River and Beach Land Corp. v. O'Donnell

• Decision Date: 22 April 1982
• Docket Number: No. 1944,1944
• Citation: 632 S.W.2d 885
• Parties: RIVER AND BEACH LAND CORPORATION and Chulavista Land Investment Co., Inc., Appellants, v. W. H. O'DONNELL, Trustee, and Joe G. Sanders, Trustee, Appellees.
• Court: Texas Court of Appeals

Page 885

632 S.W.2d 885

RIVER AND BEACH LAND CORPORATION and Chulavista Land

Investment Co., Inc., Appellants, v. W. H. O'DONNELL, Trustee, and Joe G. Sanders, Trustee, Appellees.

No. 1944.

Court of Appeals of Texas, Corpus Christi.

April 22, 1982.

Jeffrey Roerig, Cox, Wilson, Black & Roerig, Brownsville, for appellants.

Neil Norquest, O. C. Hamilton, Ewers, Toothaker, Ewers, Abbott, Talbot, Hamilton & Jarvis, McAllen, for appellees.

Before NYE, C. J., and UTTER and KENNEDY, JJ.

OPINION

NYE, Chief Justice.

This is a suit to rescind the sale of two adjoining parcels of Cameron County real estate. O'Donnell and Sanders, the sellers (hereinafter appellees), brought the suit, alleging fraud and/or mutual mistake which precluded a meeting of the minds of the parties on a material term of a real estate contract. River and Beach Land Corporation (River and Beach), the buyer, and Chulavista Land Investment Company, Inc. (Chulavista), River and Beach's nominal successor in title, (collectively, appellants), answered with general denials and counterclaimed for specific performance and damages for breach of contract and wrongful clouding of title.

In a trial before a jury, after hearing all the evidence, the trial court granted a directed verdict for appellees and denied a directed verdict requested by appellants, in effect granting the rescission in toto and denying all relief requested by appellants.

Prior to October, 1978, appellees listed for sale two tracts of land located in Cameron County, Texas, containing approximately 423 acres (Sanders tract) and 9500 acres (O'Donnell tract). A Mr. Paul Johnson, who turned out to be an agent for River and Beach, expressed interest in purchasing both tracts, which were contiguous, as a package deal. Negotiations between appellees and Johnson resulted in the execution of documents entitled "Sales Contract" between each of the appellees and Johnson on November 14, 1978. The November 14th instruments initially provided that the Cameron County properties would be conveyed to Johnson in consideration for the execution of promissory notes in favor of appellees and the conveyance of good and marketable fee simple title to properties located in Missouri and Alabama. This agreement was later amended to provide that Johnson would cause the Missouri and Alabama properties to be sold and create notes in favor of appellees.

The parties' views of the November 14th documents are significantly disparate. Appellants contend that it was a binding contract which formed the basis of the bargain although it was later modified in several respects. Appellees, on the other hand, claim that it was no more than a summarization of the negotiations to that point, and an incomplete statement, depending upon later negotiations to add essential elements to form an enforceable contract. In any case, it is clear that the parties continued to negotiate until the deal apparently closed on April 5, 1979. In the end, appellee O'Donnell conveyed to River and Beach some 469 acres less than was originally stated in the November 14th agreement, and received in exchange a correspondingly reduced promissory note.

When appellees went to record their liens and deeds of trust on the Missouri and Alabama trade properties, they discovered that Johnson had that very day caused to be recorded deeds of trust in favor of his wife, Geneva Ann Johnson, on these same properties. In addition, a note and deed of trust on a leasehold estate in Alabama which appellee Sanders was to have received from a third party were never delivered because Johnson had caused a transfer of the leasehold and a deed of trust in favor of his wife to be filed in the Alabama Deed Records on the morning of April 5, 1979. Claiming they were to have received first liens on all the trade properties, appellees filed the instant suit to rescind the contract. Appellants contend that the contract did not specify the priority of the liens to be received by appellees, and further claim that appellee O'Donnell breached the contract by failing to convey all of the property promised.

Appellees have filed a motion to dismiss the appeal, claiming mootness and waiver. The mootness claim concerns the O'Donnell tract, and the waiver claim refers to the Sanders tract.

THE SANDERS TRACT

Appellees maintain that appellants have waived their rights to contest the trial court's judgment in regards to the Sanders tract by accepting the benefits of the judgment. When the trial court granted rescission, certain promissory notes executed by third parties which were part of the consideration paid by River and Beach were ordered returned to it. Appellants did not file a supersedeas bond. On January 6, 1981, seven days after entry of the judgment complained of herein, River and Beach wrote a letter to the debtor on a certain note executed in favor of appellee Sanders on March 1, 1979. By this letter, River and Beach informed the debtor that it was now the owner of the note, that the note was in default and that it intended to commence foreclosure proceedings.

A litigant who has voluntarily accepted the benefits of a judgment cannot afterward prosecute an appeal therefrom. Carle v. Carle, 149 Tex. 469, 234 S.W.2d 1002 (1950); Graham v. Caballero, 243 S.W.2d 286 (Tex.Civ.App.-El Paso 1951, writ ref'd n. r. e.). There are two narrow exceptions to this general rule. First, if a reversal of the judgment could not possibly affect an appellant's right to the benefit accepted, he is not estopped from appealing. Carle v. Carle, supra, 234 S.W.2d at 1004. Second, the right to appeal is not waived where the economic circumstances of the appellant were such that acceptance of the benefits were not considered voluntary. Haggard v. Haggard, 550 S.W.2d 374, 376 (Tex.Civ.App.-Dallas 1977, no writ). Neither exception applies herein.

It is certain that reversal of the judgment in the instant cause would affect River and Beach's ownership of the subject note and deed of trust. Further, there has been no claim or evidence of economic hardship on River and Beach which would characterize its acceptance of the note as involuntary or under duress. Therefore, River and Beach's acceptance of the ownership of the subject note and deed of trust conferred by the judgment places it under the rule of equity announced in Carle v. Carle, supra. River and Beach is estopped from appealing the judgment of the trial court as it concerns the Sanders tract. That portion of the appellees' motion to dismiss the appeal as it concerns the Sanders tract is granted.

THE O'DONNELL TRACT

Appellees argue that the appeal so far as it concerns the O'Donnell tract is moot because a foreclosure has put the title in the hands of a third party leaving nothing to adjudicate between the parties to the instant cause.

At all times material to the transaction which forms the basis of this lawsuit, the O'Donnell tract was encumbered by a mortgage to Rio Grande Savings & Loan. It is undisputed that appellant had both actual and constructive notice of this lien. The deed from O'Donnell to River and Beach expressly provides that the conveyance is subject to the indebtedness to Rio Grande and the deed of trust securing the same. River and Beach necessarily acquired no rights in the tract other than those held by O'Donnell. See Moerbe v. Beckmann, 132 S.W.2d 616 (Tex.Civ.App.-Austin 1939, writ dism'd judgm't cor.). Rio Grande's lien was foreclosed on July 7, 1981. At the foreclosure sale, Rio Grande was the highest bidder and now holds title to the land. There was no surplus in the amount paid at the foreclosure sale. Appellees argue, and we agree, that because appellee O'Donnell also took the property subject to the existing Rio Grande lien, the foreclosure has extinguished all claims of right, title and interest of both appellants and appellees. A reversal of the judgment could not possibly restore title to the O'Donnell tract to appellants.

Appellant contends, however, that the case is not moot because there are issues of money damages involved. Appellants have of record a counterclaim against appellee O'Donnell alleging a breach of the sales contract for failure to convey all of the property which he promised to convey. Since this issue appears to have some justification, we will review the evidence regarding the merits of appellants' claim and...