Lawyers Trust Company v. City of Houston

Brief Fact Summary.

Lawyers Trust Company (Lawyers Trust) sued the City of Houston (Houston) to determine whether an original deed created a fee simple determinable or a condition subsequent, causing the land to revert back to either Lawyers Trust or Houston.

Synopsis of Rule of Law.

A title owner has a right of reentry at the occurrence of a condition subsequent.

Facts.

W.T. Carter Lumber & Building Company (Carter) executed an instrument that allowed several tracts of land to be used for public purposes in the City of Houston (Houston). The instrument stipulated that if the tracts of land were not being used for the public after 25 years, title for the tracts would return back to Carter. Before the end of the 25 years, the tract was being used for the public until Lawyers Trust Company (Lawyers Trust) acquired Carter’s interest. Lawyers Trust sued Houston regarding who ownership of the tract reverted back to. The trial court granted judgment to Lawyers Trust, and the appeals court reversed. Lawyers Trust appealed.

Issue.

Whether a title owner has a right of reentry at the occurrence of a condition subsequent?

Held.

Yes. The judgment of the court of appeals is reversed. The condition subsequent occurred because the tracts were not being used for public purposes after 25 years. Lawyers Trust therefore had a right of reentry when they executed the lawsuit. Lawyers Trust is entitled to recovery.

Discussion.

When a condition occurs in a fee simple determinable, the estate automatically terminates. When a condition occurs in a condition subsequent, the grantor maintains a right to reentry. Until the right of reentry is exercised by the grantor, the grantee maintains the right to possession.