Those who continue to be horrified by Broadway National Bank, Trustee v. Yates Energy Corp. should be relieved that the result in Endeavor Energy Resources, LP v. Anderson was more equitable. In Yates, the Texas Supreme Court held that Texas Property Code Section 5.029 permitted original parties to a conveyance to execute a correction deed without notice to or joinder of the current owners when the original grantees no longer owned the property.
In 2003 the Holcomb’s and Tom and Trudy Anderson signed a farm and ranch sale contract in which the Anderson’s were to acquire surface rights only in six tracts of a ranch and Holcomb’s were to reserve the minerals. The parties then signed a general warranty deed, the recitals of which did not comport with the intent to only convey the surface estate.
In 2007 the parties realized their error and executed a correction deed which recited that the parties intended to clarify and replace the original 2003 GWD. It was specifically stated:
- the parties ” … intended that all minerals owned by the Holcomb’s were to be reserved …” to the Holcomb’s and
- “some question has arisen regarding whether the language of the mineral reservation accomplishes this intention.”
- The 2003 GWD conveyed the surface only.
Trudy did not execute the correction deed because she had passed away. Tom was executor of Trudy’s estate. Her will established a testamentary trust designating Tom as trustee and sole beneficiary. As trustee Tom had the authority:
- To manage and handle all of the property passing to such trustee, in trust, as in the trustee’s judgment it may seem best,
- To invade and use the corpus for his own benefit,
- To do any and all things necessary for the best interests of the estate,
- To do all acts of any kind and character in handling such estate.
- To have all powers conferred under the Texas Trust Act, and
- His acts would be conclusive and binding upon all persons.
- His authority as executor of Trudy’s estate was similarly broad.
The Supreme Court in Yates rejected the argument advanced by Anderson in this case that the current interest owners who were not parties to the original transaction must execute the correction deed. Because Trudy had passed away the court had to determine for purposes of Section 5.029 who is an heir, successor or assign.
The court in Yates said “successor” fills the gap between heirs and assigns, covering entities and legal representatives who succeed an original party other than as an heir or an assign.
Tom’s broad powers as executor and trustee permitted him to execute the 2007 correction deed as Trudy’s sole successor. He possessed all decision-making authority regarding her estate and Trust assets with the exception of a conveyance of real property held by the Trust. That was not an impediment to execution of a valid correction deed. A correction deed itself without more does not constitute a sale or conveyance of real property. It simply replaces and is a substitute for the original instrument.
Anderson also asserted that Tom’s signature block did not specifically recite the capacity in which he signed. But the correction deed clearly showed that the parties intended that it bind both Tom’s and Trudy’s interests.
Tom was Trudy’s sole successor within the meaning of Section 5.029. The consents of the children were not necessary. The correction deed substantially complied with the requirements of Section 5.029.
Your musical interlude, with cowbell and without.