Schultz v. Weaver

• Decision Date: 08 November 1989
• Docket Number: No. 3-89-025-CV,3-89-025-CV
• Citation: 780 S.W.2d 323
• Parties: P.M. SCHULTZ, et al., Appellants, v. Walter W. WEAVER, et ux., Appellees.
• Court: Texas Court of Appeals

Page 323

780 S.W.2d 323

P.M. SCHULTZ, et al., Appellants, v. Walter W. WEAVER, et ux., Appellees.

No. 3-89-025-CV.

Court of Appeals of Texas,

Austin.

Nov. 8, 1989.

Rehearing Denied Dec. 6, 1989.

Jim Dear and Kevin M. Wilson, Jim Dear, P.C., Austin, for appellants.

Frank W. Rose, Smith, Carter, Rose, Finley & Hofmann, San Angelo, for appellees.

Before SHANNON, C.J., and GAMMAGE and JONES, JJ.

SHANNON, Chief Justice.

This appeal concerns the construction of a "no recourse" clause contained in a promissory note that appellants assumed in a general warranty deed.

Appellants Pete Michael Schultz and Edmond Martin seek to set aside a summary judgment rendered by the district court of Tom Green County that appellees recover against appellants personally in a suit for the unpaid balance of a promissory note. This Court will reverse the summary judgment.

Before September 1984, appellees conveyed a tract of land in Lampasas County to R.B. Lewis Company, Inc. and received a promissory note from Lewis. On September 7, 1984, Lewis deeded the land to appellants. As a part of the consideration, appellants, in the general warranty deed, assumed and agreed to pay the promissory note made payable to appellees from Lewis. The assumption clause in the deed provided that appellants would pay the unpaid principal on the note "according to the terms thereof." The promissory note in question contained a "no recourse" clause which provided that the maker of the note bore no personal liability for payment of the note and, in the event of default, the payee agreed to look only to the property securing the notice. The note was secured by a deed of trust.

Appellants failed to pay the principal and interest installments due September 7, 1987. Rather than foreclosing under the deed of trust, appellees sued appellants for the amount of the unpaid principal of the note. The district court rendered summary judgment that appellees recover against appellants personally for the unpaid balance of the principal.

Appellants urge that the district court erred in rendering summary judgment that appellees recover against appellants personally. This is so, assert appellants, because under the terms of the note and the general warranty deed appellees could look only to the land securing the debt for satisfaction in case of default.

The movant is entitled to summary judgment if he is entitled to judgment as a matter of law on the issues set out in the motion. Tex.R.Civ.P.Ann. 166a (1989). The summary judgment falls unless appellees demonstrated that appellants are liable as a matter of law on the note. This they have failed to do.

The "no recourse" clause contained in the note provided:

Maker bears no personal or coprorate [sic ] liability for payment of this note; the Payee/Holder thereof agrees to look only to the property securing said note for satisfaction of default under the terms of the note.

The deed conveying the land to appellants provided "that the Grantor [sic ] ¹ hereby assumes and promises to pay, according to the terms thereof, all principal and interest now remaining unpaid on ...