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MORRIS KAGAN ET AL. v. ELIZABETH MOODY ET AL. (12/19/57)

December 19, 1957

MORRIS KAGAN ET AL., APPELLANTS,
v.
ELIZABETH MOODY ET AL., APPELLEES



Author: Werlein

WERLEIN, Justice.

This suit was brought by appellants for specific performance of a contract for the sale of certain real estate. The contract was signed by Morris Kagan and Israel Rudy as buyers, and by Elizabeth Moody, a feme sole, individually and as attorney in fact and trustee for Laura Beth Moody, a feme sole, as sellers. The chain of title into the appellants as buyers was, according to the findings of fact of the trial court, as follows:

"(a) Quit-claim from Elizabeth Moody to Laura Beth Moody, dated February 1, 1950;

"(b) Power of Attorney from Laura Beth Moody to Elizabeth Moody, dated February 3, 1950;

"(c) Quit-claim (specifically incorporating the Trust herein) from Laura Beth Moody to Elizabeth Moody, Trustee, dated April 17, 1953;

"(d) Contract of sale from Elizabeth Moody, individually and as Attorney-in-fact and Trustee for Laura Beth Moody to M. Kagan and I. Rudy, dated June 29, 1954."

Appellants contend that under the Texas Trust Act they were not required to make any investigation as to the power of Elizabeth Moody, trustee, to execute the contract of sale, and that it was not necessary for the beneficiary of the trust, Laura Beth Moody, to join in the execution of a conveyance of the property in question. The deed in trust dated April 17, 1953, from Laura Beth Moody to Elizabeth Moody, Trustee, reads as follows:

State of Texas

County of Harris

Know All Men by These Presents:

That I, Laura Beth Moody, an unmarried woman over twenty-one years of age, of Harris County, Texas, for Ten Dollars ($10.00) cash and other good and valuable considerations to me in hand paid by Mrs. Elizabeth Moody of Harris County, Texas, as Trustee, which considerations expressly include the full and proper performance by said Elizabeth Moody, Trustee, of all of the various duties and responsibilities defined in that certain Creation of Trust and Trust Agreement of even date herewith, between said Laura Beth Moody, as Grantor, and Mrs. Elizabeth Moody, as Trustee, reference here being made to said Creation of Trust and Trust Agreement for all purposes, have granted and conveyed, and do hereby grant and convey, unto Mrs. Elizabeth Moody, Trustee, all of my property and estate whatsoever and wheresoever, Real, personal and mixed, tangible and intangible, which I own or have power to use or dispose of, and in particular but not by way of limitation, all property, real, personal and mixed, located in the State of Texas, State of California and the State of Mississippi.

To have and to hold unto the said Mrs. Elizabeth Moody, Trustee, in trust for the purposes and subject to all of the various terms and provisions specified in said Creation of Trust and Trust Agreement of even date herewith, to which reference has hereinabove been made, and I do hereby bind myself, my heirs and person -- representatives, to warrant and forever defend unto said Mrs. Elizabeth Moody, Trustee, and her successors in trust, subject to all valid and existing liens and encumbrances now of record and affecting such properties, the title to the properties hereinabove described against the claims of any and all persons whomsoever claiming or to claim the same or any part thereof.

In Testimony Whereof witness my hand at Houston, Texas, this 17 day of April, 1953.

/S/ Laura Beth Moody

(Acknowledgment)

The creation of trust and trust agreement referred to in said deed was executed the same day as the deed, but was never recorded. It gave Elizabeth Moody power to convey, encumber or otherwise dispose of the property and to invest and reinvest the revenues therefrom. On the same day that the foregoing deed and trust agreement were executed, another instrument referred to as a "codicil", which was never recorded and never referred to in any instrument in the chain of title, was executed at the home of the Moodys some hours after the execution of the April 17, 1953, deed and trust agreement. This so-called codicil, which was typed on one sheet of paper and was not acknowledged, purported to be an amendment to the formal trust instrument and undertook to limit the trustee's power to convey real estate by requiring the joinder of Laura Beth Moody, or the trust officer of the Houston Bank & Trust Company, Ross Bennett, in transactions "involving more than $5,000.00 and five years duration, such as leases, rentals, land improvements or sales * * *"

The first three instruments in the alleged chain of title of appellants were duly recorded in the office of the County Clerk of Montgomery County, Texas, prior to the execution of the contract of sale dated June 29, 1954, and the contract of sale was subsequently recorded in Montgomery County.

The trial court found that neither of the defendants, nor any other person, had ever told either of the appellants that Laura Beth Moody as beneficiary of a trust or in any other capacity had to consent to or join in the execution of any conveyance of the property in question in order for such conveyance to be valid, and neither of the appellants had actual knowledge of any such requirement or agreement. Both Morris Kagan and Israel Rudy acted in good faith at all times material to the transaction in question, and neither of them was charged with wrongdoing or overreaching.

The trial court further found that the deed from Laura Beth Moody to Elizabeth Moody as trustee, dated April 17, 1953, expressly incorporates the trust agreement therein by specific reference, and that the contract of sale between Elizabeth Moody as trustee and appellants dated June 29, 1954, expressly states that Elizabeth Moody is "the trustee for Laura Beth Moody", and that the chain of title under which appellants claim was sufficient to put plaintiffs on inquiry and charge them with notice of the trust and its beneficiary, and of such facts as might have been disclosed by pursuing such inquiry with reasonable diligence.

The court rendered judgment in favor of appellees, denying specific performance and decreeing that the appellants take nothing, and that the contract of sale be cancelled and that the sum of $5,000 which had been deposited as earnest money by the appellants, as provided in the contract of sale, be released to them. Appellants in due course perfected their appeal, and the case is now before this Court for review.

There appears to be no dispute as to the facts in the case, and the only question before this Court is one of law to determine whether the joinder of Laura Beth Moody was required on the contract of sale in order to support a decree of specific performance binding ...


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