Smith v. McMillan, 13815

• Decision Date: 30 November 1961
• Docket Number: No. 13815,13815
• Citation: 352 S.W.2d 871
• Parties: R. E. SMITH et al., Appelleants, v. W. W. McMILLAN et al., Appellees.
• Court: Texas Court of Appeals

Page 871

352 S.W.2d 871

R. E. SMITH et al., Appelleants, v. W. W. McMILLAN et al., Appellees.

No. 13815.

Court of Civil Appeals of Texas, Houston.

Nov. 30, 1961.

Rehearing Denied Jan. 18, 1962.

Hofheinz, Sears, James & Burns, Houston, Will Sears, W. Ervin James, Houston, of Counsel, for appellants.

Bell & Singleton, John V. Singleton, Jr., Otto A. Yelton, Jr., Houston, for appellees.

WERLEIN, Justice.

This suit was brought by R. E. Smith and Ray Hofheinz, appellants, against appellees for specific performance of a contract of sale of land in Brazoria County, Texas. Appellees filed a cross-action against appellants, praying that the contract be declared null and void. Trial was without a jury. After appellants rested, appellees moved for judgment on the ground that the undisputed evidence showed as a matter of law that appellants had failed to make an adequate tender of performance as a condition precedent to the relief sought by them.

The trial court rendered judgment that appellants take nothing against appellees, and declared the contract of sale null and void.

In order to obtain a clear understanding of the issues involved, the agreement of the parties dated August 24, 1959 must be carefully examined. In such agreement appellees contracted to sell and appellants to buy all of the property owned or claimed by appellees in Section 76, H. T. & B. R. R. Co. Survey, Abstract No. 562; Section 77, H. T. & B. R. R. Co. Survey, Abstract No. 302; Section 1, A. C. H. & B. Survey, Abstract No. 403; Section 2, A. C. H. & B. Survey, Abstract 566.

The contract provides that notwithstanding the enumeration by section and abstract numbers set out above, it is the intention of the sellers to sell to the purchasers all of the tracts of land owned or claimed by them in the over-all parcel of lands centering upon said Section 77, whether contained within the foregoing sections or not; that sellers will convey the surface and mineral estate in and to all of such lands by general warranty deed subject to a trust lien held by the Bank of the Southwest National Association, excepting, however, from the mineral estate such outstanding royalty and mineral interests as are shown of record, and excepting from the conveyance and warranty the rights, if any, existing under a conveyance for canal purposes.

The contract provides for a consideration of $525,000.00, and that upon final closing of the transaction, the purchasers will assume said trust lien and after deducting the pro rata portion of taxes for the year 1959 and other closing costs 'hereinafter set forth chargeable to sellers,' purchasers will pay to sellers in cash the difference between the total amount of assumed principal and accrued interest, and the over-all price of $525,000.00. The agreement also provides for an adjustment in price at the rate of $443.42 per acre should there be more or less than 1184 surface acres in the over-all parcel of lands.

Paragraphs 6 and 7 of the agreement are as follows:

'6. Sellers agree to furnish the Purchasers an abstract of title covering the above described lands from the sovereighty of the soil to a current date, which abstract shall be furnished without delay and within a reasonable time from and after the date of this agreement, and which abstract of title, upon examination, will show a good and merchantable title in the Sellers as represented in Paragraph 2 hereof, to the satisfaction of Purchasers' attorneys. Within a reasonable time after delivery of such abstracts, Purchasers will either accept the title as good and merchantable as herein set out or will furnish to the Sellers the written title opinion of Purchasers' attorneys, stating objections to the title, whereupon Sellers shall have a reasonable time to clear the objections, at Sellers' sole cost and expense, and show a good and merchantable title as aforesaid. In the event of the failure of the Sellers to furnish a good and merchantable title satisfactory to Purchasers' attorneys, the Escrow Agent shall, upon Purchasers' demand, return to Purchasers the $25,000.00 earnest money whereupon this contract shall be cancelled; or Purchasers may enforce specific performance of this contract; or, in the event of Sellers' failure to meet and cure objections to the title, Purchasers may demand and take title subject to such objections and shall be thereupon entitled to charge the Sellers and recover from them the reasonable cost and expense of curing and perfecting the title so acquired.

'7. Not later than thirty (30) days from and after the delivery of all curative instruments necessary to show a good and merchantable title to the satisfaction of Purchasers' attorneys, or thirty (30) days after acceptance by shown in the abstract as good and merchantable, in the abstract as good and merchantable, the Sellers agree to deliver a good and sufficient General Warranty Deed (subject to the exceptions set out above) in form satisfactory to the Purchasers properly conveying the lands herein contracted to the Purchasers; and upon the delivery of such deed, Purchasers agree to pay the consideration by assumption and cash payment as set out above. At the time of such closing, the Sellers will be charged with their prorated portion of taxes for the year 1959, with the cost of Federal revenue stamps, and with abstract and title costs (including cost of curing title.) * * *'

The survey of the property established that there was a total gross acreage covered by the agreement of 1202.825 acres which included 18.408 acres in County Roads, 18.76 acres in Houston Lighting & Power Company easement, 4.28 acres in Dow Chemical Company easement, .20 acre in Trunkline Gas Company easement and 17.08 acres in a rice canal easement. In addition the survey showed a probable vacancy of $36.293 acres, and that approximately five acres of the Houston Lighting & Power Company easement was included in and was a part of such vacancy.

The title opinion of appellants' attorney, delivered to appellees on November 23, 1959, listed 25 objections to the title. Thereafter, both appellants and appellees undertook to clear up and satisfy some of such objections. On January 6, 1960, appellants' attorney wrote a supplemental title opinion, which the court erred in excluding, showing the objections that had been satisfied and the defects in the title which had not been cured.

On February 29, 1960, the sale had not been consummated because there were several defects in the title which appellees had failed to cure. On that date appellants elected to take the title subject to unsatisfied objections, in accordance with Paragraph 6 of the agreement. In their letter of that date they advised appellees that they had sent to the escrow agent, Houston Bank and Trust Company, for execution by appellees, a general warranty deed covering 1184.417 acres, being the entire acreage surveyed less 18.408 acres excluded because in county road easements, and they tendered appellees the purchase price for such acreage in the sum of $525,184.90, less the Bank of the Southwest lien, the cost of the survey, the County Clerk's filing fees, costs of certified copies, Federal documentary stamps, and $27,898.12 which they stated was the reasonable cost and expense of curing and clearing title.

The $27,898.12 deducted from the amount tendered included $16,093.04 for the 36.293 acres in the vacancy at the rate of $443.42 per acre. There was also deducted $1500.00 as reasonable and necessary charges, including attorney's fees, court costs and miscellaneous legal costs to cure certain objections to the title. $10,305.08 was deducted to cover the 23.24 acres within the Dow Chemical Company, Trunkline Gas Company and Houston Lighting & Power Company easements.

Thereafter, on March 18, 1960 appellees advised appellants that the tender made by them was insufficient, stating that no value was allowed or placed upon the alleged vacancy included in the deed; the $1500.00 charge for the cost of curing title was utterly ridiculous; no value was allowed or placed upon the acreage covered by the easements included in the deed, and the tender was not in accordance with the terms of the contract. Appellees further advised appellants that since the tender in said letter of demand dated February 29, 1960 was insufficient they had decided, without waiving any of their rights, to treat such insufficient tender as a manifestation on the part of appellants to rescind the contract, and that if they were mistaken in so construing said letter, they themselves rescinded the contract by reason of appellants' insufficient tender.

The parties hereto do not contend that there is any ambiguity in the contract in question. It is appellants' contention that under the contract they had the right in making their tender to deduct from the amount tendered the value of the acreage in the vacancy and in said easements at the full rate of $443.42 per acre, although they included such acreage in the general warranty deed which they demanded that appellees execute. They also contend that they had the right to deduct the $1500.00 as reasonable and necessary charges to take care of anticipated curative work.

Appellees, on the other hand, take the position that they were not required to execute a general warranty deed to any acreage for which they were not paid the contract price of $443.42 per acre. They also contend that appellants were deducting twice for five acres included in both the Houston Lighting & Power Company easement and in the vacancy. They further contend that appellants had no right to deduct from the amount tendered the $1500.00 representing the reasonable and necessary costs of curing defects in the title since no costs had been incurred. It is their contention that they should be paid for the number of acres included in the general warranty deed, and if their title fails to any of such acreage appellants may recover from them upon their warranty.

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