Rafael D. Alvarado, Et Ux. v. R. A. Alvarado, Alfonso Ibanez and Gloria Ibanez

NUMBER 13-00-690-CV COURT OF APPEALS THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI RAFAEL D. ALVARADO AND MANUELA ALVARADO, Appellants, v. R.A. ALVARADO, ALFONSO IBANEZ AND GLORIA IBANEZ, Appellees. On appeal from the 206th District Court of Hidalgo County, Texas. O P I N I O N Before Chief Justice Valdez and Justices Yañez and Castillo Opinion by Justice Castillo This appeal arises from a suit to quiet title. Rafael D. and his wife Manuela Alvarado (Athe Alvarados@) appeal a take-nothing judgment entered following a bench trial. By three issues, appellants urge that: (1) the judgment is contrary to the greater weight and preponderance of the evidence; (2) equity demands that they recover their homestead; and (3) the trial court erred in excluding parole evidence regarding their intent. We reverse and remand. Factual Background Appellants were incarcerated in Hidalgo County jail pursuant to a warrant issued by the State of Ohio for a drug possession offense. While incarcerated, they sought their release on bail. Unable to secure the money to meet the bond requirement, they signed a document entitled Awarranty deed,@ purporting to convey their homestead, located in McAllen, to their son, R.A. Alvarado (AR.A.@), while reserving the mortgage obligation on the property.[1] R.A. met with attorney Alfonso Ibanez (AIbanez@) pursuant to his parents= request that he secure their release from jail. Ibanez, who was Mrs. Alvarado=s cousin, had been the Alvarados= attorney in other criminal matters. When R.A. could not meet Ibanez=s $20,000 request for funds to release his parents on bail, R.A. paid Ibanez $2,500 in cash and signed a document that he believed made the property collateral.[2] He then signed a warranty deed conveying the homestead to Ibanez and his wife. R.A. believed that this transfer to Ibanez was solely for the purpose of collateral for the $20,000 in bail bonds that Ibanez had told him was needed immediately.[3] The Alvarados were subsequently released from Hidalgo County jail on bond. They were required to vacate the property and, thereafter, answered to the Ohio criminal charges and served jail time, although Ibanez did not represent them there. At the time of trial, the sister of Gloria Ibanez was residing on the premises. By this lawsuit, the Alvarados sought to reacquire their homestead. Issues Presented The Alvarados present three issues in this case. In their first issue, the Alvarados claim that the trial court erred in granting judgment for the defendant because the judgment was contrary to the great weight and preponderance of the evidence submitted. In their second issue presented, they argue that the trial court should have granted them equitable relief because Aequity demanded@ that they recover their homestead property. In their third point of error, the Alvarados assert that the trial court erred in excluding parol evidence offered by the appellants to prove their case. Findings of Fact and Conclusions of Law Following trial to the bench, the trial court signed the final judgment on August 11, 2000. When a final judgment is issued following a bench trial, either party may request that the trial court issue findings of fact and conclusions of law. See Tex. R. Civ. P. 296. The Alvarados timely made a request for findings of fact and conclusions of law on August 23, 2000, but the trial court failed to provide these requested findings. When a trial court fails to provide findings of fact and conclusions of law pursuant to a request by one of the parties, that party must file in the trial court a notice of past due findings of fact and conclusions of law in order to preserve error. Tex. R. Civ. P. 297. The Alvarados timely filed their notice of past due findings of fact and conclusions of law on September 18, 2000. Although proposed findings of fact and conclusions of law were filed with the trial court by the appellee, the court never issued its own findings of fact and conclusions of law. Where a party has filed a request for findings of fact and conclusions of law and then filed a notice of overdue findings of fact, the trial court has a mandatory duty to issue those findings and conclusions. Cherne Indus., Inc. v. Magallanes, 763 S.W.2d 768, 772 (Tex. 1989); Humphrey v. Camelot Ret. Cmty., 893 S.W.2d 55, 61 (Tex. App.BCorpus Christi 1994, no writ). In such a circumstance, the failure of the trial court to respond is presumed harmful, unless the record before the appellate court affirmatively demonstrates that the party complaining of the failure to file findings of fact has suffered no injury. Tenery v. Tenery, 932 S.W.2d 29, 30 (Tex. 1996). The central question in this harm analysis is whether the circumstances of the particular case would force the appellant to guess the reason or reasons that the trial court ruled against it. Humphrey, 893 S.W.2d at 61 (citing Sheldon Pollack Corp. v. Pioneer Concrete Corp., 765 S.W.2d 843, 845 (Tex. App.BDallas 1989, writ denied)). When the trial court=s reasons for its judgment are apparent from the record, the presumption of harm is rebutted. See Guzman v. Guzman, 827 S.W.2d 445, 447 (Tex. App.BCorpus Christi 1992), writ dism=d improv. granted, 843 S.W.2d 486 (Tex. 1992) (holding that the court=s reasons for its judgment were apparent when appellant=s complaint addressed only one issue and raised only one dispute). We find that there was no harm in the present case. The Alvarados did not raise an issue in their brief complaining that the failure of the trial court to issue findings of fact prevented them from presenting issues on appeal. Indeed, they bring a challenge to the sufficiency of the evidence, and brief this court on that issue, without the benefit of the trial court=s findings of fact. Further, in the present case, the grounds for the trial court=s ruling were unambiguous. The Alvarados brought suit arguing that the property transfer was made for the purpose of securing a mortgage loan from the appellee, in order to pay for legal expenses that Ibanez provided. They presented evidence at the bench trial to demonstrate this fact. The Ibanezes argued that the transfers were straightforward and fee simple title was transferred in payment of the legal expenses. Therefore, we may rule on the merits of this case without the need to order the trial court to issue findings of fact and conclusions of law in compliance with rule 297 of the rules of civil procedure. Tex. R. Civ. P. 297. Standing In their brief, the Ibanezes raise an argument that the trial court judgment should be affirmed because the Alvarados had no standing to bring this suit, since they lacked privity of contract with him. We disagree. We begin by noting that this argument was properly raised by the Ibanezes on appeal. Standing, as a necessary component of subject matter jurisdiction, is essential to the authority of a court to decide a case, cannot be waived, and thus the lack thereof may be raised for the first time on appeal. Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 851 (Tex. 2000). In support of this argument, the Ibanezes point out that the transfer of the deed to the property was a result of a transaction between the Ibanezes and R.A. Alvarado only. We agree that there was arguably no privity of contract between the Ibanezes and the Alvarados, vis-a-vis the transfer of title. However, standing in a suit to quiet title is held by a party when they can show a justiciable interest in the property. Bell v. Ott, 606 S.W.2d 942, 953 (Tex. Civ. App.BWaco 1980, writ ref=d n.r.e.). A party may establish its interest by one of four methods: (1) title emanating from its sovereignty over the soil; (2) superior title emanating from both parties= receipt of title from a common source; (3) adverse possession; or (4) possession of the land prior to the other party=s possession. Mitchell v. Mesa Petroleum Co., 594 S.W.2d 507, 509 (Tex. Civ. App.BSan Antonio 1979, writ ref=d n.r.e.). Here, the Alvarados established that they held title and possessed the land prior to the time it was transferred to Ibanez and further demonstrated by means of their testimony and the testimony of R.A. that they did not intend to relinquish their interest in the land by means of the first conveyance. Therefore, they have standing, through their claim of retained interest in the land, to challenge the Ibanezes= claim that the transfer from R.A. to Ibanez was a transfer in fee simple rather than a mortgage of the property. First Issue In their first issue, appellants urge that the trial court erred in granting judgment in favor of the defendants because it was contrary to the great weight and preponderance of the evidence presented. We construe this issue to be a challenge to the factual sufficiency of the evidence. The issue of factual sufficiency in this case is singular: the Alvarados claimed that the transactions between the parties constituted a mortgage of the property, and the Ibanezes contended that the transaction was a full transfer of title in fee simple. The trial court=s finding for the Ibanezes thus constituted a finding of fact that the transaction constituted a transfer of title in fee simple, and not a mortgage. A mortgage involving real property is an executed contract in which the legal or equitable owner of the property pledges the title thereto as security for performance of an obligation . . . . Although mortgages have been characterized as conveyances, a mortgage is not a >deed= as the term is ordinarily used in real property transactions, nor does a mortgage dispose of the title to the property as does a deed. 30 Tex. Jur. 3d Deeds of Trust and Mortgages ' 1 (1998). The word Atransfer@ as it is associated with transference of title means Athat [the] owner of [the] property delivers it to another person with intent of passing rights that he had in it to [the] latter.@ 59 Tex. Jur. 3d Property ' 12 (1999). The Alvarados contend that the evidence clearly demonstrated that the two transactions involved in this case were intended to convey a mortgage to the Ibanezes to secure the payment of bail bonds and attorney=s fees related to the bailment, not a transfer of title. In support of this argument, they showed that much of Ibanez=s fees accrued for legal services had been paid, the $20,000 attorney fee was expressly for bail security, and the bonds were made by a professional bonding company.[4] The appellees counter that the evidence was sufficient to support the finding that the parties intended each transaction to be a conveyance for the purpose of paying legal fees for services and not a mortgage.[5] Standard of Review In considering a factual sufficiency issue, we must review all the evidence in the record. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996). We will overturn a trial court=s factual findings only if the challenged findings are so against the great weight and preponderance of the evidence as to be manifestly unjust. Maritime Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998). If those factual findings are found to be against the great weight and preponderance of the evidence, we must set aside the verdict and remand the cause for a new trial. In re King=s Estate, 244 S.W.2d 660, 661 (Tex. 1951). We review a factual sufficiency issue in a bench trial using the same standard that we use in reviewing factual sufficiency following a jury verdict. K.C. Roofing Co., Inc. v. Abundis, 940 S.W.2d 375, 377 (Tex. App.BSan Antonio 1997, writ denied). In the case of a bench trial, a review of factual sufficiency involves reviewing the trial court=s findings of fact. When those findings of fact are missing, as they are in the present case, we will presume that the trial court found all fact questions in support of the judgment. IKB Indus. v. Pro-Line Corp., 938 S.W.2d 440, 445 (Tex. 1997). We will affirm the trial court judgment on any legal theory that finds support in the pleadings and the evidence. Id. The Warranty Deeds 1. From the Alvarados to R.A. The Ibanezes rely primarily on the two written deeds documenting the transfer of property, the first from the Alvarados to R.A. and the second from R.A. to the Ibanezes, to buttress their claim of title to the land. In construing whether a property transaction was in fact a transfer of title or merely a mortgage of the property, we must ascertain the true intent of the parties. Johnson v. Cherry, 726 S.W.2d 4, 6 (Tex. 1987). Thus, we must look to whether the Alvarados and R.A. intended the first transaction to be a transfer of title, and then must look to whether R.A. and the Ibanezes intended the second transaction to be a title transfer. In a written transaction, there is a presumption that the documents themselves reflect the true intent of the parties. Perry v. Long, 222 S.W.2d 460, 465 (Tex. Civ. App.BDallas 1949, writ ref=d). However, this presumption may be overcome by parol testimony. Bantuelle v. Williams, 667 S.W.2d 810, 815-16 (Tex. App.BDallas 1983, writ ref=d n.r.e.). A transfer of title that is absolute on its face may nonetheless be shown to have been intended as a mortgage given to secure a debt. Id. The circumstances preceding, surrounding, and subsequent to the transaction may all be viewed in determining whether a transaction was truly intended as a fee simple transfer, or merely as a loan or a mortgage. Id. at 816. For example, in Johnson v. Cherry, Johnson fell heavily into debt and attempted unsuccessfully to obtain loans from several sources. Johnson, 726 S.W.2d at 5. Facing the possibility of foreclosure on his 348 acres, he turned to F.G. Cherry, director of the Texas State Bank of Tatum and the owner and operator of a feed store. Id. Cherry initially refused to grant Johnson a loan as director of the Bank of Tatum, but subsequently agreed to provide Johnson with the funds. Id. The parties executed three documents, a general warranty deed purporting to transfer title from Johnson to Cherry and the Bank, a one-year lease agreement leasing the land to Johnson for a specified sum, and an option given to Johnson to repurchase the land provided that he made the scheduled lease payments to Cherry. Id. Johnson failed to make his scheduled payment, and Cherry evicted Johnson from the land, and Johnson sued claiming title to the land. Id. Johnson claimed that the transaction was intended as a mortgage, and the jury returned a verdict in Johnson=s favor. Id. The court of appeals reversed, holding that because there was no debt owed by Johnson to Cherry, the deed could not be construed as a mortgage. Cherry v. Johnson, 703 S.W.2d 819, 822 (Tex. App.BEastland 1986), rev=d, 726 S.W.2d 4 (Tex. 1987). The Texas Supreme Court reversed the ruling made by the court of appeals, finding that the circumstances surrounding the transaction made it clear that the parties intended the transaction to be a mortgage, despite the language of the deed apparently conveying the property in fee simple. Johnson v. Cherry, 726 S.W.2d at 5. Similarly, the evidence in this case evidences the fact that the parties to the first transaction, the Alvarados and R.A., did not intend their transaction to constitute a transfer of fee simple title. The uncontradicted evidence before the trial court was that an attorney (not Ibanez) prepared a warranty deed to reflect the conveyance of the Alvarado homestead to their son, R.A. The deed did not convey the financial obligation; rather, it referred to a wraparound note, allowing R.A. to cure any default in payment. The deed states that AGrantee in this deed does not assume payment@ of the Alvarados= $31,661.08 promissory note and Ais made subject to the prior lien of a deed of trust.@ There is no evidence that a wraparound note was executed. Moreover, the attorney who prepared the deed appeared at the jail with the warranty deed unaccompanied by a notary public. Appearing separately, Mr. Alvarado signed first and then Mrs. Alvarado signed. The attorney took the document with him upon parting company with the Alvarados. The document reflects that Francisco Dimas, a notary public, signed the acknowledgment on the deed certifying that the Ainstrument was acknowledged before@ him, even though in fact the Alvarados did not sign the document in front of the notary.[6] The deed was dated, signed, and acknowledged on March 10, 1998 and filed on March 11, 1998. No evidence was adduced regarding payment of that attorney=s fees for his legal services. The undisputed evidence before the trial court was that the conveyance from the Alvarados to R.A. was to secure financing for the purposes of paying the bond to secure their release from jail. R.A. testified that his conveyance to Ibanez was intended as collateral for payment of $20,000.00 in attorney=s fees. R.A. further testified that he had previously paid Ibanez $2,500.00 in fees. The senior Mr. Alvarado paid Ibanez $13,500.00. Ibanez did not represent the Alvarados in the Ohio criminal case. There is no evidence of an agreement between the Alvarados and Ibanez regarding attorney=s fees and representation. Although she knew Ibanez did not practice in Ohio, Gloria Ibanez had no personal knowledge of the services Ibanez rendered to or on behalf of the Alvarados. According to Mr. Alvarado, for each Acourt,@ Ibanez was to charge $2,000.00. The Alvarados testified that their intent was to have R.A. use the property as collateral to obtain a loan to pay their bonds. R.A. testified that he understood the conveyance was intended only to allow him to use it to obtain a loan to secure his parents= release from jail. Although the title transfer deed states that consideration was Aten dollars and other valuable consideration,@ R.A. testified that he paid nothing to his parents for the transfer of the home. The only evidence proffered by the Ibanezes regarding this transaction was the warranty deed conveying the property from the Alvarados to R.A. 2. From R.A. to Ibanez The evidence in this case also clearly favors interpreting the contract between R.A. and Ibanez as a mortgage of the house and not a transfer in fee simple. The uncontradicted evidence before the trial court was that R.A. visited the law office of Ibanez for the purpose of obtaining the release of his parents from jail. According to R.A., Ibanez informed him that his parents would be in jail for twenty to thirty years. Although he had already paid Ibanez $2,500.00, when notified of the $20,000.00 fee, R.A. signed a document he thought would provide collateral for the fee. Upon referral by Ibanez, R.A. visited the law office of Armando Puente, who provided him with what he believed to be a document memorializing that the property was collateral for the legal fee. The document he signed is entitled Awarranty deed,@ conveying the property to AAlfonso Ibanez and wife, Gloria Ibanez@ (emphasis added). R.A. acknowledged his signature thereon. The notary signature is that of Armando Puente. The document shows it was prepared by the ALaw Office of Alfonso Ibanez@ and after recording should be returned to the same. The deed was dated and signed on March 25, 1998 and filed of record on April 7, 1998. The conveyance occurred within fifteen days of the Alvarados= conveyance to R.A. No evidence was adduced regarding payment of Mr. Puente=s legal fees. The Alvarados both testified that they did not receive any statements from Ibanez regarding his services and fees. The Ibanezes offered into evidence a document dated April 6, 1998, drawn up by Ibanez and detailing the legal fees charged to date. This document was introduced by agreement.[7] At trial, Mr. Alvarado denied having seen the statement before. Mrs. Alvarado denied having received a bill from Ibanez as well. In that document, entitled statement of professional fees and services, the total amount charged by Ibanez was $45,000.00, including $20,000 in cash used as a bail bond to secure the release of the Alvarados from jail. This document stated that the total had been paid by transfer of the Alvarados= residence to Ibanez. The Ibanezes proffered no other evidence to the trial court regarding the transfer from R.A. to Ibanez. The warranty deed purporting to convey title to Ibanez was introduced into evidence by the Alvarados. The evidence at trial clearly demonstrates that the Alvarados never intended to transfer title to R.A. for any purpose other than to obtain a mortgage on the land. Further, the trial testimony of R.A. indicates that his intent was to obtain a mortgage on the property, not to transfer full title to the land. In light of the evidence adduced at trial, we find that the judgment of the trial court was contrary to the great weight and preponderance of the evidence.[8] Remaining Points of Error Because the Alvarados= first point of error is dispositive in this case, we do not address appellants= remaining points of error numbers two and three. See Tex. R. App. P. 47.1. Conclusion For the foregoing reasons, we reverse the take-nothing judgment entered by the trial court and remand for a new trial. ERRLINDA CASTILLO Justice Do not publish. Tex. R. App. P. 47.3(b). Opinion delivered and filed this 30th day of May, 2002. 1 R.A. was a defendant below who proceeded pro se. The other defendants below were attorney Alfonso Ibanez and his wife Gloria Ibanez (Athe Ibanezes@). R.A. Alvarado did not submit an appellate brief to this Court. 2 He understood Acollateral@ to mean Apawning something.@ 3 R.A. testified that he later learned that the total amount of the bonds set for his parents was $20,000, and he could have paid just $2,000 (ten percent) to a bail bondsmen to secure the issuance of the bonds. 4 In their brief, appellants posit, AWhat then were the property transfers made for?@ 5 Ibanez did not appear at the trial. Attorney argument disclosed that he was incarcerated at the time. 6 In order for a property transaction to be recorded in real property records, it must be signed and acknowledged by the grantor in front of two credible subscribing witnesses, or acknowledged and sworn to before an officer authorized to take affidavits, such as a notary public. Tex. Prop. Code Ann. ' 12.001(b) (Vernon Supp. 2002). This transaction, not subscribed to by witnesses or acknowledged by a notary public at the time it was drafted, was therefore incapable of being properly recorded. Therefore, it would be invalid against a creditor or subsequent purchaser of the property for valid consideration. Tex. Prop. Code Ann. ' 13.001 (Vernon Supp. 2002). It would still be valid as between the parties, however. Tex. Prop. Code Ann. ' 13.001(b) (Vernon Supp. 2002). 7 The Alvarados= attorney advised the court that the Astatement was produced and tendered to us just recently by the defendant=s counsel.@ 8 Due to the fact that we are reversing on a factual sufficiency point of error and thus remanding for new trial, rather than rendering a judgment as we would if we were reversing based on legal sufficiency, we need not address other equitable issues that may be subsequently brought up and developed at trial in this case, including the issue of mortgage payments made by the Ibanezes on the property or the loss of use of the property suffered by the Alvarados. See Johnson, 726 S.W.2d at 8 (where judgment rendered, not remanded, the reviewing court considered other equitable issues). While an equitable decision involves doing fairness to both parties in view of all the circumstances of the case, we cannot issue an advisory opinion on the merits of potential claims to be raised by either party in subsequent proceedings. See Patterson v. Planned Parenthood, 971 S.W.2d 439, 443 (Tex. 1998) (holding that state courts are not empowered to give advisory opinions).