OFFICE OF THE ATTORNEY GENERAL OF TEXAS 

AUSTIN 

Honarablr Toa 0. King 

Stat8 Auditor 

Eltstr Capitol 

Austin, Psxer 

use fn deolaration of 

the faots: 

hs aurrrnt annual audit 

Or tha BOO the State Teaohers' 

9, F. C. Oatra oonrayrd mm 

(a naabar of thhr Collegr'r 

n rreular form, pmp6rlf dowrcord~d,,whiah reeltad 'for 

ration of thr mm at firma Eiundrsd 

OO), to UD in hand paid by s. ?$I. 

r other good, ~elrublo and autfiaration . . . * 

.non July 2A, 1939, 8. hi. sowell rxreutad an 

:netruasnt vvhldb referred to the l b o vo doe&, snd 

continued: 
honorable Ton C. King, rage 2 

' tw1~8 e matter of ract #7OO.‘@G of the aons&&tlcc for eeld ~onveykt~e was raid In cash 

by -@.!id S. Y. cewell, and the rereslnder of the 

oo@eratlon sas paid In pareonel property by 

+,J *?:, . . College, . . . 

“’ Aow, I, s. Lf. Sewell, . . ., grantee in 

the deed above referred to, do now hereby atate 

and declaie that .I hold said property in trust 

for the use and beoetit of sald College, end 

that of the consideration for said property, I 

psid the mm of $?OO.CG in Cash, md reld College the reaalndsr snd said property was conveyed to .xe wl th the follow-iog agreement and understsndlng betoeen me end said College: 

-I(l) If and Hhen, et any time rlthln 2 

ywrs from date heraof, said College paps to oae 

the ma of f700.00 In cash, together rlth intereat thereon froze tkzis date until paid at the 

rate or 65 per annum, then I ~411 imedfataly, 

at the request oi the proper offickle of said 

College, or of the Board of Clrectors of the 

State Teachers* Colleges of Texas, convey said 

property, together with the improrexents thereon, to the St, te of Texns, for the ase end benefit Of mid college, or t0 eny other @en&se 

in;!lcsted, such con-‘eyanoe to be ID the ram 

ot a special warranty deed, and ny wife, it llvhe, ~111 join me In the execution thereof’, lr 

requested by the parties above aenticned. 

tr’, > 

"'(4) xi a t the l d or 2 yesra fraa date 

hark said College h8e f&led to redeem said 

prc&hrty by paying me the mm of $700.00 and int@Pt@., as above mpeclfled, then, et my optlon, 

lt’lil to torielt all right or Interest in &aid 

property, together with the lmproraments than 

situated thereon, and the full and absolute 

title will then vest in xc. * 

9%~ instrument is slgnad by S. X. Serell 

only, and Is not acknowladged or recorded. 
. 

Honorsb 1 

: 

nq \t 

.^ Ye. ‘The Collepe, by its presldant, sIPned tLla 

&ion at the foot of the irmtrument: 

i.~ “The tarma end provisions of the above and 

fo;;ssolw trust agreanent are accepted. * 

qE “‘The perecml property rererred to as the 

psrt of the consideration paid by the College 

cocsisted of a house on College propert. , which 

was then tom down end moved away. This house 

was valued on the books of the College at $1,500, 

and s house 8ppraisc.d at the sane value was, and 

still is, located on the new pror,erty, the su>- 

ject of the instrtments above referred to. The 

books of the CollePe reflect thnt the trensaction F~GE regtirded as an exchanrZe of the one house 

to he rmoved for the other to reamin atending. 

“Yor;:- opinion on the follow-Ins, questions 

is respectfully requested : 

“(1) As or AuGust 31, 1939, whet \ces the 

nsture of the interest of the college In this 

p;o;erty? 

“(2) Fh;hRt would be the effect of a falli:re 

on the pert of the college to snake any paymert 

to s. v. f-ewe11 within two years f’rcw July 2L, 

19397 

“For the purposes cf this inquiry you msy 

assum such racts, not detailed, as are neceasary, I have related herein the substance of all 

the $nronaation I have. It will be helpful, hoveveyi: ir you will state the assuaptf;~ns you make. v 

,-‘$a ~111 not go into the Question of the authorlt 

of the P&rd (;f Ee@ente to enter Into such a transac + 

es outliged Ian your letter, inasmuch ae you did not apacifically ask thnt question, end as It Is not re2ulred in, 

order to ansver your questions. AB we understan& your 

second quastion, what you really want to k.:ow Is, would 

paragraph (L) of t’exell’s declqration of tnist become Operative upon the college’s failing to repay hla within txo 

years frm July 21, 1939; that is, wo:,ld there be en lutemtlc forfeiture of the college’s title? For the purpose 

of this opinion add es sureested by you, we will aeka sorie 

esau5ptlnns, one be that the hoard had authority to 

- 
Eonomblr Tom C. King, Page I 

antar into snd wnsummete the transection In the amnn6r 

desoribd by you and as if it uera one between natural parPOM. * .-, * 

-,.?,ooking ot the transaction a8 a whole, aa we ara 

ooiapellmd to do under the applleable rulea of construction, 

It apP#n that the eollcgs roraly borrowed #7OC.O0 frozn 

Sore Il. There ia no indication that &well purposed to ecqcire any interest in the property for hl!n8clt, but to the 

contrary, tha cnntenta of his decleration @f trust support 

the oonclueion that the transaction was entirely ror the 

benefit of the college and tttit all ::ewell expected was security for repayment of his @?GO.OO. Withoi:t diecussing 

the many reasons to support this conclusion, we will asaune 

that .?ewell merely intendsd to lend the College t7OO.r 

Then, If our ssaumptlon be true, and rurther aa~u01- 

k that the Eoard had authority to borrow money Lr? this 

mnner, the college becasa Indebted to C-ewe11 in the amount 

or Q;rco.co. ‘rrhether or not this was a “debt” within the 

purview of, and prohibited by, Section J.9, .4rtlcle 3 of the 

Conatitut Ion of Texas, we will not pass on as it Is not nrcessary to the deterzinstion of the questlcns subnltted. 

Eavinp determined Wet t ie intention of the part188 

to this tr+nssction was that the wlle~a become indet&d to 

Sawall, then it is to ba construad as one where the wllepe 

paid all of the aonslderatlon for t& property, but took 

title in Sewell’s naiae. Applying the law to this conetructfon of the rectr set out In Sewell’s declaration cf trust, 

the college bscme the sole beneficiary of a resulting trust, 

with Sewell holding the property es trustee for the college -- 

with the entire aquit.bls title being vested in thu college. 

The Suprjne Court of Poxas announced this nila in MaCoy v. 

Crawfci 9 Tax. 353, and apprwed it in Eix v. kmstmng, 

101 ?a 71, 106 8. K. 317. ia rorlo~: 

,ig a *‘Where one buyr land with the money of 

dn&her and tsku the daed in Sla own nes~e, a 

was eaployed in making the purch5so. 

Is the equitable owner of the land, end the pirohesar is a aere trustee end holds for thr banerit of him who paid the purchase aoney.‘” Sae 

alao, L2 Tel. Jurls. at p. 637. 

The collegs ia al80 the holder <)t the entire qp-It- 
L . 

. 

Honorable To8 C. K:ing, Pare 5 

is:;!sa:;$ a to the property In Sewall* hands under the 

3n or tNat, 8xecuted by Sara11 aubsequant to the 

l zscutl&~of the deed from Oat88 to ZWwell. but under an 

agrmaent~r:hIch we construe to h8ve taken place riaultantou8ly w%$h the execution of the deed. Same11 v. Brook8 

(Civ. Ilpp:) 207 s. Pi. 626, 8rror reruned. Althourh ths 

truust deed has not been recorded, it i8 good as between 

Sews11 and the oollage. Vernon’s 

1925, Articl8 6627. 

F.evlsad Civil Statutes, 

As previously stat&, vlewim the transaction as 

a whole, ft appear.? that In taking tl tle to the property, 

,Cev~ell’s sole purpose was to secure repayment of his $7cC.CC. 

Thereiore, the deed to Ser-cl1 was nothing more than 8 Tortgee8 and zaust be so construed. The Suprene Court has 80 

held in numerous cases and states the rule as folloP?s: 

“It zatters uo t ?:hat the language used or 

the form Iparted to the instruaent; If it was 

intended tr 6ecwe the payment of aoney, it 

mst be COnstNed as e zortga&e.” Stenper v. 

Johnson. 3 Tex. 1; Gray V. Shelby, 83 TCX. 405, 

1e s. ‘;. 805. 

Llke+.ise, the courts i&old that an instrrrmant in 

the form of a deed ebeolute, but executed with a contaaporafiCOW apraelaant thst it is mde merely to secure a debt, Is 

a mortgape. Calder v. Haasey, 66 Tex. 21S. 

Yavlq held that the deed to Srwell, though absolute, Is m4rcly a mortgage, the full eqtiable tttla la in 

the aollegs. To get tltl8 out of the wllrge, there would 

have M .be, eithsr a foreclo#ure by Sewell, or a separate COTv8yanc8~ b8 the COlleR6 to Sane11 based on a new con8148ratlon. 

xeller t ‘Xlrby, 79 S. E. 82;~Wfrler v. Womick, 30 Tax. 332. 

The cla& providing for an autbaatic forreiture at the option ti~,%well, upon tha fs5.lura of the college to ask8 thr 

~~~?&%cquired 

would be Ineftective to Uiyeat the colle!-e n’f the 

, thet Is l qultable’~tltle. 

Und8? the aseuaytlons mxde, it Is not necuuxy to 

pars on the autho.rlty of the Board of Regents or the collgcs 

to perform the various acts iri connection witA this tranaact1on. Whether the party to the transaction wsre a college or 

?n indIvldua1, Its title could net be automatically divested 

by R provIsion In a decleratlon of trust and at the option of 

the aredltor-tnrstra, ae herein pointed out. By this opinim, 
Eonorablo Ton C. i:iag , Paqe 6 

we auka no attmpt to anawer the aumy questLons 1 hich night 

.erfm out--of a law suit betwean Sawall ~anC the college, upon 

It8 ratiaro to pay ae provided in the declaration or trust 

and uhich.,.doelsratlon was apparently accepted by tha college. 

,;har.iors, it is tha opinion cf this Department 

and you ,&o so adrisrd that (1) the ~011~~s got aqcitable 

title to the property described in your letter and (2) that 

i. lta title would not be autoaeticalig forfeited by feilure 

to nake the raymen!.: prcoidad for In Sewell’e declaration 

of trust. 

Jams Gcel 

Xe E Is tant