adverse interests, is not sufficient to support an action for declaratory judgment." The opinion in Reuter states that the record presents no "actual, genuine, live, controversy" and that a declaratory judgment "would be in the nature of an advisory opinion that might or might not affect the future relations of the parties." In the case at hand, there is more than a mere difference of opinion. There is an actual, genuine, live controversy between the parties as to their rights under the lease agreement which provided for the option to purchase.

This case is not like a lease agreement with a "right of first refusal" in the event of a sale of the leased property. As this court stated in Henderson v. Nitschke, 470 S.W.2d 410 (Tex.Civ.App. Eastland 1971, writ ref'd n. r. e.), and again in A. P. Simons Company v. Julian, 531 S.W.2d 451 (Tex.Civ.App. Eastland 1975, no writ):

So under a lease provision for a first option to purchase the premises at such price as might be agreed on between the lessor and any bona fide purchaser, prior to the making of an actual agreement as to price between the lessor and a prospective purchaser, The lessee has no accrued right of purchase, but only a promise thereof which for fruition is wholly dependent on a future event which might never occur. (Emphasis added)

McPhail's lease with the veterans purports to give him the option to purchase the lands "at any time" during the five-year lease. The option is not dependent upon a future event. It is a present right which McPhail is claiming, even though he has not attempted to exercise the option. We recognize the rule that there must be a justiciable controversy between the parties before a declaratory judgment action will lie. Firemen's Insurance Company of Newark, New Jersey v. Burch, 442 S.W.2d 331 (Tex.1968). We hold that the record in this case presents a justiciable controversy and that the trial court did not err in ruling upon the validity of the option.

The third point of error claims that the trial court erred in declaring the purchase option void since the type of option in this case is not prohibited by the act. 5 We agree that the option is not void. Appellees rely upon Section 161.227 of the Code, which prohibits the veterans from granting a lease which contains "a provision for option or renewal of the lease or re-lease of the property for any term . . . ." It seems clear to us that this prohibits an option for a new lease or renewal of the existing lease, but it does not appear to specifically prohibit an option to purchase. We hold that Section 161.227 of the Code does not make the purchase option void.

Section 161.224, supra, note 1, specifically provides that property purchased from the Veteran's Land Board may not be "transferred, sold, or conveyed in whole or part until the original veteran purchaser has enjoyed possession for a period of three years from the date of purchase of the property . . . ." The granting of the option from the two veterans to McPhail did not violate this provision because the option did not pass any title. It did not constitute a transfer, sale or conveyance of any interest in the property. Roberts v. Armstrong, 231 S.W. 371 (Tex.Comm.App.1921, judgment adopted); Knox v. Brown, 277 S.W. 91 (Tex.Comm.App.1925, judgment adopted); Lusher v. First Nat. Bank of Fort Worth, 260 S.W.2d 621 (Tex.Civ.App. Fort Worth 1953, writ writ ref'd n. r. e.); Click v. Seale, 519 S.W.2d 913 (Tex.Civ.App. Austin 1975, writ ref'd n. r. e.).

Appellees rely on the case of Venable v. Patti, 490 S.W.2d 194 (Tex.Civ.App. Texarkana 1973, writ ref'd n. r. e.). In that case, the veteran attempted to sell and convey the land during the three-year period after he purchased the property from the Veteran's Land Board. The opinion states:

The length of Patti's possession is decisive because Article 5421m, Section 17 regulates and circumscribes resale of land purchased by a veteran, such as Patti, under the Veteran's Land Program. . . . The statute expresses public policy and constitutes a limitation on the right and power of a purchaser, such as Frank Patti, to alien or transfer the property purchased from the Board for a three-year period after date of the purchase.

. . . the agreement to sell was in direct contravention of Article 5421m and the public policy expressed therein and is not enforceable . . . .

In this case, the veterans did not actually sell or convey the property during the three-year period following their purchase from the Veteran's Land Board. They only gave McPhail the option to purchase the property, and the option is subject to compliance with the requirements of Section 161.224 of the Texas Natural Resources Code, supra, note 1. Even though the contract between the parties did not refer to this statute, it is clear that any sale by the veterans must comply with it. McPhail cannot exercise his option to purchase without securing approval of the Veteran's Land Board, but the option is not void. It was unenforceable during the three-year period, and it is not presently enforceable unless the Veteran's Land Board gives its approval to the sale.

Bellah v. First National Bank of Hereford, 478 S.W.2d 636 (Tex.Civ.App. Amarillo), writ ref'd n. r. e. per curiam, 484 S.W.2d 558 (Tex.1972), concerned land purchased by a veteran and then mortgaged. The court of civil appeals stated:

Although the legal title to the land is vested in the State, the purchaser, upon execution of the contract of sale and purchase and entry into possession, becomes vested with equitable title. It is axiomatic that any ownership in property that may be transferred, sold or conveyed may also be mortgaged or conveyed in trust absent some legal inhibition. Bourn v. Robinson, 49 Tex.Civ.App. 157, 107 S.W. 873 (1908, no writ); Clark v. Altizer, 145 S.W. 1041 (Tex.Civ.App. Austin 1912, writ ref'd). The statutory enactment...

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3 cases
  • TCA Bldg. Co. v. Northwestern Resources Co.
    • United States
    • Texas Court of Appeals
    • April 30, 1996
    ...2345, 2668 (current version codified as amended at TEX.NAT.RES.CODE ANN. § 161.227 (Vernon 1993)); see McPhail v. Texas Architectural Aggregate, Inc., 573 S.W.2d 893, 897 (Tex.Civ.App.--Eastland 1978, no writ). 2 On the same date TU Electric executed the ten-year lease, it also purchased, f......
  • Murren v. Foster
    • United States
    • Texas Court of Appeals
    • May 31, 1984
    ...Mrs. Murren relies on Venable v. Patti, 490 S.W.2d 194 (Tex.Civ.App.--Texarkana 1973, writ ref'd n.r.e.) and McPhail v. Texas Arch. Aggregate, Inc., 573 S.W.2d 893 (Tex.Civ.App.--Eastland 1978, no In Venable, the veteran Patti, who took possession of land pursuant to a contract of sale and ......
  • Wade v. Texaco Trading & Transp., Inc., Civ. A. No. H-90-2438.
    • United States
    • U.S. District Court — Southern District of Texas
    • December 17, 1991
    ...of the State of Texas which the Texas Supreme Court has not yet considered. Although the Plaintiffs assert that McPhail v. Texas Architectural Aggregate, Inc., 573 S.W.2d 893 (Tex.Civ.App.—Eastland 1978, no writ) partially addresses the question at hand, the Court expressly notes that the M......

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