Spencer v. Maverick, 10674.

• Decision Date: 08 January 1941
• Docket Number: No. 10674.,10674.
• Citation: 146 S.W.2d 819
• Parties: SPENCER et ux. v. MAVERICK.
• Court: Texas Court of Appeals

146 S.W.2d 819

SPENCER et ux. v. MAVERICK.

No. 10674.

Court of Civil Appeals of Texas. San Antonio.

January 8, 1941.

Appeal from Thirty-seventh District Court, Bexar County; Harry L. Howard, Judge.

Action by Laura Wise Maverick against A. B. Spencer, Jr., and wife, to recover earnest money paid under a contract to purchase realty. Judgment was rendered in favor of the plaintiff as prayed, and the defendants appeal.

Judgment affirmed.

Moursund, Ball, Moursund & Bergstrom, of San Antonio, for appellants.

Dodson, Ezell & Duke and J. D. Dodson, all of San Antonio, for appellee.

SMITH, Chief Justice.

Laura Wise Maverick sued A. B. Spencer, Jr. (and wife), to recover $2,000 earnest money paid under a contract to purchase Lots 6 and 7, Block 121, in the City of Alamo Heights, in Bexar County.

The cause was tried to the court upon a stipulation of the evidence and judgment was rendered in favor of Mrs. Maverick as prayed for. The Spencers have appealed. The trial judge filed no findings of fact or conclusions of law, as none were requested.

In the contract of sale appellant was obligated to furnish "a complete abstract * * * Title to be good and marketable or to be made so within a reasonable time, at the expense of the seller"; purchaser was given a stipulated time to investigate title after receipt of abstract, and if defects or objections were found to set forth the same in a written opinion; deal to be closed when such defects and objections were removed; if seller failed to remove defects, or "if title be found objectionable and cannot be cleared within reasonable time," purchaser was given option to require specific performance or return of earnest money.

It appears to be conceded that under the contract of sale appellants were obligated to furnish a complete abstract, showing, by its own contents, a good and merchantable title in appellants to the property to be conveyed. Appellants furnished a purportedly complete abstract, which they did not thereafter supplement or offer to supplement, thereby assuming the position that the abstract furnished showed, by its own contents, the character of title contracted for.

In due course, and after some correspondence, appellee declined to proceed with the purchase and demanded the return of the earnest money advanced by her, which was refused by appellant. This suit followed, with the result stated.

In their brief appellants select the following definition of "marketable title": "The term `marketable title,' when applied to real property, means one reasonably free from such doubt as would affect the market value of the estate; one which a prudent man with knowledge of all the facts and their legal bearing would be willing to accept (5 Words and Phrases, First Series, page 4388 et seq.); not doubts based on captious, frivolous, or astute niceties, made up for the occasion, but grave and reasonable doubts, such as would induce a prudent man to hesitate in accepting a title affected by them, and such as would make it possible or reasonably probable that the purchaser's right may become a matter of investigation, and thus affect its value. A marketable title is one that will bring as high a price in the market with the purchaser's objection to its sufficiency as without [citing authorities]." Texas Auto Co. v. Arbetter, Tex.Civ.App., 1 S.W.2d 334, 336.

Appellee presents this definition of the term: "A good and merchantable title is said, in 5 Thompson on Real Property, § 4296, to be: `A title that is fairly deducible of record and not depending on matters resting in parol. The term "marketable title" when applied to real estate, means a title free from reasonable doubt. An equitable title is not a marketable title. A title open to reasonable doubt is not a marketable title. The court cannot make it such by passing upon an objection depending upon a disputed question of fact or a doubtful question of law in the absence of the party in whom the outstanding right was vested. He would not be bound by the adjudication and could raise the same question in a new proceeding. * * * It would especially be unjust to compel a purchaser to take a title the validity of which depends upon a question of fact where the facts presented upon the application might be changed on a new inquiry or are open to opposing influences. A reasonable doubt concerning the title exists when there is uncertainty as to some fact appearing in the course of its deduction, and the doubt makes it such as affects the value of the property or will interfere with its sale. It is one in which the possession can be acquired and retained without litigation or judicial decision. It means a title that is reasonably free from such doubts as will affect the market value of the estate; one which a reasonably prudent person with knowledge of all the facts and their legal bearing, would be willing to accept. The title should not only be good, but indubitable. * * * A title may be perfect and yet not marketable. * * * A title may be good in fact but to be marketable it must [be] of good record.' * * * `Where the contract stipulates the character of title to be conveyed, effect will be given to such stipulation.' We think the Texas cases are in line with the rules announced in the text just quoted. * * * `Inasmuch as the law implies a contract that the purchaser shall receive a good title to the land, free from all defects, charges and incumbrances, it would seem unnecessary that the purchaser should insert in the contract any provision assuring him such title.'" Shamrock Oil & Gas Co. v. Williams, Tex.Civ.App., 63 S.W.2d 570, 574.

At the outset we must determine the question of whether the burden rested upon appellee to show, or upon appellant to negative, that the defects of title appellee pointed out were such as were reasonably calculated to render the title unmerchantable within the purview of the contract. Upon that question we hold, generally, that where, as in this case, the seller is required to furnish abstract showing merchantable title, and purchaser is required within a stipulated time to point out the defects of title shown in the abstract so furnished, and does so, the burden rests upon the seller to cure the claimed defects or else show they are not such as would impair the merchantability of the title (Lieber v. Nicholson, Tex.Com.App., 206 S.W. 512; Davenport v. Sparkman, Tex.Com.App., 208 S.W. 658); whereas, on the other hand, if the purchaser raises objections upon defects not disclosed in the abstract, the burden rests upon him to show that those defects are such as impair the merchantability of the title. Hollifield v. Landrum, 31 Tex.Civ.App. 187, 71 S.W. 979. We come, then, to the specific objections to title pointed out by appellee through the opinion of her attorneys.

And, first, we consider the fifth objection, as follows: "5. Paving improvements have been made around the property, to secure the payment for which the law gave a lien. The abstract does not show whether or not such a lien exists, and satisfactory proof should be furnished that no paving lien exists against the property."

The existence of the improvements mentioned in the objection was not disclosed in the abstract of title furnished appellee by appellant, and under the rule stated the burden rested upon appellee to show that the defect was such as to impair the merchantability of appellants' title. For, while it is true a prospective purchaser would be required to take notice of the existence of those improvements and of the proceedings of the municipality with respect thereto (Heisig v. Vaughn, Tex.Civ.App., 15 S.W.2d 113; Uvalde Co. v. Tribble, Tex.Civ.App., 292 S.W. 932), the extraneous fact of the existence of those improvements cannot be said to have been disclosed by the abstract, and the burden of going forward with proof of injury was cast upon appellee. Hollifield v. Landrum, 31 Tex.Civ.App. 187, 71 S.W. 979. That burden was not discharged by appellee. While the stipulation of the evidence shows the existence of said improvements at the time the contract involved was made, there is nothing therein, save the statements contained in the reply letter of appellants' attorneys to said objection 5, tending to show whether any lien was or was not created by reason of said improvements. And, if those statements could be looked to, they show that no lien was ever created.

Appellee's objection 6 to the title tendered by appellants relates to restrictions against the business use of the property involved.

One of appellants' contentions under that objection is that the undisputed evidence shows that the abstract does not disclose a "general scheme" of selling and conveying lots out of the Alamo Heights subdivision against business use, and that, therefore, the burden to prove this objection impaired the market value of Lots 6 and 7, or interfered with their saleability, rested upon appellee, and that burden was not met.

The abstract showed: (a) deed in 1910 from Alamo Heights Company to V. A. Scovill to Lot 6, wherein it was provided that title should pass, and the deed was made, upon certain conditions, among others, that vendee, his heirs or assigns, would not use the same or permit use thereof "for business pursuits, other than hotels, boarding or lodging houses," nor for the treatment of contagious or infectious diseases for profit, nor for the sale, etc., of malt or other intoxicating liquors; (b) successive deeds to Lot 6 bearing the same restrictions; (c) deed from Alamo Heights Company to Clifton George Company in 1914, and correction deed in 1915, to approximately 700 lots in Alamo Heights subdivision, including said Lot 7, but not said Lot 6, and in which all restrictions contained in deeds to Lot 6 were retained except only the restriction against hotels, etc.; (d) deed from Clifton George Company in 1922 to P. M. Gordon, containing the same restrictions as in deed to the approximately 700 lots above...