Untitled Texas Attorney General Opinion

THE ATTORSEY GENERAL
OF TEXAS

.April 10, 1987

Honorable Gamy Mauro Opinion No. JM-675
Commissioner
General Laud Office Re: Restrictions on conveyauce of
1700 North Congress Avenue particular tracts of land deeded to
Austin, Texas 78701 the state for the use and benefit of
the TlSdS Department of Mental
Eealth and Mental Retardation

Dear Mr. Mauro:

The Asset Management Division of the General Land Office has
requested au opiniou as co the restrictions. if any, that exist on the
use or conveyance of surplus land in two tracts chat were conveyed to
the state of Texas for the use and benefit of the Texas Department of
Mental Health and Mental Retardation. The deeds conveying these lands
to the state contain language obligating the state co build facilities
for the care of the mentally retarded on the respective tracts. The
facilities have been constructed, and both facilities occupy only part
of the land conveyed by the deeds. You advise us chat a lease, sale,
or trade of the excess land will not impair the continued operation of
either of those facilities.

A tract in Nueces County was conveyed to the scace by the city of
Corpus Christi. The other tract. in Tarranc County, was conveyed
jointly to the state by the Sid W. Richardson Foundation and the Amon
G. Carter Foundation.

The city of Corpus Christi deed, entitled Warranty Deed, provides
in part that the city

in consideration of the promise and the obligation
of the State of Texas . . . to plan and construct
permanent, suitable, substantial, and fireproof
buildings sufficient in all respects to care
for mentally retarded persons does hereby Grant,
Bargain, Sell. and Convey unto the State of
Texas . . . the following described tract of land,
situated in Nueces County, Texas, co-wit:

[description]

The habendum clause contains language chat the above described
premises are "for the use and benefit of the Corpus Christi State

p. 3095
Eonorable Garry Mauro - Page 2 (JM-675)

School as a school for the diagnosis, special training, education,
supervision, treatment, care and control of mentally retarded persons
of the State of Texas and the city of Corpus Christi." The deed
contains the further provision that:

The consideration for this deed being the
obligation of the state to construct upon said
grounds prrmanent. suitable. substantial, and
fireproof buildings sufficient in all respects to
care for mentally retarded persons, unless said
school be established by commencement of construc-
cion on or around September 1, 1968, and continue
thereafter with due diligence, the title to the
said premises shall automatically revest in the
grantor, city of Corpus Christi. and this con-
veyance shall be of no further force or effect.

Each of the deeds by the two foundations. entitled Deed, provides
in part that the foundation

does Give, Grant, and Convey . . . unto the State
of Texas . . . subject to the special conditions
referred to hereinafter, a determinable fee
interest in and to an undivided one-half (l/2)
interest in and to all that certain tract and
parcel of a land lying and being situated in
Tarranc County, Texas, described as follows:

[description]

Both the habendum clauses and warranty clauses contain the language
"subject to the special conditions referred to hereinafter." The
deeds concain the further provision that:

This conveyance IS made upon the specific con-
ditions, which Grantee herein by the acceptance of
this deed agrees to and accepts, that the State of
Texas, Texas Department of Mental Health and
Mental Retardation, will construct upon the above
described property a school for the care of
mentally retarded persons of the State which
facility . . . that the construction of such
school will . . . commence on or before September
1. 1973, and be thereafter diligently prosecuted
to completion to the extent authorized by the
above Act; that the premises and any and all parts
thereof. together with any and all improvements
attached or affixed thereto shall forever be used
for public purposes.

p. 3096
Honorable Gamy Mauro - Page 3 (JM-675)

The goal of a court when construing a deed of conveyance is to
ascertain the intention of the parties to the conveyance. The cases
construing deeds involve the courts' interpretations of the language
of the specific deeds in light of the facts and circumstances under
which the deeds were executed. See Harkey v. liarkey, 60 S.W.2d 834
(Tex. Civ. App. - Austin 1933, zt ref'd). Whether the deeds in
question create covenants, conditions. or determinable fees and
whether there is substantial compliance with any restrictions requires
subjective interpretations of the language of the individual con-
veyances and factual determinations that we can not make with
certainty in the opinion process. However, we will attempt to offer
guidance by discussing policies that have been employed by the courts
in construing deeds and conveyances.

The cardinal rule for the construction of deeds is that the
intention of the parties is co be ascertained and given effect and
such intention is to be gathered from a consideration of the entire
instrument, together with the surrounding circumstances, unless such
intention is in conflict with some unbending canou of construction or
settled rule of property or is repugnant to the terms of the grant.
Since the language of a deed is chat of the grantor, if there is any
doubt as to its construction. it will be resolved against the grantor
and in favor of the grantee. The largest estate that its terms will
permit will be conferred on the grantee. See Dilbeck v. Bill Gaynier,
Inc., 368 S.W.Zd 804 (Tex. Civ. App. -Dallas 1963. writ rrf'd
ze.); Gex v. Texas Company. 337 S.W.2d 820 (Tex. Civ. App. -
Amarillo 1960, writ ref'd n.r.e.); Hedick v. Lone Star Steel Company,
277 S.W.2d 925 (Tex. Civ. App. - Texarkana 1955, writ ref'd n.r.e.).

It has long been established that the law does not favor for-
feitures. The courts will not declare a forfeiture unless compelled
to do so by language that will admit of no other construction.
Forfeiture clauses fail in the event they are ambiguously expressed.
If a provision is ambiguous, chat alone may condemn ic as a forfeiture
provision. See Link v. Texas Pharmacal Company. 276 S.W.2d 903 (Trx.
Cl". App. -San Antonio 1955, no writ); W.F. White Land Co. v.
Christenson, 14 S.W.2d 369 (Tex. Civ. App. - Fort Worth 1928, no
writ).

The courts differentiate between types of deed restrictions on
the use of land. Some are classified as covenants and others as
conditions. A covenant is a promise on which a conveyance is
executed, the breach of which gives the grantor a right of in-
junctive relief or an action for specific performance or damages, but
not a right of reinvestment of title. See W.F. White Land Co. v.
Christenson, 14 S.W.2d at 371; see also Rex v. Kotzur, 267 S.W. 759
(Tex. Civ. App. - San Antonio 1924, no writ); Elliocc v. Elliott, 109
S.W. 215 (Tex. Civ. App. 1906, writ ref'd).

A condition, oo the other hand, will have the effect of vesting
or reinvesting title. A frequent issue involving conditions is

p. 3097
Honorable Gamy Mauro - Page 4 (m-675)

whrcher *the condition is a condition subsequent or whether ic is a
special limitation and determinable fee. A condition subsequent
designates a happening that gives the grantor a right to terminate rhe
estate and. by re-entrv._ to be reinvested with the title. The re-
investment is-not automatic but requires affirmative action by the
grantor. See Community of Priests of St. Basil v. Byrne, 255 S.W.
601. judgmtydopted (Tax. Corn'''App. 1923). An estate subject to a
special limitation restricting the use of land is created-when the
language of conveyance provides that the estate is granted so long as
a designated condition does or does not exist. It is a limitation on
the duration of the estate. The estate granted is automatically
terminated by occurrence of the condition. A determinable fee is a
distinctive name chat has bean given a fee simple estate that is
subject to a special limitation. See Colby v. Sun Oil Company, 288
S.W.2d 221 (Tex. Civ. Am. - GalGton 1956. writ ref'd n.r.e.):
Wampler v. Barringcon, 2bi S.W.Zd 883 (Tex. Civ. App. - Texarkana
1953, writ ref'd n.r.e.); Daggett v. City of Fort Worth, 177 S.W. 222
(Tex. Civ. App. - Amarillo 1915, no writ): Williams. Restrictions on
the Use of Land: Conditions Subsequent and Deceminable Fees, 27 Tex.
L. Rev. 158 (1948); Walkar. Property Interest Created By Lease, 7 Tex.
L. Rev. 8 (1929). Still another condition that may arise from an
instrument of conveyance is a condition precedent, which is a
condition that must take place before the estate can vest. A
condition precedent postpones the passage of title from the grantor to
the grantee until the condition is performed. See City of Dallas v.
Etheridge. 253 S.W.2d 640 (Tex. 1952); SpinksF. First Christian
Church of Vera, 273 S.W. 815. judgmt adopted (Tex. Comm'n App. 1925).

Definitions of the different categories of restrictions are well
established. The difficulty arises in construing the dead in each
case. Certain general principles for construing particular instru-
ments have been developed, but it is not always easy to apply the
principles to a particular case.

As we previously stated, the largest estate that the terms and
language of the conveyance will permit will be conferred on the
grantee. Thr courts construe a provision as a covenant rather than as
a condition if the terms are susceptible of that interpretation.
Promises and obligations of the grantee are construed as covenants
unless the language and circumstances of the conveyance clearly reveal
an intention to create a conditional estate. If the language has a
doubtful meaning. the courts have held it to be a covenant rather than
a condition. Likewise, interpretation as a condition subsequent is
less objectionable than construction as a special limitation or
determinable fee. See Lawyers Trust Co. v. City of llouston_,359
S.W.Zd 887 (Tex. 1962); Heame v. Isradshaw. ,312 S.W.2d 948 (Tex.
1958); Zap&a v. Torres, 464 S.W.2d 926 (Tex. Civ. App. - Dallas 1971,
no writ); Hedick v. Lone Star Steel Co.. 277 S.W.Zd 925 (Tex. Civ.
APP. - Texarkana 1955, writ ref'd n.r.e.); City of Wichita Falls v.
Bmner, 165 S.W.2d 480 (Tex. Civ. App. - Fort Worth 1942, writ ref'd).
As between a condition subsequent and a condition precedent, if the

p. 3098
Honorable Gamy Mauro - Page 5 (JM-675)

language of a conveyance creates doubt as to the nature of a
condition, the courts hold that the conveyance imposes a condition
subsequent rather than a condition precedent. Also, the fact chat a
arancee is entitled to possession and use of the property implies a
Condition subsequent idstead of a condition precedent. Railroad
Commission v. American Trading and Production Corp., 323 S.W.2d 474
(Tex. Civ. App. - Austin), cert. denied, 361 U.S. 886 (1959).

The courts frequently have found that the use of certain words
and terms is indicative of the intention of the parties to a
conveyance, but is not necessarily conclusive. We are not aware,
however, of a case in which a court has construed the specific
language and circumstances of the deeds conveying the two tracts in
question for use by the Texas Department of Mental Health and Mental
Retardation.

A mere recital of uses to which granted premises are to be
applied does not ordinarily create a condition and may not create even
a covenant. It has long been settled that where a deed contains apt
language to grant an unconditional fee estate in land, other language
in the instrument which denotes that the land is granted for a par-
ticular purpose is not regarded as implying that the grant is condi-
tional. 1; Texas 6 P. Railway Co. v. Martin, 71 S.W.2d 867 (Tex.
1934). the court found that a deed where the grantors "granted" land
"for-depot purposes and uses" conveyed a fee simple title without
condition. In Hughes v. Gladewater County Line Independent School
District, 76 S.W.2d 471 (Tex. 1934), the court determined that a deed
that contained a statement in both the granting clause and the
habendum clause that the land was to be used for school purposes only
did oat create either a condition subsequent or a special limitation
that would have established the duration of the grant and did not
constitute a covenant. Normally, there must be language of a right
of re-entry if a condition subsequent is created and language of
reversion or revesting of the property in the case of a determinable
fee. See Davis v. Skipper, 83 S.W.Zd 318 (Tex. 1935); Gabert v.
0lcoct.m S.W.985 (Tex. 1893); Gahagan v. Texas 6 P. Railway Co., 231
S.W.2d 762 (Tex. Civ. App. - Dallas 1950, writ ref'd n.r.e.); Toole v.
Christ Church, Houston, 141 S.W.Zd 720 (Tex. Civ. App. - Galveston
1940, writ ref'd); Harris v. Rather, 134 S.W. 754 (Tex. Civ. App.
1911. writ ref'd).

Words of re-entry or forfeiture are not indispensable to the
creation of a condition but are important'as evidence of au intention
to impose one of the conditions on an estate. Where an express
reversionary clause in a deed to school trustees evidenced the inten-
cion of the parties that the land would revert to the grantor if the
land ceased to be used for school purposes, the court couscrued the
reverter clause as entitling the grantor to a recovery of the laud in
case it was abandoned for school purposes. See Dickenson v. Board of
Trustees, 204 S.W.Zd 418 (Tex. Civ. App. -Fort Worth 1947, &it
ref'd).

p. 3099
Honorable Garry Mauro - Page 6 (JM-675)

The use of the technical words "coudition" or “covenant” in a
deed is not totally determinative of the character of the provision to
which it refers. While the words "on condition" in a deed are apt
words to create a condition, they do not necessarily do so. See
Dilbeck v. Bill Gaynier, Inc., 368 S.W.2d at 807. The use of the wa
"if" traditionally has been a strong indication that the parties
intended a condition subsequent, although it is not conclusive. - See
Lawyers Trust Co. v. City of Houston, 359 S.W.2d at 890. We are not
aware of a case in which a court addressed the significance of the use
of the technical words "determinable fee interest" in the granting
clause of a deed as was done in the conveyance of the Tarranc County
tract. However, in Waters v. Ellis, 312 S.W.2d 231 (Tex. 1958), the
Texas Supreme Court stated that “it is a recognized rule of construc-
don that where there is a 'necessary repugnance' of clauses in a
conveyance. the granting clause prevails over the other provisions of
the deed.' In another case, an agreement by a grantee to care for the
grantor was found to be a covenant, and not a condition, even though
the habendum clause was followed by the phrase "subject to the terms
and conditions hereinafter provided." Sisk v. Bandon, 70 S.W.2d 689
(Tex. 1934). A recitation of a grantee's promise as consideration for
a conveyance, especially in the absence of language reserving the
right to terminate the estate, does not in itself indicate an
intention to convey a conditional estate. - See Zapata v. Torres, 464
S.W.2d at 929.

If a deed is for valuable consideration' as distinguished from a
deed of gift or deed for nominal consideration, a court will lean more
strongly away from a construction that creates a condition. --
See Toole
v. Christ.Church, Houston. 141 S.W.2d at 720; Texas h P. Railway Co.
v. Martin, 71 S.W.2d at 870; Gabert v. Olcott. 23 S.W. at 987. In
Community of Priests v. Byrne, w ra, land was conveyed for
maintenance of a school without any other consideration. The court
found that where the language manifested only an agreement to reconvey
if the school was not maintained, the agreemept was only a covenant
and title vested in the grantee without condition subsequent or
special limitation.

It has been suggested that where there has been substantial
compliance with a covenant or condition in a deed, a transfer of part
of the estate or a use other than that called for in the deed does not
subject the estate to termination or give rise to a cause of action
for damages. We agree that substantial compliance with the terms of a
conveyance probably will prevent forfeiture of title or damages. See
Boyt v. Geist. 364 S.W.2d 461 (To%. Civ. App. - Eouston 1963,o
writ); Wanton v. City of San Antonio' 207 S.W. 951 (Tex. Civ. App. -
San Antonio 1918, writ rrf'd). As previously stated, however, what
constitutes substantial compliance involves subjective interpretations
of conveyances and determination of facts chat are not appropriate in
the opinion process.

p. 3100
Honorable Carry Mauro - Page 7 (JM-675)

A finding by a court that there has been substantial compliance
with a condition generally has prevented a forfeiture. In McCarthy v.
City of Houston, 389 S.W.2d 159. 163 (Tex. Civ. App. - Corpus Christ1
1965, writ ref'd n.r.e.). the court stated that “before a court should
declare a reverter of a fee title under a condition subsequent. the
facts should be such as to show a definite violation or breach of the
condition subsequent." Where a restriction required the grantee to
use land solely for gin purposes and the property was used for gin and
additional purposes, the court held that the restriction did not
preclude the use of the property for the other purposes so long as a
gin was operated on the premises. While the deed provided that the
property was to be used solely for gin purposes, it made no provision
for a reversion in case the property was used for a purpose in
addition to gin purposes. The court said that the use for other
purposes that did not interfere with use for gin purposes did not
operate as a reversion of title. See Gleghorn v. Smith, 62 S.W. 1096
(Tex. Civ. App. 1901, writ ref'd), In Davis v. Skipper, supta, the
deed in question conveyed property to be used for church purposes only
and provided that title would revest in the grantor if use as a church
was abandoned. The court found a conveyance of a determinable fee to
the grantees and determined that so long as the property was used for
church purposes, there was no intention to restrict its physical use,
provided it was not used for some other inconsistent business or
enterprise. In so finding, the Davis court quoted from an Indiana
case as follows:

The owner of a determinable fee in real estate
has all the right of an owner in fee simple in
regard to the use or disposal of the real estate;
he may use it in any way. may cut and sell the
trees growing upon the land, strip the sod and
clay from its surfsce. take out the minerals from
underneath, sell it without restriction; his
rights being equivalent to those of an owner in
fee simple, save that his fee is liable to be
defeated at any time by the occurrence of the
contingency by which it is determined. and. if he
should sell, his purchaser would also take a
determinable fee.

Hillis v. Dils, 100 N.E. 1047, 1049 (Ind. App. Ct. 1913). See also
Hamman v. City of Houston, 362 S.W.2d 402 (To%. Civ. App. -'Fort Worth
1962, writ ref'd n.r.e.1 (part of tract' conveyed to city for park
purposes condemned by state for highway purposes).

Texas courts have adopted the general policy that, where there is
ambiguity in restrictions concerning the use of real property or
substantial doubt as to the meaning of a restriction, the ambiguity
and doubt will be resolved in favor of the free use of the land. See
Baker v. Brackeen. 354 S.W.2d 660 (Tax. Civ. App. - Amarillo 1962.T

p. 3101
Honorable Garry Mauro - Page 8 (JM-675)

writ); Burkhart v. Christian, 315 S.W.2d 668 (Tex. Civ. App. - Waco
1958, writ ref'd n.r.e.).

SUMMARY

In construing deeds of conveyance, the courts
ascertain the intentions of the parties co the
deeds by interpreting the language of the specific
deeds in light of the circumstances under which
the deeds are executed. The courts have resolved
doubt as to the construction of deeds in favor of
grantees and have declared forfeitures of an
interest in property only when the language of a
deed permits no other construction. Where re-
acrictions exist, the courts have resolved doubt
in favor of a covenant rather than a condition and
tend to find that a condition is a condition
subsequent instead of a special limitation and
determinable fee. Substantial compliance with a
covenant or condition in a deed probably will
prevent damages or a forfeiture of title. Whether
specific deeds cream covenants, conditions, or
determinable fees, and whether there is sub-
stantial compliance with a restriction, requires
subjective interpretation of the language of the
deed and factual determinations for which the
article 4399 opinion process was not intended.

J
Very truly yours

&
JIM MATTOX
Attorney General of Texas

JACK HIGHTOW!B
First Assistant Attorney General

MARYEELLER
Executive Assistant Attorney General

JUDGE ZOLLIE STEAXLIIT
Special Assiacant Attorney General

RICK GILPIN
Chairman, Opinion Committee

Prepared by Nancy Sutton
Assistant Attorney General

p. 3102
I..