Michael Caress, Michael York and Manuel Villarreal v. Jane M. Lira ( 2010 )

OPINION
No. 04-10-00065-CV
Michael CARESS, Michael York and Manuel Villarreal,
Appellants
v.
Jane M. LIRA,
Appellee
From the 406th Judicial District Court, Webb County, Texas
Trial Court No. 2008-CVQ-000782-D4
Honorable Oscar J Hale, Jr., Judge Presiding
Opinion by: Sandee Bryan Marion, Justice
Sitting: Catherine Stone, Chief Justice
Sandee Bryan Marion, Justice
Steven C. Hilbig, Justice
Delivered and Filed: September 15, 2010
AFFIRMED
This is an appeal from a partial summary judgment rendered in favor of appellee on her
trespass to try title claim against appellants. The disputed property was sold to appellee, and
then, one month later, also sold to appellants at a foreclosure sale. We affirm.
BACKGROUND
The following facts are not in dispute. In 2006, Gares II, Inc. (“Gares”) purchased a tract
of land in a residential subdivision that included three lots, one of which is the lot at issue in this
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appeal. Gares’ purchase was funded by Laredo National Bank pursuant to a real estate lien note,
which was secured by a first lien Deed of Trust (“the Gares Deed”). When Gares defaulted on
his obligation to pay the note, the Substitute Trustee posted the property for a foreclosure sale on
March 10, 2008. The next day, Gares sold the lot at issue here to appellee, Jane Lira. The bank
did not execute a release of lien; therefore, none was recorded. The foreclosure sale occurred on
April 1, 2008. Following the sale, the bank executed and delivered a Substitute Trustee’s Deed
conveying three lots, including the one at issue here, to appellants. Lira filed the underlying
trespass to try title suit against the bank and the appellants. Lira subsequently filed a motion for
partial summary judgment. The trial court granted the motion voiding the trustee’s sale and
severed Lira’s claims against appellants from other claims against other parties in the underlying
suit.
DISCUSSION
To recover in her trespass to try title suit, Lira bore the burden to prove her title to the
disputed property by: (1) proving a regular chain of conveyances from the sovereign, (2)
establishing superior title out of a common source, (3) proving title by limitations, or (4) proving
title by prior possession coupled with proof that possession was not abandoned. Martin v.
Amerman, 133 S.W.3d 262, 265 (Tex. 2004); Longoria v. Lasater, 292 S.W.3d 156, 165 (Tex.
App.—San Antonio 2009, pet. denied). Lira’s claim must rest on the strength of her title, not a
weakness in the appellants’ title. Longoria, 292 S.W.3d at 165.
In this case, there is no dispute Lira and appellants claim title from a common source;
thus, Lira had only to prove she held superior title. In her motion for summary judgment, Lira
argued she held superior title because the trustee’s sale of the lot to appellants was void on the
grounds that the bank agreed to release the lot from the lien under the Gares Deed in exchange
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for Lira paying to the bank the agreed payoff amount on the lot. Lira requested and received a
payoff amount as it applied to the lot, and although she paid that amount to the bank, the bank
did not execute an instrument evidencing the bank’s release of the lot from the Gares Deed. The
bank then allowed the same lot to be sold at a foreclosure sale. In their response, appellants
countered that the foreclosure sale was not void because the Gares Deed does not contemplate or
authorize a partial payment of the debt owed by Gares. Instead, according to appellants, the
Gares Deed requires that the entire debt secured by the deed be paid before any lien is released.
Therefore, appellants argued, because Lira only made a partial payment toward Gares’ debt as to
the one lot, the lien on the one lot could not be released.
Our resolution of this issue centers on the construction of the Gares Deed. Generally, the
construction of an unambiguous deed is a question of law. Terrill v. Tuckness, 985 S.W.2d 97,
101 (Tex. App.—San Antonio 1998, no pet.) (noting rules of contract construction ordinarily
apply to construction of a deed). In construing a deed, our primary duty is to ascertain the intent
of the parties as provided within the four corners of the document. Luckel v. White, 819 S.W.2d
459, 461 (Tex. 1991). We must examine and consider the entire writing in an effort to
harmonize and give effect to all the provisions of the deed, even if different parts of the deed
appear inconsistent or contradictory. Id. at 462. We assume the parties intended every clause to
have some effect; therefore, the language of the deed should be interpreted so that no provision is
rendered meaningless. Id.; Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). No single
provision taken alone will be given controlling effect; rather, all the provisions must be
considered with reference to the whole instrument. Coker, 650 S.W.2d at 393.
The Gares Deed defines the “Mortgaged Property” to include “the real property described
in Exhibit “A,” which states as follows:
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Situated in Webb County, Texas, and being the Surface Only of Lot
Number Seven (7), in Block Number One (1), Lot Number One (1) in Block
Number Two (2), and Lot Numbers Four (4) and Fourteen (14) in Block Number
Three (3), D&J Alexander Subdivision, Unit VIII, a subdivision situated in the
City of Laredo, as per the Plat recorded in Volume 25, Page 162, Webb County
Plat Records.
The deed defines “Indebtedness” to include “[a]ny sums becoming due and payable
pursuant to the Note.” The “Payment of Indebtedness” and “Partial Payments” clauses of the
deed state respectively as follows:
If [Gares] shall pay, or cause to be paid, all of the Indebtedness and does
keep and perform each and every covenant, condition, and stipulation herein, in
the Note contained, or in any other instrument securing, evidencing or related to
the Indebtedness, then this agreement and the grants and conveyances contained
herein shall become null and void, and the Mortgaged Property shall revert to
[Gares] and the entire estate, right, title and interest of the Trustee and Noteholder
will thereon cease; and the Noteholder in such case shall, upon request of [Gares]
and at [Gares’] costs and expense, deliver to [Gares] proper instruments
acknowledging satisfaction of this instrument; otherwise, this agreement shall
remain in full force and effect.
...
Acceptance by Noteholder of any payment of less than the amount due on
the Indebtedness shall be deemed acceptance on account only and the failure to
pay the entire amount then due shall be and continue to be a default; and at any
time thereafter and until the entire amount due on the Indebtedness has been paid,
Noteholder shall be entitled to exercise all rights conferred on it by the terms of
this agreement upon the occurrence of an Event of Default.
Appellants contend the Partial Payments clause does not allow a lien on a single lot to be
released until the entire Indebtedness is paid in full. We do not agree with appellants’ narrow
interpretation of the Partial Payments clause. We construe this clause as evidencing the parties’
intent that any payment less than the full amount required under the loan agreement constitutes
an act of default. However, we do not construe this clause as precluding the bank from releasing
its lien on a lot-by-lot basis.
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“A seller or lienholder may execute a partial release, that is, a release of the property
subject to the lien.” 63 TEX. JUR. 3d Real Estate Sales § 414 (2010). “The seller is not required
to execute a partial release unless there is an agreement to that effect.” Id. Here, the Gares Deed
does not contain a separate clause expressly entitled as an agreement between the bank and
Gares allowing Gares to sell off the Mortgaged Property lot-by-lot and obtain a release of lien as
to the sold lot(s). However, two clauses in the Gares Deed evidence an intent to allow for such
an occurrence under certain circumstances. It is an act constituting a default if Gares “without
the prior written consent of [the bank], sells, transfers, [or] conveys . . . its interest in the
Mortgaged Property (or any part thereof) . . . .” [Emphasis added.] This clause evidences an
intent by the parties that Gares may sell “any part” of the Mortgaged Property if it first obtains
written consent from the bank. The deed also contains a clause that allows the bank “without
notice, [to] release any part of the Mortgaged Property or any person liable for the Indebtedness
without in any way affecting the liens hereof on any part of the Mortgaged Property not
expressly released . . . .” [Emphasis added.] This clause evidences an intent by the parties that
the bank may release its lien on a lot-by-lot basis.
After examining the plain language of this unambiguous deed and construing the deed in
its entirety, we conclude it was the intent of the parties that the bank could release its lien as to
any part of the Mortgaged Property without first requiring that the entire Indebtedness be paid in
full. Lira’s summary judgment evidence establishes that the bank admitted “the payoff check
was sufficient for [the bank] to execute a partial release of lien releasing [the lot]” and the bank
no longer had a lien against the property “[u]pon successful negotiation of the Payoff Check
tendered by or on behalf of” Lira. However, despite these admissions, the bank never executed a
document evidencing its release of its lien. Nevertheless, under the circumstances presented
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here, we do not believe the failure to execute a written release invalidates the sale to Lira. A lien
is usually extinguished upon payment of the indebtedness that it was created to secure. Spencer-
Sauer Lumber Co. v. Ballard, 98 S.W.2d 1054, 1055 (Tex. Civ. App.—San Antonio 1936, no
writ). The extinguishment is complete even without a written release. Id. Therefore, because
the lien on the lot purchased by Lira was extinguished prior to the foreclosure sale, there was no
lien as to that lot to foreclose, and the trustee had no power to transfer title to the lot to
appellants. See Diversified, Inc. v. Walker, 702 S.W.2d 717, 721 (Tex. App.—Houston [1st
Dist.] 1985, writ ref’d n.r.e.) (if trustee conducting foreclosure sale had no lawful authority to
offer property for sale, purchaser could not acquire title to the property). Accordingly, we
conclude the trial court did not err in rendering summary judgment in favor of Lira on her
trespass to try title claim against appellants.
CONCLUSION
We overrule appellants’ issue on appeal and affirm the trial court’s judgment.
Sandee Bryan Marion, Justice
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