2. Fourth District Court of Appeals—San Antonio
This case dealt with whether verbal expressions of an executor and certain trust language created a right of first refusal in favor of trust beneficiaries. The court was faced with determining whether the specific trust language implied a right of first refusal and a binding intent to keep a family ranch together. The court relied on the trust’s mandatory language in regard to the powers of the executor in its determination that no right of first refusal was created in favor of the beneficiaries to limit the executor’s authority to sell the property.134
The case centered around the Estate and beneficiaries of Francisco Rodriguez, Deceased, who died in February of 2015. Per Francisco’s will, his named beneficiaries were his four children and his daughter in law, Blanca Rodriguez. Francisco designated his son, Frank Rodriguez, as independent executor of the will and as trustee of the testamentary trust created by said will. A dispute arose between Frank and Blanca when Frank entered into a contract to sell the property to Chris Christians (“Christians”) for $259,900. Blanca claimed that Frank had promised the beneficiaries and family members that they would have an opportunity to match any offer he received to purchase the ranch. However, Frank entered into the sales contract without consulting the beneficiaries and with an initial offer of $240,000 on the table from Blanca. When Blanca raised her offer to $265,000 and was rejected, she filed suit. Blanca alleged that the sales contract with Christians violated a right of first refusal contained in the trust in favor of the trust beneficiaries.135
Christians intervened in the suit seeking specific performance of the contract to purchase the ranch. Blanca and Christians filed competing summary judgment motions pertaining to whether Frank had the authority to sell the ranch and whether the trust contained a right of first refusal in favor of the trust beneficiaries. The trial court denied Blanca’s motion for summary judgment and granted Christians summary judgment motion, ordering Frank to perform his obligations under the contract.136 This appeal followed.
The appellate court began its analysis by examining the specific terms of the will and trust created by said will. Section IX of the will, titled Powers of the Executor, gave Frank specific power to sell the property of the estate and is as follows:
I hereby grant unto my Independent Executor or any successor named above, full power and authority over any and all of my estate and they are hereby authorized to sell, manage, and dispose of the same or any part thereof, and in connection with any such sale or transaction, make, execute and deliver proper deeds, assignment or other written instruments and to do any and all things proper or necessary in the orderly handling and management of my estate.
Sections V and VII of the will, titled Powers of the Trustee, gave Frank specific power to sell the property of the Trust and is as follows:
[V] B. My Trustee can sell the corpus of this Trust, but it [is] my desire my ranch stay intact as long as it is reasonable. If the corpus is sold it shall be distributed as set out in Section III, C and D.
[VII] A. The Trustee during the continuation of each trust shall have the sole and complete right to possess, control, manage, and dispose of each trust estate and the said Trustee shall have the powers, rights, responsibilities and duties given to or imposed upon by trustees by the Texas Trust Code as such Code now exists.
The court was tasked with determining the intent of the language within the four corners of the document, excluding notions about what they believe the testator may have intended to write.137 Blanca argues that the language stating Francisco’s desire that his ranch stay intact as long as it is reasonable is mandatory rather than precatory language and created a right of first refusal to purchase the ranch in the beneficiaries.138 When considering whether the desire to have the ranch remain intact was mandatory or precatory the court looks to the testator’s intent via the express powers given to Frank as trustee.139 In consideration of the specific mandatory language granting Frank the power to “sell the corpus,” the court holds that the desire to keep the ranch intact is precatory language, which did not impose a legal obligation on Frank preventing the sale of the ranch to Christians.140 The alleged right of first refusal is illegitimate based off the same mandatory language granted to Frank. The court holds that Blanca’s argument, focused on power granted to the trustee in [V], Section E, does not require the trustee to offer a right of first refusal to anyone prior to sale of the corpus. Section E discusses the condition that requires any one beneficiary wanting to sell their respective share to only sell it to the remaining beneficiaries.141 Therefore, the court overall holds that none of the clauses, nor the Will as a whole evidence an intent to limit Frank’s power to sell the ranch by creating a right of first refusal.
Francisco’s desire to keep the ranch intact was precatory language and does not prevent Frank from entering into a contract to sell the ranch to Christians. The same language and the Will as a whole did not create a right of first refusal in the beneficiaries that would stop Frank from selling the ranch. This case will be helpful for landmen when reviewing instructions in a will or trust to determine what language is binding by distinguishing mandatory from precatory language.
133 Estate of Francisco Rodriguez, Deceased, No. 04-17-00005-CV, 2018 WL 340137, (Tex. App.—San Antonio Jan.
134 Id. at *1.
136 Id. at *2.
137 Id. at *3.
139 Id. at *5.
140 Id. at *4.