699 Dragon v. Trial, No. 04-16-00758-CV, 2017 WL 5162180 (Tex. App.—San Antonio Nov. 8, 2017, no pet.)

Thursday, August 30th, 2018

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.

Dragon v. Trial, No. 04-16-00758-CV, 2017 WL 5162180 (Tex. App.—San Antonio Nov. 8, 2017, no pet.) (mem. op.), held that the estoppel by deed doctrine is relational or transactional, rather than based on the chain of title. In 1932, Leo acquired an undivided 1/7th interest in 237 acres in Karnes County. In 1983, Leo conveyed one-half of his interest (1/14), by a recorded Gift Deed, to his wife, Ruth. In 1992, by Warranty Deed, Leo purported to convey all of the 237-acre tract to Dragon, reserving the minerals for a fifteen-year term. Dragon did no title review and was not aware of the prior recorded 1983 Gift Deed. In 1996, Leo died testate, leaving all in trust for the benefit of wife Ruth for life, remainder to their two sons. In 1997, the term mineral interest terminated. In 2010, wife Ruth died intestate, survived by the two sons. In 2014, Dragon sued the sons to clear title. Sons contended that they were not successors in interest to Leo under the 1992 Warranty Deed, but claimed under their mother’s (wife Ruth’s) 1983 Gift Deed. Dragon asserted that sons were estopped to claim title by the breach of warranty in the 1992 Warranty Deed.

Leo clearly breached the warranty in the 1992 Warranty Deed. The estoppel by deed doctrine prohibits the assertion of title in contradiction or breach of a warranty. Because Leo clearly breached his warranty, Leo would have been estopped from asserting title to any interest in the property in contradiction to Leo’s warranty. The issue was whether the remainder beneficiaries of Leo’s trust (sons) were also estopped. Dragon argued that “the [sons], as Leo’s heirs, are bound by the deed’s warranty” and should be estopped from asserting any interest in the property because the 1992 Warranty Deed purported to convey all of the property. The sons maintained that they were not obligated under the 1992 Warranty Deed’s warranty because their 1/14th interest arises from Ruth and the 1983 Gift Deed, not from Leo, and Ruth was not a party to the 1992 Warranty Deed.

The warranty clause effectively guarantees that the grantors, their assigns, and heirs will “warrant and forever defend” Dragon against any and all claims any person has against the conveyed property. The estoppel by deed doctrine “prohibits the assertion of title in contradiction or breach of the warranty.” If a deed contains a covenant or warrants to convey a fee simple or a lesser title and the deed does not, the estoppel by deed doctrine may estop the grantor or his assigns from asserting an interest in the land in derogation of the interest which the deed purports to convey. In the leading case (Duhig), there was an outstanding 1/2 mineral interest, but Grantor Duhig purported to convey all with warranty, reserving 1/2 of the minerals to the Grantor Duhig. Duhig held that Grantee received 1/2 of the minerals because Duhig was estopped to assert the reservation in his own deed.

The court stated that estoppel by deed not only binds grantors to the deed’s recitals, but also applies to “grantees, privies in blood, privies in estate, and privies in law.” Leo breached the warranty granted in the 1992 Warranty Deed, and he would be estopped from asserting the title or interest in the property set forth in the deed. Likewise, Leo’s sons would also be estopped because they are the “remainder” beneficiaries of Leo’s estate and trust, and therefore, his privies in blood, privies in estate, and privies in law. Therefore, the sons are bound by the recitals of the 1992 Warranty Deed and cannot assert any claims or titles in contradiction to their duty as heirs and assigns to defend Dragon against all claims pertaining to the deed.

This is a Memorandum Opinion and should be critically reviewed. It does not seem to recognize the concept of separate chains of title, and further research might establish that references to “privity of blood” in other cases essentially means intestate succession in the same chain of title.

The significance of the case is the holding that being related by “blood” to a grantor in breach of grantor’s warranty to another is enough to be divested of title. It also holds that acquiring title from a grantor, who subsequently breaches his warranty to another, may result in loss of title, because it is the same “estate.”