Court Opinion

ID: 4145754
Source: CourtListenerOpinion
Date Created: 2017-02-18 04:00:25.270136+00
Date Added: 2024-06-11T14:21:48.327156
License: Public Domain

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      do-
                           wrcord~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 autfi-
                       aration . . . *
             .non July   2A, 1939,      8.    hi. sowell rxreutad    an
        :netruasnt    vvhldb referred        to the lb o vodoe&,    snd
        continued:
honorable      Ton C. King,   rage 2

         ' tw1~8e matter          of ract   #7OO.‘@Gof the aon-
     s&&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 Col-
     lege the reaalndsr snd said property was convey-
     ed to .xe wl th the follow-iog agreement and under-
     stsndlng 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 inter-
     eat 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 there-
     on, to the St, te of Texns, for the ase end bene-
     fit 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 llv-
     he, ~111 join me In the execution          thereof’,  lr
     requested by the parties above aenticned.

       tr’,>
            "'(4) xi a t th eld 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 in-
     t@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

            ‘The Collepe,
        : .^Ye.           by its presldant, sIPned tLla
      nq\t&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 trensac-
     tion 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;hRtwould 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 necea-
     sary, I have related herein the substance of all
     the $nronaation   I have.  It will be helpful,  hov-
     eveyi: ir you will state the assuaptf;~ns you make. v
          ,-‘$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 apacif-
ically   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 Op-
erative upon the college’s        failing    to repay hla within txo
years frm July 21, 1939; that is, wo:,ld there be en lute-
mtlc 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 par-
POM. * .-,
          *
           -,.?,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 ec-
qcire 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 se-
curity 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 nrc-
essary 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 conetruc-
tfon 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 pir-
      ohesar is a aere trustee end holds for thr bane-
      rit 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
            lzscutl&~of    the deed from Oat88 to ZWwell. but under an
.           agrmaent~r:hIch we construe to h8ve taken place riaultan-
            tou8ly 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 F.evlsad Civil Statutes,
            1925, Articl8 6627.
                        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 Tort-
            gee8 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 contaaporafi-
            COW 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 absol-
            ute, 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 COT-
            v8yanc8~ 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 op-
            tion ti~,%well,    upon tha fs5.lura   of the college    to ask8 thr
                        would be Ineftective     to Uiyeat the colle!-e n’f the
            ~~~?&%cquired        , 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 tranaac-
            t1on.   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 ~anCthe 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
                                                                XeEIs tant