Stewart v. Stine

• Decision Date: 09 August 2001
• Docket Number: No. 2-00-184-CV,2-00-184-CV
• Citation: 57 S.W.3d 94
• Parties: (Tex.App.-Fort Worth 2001) WILLIAM D. STEWART, JR., APPELLANT v. MARY NELLE STINE, APPELLEE
• Court: Texas Court of Appeals

Page 94

57 S.W.3d 94 (Tex.App.-Fort Worth 2001)

WILLIAM D. STEWART, JR., APPELLANT v. MARY NELLE STINE, APPELLEE

No. 2-00-184-CV

Court of Appeals of Texas, Fort Worth

August 9, 2001

From the 67th District Court of Tarrant County

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[Copyrighted Material Omitted]

Panel A: CAYCE, C.J.; DAY and WALKER, JJ.

OPINION

WALKER, JUSTICE

INTRODUCTION

The primary issue in this appeal is whether appellee possesses standing to sue her former son-in-law for breach of the agreement incident to divorce he entered into with appellee's daughter. Because we conclude that appellee lacks standing, we reverse the trial court's judgment for appellee and render judgment against appellee.

FACTS

In 1984, Mary Nell Stine ("Stine") loaned her daughter, Nancy Stewart, and her son-in-law, William D. Stewart, Jr. ("Stewart") $100,000 to assist the couple in the purchase of a home. [rr 57, cr 6] The Stewarts signed an April 26, 1984,$100,000 promissory note ("Note") payable on demand by Stine. In September 1985, the Stewarts paid Stine $50,000 pursuant to the Note, leaving a Note balance of $50,000.

The Stewarts divorced in 1992. On October 2, 1992, the 231st District Court of Tarrant County, Texas signed the Stewarts' agreed final decree of divorce and property settlement agreement. The decree approved and incorporated by reference the agreement incident to divorce signed by the Stewarts and attached to the decree.

The agreement incident to divorce awarded use of the Stewarts' home to Stewart and required him to be responsible for mortgage payments, repairs, and maintenance on the home unless and until he sold the home. The agreement incident to divorce also provided:

[w]hen the property is sold the proceeds of said sale are to be paid as follows:

a. closing costs and all costs of sale;

b. first lien payment to be paid in full at Alta Mesa National Bank;

c. any monies owing to Mary Nelle Stine are to be paid in the current principal sum of $50,000.00;

d. any and all remaining proceeds are to be divided between the parties, 50% to NANCY KAREN STEWART and 50% to WILLIAM DEAN STEWART, JR.

The parties agree that other party can petition the Court at any time to appoint a receiver and sell the residence at 6513 Lago Vista, Fort Worth, Texas at any time.

The parties agree that with regard to the note to Mary Nelle Stine, after application of the proceeds of the residence at 6513 Lago Vista, Fort Worth, Texas, if there are any amounts owing to Mary Nelle Stine the remaining balance owing to her will be appropriated 50% to NANCY KAREN STEWART and 50% to WILLIAM DEAN STEWART, JR. and said 50% from each party will be due and payable upon the determination that the proceeds from the sale of said residence are not sufficient to repay said $50,000.00 in full.

Stewart sold the home on November 17, 1995. The proceeds realized from the sale totaled $6,820. Stewart did not pay those proceeds to Stine.

THE LAWSUIT

On July 27, 1998, Stine sued Stewart in the 67th District Court of Tarrant County, Texas. Stine claimed that she was a third-party beneficiary of the Stewarts' agreement incident to divorce and that, based on the above-quoted language contained in that agreement, she was entitled to enforce the provisions of the agreement incident to divorce that were made for her benefit. After a bench trial, the trial court entered judgment for Stine for $27,410 plus prejudgment and postjudgment interest.

The trial court made findings of fact and conclusions of law. The trial court found, in part, that Stine was a third-party beneficiary of the agreement incident to divorce, that Stewart breached the agreement incident to divorce, and that Stine suffered damages in the amount of $27,410.

THE APPEAL

Stewart raises five issues in this appeal.¹ In his first issue, he contends that the 67th District Court lacked subject matter jurisdiction over Stine's lawsuit. Standing is implicit in the concept of subject matter jurisdiction. Tex. Ass'n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 443 (Tex. 1993). Although Stewart's issue on appeal is phrased in terms of "subject matter jurisdiction" instead of "standing," we liberally construe his point as raising the issue of standing because standing is a component of subject matter jurisdiction. Tex. R. App. P. 38.1(e) (providing that the "statement of an issue or point will be treated as covering every subsidiary question that is fairly included"). We note that we are required, even on our own motion, to address a party's standing to bring suit when it is an obvious issue in the case. Tex. Ass'n of Bus., 852 S.W.2d at 445-46 (supreme court addressed standing issue on its own motion).

Additionally, after this case was submitted, the supreme court addressed a non-spouse's ability, or standing, to enforce an agreement incident to divorce. Brown v. Fullenweider, 52 S.W.3d 169 (2001). Through a post-submission letter brief, Stine asserts that the supreme court's reasoning in Brown v. Fullenweider resolves the subject matter jurisdiction issue against Stewart. Application of Brown v. Fullenweider to the present facts squarely presents the issue of Stine's standing. Thus, we address whether Stine possesses standing to sue her former son-in-law for breach of the agreement incident to divorce he entered into with Stine's daughter.

STANDING

Subject matter jurisdiction is essential to the authority of a court to decide a case. Tex. Ass'n of Bus., 852 S.W.2d at 443, 445-46. Standing is a necessary component of subject matter jurisdiction. Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 850 (Tex. 2000). Standing is a question of law. Accord Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998) (holding that because ripeness is a component of subject matter jurisdiction, it is question of law subject to de novo review), cert. denied, 526 U.S. 1144 (1999). We construe Stine's pleadings in her favor and, if necessary, review the entire record to determine whether any evidence supports Stine's standing to sue her former son-in-law. See Tex. Ass'n of Bus., 852 S.W.2d at 446.

1. Stine's Pleadings

Stine pleaded, in part:

Plaintiff would show that she is a third-party beneficiary of the Agreement Incident to Divorce insofar as payment of the [Note] is concerned, and is entitled to enforce the provisions of the Agreement Incident to Divorce that were made for her benefit.

Stine attached to her petition copies of the pertinent pages of the Stewarts' agreement incident to divorce. She claims that she sued Stewart for breach of contract, specifically breach of the agreement incident to divorce, not for enforcement of the agreement incident to divorce. She argues that her suit is governed by general contract law, not by the family code. Stewart, on the other hand, claims that Stine's suit is a suit to enforce a divorce decree providing for a division of property. He points out that the statute of limitations had expired on the Note and argues that Stine clearly sued him to enforce the agreement incident to divorce.²

2. Third-party Beneficiary Status

Stine claims, and the trial court made a conclusion of law, that she was a third-party beneficiary of the agreement incident to divorce executed between the Stewarts. The fact that a person might receive an incidental benefit from a contract to which he is not a party does not give that person a right of action to enforce the contract. MCI Telecomm. Corp. v. Tex. Util. Elec. Co., 995 S.W.2d 647, 651 (Tex. 1999). A third party may recover on a contract made between other parties only if the parties intended to secure some benefit to that third party, and only if the contracting parties entered into the contract directly and primarily for the benefit of the third party. Id.; Bass v. City of Dallas, 34 S.W.3d 1, 7 (Tex. App. Amarillo 2000, no pet.).

To qualify as one for whose benefit the contract was made, the third party must show that he is either a donee or creditor beneficiary of, and not one who is only incidently benefitted by the performance of, the contract. MCI Telecomm., 995 S.W.2d at 651; Old Republic Sur. Co. v. Cross, 27 S.W.3d 35, 37 (Tex. App. San Antonio 2000, pet. denied). A person is a donee beneficiary if the performance of the contract inures to his benefit as a gift. Esquivel v. Murray Guard, Inc., 992 S.W.2d 536, 543 (Tex. App. Houston [14th Dist.] 1999, pet. denied); Brunswick Corp. v. Bush, 829 S.W.2d 352, 354 (Tex. App. Fort Worth 1992, no writ). An example is a prenuptial agreement in which a prospective bride promises to execute a will to benefit her prospective husband's children from a previous marriage. Esquivel, 992 S.W.2d at 543. A person is a donee beneficiary only if a donative intent expressly or impliedly appears in the contract. Id.

If, on the other hand, that performance will come to the third party beneficiary in satisfaction of a legal duty owed to him by the promisee, he is a creditor beneficiary. MCI Telecomm., 995 S.W.2d at 651. In this context, a creditor beneficiary may be defined as a third person to whom the bargain-seeking party (the "promisee" or contract party exacting the particular stipulation) has an indebtedness, contractual obligation, or other legally enforceable commitment, which commitment the bargain seeker wishes to discharge or protect by stipulating that the bargain-giver (the opposing contract party or "promissor" concerning the particular stipulation) shall deliver a contract performance to the third party. MJR Corp. v. B & B Vending Co., 760 S.W.2d 4, 11 (Tex. App. Dallas 1988, writ denied). The essence of the "creditor beneficiary" position requires not only that the bargain-seeking party intend to confer a benefit upon the third party; he must further intend that the third party have the right to enforce the agreement. Id.

In determining whether a third party can enforce a contract, the intention of the contracting parties is controlling. MCI Telecomm., 995 S.W.2d at...