Published on:

Vesting Conditions in Texas Deeds Must be Met

The Texas Court of Appeals in Houston recently decided a case, UNION PACIFIC RAILROAD COMPANY v. AMERITON PROPERTIES INCORPORATED, that contains an important caveat for anyone preparing or interpreting a deed.


Galveston, Harrisburg & San Antonio Railway Company (GHSR), the predecessor to Union Pacific Railroad Company, acquired title to certain Texas land in 1879 after commencing a condemnation proceeding against the owner, Mary Lawrence. GHSR and Mrs. Lawrence agreed to settle the condemnation proceeding, and Mrs. Lawrence gave GHSR a deed in return for GHSR’s payment of $437 for a portionthe land.

Through a number of subsequent transactions, Ameriton Properties Inc. became an owner of a portion of the land. Ameriton believed that the deed obtained by GHSR for the “right of way” conveyed only an easement, and not fee simple title, and the right of way or easement had been abandoned.  As a result. Ameriton argued that Union Pacific had no further interest in the land. The trial court agreed that Union Pacific’s only interest in the land was a right of way, and that it had been abandoned. Union Pacific appealed.

What Is A “Right Of Way?”

The term “right of way” in a deed does not by itself necessarily describe the estate conveyed: what is conveyed could be either a fee simple interest or it could be only an easement. The trial court did not determine the intent of the phrase “right of way” in the deed from Ms. Lawrence to Union Pacific’s predecessor.

Ameriton argued that a railroad can only ever acquire an easement (rather than fee simple ownership) by condemnation, and the Lawrence deed only conveyed what GHSR sought to obtain by condemnation. On the other hand, the Lawrence deed to GHSR did not result directly from a court order or condemnation decree, but was the result of a compromise between Ms. Lawrence and GHSR while the condemnation suit was pending appeal. The Court of Appeals, after reviewing the language of the deed, held that as used in this deed the term “right of way” was not ambiguous, and instead conveyed a fee simple interest in the land to GHSR. Thus, Union Pacific ostensibly owned a fee simple interest.

Conditions To Vesting of the 1879 Deed

Union Pacific was not home free, however. The 1879 deed contained a condition that required GHSA to perform for the deed to vest, specifically, building a railroad on the land and running railroad cars to the Texas & New Orleans Railroad Depot before January 1, 1881. Ameriton argued that there is no evidence that GHSA met this condition, only evidence that Union Pacific had removed some tracks from the land at some point and that Union Pacific no longer used the land for railroad purposes.

The Court of Appeals held Union Pacific had not demonstrated that the condition in the deed, that a railroad had been built on the land and that rail cars had run on it to the Texas & New Orleans Railroad Depot before January 1, 1881. Therefore, the Court sent the case back to the trial court for a hearing on this issue.