In the

Court of Appeals

Second Appellate District of Texas

at Fort Worth ___________________________

No. 02-20-00286-CV

___________________________

On Appeal from the 67th District Court

Tarrant County, Texas

Trial Court No. 067-317774-20

Before Sudderth, C.J.; Kerr and Womack, JJ. 

Opinion by Justice Kerr

BENBROOK ECONOMIC DEVELOPMENT CORPORATION, Appellant

V. 

THE NATIONAL BANK OF TEXAS, Appellee
2

OPINION

I. Introduction

Appellant Benbrook Economic Development Corporation (BEDC) is a 

subsequent purchaser of real property. Appellee The National Bank of Texas (NBT)

holds the property’s previous owner’s promissory note and deed of trust, both given 

by a third party, as security for an unrelated loan.1 After the previous owner defaulted 

on his loan with NBT, NBT filed for judicial foreclosure. BEDC and NBT then filed 

cross-motions for summary judgment on their respective rights to the property. The 

trial court overruled BEDC’s objections to NBT’s summary-judgment evidence,

granted NBT’s motion, and denied BEDC’s motion. In a single issue briefed as

multiple subissues, BEDC complains that the trial court’s rulings were erroneous.

To be entitled to judicial foreclosure via summary judgment, the movant must 

prove that (1) a financial obligation—such as a promissory note—exists and that the

movant has some privity to it; (2) a lien—such as a deed of trust—secures the 

financial obligation; (3) a default on the financial obligation has occurred; and (4) the 

property subject to the lien is the same property on which the movant seeks to 

enforce the lien. See De La Garza v. Bank of N.Y. Mellon, No. 02-17-00427-CV, 

2018 WL 5725250, at *7 (Tex. App.—Fort Worth Nov. 1, 2018, no pet.) (mem. op.); 

Mark v. Household Fin. Corp. III, 296 S.W.3d 838, 839 (Tex. App.—Fort Worth 2009, 

1

The property passed through other hands before ultimately ending up with 

BEDC.
3

no pet.); see also Rinard v. Bank of Am., 349 S.W.3d 148, 152 (Tex. App.—El Paso 2011, 

no pet.). Because the record contains a fact issue about whether the deed of trust on 

the property was discharged, the trial court erred by granting summary judgment in 

NBT’s favor. Because the record also reflects that BEDC took ownership of the 

property with constructive notice of all the property’s recorded liens and related 

instruments, summary judgment was not appropriate for BEDC either.

Accordingly, we reverse the trial court’s judgment and remand the case for 

further proceedings.

2

II. Legal Background: Interplay of Texas Business and Commerce Code 

Chapters 3 and 93 with Real-Property Law

This case involves the interplay between two systems whose terminology we 

review up front: first, the UCC, which generally applies to contracts, personal 

property, and notes, and second, real-property law. See David Z. Conoly, Foreclosure on 

a Collateral Transfer of Note & Lien, 42 State Bar of Tex. Prof. Dev. Program, Advanced 

Real Estate Law Course 26, 26.1 (2020) (observing that when a collateral note itself is 

2

Based on our disposition here, we do not reach BEDC’s evidentiary subissues.

See Tex. R. App. P. 47.1 (requiring the court to hand down a written opinion that is as 

brief as practicable but that addresses every issue raised and necessary to final

disposition of the appeal).

3

The Uniform Commercial Code (UCC) identifies its chapters as “articles,”

while the Texas incorporation of the UCC in the Business and Commerce Code uses 

“chapters.” For consistency, we will use “chapter” throughout.
4

secured by real property, “the separate worlds of real property Secured Transactions 

and personal property Secured Transactions each have a role in the transaction”).

The property’s original buyers, K&M Collision and its owners Michael and 

Elaine Admire, gave the property’s original seller, John Franklin Campbell,

4 a 

purchase-money promissory note (the K&M note), a negotiable instrument under 

UCC Chapter 3.

5

To secure that note, K&M Collision gave Campbell a vendor’s lien. A 

purchase-money vendor’s lien is “a charge imposed by contract to secure payment of 

the purchase price of real property.” XTO Energy, Inc. v. EOG Res., Inc., 554 S.W.3d 

127, 138 (Tex. App.—San Antonio 2018, pet. granted, judgm’t vacated and remanded 

by agr.) (quoting Glenn v. Lucas, 376 S.W.3d 268, 275 (Tex. App.—Texarkana 2012, no 

pet.)). Under a vendor’s lien, “legal title does not pass to the vendee. A vendee owns 

the equitable interest along with a contract for the purchase of land.” Flag-Redfern Oil 

Co. v. Humble Expl. Co., 744 S.W.2d 6, 8 (Tex. 1987); see Disanti v. Wachovia Bank, NA, 

No. 2-08-330-CV, 2009 WL 1372970, at *3 (Tex. App.—Fort Worth May 14, 2009, 

4

Campbell signed various documents in various capacities. We will collectively 

refer to him as “Campbell” because capacity was not argued in the trial court.

5

To be “negotiable” under UCC Chapter 3, an instrument must be an 

unconditional promise to pay a fixed amount of money on demand or at a definite 

time, must not contain additional undertakings by the obligor, and must be payable to 

bearer or to order when first issued. Adam J. Levitin, The Paper Chase: Securitization, 

Foreclosure, and the Uncertainty of Mortgage Title, 63 Duke L.J. 637, 655–56 (2013); see 

generally Tex. Bus. & Com. Code Ann. §§ 3.102(a), .104(a), .106.
5

no pet.) (mem. op.). “When an express vendor’s lien is retained to secure unpaid 

purchase money, the vendor holds superior title, and the vendee has a mere equitable 

right to acquire title by carrying out the agreement.” Dominey v. Unknown Heirs & Legal 

Representatives of Lokomski, 172 S.W.3d 67, 73 (Tex. App.—Fort Worth 2005, no pet.).

The purchase contract “is treated as executory between the vendor and vendee and 

those holding under them until the purchase money [obligation] is fully satisfied.”

Glenn, 376 S.W.3d at 275 (quoting Bunn v. City of Laredo, 245 S.W. 426, 429 (Tex. 

Comm’n App. 1922, judgm’t adopted)).

Also to secure its note, K&M Collision gave Campbell a deed of trust. A deed 

of trust “is a mortgage with a power to sell on default. It is a conveyance of real 

property in trust by way of security, defeasible or redeemable at any time prior to the 

sale of the property.” 30 Tex. Jur. 3d Deeds of Trust and Mortgages § 2 (2022) (footnotes 

omitted); see Johnson v. Snell, 504 S.W.2d 397, 399 (Tex. 1973); see also Fin. Freedom Sr.

Funding Corp. v. Horrocks, 294 S.W.3d 749, 755 (Tex. App.—Houston [14th Dist.] 

2009, no pet.) (“The purpose of a deed of trust is to secure to a lender the repayment 

of a borrower’s debt.”). “When a mortgagor executes a deed of trust[,] the legal and 

equitable estates in the property are severed,” and the mortgagor retains legal title 

while the mortgagee holds the equitable title. Flag-Redfern, 744 S.W.2d at 8.

Campbell used the K&M note and deed of trust as collateral to secure a large

unrelated promissory note that he gave to Pinnacle Bank in exchange for a loan.

Pinnacle later assigned its interest in the K&M note and related documents to NBT as 
6

part of Campbell’s collateral to secure NBT’s even larger (but also unrelated)

promissory note from Campbell. Campbell’s promissory note to NBT was a UCC

Chapter 3 negotiable instrument.

UCC Chapter 3, which applies only to negotiable instruments, is generally 

thought of as “payment system” law—but it is also property law for certain payment 

and debt instruments, including mortgages, “because of the common-law doctrine 

providing that ‘the mortgage follows the note,’ meaning that a transfer of the note 

effectuates a transfer of the associated security interest.” Levitin, 63 Duke L.J. at 653, 

655. UCC Chapter 3 provides a method for transferring negotiable instruments: if an 

instrument is payable to bearer, delivery alone will suffice for negotiation; if the 

instrument is payable to the order of an identified person, then negotiation requires 

not only delivery but also indorsement by the prior holder, which gives the transferee 

all the transferor’s rights to enforce the instrument. Id. at 657–58 (citing UCC 

§§ 3.201, .203–.205).

UCC Chapter 9, on the other hand, governs security interests and contains a 

mechanism for transferring both promissory notes and mortgages. Id. at 676, 690–

91 (referencing UCC § 9.203(g)). But UCC Chapter 9 says nothing about note 

enforcement, leaving that to UCC Chapter 3.

6 Id. at 699–700. Under UCC Chapter 3, 

6

NBT argues that the UCC “simply does not apply to interests in and liens on 

real property.” But “[i]ssues relating to the transfer, ownership, and enforcement of 

mortgage notes” are affected by UCC Chapter 3 when the mortgage note is a 

negotiable instrument and by UCC Chapter 9 when addressing transfer of note 
7

an instrument is paid to the extent payment is made by or on behalf of a party obliged 

to pay the instrument and to a person entitled to enforce the instrument. Tex. Bus. & 

Com. Code Ann. § 3.602(a). It can also be paid to a person formerly entitled to 

enforce the note, but only if at the time of the payment, the party obliged to pay has 

not been adequately notified both that the note has been transferred and that payment 

is to be made to the transferee. See id. § 3.602(b). A notification is “adequate” only if it 

is signed by the transferor or the transferee, reasonably identifies the transferred note, 

and provides an address at which future payments are to be made. Id.

Although UCC Chapter 9’s scope does not generally apply to “the creation or 

transfer of an interest in or lien on real property,” one exception to this general rule is 

for “liens on real property in Sections 9.203 and 9.308.” Id. § 9.109(d)(11)(A). Section

9.203 provides that a security interest attaches to collateral when it becomes

ownership and the transferee’s right, “under certain circumstances, to record its 

interest in the mortgage in the applicable real estate recording office.” Permanent 

Editorial Bd. for the Unif. Commercial Code, Report of the Permanent Editorial Board for

the Uniform Commercial Code: Application of the Uniform Commercial Code to Selected Issues 

Relating to Mortgage Notes 2 (2011), https://www.ali.org/media/filer_public/

1a/10/1a103e01-5bbe-4d2e-a65c-c766b7b2b054/peb_report_-_november_2011.pdf

(UCC Board). Compare Tex. Bus. & Com. Code Ann. § 9.101 cmt. 1 (stating that UCC 

Chapter 9 “provides a comprehensive scheme for the regulation of security interests 

in personal property and fixtures”), with id. cmt. 4.a. (stating that UCC Chapter 9 “also 

addresses explicitly . . . any property (including real property) that secures a right to 

payment or performance that is subject to an Article 9 security interest,” and 

referencing Sections 9.203 and 9.308), and id. § 9.109(d)(11) (setting out certain

exceptions to the UCC’s general statement that Chapter 9 “does not apply to . . . the 

creation or transfer of an interest in or lien on real property . . . as defined by Section 

64.001, Property Code”).
8

enforceable against the debtor with respect to the collateral, and that it is enforceable 

against the debtor and third parties if value has been given, the debtor has rights in 

the collateral or the power to transfer rights in the collateral to a secured party, and, 

among other things, the debtor has authenticated a security agreement that describes 

the collateral. Id. § 9.203(a), (b)(1)–(3)(A). “The attachment of a security interest in a 

right to payment or performance secured by a security interest or other lien on 

personal or real property is also attachment of a security interest in the security 

interest, mortgage, or other lien.” Id. § 9.203(g); see id. § 9.203 cmt. 9 (“Subsection (g) 

codifies the common-law rule that a transfer of an obligation secured by a security 

interest or other lien on personal or real property also transfers the security interest or 

lien.”); see also Conoly, 42 State Bar of Tex. Prof. Dev. Program, Advanced Real Estate 

Law Course, at 26.5 (explaining that foreclosure of a collateral note under a collateral

transfer is governed by the Texas Business and Commerce Code rather than by the 

Texas Property Code but also noting that when the collateral note is a note secured by 

a deed-of-trust lien on real property, the underlying real property is the primary source 

of security and the collateral note security “is merely a means of reaching the real 

property”).

UCC Chapter 9 defines “mortgage” as a “consensual interest in real property, 

including fixtures, that secures payment or performance of an obligation,” Tex. Bus. 

& Com. Code Ann. § 9.102(a)(55), and “encumbrance” as “a right, other than an 

ownership interest, in real property,” including mortgages and other liens on real 
9

property, see id. § 9.102(a)(32). “Issues concerning mortgages under Chapter 9 arise in 

the context of priority conflicts between a security interest created under 

Chapter 9 and an interest in the same collateral created by a mortgage.” 2 Vernon’s 

Tex. Code Forms Anno., UCC Forms § 9.102(a)(55) (4th ed. 2021).

The following illustrates how the UCC can overlap with real-property law:

Maker issued a mortgage note payable to the order of Payee. Payee 

borrowed money from Funder and, to secure Payee’s repayment

obligation, Payee and Funder agreed that Funder would have a security 

interest in the note. Simultaneously with the funding of the loan, Payee 

gave possession of the note to Funder. Funder has an attached and 

enforceable security interest in the note. UCC § 9.203(b). This is the case 

even if Payee’s agreement is oral or otherwise not evidenced by an

authenticated record. Payee is no longer a person entitled to enforce the 

note (because Payee is no longer in possession of it and it has not been

lost, stolen, or destroyed). UCC § 3.301. Funder is a person entitled to 

enforce the note if either (i) Payee indorsed the note by blank 

indorsement or by a special indorsement identifying Funder as the 

person to whom the indorsement makes the note payable (because, in 

such cases, Funder would be the holder of the note), or (ii) the delivery 

of the note from Payee to Funder constitutes a transfer of the note 

under UCC § 3.203 (because, in such case, Funder would be a nonholder 

in possession of the note with the rights of a holder).

UCC Board, supra n.6, at 10–11 (footnote omitted).7

With these terms and the relevant statutory scheme in mind, we turn to the 

facts.

7

This example does not address the interplay between state law on agency and 

UCC Chapter 9, the significance of which we address later.
10

III. Background

A. Factual History8

Campbell’s 2011 sale to K&M Collision. On January 1, 2011, Campbell 

issued a warranty deed with vendor’s lien to K&M Collision and the Admires in 

exchange for a $674,644.16 promissory note “secured by a first and superior vendor’s 

lien and superior title retained in this deed and by a first-lien deed of trust.” The deed 

was recorded in the county real-property records on June 1, 2011. Campbell was 

identified as K&M Collision’s lender in the January 1, 2011 deed of trust, which 

defined “lender” as including “any mortgage servicer for Lender.” The deed of trust 

was recorded in the real-property records, also on June 1, 2011. See Tex. Prop. Code 

Ann. § 13.002(1).

Pinnacle’s 2012 loan to Campbell. A little over a year later, in August 2012,

Campbell used the deed of trust and other documents to secure an unrelated

$225,000 loan from Pinnacle.

9 In doing so, he executed a “Collateral Assignment of 

Beneficial Interest in Deed of Trust/Mortgage and Collateral Documents.”10 The 

8

The documents and facts we discuss are all in the summary-judgment record.

9

The loan was made on behalf of Campbell himself; his trust; and his 

companies Falcon 206 Exploration Sales and Leasing LLC and Campbell’s Auto 

Body, Inc.

10When a note’s payee seeks to use the note as collateral or to sell the note 

outright, UCC Chapter 9 “governs that transaction and determines whether the 

creditor or buyer has obtained a property right in the note.” UCC Board, supra n.6, at 

8. The sold right to payment is designated “collateral.” Id. at 9. To create a “security 
11

collateral assignment referenced the K&M note and prohibited Campbell from 

modifying any collateral loan—that is, the K&M note—or collateral-loan documents 

without Pinnacle’s prior written consent. It also stated that Campbell, as pledgor,

hereby collaterally assigns, transfers, conveys, sets over, and pledges to 

[Pinnacle], and grants to [Pinnacle] a security interest in, all Pledgor’s 

right, title and interest in the Collateral Loan and the Collateral Loan 

Documents. This Assignment is made pursuant to, and the assignments 

made herein are further evidenced by, a certain Collateral Assignment 

and Security Agreement (Promissory Notes and Collateral Documents) 

dated even date herewith . . . . The assignment of Pledgor’s interests to 

[Pinnacle] shall remain in full force and effect, and shall be upon all 

other persons and entities unless and until a release of this Agreement 

has been executed and filed of record by [Pinnacle].

The assignment also said:

For purposes of clarification, notwithstanding anything to the contrary 

contained in this Assignment or the aforementioned assignment 

described in the Collateral Documents Assignment, the assignment is 

not and shall not be construed as an absolute assignment; rather, it is 

intended to be a collateral assignment for the purpose of granting 

Lender a security interest in the Collateral Loan and the Collateral Loan 

Documents.

Compare Tex. Bus. & Com. Code Ann. § 3.302(e) (limiting recovery of holder in due 

course who possesses only a security interest in a negotiable instrument), with id.

§ 9.604(a) (stating that if a security agreement covers both personal and real property, 

the secured party may proceed against the personal property without prejudicing any 

interest” in either the note securing an obligation or the outright sale of the note: 

(1) value must be given; (2) the seller must have rights in the note or the power to 

transfer rights in the note to a third party; and (3) either the seller must authenticate a

security agreement that describes the note or the secured party must take possession 

of the note in accordance with the seller’s security agreement. Id.
12

rights with respect to the real property, or against both personal and real property “in

accordance with the rights with respect to the real property”).

The assignment was recorded on September 11, 2012.

Pinnacle’s 2015 assignment to NBT; NBT’s loan to Campbell. Three 

years later, Pinnacle assigned its interests to NBT as security for NBT’s unrelated 

$750,000 loan to Campbell.11 The assignments were recorded on November 25, 2015.

The K&M note was additionally marked, “Pay to the order of the National Bank of 

Texas in accordance with Collateral Assignment of Beneficial Interest in Deed of 

Trust/Mortgage and Collateral Documents dated August 17, 2012,” and it was signed 

by a Pinnacle branch president. NBT took physical possession of the promissory 

note. The “Assignment and Transfer of Deed of Trust and Lien, Guaranty and 

Miscellaneous Documents” stated that Pinnacle, as “Holder of the Note, Deed of 

Trust and lien[,] sells, transfers, conveys and assigns the Note, Deed of Trust, lien, 

Guaranties and all supporting documentation and the COLLATERAL 

ASSIGNMENT OF BENEFICIAL INTEREST IN DEED OF 

TRUST/MORTGAGE AND COLLATERAL DOCUMENTS, (collectively ‘Loan 

Documents’) to [NBT].”

11The record does not indicate whether Pinnacle was repaid out of the NBT 

loan proceeds, but Pinnacle is not a party and its interests have not been raised by the 

parties.
13

Campbell also signed a “Commercial Pledge Agreement” in connection with 

the NBT loan transaction in which he granted NBT a security interest in collateral to 

secure his note, agreed that NBT would have the rights stated in the agreement 

regarding the collateral, and identified the collateral as Campbell’s

present and future rights, title and interest in and to the following 

described investment property, together with any and all present and 

future additions thereto, substitutions therefor, and replacements

thereof, and further together with all income and proceeds as described 

herein: ASSIGNMENT OF NOTE RECEIVABLE DATED 

JANUARY 1, 2011 FROM K&M COLLISION . . . AND [THE 

ADMIRES] IN THE ORIGINAL AMOUNT OF $674,644.16.

In the pledge agreement, Campbell warranted to NBT that, among other 

things, he would not sell, transfer, encumber, or otherwise dispose of any of his rights 

in the collateral except as provided by the agreement; that “[t]o the extent the 

Collateral consists of promissory notes or other instruments, as defined by the [UCC], 

the Collateral is enforceable in accordance with its terms, is genuine, and fully 

complies with all applicable laws and regulations concerning form, content and 

manner of preparation and execution”; and that NBT could file a UCC financing 

statement or a copy of the agreement to perfect its security interest. Campbell also 

agreed to immediately deliver to NBT all income and proceeds from the collateral. If 

Campbell defaulted, NBT could (among other remedies) sell the collateral “at one or 

more public or private sales” or “maintain a judicial suit for foreclosure and sale of”

the collateral. In addition, the agreement defined “related documents”—with which 

Campbell also had to comply—to include “all promissory notes, credit agreements, 
14

loan agreements, . . . security agreements, mortgages, deeds of trust, security deeds, 

collateral mortgages, and all other instruments, agreements and documents, whether 

now or hereafter existing, executed in connection with the indebtedness.”

K&M Collision’s 2016 sale to JS & TA Properties. Not quite another full 

year passed before K&M Collision decided to sell the property to JS & TA Properties, 

LLC (JS&TA), in a transaction effective June 16, 2016. Around that time, Campbell 

owed NBT $667,237.37.

Before the property’s transfer to JS&TA, Brittaney Siciliano, an officer of 

Republic Title, exchanged emails with Campbell in early June about the K&M note’s 

payoff amount,

12 which he told her would be $600,090.61, plus $3,000.45 in interest 

for that month, divided by 30 days, to amount to $100.01 per day.

13 Republic Title 

12Under Property Code Section 12.017, a title insurance company may request a 

“payoff statement” for a mortgage on nonresidential property with an original face 

amount of indebtedness of less than $1.5 million. Tex. Prop. Code Ann. 

§ 12.017(a)(5), (b). A “payoff statement” is a statement of the amount of “the unpaid 

balance of a loan secured by a mortgage, including principal, interest, and other 

charges properly assessed under the loan documentation of the mortgage; and interest 

on a per diem basis for the unpaid balance.” Id. § 12.017(a)(5)(A)–(B). A person 

transmitting a payoff statement is considered the “mortgage servicer”—“the last 

person to whom a mortgagor has been instructed by a mortgagee to send payments

for the loan secured by a mortgage”—for the mortgage described in the payoff 

statement. Id. § 12.017(a)(3); see also id. § 51.0001(3) (defining “mortgage servicer” as 

“the last person to whom a mortgagor has been instructed by the current mortgagee 

to send payments for the debt secured by a security instrument” and stating that a 

mortgagee may be the mortgage servicer).

13Campbell had previously emailed Meagan Kendrick, Siciliano’s sister and 

Republic Title coworker, in response to Kendrick’s May 2016 query about payoff
15

business records show that on May 25, 2016, Siciliano had asked a legal assistant to 

prepare a release of lien and that an initial draft was prepared for NBT to sign as the 

current owner and holder of the debt and lien securing the 2011 deed of trust that had

been assigned to it from Pinnacle. Siciliano later asked the legal assistant to revise the 

release of lien to reflect release of Campbell’s—not NBT’s—interest,

14 and a new 

draft was created showing Campbell as the current owner and holder of the debt and 

lien and omitting any information about or reference to Pinnacle and NBT. Republic 

Title’s records showed that it knew of the assignments from Campbell to Pinnacle and 

then to NBT, but they also showed that K&M Collision’s owners had been paying 

Campbell on the note.

15 Siciliano notarized the June 16, 2016 “general warranty deed 

with vendor’s lien (2nd vendor’s lien)” from K&M Collision to JS&TA, and it was 

recorded several days later.

figures for the K&M Collision sale. In that email, he told her, “The payoff on 5-1-

2016 was $601,429.61” with daily interest of $97 per day.

14Siciliano’s June 16 email read, “Release should be signed by John Franklin 

Campbell, IV, as Trustee for the John Franklin Campbell IV Living Trust. That is

who we are paying off. Can you revise please?”

15From the record, it does not appear that K&M Collision ever knew about 

Campbell’s assignments. Until Republic Title sent K&M Collision the payoff 

statement, Campbell had apparently been the “last person to whom [K&M Collision] 

[was] instructed by [Campbell] to send payments for a debt secured by a security 

instrument,” and thus Campbell had arguably been K&M Collision’s mortgage 

servicer. See Tex. Prop. Code Ann. §§ 12.017(a)(3), 51.0001(3).
16

The June 17, 2016 Republic Title seller’s settlement statement shows that out 

of the $740,000 sales price paid to K&M Collision, Campbell received $601,790.78 by 

wire transfer. Campbell executed a “full release of lien” on December 16, 2016, that 

was filed on January 10, 2017. In that release, Campbell represented that he was the

current owner and holder of the K&M note, lien, and deed of trust and that he 

released and discharged “any and all other liens and security interests securing said 

indebtedness” in consideration of the full and final payment of the note.

16

Campbell’s eventual loan default; JS&TA’s 2019 sale to BEDC. In 

November 2017, NBT renewed Campbell’s loan; Campbell’s associated promissory 

note, now for $649,995.48, again listed as collateral the assignment of the 2011 K&M 

note—the payoff of which Campbell had surreptitiously pocketed in 2016—as well as 

a security agreement on his private plane. Campbell’s note to NBT went into default 

by its terms at maturity in December 2018.

Shortly afterward, and for unexplained reasons, another release of lien on the 

K&M note was recorded, on January 9, 2019. Although not filed until that day, this

release was dated June 17, 2016, and signed by Campbell. In the paragraph defining 

the “debt and lien” that Campbell was the “current owner and holder of” and that he 

was releasing, both Pinnacle’s and NBT’s interests were referred to:

16A different release, which referred to Pinnacle and NBT and which Campbell 

had apparently signed on June 17, 2016, was recorded some two years later, as we

note below.
17

A few months later, JS&TA transferred the property to BEDC through a 

special warranty deed that was recorded in April 2019. The business records of WFG

National Title Company, the underwriter for McKnight Title, which handled that sale, 

identified not only the recorded assignments to Pinnacle and to NBT, but also both 

versions of Campbell’s recorded releases.

17

B. Procedural History

NBT initially sued the City of Benbrook and Campbell (individually and in his 

trustee status), seeking to judicially foreclose on the property and to recover for the

unpaid principal balance that Campbell owed on his 2017 promissory note. Campbell 

filed for bankruptcy, and in its first amended petition, NBT dropped Campbell 

individually but kept him in the suit in his trustee status and amended its pleading to 

sue BEDC rather than the City of Benbrook. NBT later added Republic Title as a 

defendant; added a request for a declaratory judgment that Campbell’s December 16, 

17Coincidentally, Kendrick was then working at McKnight Title.
18

2016 release of lien was void; alleged that there had been a fraudulent closing by 

Republic Title; and sought recovery for, among other things, tortious interference 

with contract, breach of fiduciary duty, and fraud by nondisclosure as to Republic 

Title.

BEDC answered with a general denial and several affirmative defenses, 

including that the deed of trust had been extinguished by payment of the underlying 

obligation and that it lacked actual or constructive notice of NBT’s claims.

BEDC’s Motion for Summary Judgment. BEDC filed a traditional

summary-judgment motion, arguing that NBT’s judicial-foreclosure claim failed as a 

matter of law because the deed of trust had been automatically extinguished in 

2016 when K&M Collision paid the K&M note in full. Among BEDC’s summaryjudgment evidence were the documents showing that NBT had received an 

assignment of only a collateral interest in the 2011 K&M note and deed of trust,

Siciliano’s and Campbell’s June 2016 email exchange about the payoff amount to 

Campbell,

18 the Republic Title seller’s settlement statement reflecting “payoff loan” to 

Campbell, an email receipt regarding the wire transfer of $601,790.78 to Campbell at 

18Kendrick and Campbell’s May 2016 email exchange about the payoff amount 

to Campbell was included in NBT’s summary-judgment evidence. When both parties

move for summary judgment and the trial court grants one motion and denies the

other, the reviewing court should review both parties’ summary-judgment evidence 

and determine all questions presented. Mann Frankfort Stein & Lipp Advisors, Inc. v. 

Fielding, 289 S.W.3d 844, 848 (Tex. 2009). We should then—if possible—render the 

judgment that the trial court should have rendered. See Myrad Props., Inc. v. LaSalle 

Bank Nat’l Ass’n, 300 S.W.3d 746, 753 (Tex. 2009); Mann Frankfort, 289 S.W.3d at 848.
19

E-Trade Bank, and Campbell’s December 2016 “Full Release of Lien,” which made 

no mention of Pinnacle or NBT. 

In its response to BEDC’s summary-judgment motion, NBT complained that 

BEDC had not explained how Campbell had the authority to execute a release of 

NBT’s lien, argued that an issue existed about whether the proper party was paid in 

the 2016 sales transaction, and pointed out a disparity between the release of lien that 

Campbell had signed in June 2016 (recorded in 2019) and the release he signed in

December 2016 (recorded in 2017). NBT argued that BEDC was charged with 

constructive notice of NBT’s lien, that a release was required from NBT, and that 

Republic Title had taken no steps to obtain a release from NBT. NBT incorporated

by reference its own summary-judgment motion, discussed below, and the evidence 

attached to that motion.

Replying to NBT’s summary-judgment response, BEDC argued that NBT’s 

and Campbell’s rights to receive the payoff were exclusively governed by the terms of 

the K&M note, NBT’s collateral pledge agreement with Campbell, and NBT’s 

recorded assignment of Pinnacle Bank’s collateral interest, and that NBT had brought 

forward no admissible evidence to support its judicial-foreclosure claim.

NBT’s Cross-Motion for Summary Judgment. NBT filed a cross-motion 

for summary judgment, arguing that it was entitled to judgment as a matter of law on 

the amount of its lien against the property and to a declaration that Campbell’s 
20

purported December 16, 2016 release filed in January 2017 was void.19 Although 

NBT’s summary-judgment evidence was voluminous,20 we note only those items

pertinent to our disposition of this appeal on the issue of BEDC’s notice of NBT’s 

interest: 

• A certified copy of the 2011 K&M deed of trust.

• The August 17, 2012 “Collateral Assignment of Beneficial Interest in Deed of 

Trust/Mortgage and Collateral Documents” between Campbell and Pinnacle,

recorded on September 11, 2012.

• The November 20, 2015 assignment of lien and 2011 K&M deed of trust from 

Pinnacle, as “Holder of Note, Deed of Trust and Lien,” to NBT, recorded on 

November 25, 2015.

• The November 20, 2015 “Assignment and Transfer of Deed of Trust and Lien, 

Guaranty and Miscellaneous Documents” from Pinnacle to NBT, referencing the 

K&M note and deed of trust and recorded on November 25, 2015.

• Campbell’s December 16, 2016 release of lien, recorded on January 10, 2017.

19NBT’s motion did not state any specific summary-judgment grounds.

Although it is fundamental that a summary-judgment motion must stand or fall on the 

grounds it specifically and expressly sets forth and reliance may not be placed on 

summary-judgment evidence for such grounds, see McConnell v. Southside ISD, 

858 S.W.2d 337, 339, 341 (Tex. 1993), BEDC did not brief this subissue on appeal.

20Among other things, NBT attached excerpts from the February 11, 

2020 depositions of Siciliano and Kendrick and from Campbell’s February 28, 

2020 sworn statement. Because we do not reach BEDC’s complaints about Siciliano’s

and Kendrick’s depositions, see supra n.2, we mention only that both Siciliano and 

Kendrick testified that they recalled nothing about the 2016 Republic Title 

transaction. Likewise, because we do not reach BEDC’s objection to Campbell’s 

sworn statement, we do not go into his testimony except to say that he claimed to 

have relied on Republic Title to tell him what was needed for the 2016 transaction.
21

• Campbell’s June 17, 2016 release of lien, recorded on January 9, 2019.

21

BEDC filed a response to NBT’s motion in which it incorporated its summaryjudgment motion by reference, as well as all admissible summary-judgment evidence 

in the record. It argued that the payment to Campbell extinguished the deed-of-trust 

lien, barring NBT’s judicial-foreclosure claim as a matter of law.

In a reply brief, NBT argued that BEDC had failed to identify any evidence to 

show that Campbell’s December 2016 release of lien was not void or to show that 

Campbell was NBT’s agent for payoff or any other purpose.

22 NBT asserted that the 

evidence showed that at the time of the 2016 payoff, it owned a deed of trust and a 

vendor’s lien on the property and had physical possession of the K&M note and that 

21NBT also attached a title search of all grantees on the property’s current deed

run by Republic Title on May 17, 2016. Those records showed the transfer of a

warranty deed from Campbell to K&M Collision and Campbell’s Auto Body 

Benbrook on June 1, 2011; the transfer of “COLL ASG/TFR” from Campbell (as 

well as Falcon 206 and Campbell’s Auto Body Inc.) to Pinnacle Bank on September 

11, 2012; and K&M Collision’s owners, K&M Collision, and Pinnacle Bank’s transfers

of “ASGMT LIEN” to NBT on November 25, 2015.

22A trial court cannot grant summary judgment on grounds not presented in the 

summary-judgment motion. See Tex. R. Civ. P. 166a(c); G & H Towing Co. v. Magee, 

347 S.W.3d 293, 297 (Tex. 2011); see also State Farm Lloyds v. Page, 315 S.W.3d 525, 

532 (Tex. 2010) (stating that a “[s]ummary judgment may not be affirmed on appeal 

on a ground not presented to the trial court in the motion”). New grounds for 

summary judgment asserted by a movant in a reply brief are not properly considered 

on appeal. Atmos Energy Corp. v. Paul, 598 S.W.3d 431, 467 (Tex. App.—Fort Worth 

2020, no pet.); see Yeske v. Piazza Del Arte, Inc., 513 S.W.3d 652, 677 (Tex. App.—

Houston [14th Dist.] 2016, no pet.) (stating that a summary-judgment movant may 

not use its reply brief to amend its motion or to raise new and independent summaryjudgment grounds).
22

the chain of title put BEDC on both constructive notice to inquire about the rights of 

other parties in the property being conveyed and actual notice through McKnight 

Title’s acting as WFG’s agent in the 2019 JS&TA/BEDC transaction.

Trial Court’s Orders. The trial court denied BEDC’s motion and granted 

NBT’s, stating that Campbell owed NBT $789,721.94 as of March 26, 2020; declaring 

void the December 16, 2016 release of lien recorded on January 10, 2017; and 

granting NBT’s request for judicial foreclosure on the property. The trial court 

severed NBT’s claims against BEDC to make the summary-judgment order final and 

appealable. 

IV. Discussion

BEDC complains that the trial court erred by granting summary judgment for 

NBT, claiming that its evidence shows that the deed of trust held by NBT was

extinguished as a matter of law. NBT disagrees, contending that the deed of trust was

not extinguished and that BEDC purchased the property with notice. We begin with 

the question of notice.

A. BEDC had notice.

Under Property Code Section 13.001, a conveyance of real property or a 

mortgage or deed of trust is void as to a subsequent purchaser for valuable 

consideration who lacks notice of it “unless [it] has been acknowledged, sworn to, or 

proved and filed for record as required by law.” Tex. Prop. Code Ann. § 13.001; 

Broadway Nat’l Bank, Tr. of Mary Frances Evers Tr. v. Yates Energy Corp., 631 S.W.3d 16, 
23

26 (Tex. 2021). An instrument that is properly recorded in the proper county is notice 

to all persons of the instrument’s existence. Tex. Prop. Code Ann. § 13.002(1); Bank of 

Am. v. Babu, 340 S.W.3d 917, 923 (Tex. App.—Dallas 2011, pet. denied) (“A party has 

constructive notice of instruments properly recorded in the proper county.”);

3 Aloysius A. Leopold, Texas Practice Series: Land Titles And Title Examination § 8.3 (3d

ed. 2021) (“The primary purpose of the recording statutes, which require the 

registration of deeds and other instruments affecting interests in land,[] is to give 

notice of the contents[] of the recorded instruments.”).

A bona fide purchaser is one who acquires property in good faith, for value, 

and without notice—constructive or actual—of any third-party claim or interest. 

Broadway Nat’l Bank, 631 S.W.3d at 26. Constructive notice may create an irrebuttable 

presumption of actual notice in some circumstances, and recorded instruments in a 

grantee’s chain of title generally establish an irrebuttable presumption of notice. Trinity 

Fin. Servs., LLC v. Mahanay, No. 02-21-00027-CV, 2022 WL 247433, at *3–4, 

*6 n.3 (Tex. App.—Fort Worth Jan. 27, 2022, no pet. h.) (mem. op.) (expressly 

declining to hold that a lien’s validity factors into whether there is constructive notice 

of it).23

23We recently discussed deeds of trust in Mahanay, in which a property owner

took out a loan and signed a promissory note and deed of trust, which were then

assigned to other financial institutions—first to Credit Union of Texas (CUTX) and

then to Companion Property and Casualty Insurance (CPCI)—and recorded in the 

county real-property records. 2022 WL 247433, at *1. When the owner sold the 

property, the title commitment specifically identified that the property was 
24

The party claiming bona-fide-purchaser status has the burden to prove the 

defense, and it is well settled that a purchaser is bound by every recital, reference, and 

reservation contained in or fairly disclosed by any instrument that forms an essential 

link in the chain of title under which he claims. Id. at *3–4. Any description, recital of 

fact, or reference to other documents in an instrument puts the purchaser on inquiry, 

and he is bound to follow up this inquiry, step by step, from one discovery to another 

and from one instrument to another, until the whole series of title deeds is exhausted 

and a complete knowledge of all matters referred to and affecting the estate is 

obtained. Id. at *4.

The record reflects that BEDC had constructive—if not actual—notice of 

NBT’s interest in the property, including the recording of Pinnacle’s assignment to 

NBT and the two unidentical releases of lien purporting to relinquish Campbell’s

interests—with the second release recorded just four months before BEDC bought 

the property and explicitly referring to both the Pinnacle and NBT assignments. See

encumbered by a lien as reflected in the county real-property records. Id. The owner 

told the buyers’ title agent that the note and lien had been paid off in 2009, provided 

the title agent with CUTX’s contact information, and encouraged the buyers to verify 

the status of the note and lien. Id. CUTX confirmed to the buyers’ title agent that the 

seller had paid the note’s full amount in 2009 and that it should have recorded a 

release of lien at that time, and it filed a release of lien in July 2014. Id. When Trinity 

came into possession of the note and deed of trust, it attempted to foreclose on the 

property in 2019. Id. We held that whether the lien had been extinguished was 

irrelevant to the buyers’ bona-fide-purchaser defense (which failed because they were 

on notice due to the real property records) and that the buyers were “free to prove 

th[e] vital fact [of extinguishment] regardless of the bona fide purchaser defense” on 

remand. Id. at *6–7.
25

Broadway Nat’l Bank, 631 S.W.3d at 26 (defining a bona fide purchaser as one who 

acquired property in good faith, for value, and “without notice of any third-party claim 

or interest” (emphasis added)). Accordingly, we must now consider whether a 

genuine, material fact issue exists with regard to NBT’s interest that might preclude 

summary judgment in its favor.

B. NBT’s lien might have been extinguished.

Campbell issued a warranty deed with vendor’s lien to K&M Collision in 

exchange for the K&M note—a note secured both by the vendor’s lien and by a deed

of trust.

24 Campbell then used the K&M note and deed of trust to secure unrelated

loans, first from Pinnacle and then from NBT. NBT argues that the 2012 and 

2015 assignments plainly indicate that it held the deed-of-trust lien, and we agree. But

nothing in the summary-judgment record shows that Pinnacle or NBT was ever 

identified as K&M Collision’s loan servicer on the note that the deed of trust secured. 

Instead, the record tangentially reflects through Republic Title emails that Campbell

had continued to collect loan payments on the K&M note from K&M Collision’s 

owners.

Payoff of the K&M note extinguished the vendor’s lien and the deed of trust. 

Southland Life Ins. Co. v. Barrett, 172 S.W.2d 997, 1000 (Tex. App.—Fort Worth 1943, 

24Under UCC Chapter 3, K&M Collision, the note’s maker, was obliged to pay

the amount of the note to the person entitled to enforce the note and such payment 

would result in a discharge of K&M Collision’s obligation on the note. See Tex. Bus. 

& Com. Code Ann. §§ 3.103(b), .203, .301, .412, .602; UCC Board, supra n.6, at 4.
26

writ ref’d w.o.m.); see Caress v. Lira, 330 S.W.3d 363, 366 (Tex. App.—San Antonio 

2010, pet. denied) (“A lien is usually extinguished upon payment of the indebtedness 

that it was created to secure.”); see also Jarvis v. K & E Re One, LLC, 390 S.W.3d 631, 

642 (Tex. App.—Dallas 2012, no pet.) (“When Stewart Title forwarded the loan 

payoff funds to NAC, the Jarvises’ agent with authority to accept the funds, the lien 

on the property was extinguished and the [deed of trust] was discharged.”); Am. First 

Nat’l Bank v. Jordan-Lewis Dev., L.P., No. 01-09-00990-CV, 2011 WL 2732779, at 

*5 (Tex. App.—Houston [1st Dist.] July 14, 2011, no pet.) (mem. op.). This is because 

“[a] mortgage can have no legal effect apart from [the] debt or obligation it is designed 

to secure, and the mortgage thus ceases to exist on payment of the underlying debt.”

1 W. Mike Baggett and Brian Thompson Morris, Texas Practice Guide: Real Estate Litig.

§ 4:89 (2022); see 2 James N. Johnson, Texas Practice Guide: Real Trans. § 10:94 (2021) 

(“The lien of a mortgage or trust deed is extinguished or discharged when satisfaction 

of the note evidencing the debt secured by the mortgage occurs.”). But see Russell & 

Seisfeld v. Kirkbride, 62 Tex. 455, 456–57 (1884) (noting that if a property’s seller has

transferred notes given to secure purchase money, he could not be permitted “to 

destroy the security which may constitute the sole or chief value of the note or notes 

transferred”); Myers v. Crenshaw, 116 S.W.2d 1125, 1129 (Tex. App.—Texarkana 1938)

(stating that purchase-money note’s assignee has no right to rescission; rather his sole 

right is to have the land sold and proceeds applied to satisfy his purchase-money 

note), aff’d, 137 S.W.2d 7 (Tex. [Comm’n App.] 1940).
27

Further, unless otherwise displaced by UCC provisions, agency law 

supplements the UCC. Aquaduct, L.L.C. v. McElhenie, 116 S.W.3d 438, 443 (Tex. 

App.—Houston [14th Dist.] 2003, no pet.). And under the UCC, a final payment to 

an authorized agent is deemed payment to the principal. Id.; see Metro. Ins. & Annuity 

Co. v. Peachtree Settlement Funding, LLC, 500 S.W.3d 5, 17 (Tex. App.—Houston [1st 

Dist.] 2016, no pet.) (citing Jarvis, 390 S.W.3d at 640). This is true even if the agent 

misappropriates the money. Jarvis, 390 S.W.3d at 640. Under such circumstances, the 

principal bears the loss because, as the party who trusted the wrongdoer, the principal

was in the best position to avoid the loss. Gusma Props., L.P. v. Travelers Lloyds Ins. Co., 

514 S.W.3d 319, 323 (Tex. App.—Houston [14th Dist.] 2016, no pet.). Circumstantial 

evidence can establish an agency relationship and determine the scope of the agent’s

authority, but the question of agency is usually one of fact. Jarvis, 390 S.W.3d at 639, 

641; Aquaduct, L.L.C., 116 S.W.3d at 442. An agent cannot create the authority to bind 

the principal; actual or apparent authority is created only by the principal’s words or 

conduct. Coleman v. Otese Ltd., No. 02-19-00015-CV, 2020 WL 370577, at *6 (Tex. 

App.—Fort Worth Jan. 23, 2020, no pet.) (mem. op.).

We have found two cases involving unfaithful loan servicers who 

misappropriated payoff funds. See Jarvis, 390 S.W.3d at 640; Aquaduct, L.L.C., 

116 S.W.3d at 443. In Jarvis, the debtor signed a note and deed of trust naming her 

lenders as beneficiaries “c/o” the loan servicer at whose office she made monthly 

payments. 390 S.W.3d at 635. When the debtor decided to sell the property, the loan
28

servicer provided the payoff amount and wiring instructions to its account to the

buyer’s title company. Id. at 635–36. The loan servicer received the loan payoff funds 

but did not disburse them to the lenders; instead, it sent the lenders monthly checks 

purporting to be note payments and then stopped making those payments. Id. When 

the lenders learned a year later that the property had been sold, they informed the 

loan servicer that it was “no longer authorized to act as a servicing agent on [their] 

behalf.” Id.

At trial, the lenders denied that they had given the loan servicer the authority to 

accept loan payoffs on their behalf. Id. at 640. Other evidence, however, showed that 

of the lenders’ ten loans with this particular loan servicer, three—including the one at 

issue—had been paid off, and in the first two, the loan servicer had received the 

payoff funds and then disbursed the funds to the lenders, who did not assert either 

time that the loan servicer had lacked authority to receive the funds on their behalf. Id.

at 637, 641. The trial court found—and the appellate court agreed that more than a 

scintilla of evidence supported—that through the lenders’ and loan servicer’s course 

of conduct, they had established a usual, customary, and authorized procedure by

which the loan servicer directly received payoff funds and then disbursed them to the 

lenders and that the loan servicer had the implied actual authority to accept and 

receive the loan payoff on the note at issue on the lenders’ behalf. Id. at 637, 640–41. 

When the title company forwarded the loan-payoff funds to the loan servicer, the 
29

lenders’ agent with authority to accept the funds, “the lien on the property was 

extinguished and the [deed of trust] was discharged.” Id. at 642.

Likewise, in Aquaduct, when a loan servicer converted a note’s payoff amount

during a loan refinance, the trial court found—and the appellate court agreed—that

the evidence sufficed to show that the loan servicer had implied actual authority to 

accept full payment of the note on the lienholder’s behalf. 116 S.W.3d at 442–43. 

When the lienholder had acquired the note and deed of trust, it failed to make a 

written agreement defining the scope of the loan servicer’s authority, and the

lienholder’s president testified that the loan servicer had had the authority, among 

other things, to conduct the day-to-day business of handling the notes and to issue 

payoff statements. Id. at 442. The loan servicer’s letter to the lienholder’s newly

acquired debtors merely informed them that servicing of the note had been 

transferred to it and directed them to send their payments to it; the letter did not 

mention the new lienholder’s name, and the new lienholder never had any 

communication with its debtors. Id. The lienholder did not tell its loan servicer that it 

could not accept full payments of notes until two years after the loan servicer had 

accepted the full payoff at issue in the case. Id. at 442–43.

Here, although NBT argues that BEDC provided no evidence to show that

Campbell had a right to enforce the K&M note even before he assigned the note and 

liens to Pinnacle, the K&M note’s terms require payment to “Lender,” who was

identified in the note as Campbell, at his address “or any other place that Lender may
30

designate in writing,” and the deed of trust defined “Lender” to include “any 

mortgage servicer for Lender.” There is no evidence that Pinnacle, or NBT upon its 

acquiring the note and deed of trust, instructed K&M Collision to stop making note 

payments to Campbell and instead to make payments to Pinnacle and, later, to NBT.

To the contrary, the summary-judgment evidence tends to show that K&M

Collision’s owners were still making payments to Campbell in May and June 2016,

when Campbell gave Republic Title payoff information for the K&M note, and no 

record evidence shows that K&M Collision’s owners were ever notified to pay anyone

else. See Tex. Prop. Code Ann. § 12.017(a)(3) (defining “mortgage servicer” as the last 

person to whom a mortgagor has been instructed by a mortgagee to send payments 

for a loan secured by a mortgage), § 51.0001(3) (same). Accordingly, a genuine issue 

of material fact remains concerning Campbell’s status as NBT’s loan servicer and 

payoff agent. If, as this record implies and as viewed in the light most favorable to 

BEDC as the nonmovant, Campbell had authority to accept the payoff—as he had 

been accepting K&M Collision’s monthly payments—then Republic Title’s payment 

discharged NBT’s lien and BEDC took the property free of NBT’s interest, even 

though Campbell continued to use the no-longer-valid liens to secure a loan extension

from NBT. See Tex. Bus. & Com. Code Ann. § 3.602 (explaining that an instrument is 

considered paid to the extent payment is made by or on behalf of the party obliged to 

pay it and to a person entitled to enforce it or to a person formerly entitled to enforce

it if, at the time of payment, the obligor has not received adequate notification that the 
31

note has been transferred and that payment is to be made to the transferee); see also id.

§ 9.308 cmt. 6 (explaining that attachment and perfection of a security interest in a 

secured right to payment do not of themselves affect the obligation to pay and that 

UCC Chapter 9 does not determine who has the power to release a mortgage of 

record, which is determined by real-property law).

Because there remains a genuine issue of material fact regarding the status of 

the lien, the trial court erred by granting a summary judgment of judicial foreclosure 

in NBT’s favor. See De La Garza, 2018 WL 5725250, at *7. We sustain this portion of 

BEDC’s sole issue.

V. Conclusion

Having sustained the dispositive portion of BEDC’s sole issue, we reverse the 

trial court’s judgment and remand the case for further proceedings.

/s/ Elizabeth Kerr

Elizabeth Kerr

Justice

Delivered: April 7, 2022