Marceline Lasater v. Kenneth J. Hawkins, et al.

A contract for the sale of a sixty-four acre tract of land provided that a vacant house on the tract and the lot immediately surrounding it would automatically revert to the seller if the buyers did not install a water line across the property within a year of the contract’s execution. The same condition was set out in the warranty deed. The buyers failed to install the water line, but the seller, a Texas resident, did not immediately attempt to retake possession of the house and lot. Five years after the contract was signed, the seller filed a “notice of automatic reverter of title,” followed by a declaratory judgment suit to quiet title and to recover damages. The trial court granted partial summary judgment to the seller, ruling that the contract and the deed created a fee simple determinable and, therefore, that ownership of the disputed property reverted to her by operation of law one year after the contract of sale was executed. A hearing on damages resulted in an award to the seller of about $142,000 in compensatory damages, which included income that the buyers had collected from renting out the house prior to the filing of the notice of reverter. Buyers contend on appeal that the estate created by the contract of sale was not a fee simple determinable, but rather a fee simple subject to a condition subsequent, a form of future interest under which the property does not revert to the seller until the seller takes some action to retake possession of the property. Such an interest would result in a much smaller award of damages against the buyers under the circumstances of this case. We affirm the trial court’s holding that the contract of sale created a fee simple determinable, but we modify its award of damages to correct an error.