Pine v. Gibraltar Savings Association

• Decision Date: 12 December 1974
• Docket Number: No. 16383,16383
• Citation: 519 S.W.2d 238
• Parties: Robert E. PINE, Appellant, v. GIBRALTAR SAVINGS ASSOCIATION, Appellee. (1st Dist.)
• Court: Texas Court of Appeals

Page 238

519 S.W.2d 238

Robert E. PINE, Appellant, v. GIBRALTAR SAVINGS ASSOCIATION, Appellee.

No. 16383.

Court of Civil Appeals of Texas Houston (1st Dist.).

Dec. 12, 1974.

Rehearing Denied Jan. 16, 1975.

Harry S. Jones, Robert H. Zoda, Jr., Bellaire, for appellant.

Kronzer, Abraham & Watkins, Bobert E. Ballard, W. James Kronzer, Monteith, Baring & Nester, Charles A. Nester, Houston, for appellee.

PEDEN, Justice.

Gibraltar Savings Association sued Robert E. Pine to recover a deficiency judgment after foreclosure of three deed of trust liens securing promissory notes executed in favor of Gibraltar by Mr. Pine . Mr. Pine filed a cross-action against Gibraltar for conversion of his water and sewer lines and for a breach of contract alleging damages in the amount of $450,000. Each party sought a summary judgment. After the first hearing, Gibraltar obtained a summary judgment as to the deficiency and a summary judgment denying Pine recovery on his cross-action. On appeal this court approved the granting of the summary judgment in favor of Gibraltar as to recovery of the deficiency and it has remained in effect as an interlocutory order; we reversed and remanded the summary judgment that Pine take nothing on his cross-action. Pine v. Gibraltar Savings Association, 427 S.W.2d 714 (Tex.Civ.App.1968, no writ). On remand the parties were realigned with Pine as the plaintiff, and, in a non-jury trial, the trial judge granted Gibraltar's motion for judgment when Pine rested his case. This appeal is from that take-nothing judgment.

Mr. Pine was the developer of Glenwood Bayou Subdivision in Brazoria County. He obtained three loans from Gibraltar to improve and develop his property. As security for them he executed three deeds of trust encompassing much of the property located in the subdivision. When Gibraltar foreclosed the three deed of trust liens it took over and operated the water and sewer systems, including the pipes, until it sold the water system to Community Utilities, Inc.

Pine contends that the water and sewer pipes were never subject to any lien, that they were never dedicated to public use and that he intended to maintain them as his own private utility systems when Gibralter foreclosed on the deeds of trust. In Pine's first three points of error he contends that the trial court erred in granting the take-nothing judgment as to his allegations of conversion because there was probative evidence that Gibraltar received no title to the lines, that Pine was the sole owner and that the lines did not become part of the realty.

The water plant and sewer treatment plant were placed on separate sites known as Reserve Tract G and Reserve Tract H, respectively. Both tracts were included in the security in both the $87,000 deed of trust and the $217,655 deed of trust. The $87,000 loan was secured partially by '. . . the 'Reserve' Section of the Glenwood Subdivision . . . according to the recorded map or plat thereof attached to Deed recorded in Volume 719 at page 195 of the Deed Records of Brazoria County, Texas.' This is stipulated to be all property marked 'Reserved' on plaintiff's exhibit 23. Plaintiff's exhibit 24 shows that Reserve Tracts G and H, part of the security for the $217,655 loan, were carved out of the large reserve area shown in plaintiff's exhibit 23. Therefore, these tracts were security for both the $87,000 and $217,655 loans.

The deeds of trust created a security interest in the described property 'together with all improvements thereon, or hereafter to be placed thereon and all and singular the rights and appurtenances to the same belonging or in anywise incident or appertaining . . .' One question is whether the water and sewer lines were included in the property listed as security for the loans.

The $87,000 deed of trust included the following provision:

'The indebtedness evidenced by said $87,000 note represents acquisition costs of the property hereby conveyed in trust, and with regard to the development and improvement thereby, (Pine) covenants with (Gibraltar) as follows:

'(a) that the streets in the subdivision will be paved in accordance with plans and specifications for that purpose, it being understood that curbs and gutters will be installed.

'(b) that storm and sanitary sewers will be installed in the Subdivision in accordance with plans and specifications.

'(c) that water, gas and electricity shall be made available to each lot site.

The $217,655 deed of trust contained the following provision:

'This loan is made under the Rules and Regulations for the Federal Savings and Loan System, together with the amendments thereto, being a loan to finance the purchase and improvement of developed buildings lots and sites, and (Pine) covenants with (Gibraltar) as follows:

'(a) that it is understood that all utilities, streets, and other improvements have been placed in the loan security, said lots constituting the loan security being fully developed and ready for the erection of improvements.

Mr. Pine testified as follows:

'Mr. Ballard: Do you know what they are talking about when they say 'developed building lots'?

'Mr. Pine: I know what the developed building lots are.

'Mr. Ballard: Would that be the same as building lots with all the utilities and pavements, curbs, gutters and everything put in?

'Mr. Pine: That's my interpretation.'

Mr. Pine testified he did not place the water and sewer pipe lines in the security but did concede that the water and sewer treatment Plants are part of the security because they became part of the realty of Reserve Tracts G and H. He testified that he did not intend to dedicate the water and sewer lines to public use; we need not decide if a fact issue was raised as to dedication of the lines.

As we have noticed, any present or future improvements placed on or in the described property and all appurtenances to the described property were included in the security. It is clear that under the covenant in the $217,655 deed of trust all utilities were considered to be improvements and 'have been placed in the loan security.' This made the lines part of the security, so Gibraltar obtained title to them through the foreclosure.

There was a part of Glenwood Bayou Subdivision, known as Section 1, which was not included in the loan security, and we are not convinced that the parties specifically provided in the covenants that the water and sewer lines in Section 1 were made part of the loan security.

We next consider whether all of the water and sewer lines in Glenwood Bayou Subdivision were appurtenances to Reserve Tracts G and H. Pertaining to real property, an appurtenance 'means and includes all rights and interests in other property necessary for the full enjoyment of the property conveyed and which were used as necessary incidents thereto.' An appurtenance is also defined as 'everything necessary to the beneficial use of the property, . . . whatever is needed to complete a structure and make it capable of performing its intended function.' 6 C.J.S. Appurtenance p. 136.

Szilagy v. Taylor, 63 Ohio App. 105, 25 N.E.2d 360, 361 (1939), states that:

'Things pass as incidents to or appurtenances of realty when they are attached thereto and are essential to its use; in other words, when they are fixtures. Two general tests to be applied in determining whether a particular article is a fixture are, adoption or application to the use or purpose to which that part of the realty to which it is connected is appropriated, and intention to make the article a permanent accession to the freehold.'

A Texas court has defined appurtenances in the following manner:

"Appurtenance', with reference to realty, has been said to be analogous to 'improvements'; and it has been defined as something annexed to another thing more worthy; that which belongs to something else; and that which belongs to another thing, but which has not belonged to it immemorially. 6 C.J.S. Appurtenance p. 134.' Hancox v. Peek, 355 S.W.2d 568, 569 (Tex.Civ.App.1962, writ ref. n.r .e.).

The Supreme Court of California, in Trask v. Moore, 24 Cal.2d 365, 149 P.2d 854 (1944), encountered a problem whose controlling facts were remarkably similar to those in our case. Ealey owned four lots in an unincorporated area. On this property were located two wells and pumping plants from which there extended a series of pipes furnishing water to some seventy neighboring homes at a monthly rate. Ealey executed to Trask, as security for his promissory note, a deed of trust covering the four lots 'together with the rents, issues and profits thereof; also all appurtenances including water rights in which trustor may have an interest, whether represented by stock of any water company or otherwise, benefiting the property herein described.'

Although his obligation on the note was still outstanding, Ealey later sold these lots to Mr. and Mrs. Moore and transferred the water distributing system to them by a separate conveyance.

On Ealey's default in payment of his note to Trask, the lost were sold by the trustee under the deed of trust to Trask. Meanwhile the Moores had disconnected the water distributing system from the pumping plants on...