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Trial v. Dragon

Supreme Court of Texas

June 21, 2019

Joseph Russell Trial and Michael Leo Trial, Petitioners,
v.
Jerome Dragon, Jr. and Patricia G. Dragon, Respondents

          On Petition for Review from the Court of Appeals for the Fourth District of Texas

          OPINION

          Paul W. Green, Justice

         In this case, we examine whether the estoppel by deed doctrine applies to prevent the petitioners from asserting title to an interest they inherited from their mother, when their father previously purported to sell that interest to the respondents. We hold that neither the estoppel by deed doctrine nor our opinion in Duhig v. Peavy-Moore Lumber Co., 144 S.W.2d 878 (Tex. 1940), applies in this case. Accordingly, we reverse the court of appeals' judgment and hold that the petitioners are entitled to retain the interest inherited from their mother. But we remand the case to the trial court to determine whether damages are appropriate for the respondents' breach of warranty claim.

         I. Background

         Leo Trial and his six siblings each owned a 1/7 interest in certain real property situated in Karnes County, Texas, which totaled 237 acres.[1] In 1983, Leo gifted to his wife, Ruth, "one-half (1/2) of all of [his] right, title and interest in and to" the Karnes County property. As a result of that gift, Leo and Ruth then each owned a 1/14 interest in the Karnes County property, with Ruth's 1/14 being her separate property. The deed was recorded in Karnes County within days of execution.

         In 1992, Leo and his still-living siblings purported to convey the entire Karnes County property to the Dragons. Leo and his siblings executed separate but identical deeds, each containing the following language: "WE, LEO TRIAL of Karnes County, Texas, [and other grantors] . . . do BARGAIN, GRANT, SELL AND CONVEY unto the [Dragons] all that certain parcel or tract of land, lying and being situate[d] in Karnes County, Texas . . . ."[2] The Dragons paid approximately $100, 000 for the property, which was financed in part over a fifteen-year period. The Dragons did not obtain a title opinion or title insurance and were not represented by counsel. The deed contained a fifteen-year mineral reservation and a general warranty clause that provided:

TO HAVE AND TO HOLD the above described premises, together with all and singular the rights and appurtenances thereto in anywise belonging unto the [Dragons], their heirs and assigns forever, and We do hereby bind ourselves, our heirs, executors and administrators to WARRANT AND FOREVER DEFEND all and singular the said premises unto the [Dragons], their heirs and assigns against every person whomsoever lawfully claiming or to claim the same, or any part thereof.

         The deed did not mention Ruth's 1/14 interest, there is no indication that the Dragons were actually aware of Ruth's interest, and Ruth was not a party to the 1992 sale.

         Leo died in 1996, about four years after the sale to the Dragons. Under his will, his entire estate was devised to trust for the remainder of Ruth's life, and, upon her death, the corpus went to their two sons, Joseph and Michael. The will named Ruth as independent executrix of the estate and trustee of the trust. After Leo's death, Ruth continued to accept and endorse the Dragons' remaining payments from the 1992 sale and later endorsed the release of lien, signing on Leo's signature line as "Leo Trial by Ruth Trial." Ruth died in 2010, but her will was not probated. As a result, Ruth's 1/14 interest passed to the Trial sons through intestacy, giving each son a 1/28 interest in the Karnes County property.

         In 2008, after the Trials' mineral reservation expired, the Dragons approached the oil and gas operator for a new division order, which would direct the operator to begin making the royalty payments to the Dragons in full. The operator did so until 2014 when a lease status report showed that Ruth owned a 1/14 interest "in her own right," that she had died intestate, and that she had two sons. Accordingly, a new division order was entered, directing the operator to make royalty payments to Joseph Trial and Michael Trial, the two sons, in a suspended account.

         The Dragons filed suit against the Trial sons, asserting multiple causes of action including breach of warranty and estoppel by deed. The case was presented in competing summary judgment motions, both traditional and no-evidence. The trial court denied the Dragons' motion and granted the Trials' motions, ruling in favor of the Trials on almost every claim at issue in the suit, including breach of warranty and estoppel by deed.[3] The Dragons appealed.

         On appeal, the Dragons argued, among other things, that the trial court erred in denying their motion for summary judgment because the 1992 deed conveyed the entire 14/14 interest in the property, and estoppel by deed divested the Trials of any interest. The Trials countered that together they inherited the 1/14 interest from their mother, an independent source from the 1992 deed, and therefore estoppel by deed did not apply.

         The court of appeals reversed the trial court's judgment and rendered judgment for the Dragons based on estoppel by deed and our decision in Duhig, 144 S.W.2d 878. See 568 S.W.3d 160, 167-69 (Tex. App.-San Antonio 2017, pet. granted) (mem. op.). The court of appeals relied on Duhig to hold that because Leo, grantor to the 1992 deed, breached the general warranty "at the very time and execution of the deed" by "purport[ing] to convey what he did not own," estoppel by deed would apply to estop Leo from claiming an interest that contradicts the general warranty. Id. at 167 (quoting Duhig, 144 S.W.2d at 880). Building on that, the court concluded that estoppel by deed applies to the Trial sons as remainder beneficiaries of Leo's estate, estopping them from claiming an interest that contradicts the general warranty because "estoppel by deed applies to grantors, grantees, privies in blood, privies in estate, and privies in law." Id. at 168-69. Specifically, the court of appeals held:

As set forth in Duhig, XTO Energy, and Angell, estoppel by deed applies to grantors, grantees, privies in blood, privies in estate, and privies in law. Here, Leo conveyed a 1/7th interest in the 1992 Deed rather than the 1/2 of the 1/7th interest he owned. Because Leo purported to convey more than he owned, he breached the warranty he granted in the 1992 Deed and would be estopped from asserting title to any interest in the property in contradiction to the warranty. The Trials are remainder beneficiaries of Leo's estate and trust, and, therefore, they are his privies in blood, privies in estate, and privies in law. As such, they also are bound by the recitals in the 1992 Deed. The Trials are therefore estopped from asserting title to any interests in contradiction to Leo's duty to defend the Dragons against all claims to "all that certain parcel or tract of land." Accordingly, the trial court erred in rendering summary judgment in favor of the Trials.

Id. (citing Duhig, 144 S.W.2d at 880-81; XTO Energy Inc. v. Nikolai, 357 S.W.3d 47, 58-59 (Tex. App.-Fort Worth 2011, pet. denied); Angell v. Bailey, 225 S.W.3d 834, 842 (Tex. App.-El Paso 2007, no pet.)).

         The Trial sons filed a petition for review in this Court, arguing that the court of appeals misapplied Duhig, and as a result, erred by applying the doctrine of estoppel by deed. We granted the petition. 62 Tex. Sup. Ct. J. 320 (Jan. 18, 2019).

         II. Analysis

         A. Standard of Review

         We review a grant of summary judgment de novo. Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009). Because the parties presented the case through competing summary judgment motions, both traditional and no-evidence, and the trial court granted the Trials' motions while denying the Dragons', we review the summary judgment evidence presented by both sides and render judgment that the trial ...


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