Tuesday, August 14, 2007

Decision to deed separate property to wife to obtain second homestead exemption comes back to haunt husband in divorce

Dallas Court of Appeals reverses trial court's invalidation of deed; renders judgment that the property was validly conveyed by the husband and is the sole and separate property of the wife. Also holds that consideration of parol evidence regarding oral argeement to convey the property back to the husband was error.

Mikie Lee Wells v. Eugene G. Wells, No, 05-06-00773-CV (Tex.App.- Dallas, Jul. 30, 2007)


Before Justices Morris, Francis, and MazzantOpinion By Justice Francis

Mikie Lee Wells appeals a property division incident to divorce. In six issues, appellant generally argues the trial court erred in invalidating a deed conveying property to her and awarding that same property to her ex-husband, Eugene G. Wells. For reasons set out below, we agree. Accordingly, we reverse that portion of the trial court's divorce decree awarding the property to appellee and render judgment for appellant.

For the most part, the facts of this case are undisputed. Appellant and appellee married in 1993 after the deaths of their spouses. Before marrying, they signed a prenuptial agreement that all property owned by each and any income derived from that property or later acquired would remain that party's separate property. In 2000, the couple purchased property in Grayson County and built a house on it. Each used separate property to pay for the land and house.

The couple moved into the house in January 2001. After receiving their first tax statement, they went to the Grayson County Appraisal District to apply for a homestead exemption to reduce their tax burden. Appellee testified the application was denied because he already owned homesteaded property in Tarrant County. At that point, appellee came up with a solution: he would convey his interest in the Grayson County property to appellant.

Appellant and appellee went to see an attorney, who drafted a deed that conveyed appellee's interest in the property to appellant for $10 and other good and valuable consideration. Appellee signed the deed and left it with the lawyer to record. The lawyer filed the deed of record in Grayson County, and the deed, according to its terms, was then mailed to appellant. The property received homestead exemptions in 2002, 2003, 2004, and 2005. In June 2004, appellee filed for divorce and sought to invalidate the deed.

Conflicting evidence was presented as to whether the parties had a prior oral agreement that if they were unable to secure a homestead exemption on the property, appellant would reconvey the property to appellee. Appellee testified there was such an agreement, while appellant testified there was not.

After hearing the evidence, the trial court signed a final divorce decree invalidating the deed, awarded each party an undivided interest in the property as his/her sole and separate property, and ordered the property to be sold. The trial court also made findings of fact and conclusions of law. Notably, the trial court concluded the deed was “not valid and enforceable as the sole purpose of said conveyance was for obtaining a homestead exemption on the Property in dispute and was not intended to act as a true conveyance of [appellee's] interest in the Property as per the failure of the delivery of the Cash Warranty Deed.” The trial court also found, among other things, that appellee did not intend to actually convey, and appellant did not intend to actually accept, appellee's interest in the property. This appeal ensued.

In six issues, appellant complains the trial court considered inadmissible parol evidence in reaching the legal conclusion of no delivery and contends the evidence is legally and factually insufficient to support its findings of no actual intent to deliver or accept the deed.

We review conclusions of law to determine whether the trial court correctly drew the legal conclusions from the facts. Dallas Morning News Co. v. Bd. of Trustees of Dallas Indep. Sch. Dist., 861 S.W.2d 532, 536 (Tex. App.-Dallas 1993, writ denied). We review the legal and factual sufficiency of an adverse finding on which the complaining party did not have the burden of proof under well-established standards. See Pulley v. Milberger, 198 S.W.3d 418, 426-27 (Tex. App.-Dallas 2006, pet. denied).

To render a deed effective, it must be (1) delivered into the control of the grantee and (2) the grantor must intend the deed to become operative as a conveyance. See Binford v. Snyder, 144 Tex. 134, 143-44, 189 S.W.2d 471, 475 (Tex. 1945); Adams v. First Nat'l Bank of Bells/Savoy, 154 S.W.3d 859, 869 (Tex. App.-Dallas 2005, no pet.). Whether there has been in fact a delivery is for the trier of the facts, while the question of what constitutes a delivery is one of law. Ragland v. Kelner, 148 Tex. 132, 221 S.W.2d 357, 359 (Tex. 1949); Adams, 154 S.W.3d at 870. The question of whether a deed has been delivered is primarily one of the grantor's intent. Taylor v. Sanford, 108 Tex. 340, 193 S.W. 661, 662 (1917); Adams, 154 S.W.3d at 869. To consummate a delivery, the deed must be placed in the hands of the grantee, or within his control. Jones v. Young, 539 S.W.2d 901, 904 (Tex. Civ. App.-Texarkana 1976, writ ref'd n.r.e.); Chasteen v. Miller, 349 S.W.2d 772, 775 (Tex. Civ. App.-San Antonio 1961, writ ref'd n.r.e.). Just as the recording of a deed creates a presumption that the deed was delivered, it also creates a presumption that the grantee accepted the deed. Tex. Land & Mortgage Co. v. Cohen, 138 Tex. 464, 159 S.W.2d 859, 863 (1942); Panhandle Baptist Found., Inc. v. Clodfelter, 54 S.W.3d 66, 71-72 (Tex. App.-Amarillo 2001, no pet.) . The presumption of both delivery and acceptance may be rebutted by contrary evidence. Panhandle Baptist Found., 54 S.W.3d at 72.

The undisputed evidence in this case shows that, in an effort to secure a homestead exemption and, in turn, a reduced tax burden, appellee had a deed drawn conveying his interest in the property to appellant. Appellee signed the deed, had the lawyer record the deed, and had the deed delivered to appellant. The deed contained no conditional or restrictive language. These facts create a presumption that appellee delivered, and appellant accepted, the deed.

To rebut the presumption, appellee relies on evidence of an alleged oral agreement that appellant would reconvey the property if the homestead was not obtained. We agree with appellant that this testimony was inadmissible parol evidence. See Footnote 1 Regardless, even if admissible, it does not negate present intent to convey. To the contrary, the evidence showed that the purpose of the deed was to obtain a homestead exemption; however, that purpose could not be accomplished in the first instance unless title effectively passed from appellee to appellant. See Stout v. Clayton, 674 S.W.2d 821, 826 (Tex. App.-San Antonio 1984, writ ref'd n.r.e.) (concluding that evidence of purpose of transfer was to ensure grantor's eligibility for governmental assistance was not evidence of nondelivery because purpose could only be achieved if grantor divested herself of title to property). The evidence relied upon by appellee simply demonstrates his desire to have the property reconveyed to him if appellant was unable to secure a homestead exemption. As stated previously, no such language was incorporated into the deed nor did the parties execute a separate written agreement regarding any reconveyance. Moreover, the undisputed evidence showed that a homestead exemption was obtained on the property in each eligible year.

We conclude there is no evidence to support the trial court's findings of no intent to convey or accept appellee's interest in the property. Likewise, we conclude the trial court's conclusion that the deed was not valid for failure of delivery is erroneous. We therefore sustain appellant's points of error.

We reverse that portion of the trial court's final divorce decree awarding an undivided one- half interest in the property to appellee and render judgment that the property is the sole and separate property of appellant.


Footnote 1 Appellee argues appellant has waived admission of this evidence by withdrawing her objection at trial. To the contrary, parol evidence is not a rule of evidence, but a rule of substantive law that bars the court from considering evidence violative of the rule, even though it is admitted without objection. Hubacek v. Ennis State Bank, 159 Tex. 166, 317 S.W.2d 30, 32 (1958); King v. Fordice, 776 S.W.2d 608, 612 (Tex. App.-Dallas 1989, writ denied). Evidence admitted in violation of the rule is incompetent and without probative force and cannot be properly given legal effect. Johnson v.Driver, 198 S.W.3d 359, 364 (Tex. App.-Tyler 2006, no pet.).

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