San Antonio Sav. Ass'n v. Palmer, 04-88-00447-CV

• Citation: 780 S.W.2d 803
• Decision Date: 30 August 1989
• Docket Number: No. 04-88-00447-CV,04-88-00447-CV
• Parties: SAN ANTONIO SAVINGS ASSOCIATION and Xavier Sanchez, Trustee, v. William PALMER, Independent Administrator of the Estate of Booney M. Moore, Robert E. Dardeman, Marie M. Davis and Helen M. Garner, Individually and as Heirs of the Estate of Booney M. Moore.
• Court: Texas Court of Appeals

Page 803

780 S.W.2d 803

SAN ANTONIO SAVINGS ASSOCIATION and Xavier Sanchez, Trustee, v. William PALMER, Independent Administrator of the Estate of

Booney M. Moore, Robert E. Dardeman, Marie M.

Davis and Helen M. Garner, Individually

and as Heirs of the Estate of

Booney M. Moore.

No. 04-88-00447-CV.

Court of Appeals of Texas,

San Antonio.

Aug. 30, 1989.

Rehearing Denied Oct. 18, 1989.

Robert E. Golden, Charles M. Jefferson, Smith, Barshop, Stoffer & Millsap, San Antonio, for appellants.

Frederick R. Zlotucha, San Antonio, for appellees.

Before CADENA, C.J., BIERY, J., and GERALD T. BISSETT, Assigned Justice.

OPINION

GERALD T. BISSETT, Assigned Justice.

This is an appeal from a summary judgment in favor of William Palmer, Independent Administrator of the Estate of Booney M. Moore, Deceased, Robert E. Dardeman, Marie M. Davis, and Helen M. Garner, individually and as devisees and legatees of Booney M. Moore, Deceased, plaintiffs in the court below and appellees in this Court. They will be referred to as "plaintiffs." San Antonio Savings and Loan Association, hereinafter "SASA," and Xavier Sanchez, trustee under the hereinafter mentioned deed of trust, and who is a nominal party to this appeal, were defendants in the court below and are appellants in this Court.

SASA purchased five general mortgage bonds from the Estate of Booney M. Moore, Deceased, hereafter the "decedent's estate," for the sum of $2,400,000.00 cash. The bonds were secured by a deed of trust on certain real property, hereinafter particularly described, in Bexar County. Xavier Sanchez was the trustee. When payments on the underlying obligation were not timely made by the personal representative of the decedent's estate, SASA posted the real property for foreclosure.

On November 30, 1987, plaintiffs brought suit in the 57th Judicial District Court of Bexar County, Texas, to enjoin defendants from foreclosing under the deed of trust. On March 4, 1988, the case was transferred to Probate Court No. 2, Bexar County, and consolidated with the administration of the decedent's estate. Thereafter, plaintiffs filed an amended petition asking the probate court to declare the lien on the real property to be void and to cancel the underlying debt. SASA, among other assertions, asserted that the lien and debt were valid and that plaintiffs were estopped to challenge their validity.

Plaintiffs and defendants both filed motions for summary judgment. On May 31, 1988, the probate court signed and rendered a final summary judgment, granting plaintiffs' motion and denying defendants' motion. The court, in its judgment, declared that SASA's lien was void and that the underlying debt was equally void, and permanently enjoined SASA from foreclosing on the real property. As a result of this judgment, plaintiffs own the subject property free of all debt and have received $2,400,000.00, paid to decedent's estate by SASA, which they are under no obligation to repay.

Booney M. Moore was the sole owner of a 187-acre tract of land off Bandera Road in San Antonio, Texas, hereafter the "Bandera Road property." On April 12, 1985, the Coble Wall Trust Company, Inc. was appointed guardian of the "Estate of Booney M. Moore, an Incompetent Person," in Cause No. 84-PC-2756. Elwood Cluck was Chairman of the Board in the Coble Wall Trust Company, Inc. and its attorney. He developed a plan for the Estate of Booney M. Moore, an Incompetent Person, hereafter the "guardianship estate." The Bandera Road property was worth several million dollars, and once Mrs. Moore died, substantial estate and inheritance taxes would be due. Mrs. Moore did not possess sufficient liquid assets to pay such taxes. Accordingly, the plan, if put into operation, would avoid the forced sale of the Bandera Road property upon the death of Mrs. Moore, and would inject liquidity into her estate.

In devising the estate plan, the guardian had negotiations and discussions with attorneys representing Mrs. Moore's devisees, legatees, and heirs. The attorneys for all interested parties reviewed the proposed estate plan. On November 22, 1985, the probate court entered its order authorizing the establishment of an estate plan, which was approved and agreed to by Robert Dardeman, Helen Garner, Marie Davis, and their attorneys. The order noted that Booney M. Moore was then 93 years old, in poor health, and had a life expectancy of probably less than thirty days. The guardian, pursuant to the estate plan, was ordered to organize a Texas corporation, to be named "The Estate of Booney M. Moore, Inc.," hereafter the "corporation," for the purpose of acquiring Mrs. Moore's title to the Bandera Road property and other real property owned by her. The guardian was also ordered to convey all of the Bandera Road property and other real property owned by Mrs. Moore to the corporation in exchange for 10,000 shares of preferred stock of the corporation, 1,000 shares of common stock of the corporation, and $2,500,000.00 in general mortgage bonds issued by the corporation. The guardian was further ordered to offer the general mortgage bonds for sale to the public for cash in order to obtain funds for the support of Mrs. Moore and for the payment of estate, inheritance, and other taxes upon her death.

Pursuant to the order, the corporation was created on November 22, 1985. On November 25, 1985, the guardian conveyed the Bandera Road property to the corporation in exchange for the common stock, the preferred stock, and the general mortgage bonds of the corporation. SASA was contacted by the guardian for the first time on November 26, 1985, regarding the sale of the bonds.

Booney M. Moore died on December 12, 1985. The guardianship proceeding was discontinued and a new proceeding in the probate court, entitled "The Estate of Booney M. Moore, Deceased," was commenced. The Coble Wall Trust Company was appointed by the probate court to be the temporary administrator of the decedent's estate. One of the specific powers given to the temporary administrator in the probate court's order was the power to complete the estate plan previously approved by the probate court in the guardianship proceeding.

On December 19, 1985, SASA issued a commitment letter to the decedent's estate, in which it agreed to purchase the general mortgage bonds from the estate for $2,400,000.00 in cash. Payment of the bonds was secured by a first lien deed of trust on the Bandera Road property, dated November 25, 1985, executed by the president of the corporation, as grantor, to Xavier Sanchez, as trustee.

On December 26, 1985, the temporary administrator filed an "Application for Sale of Personal Property" with the probate court, seeking the court's permission to complete the estate plan by having the decedent's estate sell the mortgage bonds of the corporation to SASA upon the terms set out in the commitment letter. The probate court authorized this sale by its order dated December 26, 1985.

On December 31, 1985, the general mortgage bonds were sold by the decedent's estate to SASA for $2,400,000.00 cash. In return, SASA received the bonds and a first deed of trust lien on the Bandera Road property.

The guardian filed its final account in the guardianship proceeding on February 15, 1986. It recited: 1) that the guardian conveyed the Bandera Road property and other tracts of land belonging to Mrs. Moore to the Estate of Booney M. Moore, Inc., a Texas Corporation, on November 25, 1985, "in exchange for stock and bonds"; 2) that it received the general mortgage bonds (face value, $2,500,000.00) issued by the corporation on November 25, 1985, "in exchange for real property"; and 3) that the general mortgage bonds were sold by the decedent's estate to SASA on December 31, 1985, for $2,400,000.00. The probate court approved the guardian's final account by order signed on April 9, 1986.

The interest payment on the bonds due on July 1, 1987, was not paid. SASA made demand for the delinquent payment and when such payment was not forthcoming, SASA declared the balance due on the mortgage bonds immediately payable and posted the property for foreclosure. Thereafter, on November 30, 1987, plaintiffs filed their original petition to block the foreclosure sale of the Bandera Road property. Such foreclosure sale was enjoined by the probate court, pending final trial. Plaintiffs, in their second amended petition, sought to void SASA's lien against the Bandera Road property and to cancel the underlying debt owed to SASA. In addition, they asserted causes of action for negligence, fraud, infliction of mental anguish, conspiracy, and breach of a duty of good faith and fair dealing; and they sought a permanent injunction to enjoin and restrain a foreclosure sale on the Bandera Road property. SASA then filed its second amended answer and counterclaims, in which it asserted: 1) the validity of the guardian's sale; 2) the affirmative defense of estoppel; 3) a cause of action for rescission on the grounds of mutual mistake of fact; and 4) total failure of consideration.

Plaintiffs, in their motion for summary judgment, sought to obtain summary judgment solely on the issues of the invalidity of SASA's mortgage lien against the property and the invalidity of the debt, asserting that the sale of the Bandera Road property by the guardianship estate to the corporation on November 25, 1985, was void, and the deed of trust given as security was also void, because after the sale took place no report of sale in the guardianship estate was filed with the probate court, and the court did not sign an order approving the sale.

SASA then filed its own motion for summary judgment, contending, among other contentions, that 1) as a matter of law, the transfer of the Bandera Road property was valid and that the lien had been created in compliance with the Probate Code; and 2) plaintiffs were estopped from challenging the validity of the lien in question.

Thereafter, the probate court...