Court Opinion

ID: 9681260
Source: CourtListenerOpinion
Date Created: 2023-08-24 07:46:46.33364+00
Date Added: 2024-06-11T18:17:32.858378
License: Public Domain

DUNN, Justice,
dissenting.
I respectfully dissent. An option does not operate as a conveyance of title in properly. At most, the optionee secures only the right to acquire an interest in land by complying with the terms of the option. Thermo Products Co. v. Chilton Indep. School Dist., 647 S.W.2d 726, 734 (Tex.App.—Waco 1983, writ ref’d n.r.e.); Lefevere v. Sears, 629 S.W.2d 768, 770-71 (Tex.Civ. App.—El Paso 1981, no writ); McCaleb v. Wyatt, 257 S.W.2d 880, 881 (Tex.Civ.App.—Fort Worth 1953, writ ref’d n.r.e.). The ownership of the property remains in the optionor until the optionee exercises the option. Whitson Co. v. Bluff Creek Oil Co., 278 S.W.2d 339, 342 (Tex.Civ.App.—Fort Worth 1955), affd', 156 Tex. 139, 293 S.W.2d 488 (1956).
I agree with the majority that a contract for the sale of real estate passes equitable title to the purchaser. Hamon v. Allen, 457 S.W.2d 384 (Tex.Civ.App.—Corpus Christi 1970, no writ). However, an option only gives the optionee the right to elect to purchase the property at stated terms with*240in a specified period of time, but with no obligation to do so, so no title passes at the time the option contract is formed, and time is of the essence. McCaleb v. Wyatt, 257 S.W.2d at 880. The equitable title that the purchaser acquires in the sales contract situation does not pass to the optionee until he exercises his option. Options and contracts of sale constitute two separate and distinct kinds of agreements. Lefevere v. Sears, 629 S.W.2d at 768, 770.
The question remains whether the option contract falls within the broad definition of “real estate” as defined in the Real Estate License Act. The Act defines “real estate” as “a leasehold, as well as any other interest or estate in land, whether corporeal, incorporeal, freehold, or nonfreehold, and whether the real estate is situated in this state or elsewhere.” Tex.Rev.Civ.Stat. Ann. art. 6573a, sec. 2(1) (emphasis added).
The main thrust of the definition confines itself to “interest or estate in land.” The terms “corporeal” and “incorporeal” are descriptive terms. An option is only a right to create an interest in real estate, and not an interest itself. Since the legislature limited the application of sec. 20(b) to sales or purchases of interests or estates in land, I would not extend this limitation to an option, which is only a right to create such an interest. See Barnes v. Howard, 317 S.W.2d 117, 119-20 (Tex.Civ.App.—Waco 1958, no writ).
I would conclude that an option is not “real estate,” as defined by the act. Consequently, any agreement to pay a commission on the sale of an option is not subject to the requirement of section 20(b) of a signed writing. The Real Estate Act did not, as a matter of law, bar appellant’s suit to prove there was an alleged commission agreement.
The majority dispenses with the cases that support that an option is not an interest in land by saying that they all deal with whether “title” passes, and therefore the definition that an option only creates a “right to create an interest” in land does not control. They overlook the supreme court’s opinion in Busby, which states that:
Such a [option] contract certainly did not operate to vest in Mrs. Busby any equitable title to this land when Michael became the purchaser thereof. It merely gave Mrs. Busby an option to purchase.
Michael v. Busby, 139 Tex. 278, 284, 162 S.W.2d 662, 665 (1942) (emphasis added).
Further, when one party fully performs a contract, the statute of frauds may be unavailable to the other party if he knowingly accepts the benefits and partly performs. Callahan v. Walsh, 49 S.W.2d 945, 948 (Tex.Civ.App.—San Antonio 1932, writ ref’d); Estate of Kaiser v. Gifford, 692 S.W.2d 525, 526 (Tex.App.—Houston [1st Dist.] 1985, writ ref’d n.r.e.); Le Sage v. Dunaway, 195 S.W.2d 729, 731 (Tex.Civ.App.—Waco 1946, no writ). Where there is strong evidence establishing the existence of an agreement and its terms, the party relying on the agreement suffers detriment for which he has no adequate remedy, while the other party, if permitted to plead the statute, would reap an unearned benefit. To apply the statute of frauds then and declare the agreement unenforceable would be to permit use of the statute of frauds to perpetuate fraud. Because section 20(b) is an extension of the statute of frauds, application of the part-performance exception to section 20(b) is proper if its application is consistent with the rationale common to application of the part-performance exception in the statute of frauds. Carmack v. Beltway Dev. Co., 701 S.W.2d 37, 41 (Tex.App.—Dallas 1985, no writ).
There is documentary evidence in the record before this Court establishing the possible existence of part performance (i.e. payment by Levering to Hitchcock of a commission for the sale of two tracts of land that the documents indicate were involved in the same alleged contract). This is evidence of possible part performance.
Hitchcock claims that it contracted with Levering to sell two tracts of land and the “option” held by Levering to purchase certain other realty. He asserts that he secured buyers for the two parcels, and Levering paid him his commission. Additionally, he secured a buyer for the purchase of the option, and Levering refused to pay his commission on this sale.
*241The record contains Hitchcock’s letter to Levering dated April 22, 1981, concerning the status of three “properties” that Levering owned or had optioned. The letter stated that Hitchcock had three parties interested in “either purchasing for cash (one of the parcels of land) and/or paying a premium to you at the time of the exercise of the option of the other two properties to acquire these parcels.” The letter further stated that a commission was to be paid “if I am successful in concluding a transaction whereby you convey these properties to an entity that I procure.” Hitchcock attached to his letter “an agreement to evidence our understanding regarding a brokerage commission.” The attached agreement was not an exclusive listing, but was “only evidence of [Levering’s] agreement to pay a brokerage commission if a transaction is completed.” That agreement was not signed by Levering or Hitchcock.
The document, entitled “Authority to Sell Real Estate,” first lists the property involved as follows:
LEGAL DESCRIPTION:
a) 11.6 acre tract on Almeda Road owned by Levering & Reid.
b) 15.27 acre tract on Cambridge Drive optioned by Levering & Reid [Emphasis added.]
c) 9.6 acre on O.S.T. optioned by Levering & Reid.
The agreement then states:
In consideration of the promise of the undersigned Broker ... to use his efforts to obtain a Purchaser for the real property described herein, at the price and terms stated or at any other price and terms acceptable to Owner, Owner grants to Broker the right and authority to offer said real property for sale.
Even if the option involved herein is covered by the statute of frauds, there still remains possible questions of fact to be determined.
I would reverse the judgment and remand the case to the trial court.