The State of Texas v. Miller MacHine & Welding, Inc.

Reversed and Rendered and Opinion filed May 7, 2024.

In The

Fourteenth Court of Appeals

NO. 14-23-00201-CV

THE STATE OF TEXAS, Appellant

V.
MILLER MACHINE & WELDING, INC., Appellee

On Appeal from the 334th District Court
Harris County, Texas
Trial Court Cause No. 2018-23407

OPINION

In this adverse-possession case, the State of Texas challenges the trial court’s
judgment granting Miller Machine & Welding, Inc., title of that portion of a railroad
right-of-way that Miller had leased from the railroad for over thirty-five years in the
mistaken belief that the railroad owned the property. In the dispositive issue, the
State argues that Miller could not prove that it exercised hostile, adverse, or
exclusive possession of the property because Miller rented the property throughout
its occupancy. We agree. Thus, without addressing the State’s remaining issues, we
reverse the judgment and render a take-nothing judgment against Miller.

I. BACKGROUND

In 1895, in what is now the City of Seabrook, Texas, P.E. Nicholson Sr.
granted the Galveston, La Porte and Houston Railway Company Corporation a
railway right-of-way 150 feet wide and traversing Nicholson’s property
approximately from north to south. We refer to the railway company and its
successors collectively as “the Railroad” and the document creating the easement as
“the Railroad Deed.” Later that year, Seabrook N. Sydnor bought Nicholson’s
property, and the following year, Sydnor, as president of the Seabrook Town Lot &
Improvement Co., filed the Seabrook subdivision’s original plat. This plat was
superseded in 1903, when the subdivision was replatted and the roads dedicated for
public use. The final plat includes all of the Nicholson property deeded to Sydnor.
In the 1930s, the State constructed State Highway 146 bordering the eastern line of
the Railroad easement. To accomplish this, the State acquired title to, or an easement
over, each block shown in the 1903 plat as abutting the eastern line of the Railroad
right-of-way.

In 1979 or 1980, Miller’s owner Franklin Miller began leasing a portion of
the eastern half of the Railroad easement for his business, Miller Machine &
Welding, Inc. The parties generally do not distinguish between the man and the
company, and we follow their example, referring to either or both as “Miller.”

Miller rented the disputed property from the Railroad, which represented to
him that it owned the property. Over time, Miller began to lease a larger area and to
sublet part of the leased premises to others. He rented the disputed property until
2017, when the Railroad informed Miller that it was terminating the lease. The State
was then acquiring the land within the Railroad easement to expand the neighboring
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highway’s right-of-way, and the Railroad quitclaimed its interest to the State, which
paid Miller for his improvements to the premises.1

Miller then filed this trespass-to-try-title action,2 asserting that he had
acquired the land by adverse possession, and that his title was superior to that of the
owners, whom Miller identified as the unknown heirs of P.E. Nicholson Sr. (“the
Heirs”). The trial court appointed an attorney ad litem “for the unknown heirs of P.E.
Nicholson, Jr.” and required Miller to notify the State of the suit, whereupon the
State intervened in the case as a defendant. The State argued that (1) the grantors did
not retain a reversionary fee interest in the land within the Railroad easement; (2) the
Railroad did not abandon or terminate the easement before quitclaiming its interest
to the State; (3) State-owned land is not subject to adverse possession, and because
the State owns the land abutting the eastern line of the Railroad easement, it also
owns the land to the center of the easement, which includes the property claimed by
Miller;3 and (4) Miller cannot adversely possess the rented property because he
occupied the land as a tenant rather than under a claim of ownership.

The case was tried without a jury, and the trial court ruled in Miller’s favor.
After making a few alterations, the trial court signed Miller’s proposed judgment,
which included Miller’s proposed findings of fact and conclusions of law. In

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The State and Miller stipulated that the State would not argue that Miller’s removal from
the premises defeats the adverse-possession claim.
2
Although Miller pleaded and continues to maintain that this is a quiet-title action, the true
character of an action is determined by examining the substance of the petition. Brumley v. McDuff,
616 S.W.3d 826, 833 (Tex. 2021). Miller pleaded that it had adversely possessed the subject
property and asked the trial court to grant Miller title. Because this case is a dispute over title to
land, it is, as a matter of law, a trespass-to-try-title action, “and “must be treated as such.” See id.
at 833–35 (quoting Martin v. Amerman, 133 S.W.3d 262, 264 (Tex. 2004), superseded in part by
statute on other grounds); see also TEX. PROP. CODE § 22.001(a).
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The State contends that it owns the land on both sides of the Railroad right-of-way, but
because all of the land that Miller claims is located on the eastern half of the Railroad easement,
only the State’s claim to own the eastern half of the easement was at issue.

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accordance with Miller’s theory of ownership, the trial court found or concluded that
the Railroad Deed authorized the Railroad to use the easement exclusively for
“railroad purposes.” The trial court also stated the findings or conclusions
paraphrased below, which the State challenges on appeal on no-evidence grounds:

• The State’s claimed ownership of the lands abutting the Railroad easement
does not give the State the right to claim ownership of the disputed property
because, in the Seabrook Deed conveying title to the land, the grantors
reserved and excepted “any right to make a claim upon the lands within the
easement of the railroad”;
• When the easement terminated, full and unencumbered title reverted to the
Grantors;
• The Railroad terminated the easement by removing its tracks and ceasing all
service between 1980 and 1986;
• The Heirs were the lawful owners of the disputed property throughout Miller’s
occupancy;
• Miller held the land in hostile occupation to the Heirs, and possessed and used
it continuously, openly, notoriously, exclusively, and peaceably for the ten-
year period required to establish adverse possession; and
• Miller is recognized as the lawful owner of record since March 1989.
Finally, the trial court concluded that “the State must avail itself of its power
of Eminent Domain to acquire a perpetual easement for highway purposes” and
ordered the State “to undertake acquisition in compliance with Art. 17 of the Texas
Constitution immediately to rectify the unlawful eviction of [Miller] in 2017.”

On appeal, the State reurges the arguments it made in the trial court and
additionally contends that no evidence supports the trial court’s findings described
above. In addition, the State contends that the trial court committed harmful error by
failing to issue findings of fact and conclusions of law, and that, as a matter of law,

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the State can acquire land for a right-of-way in fee and is not limited to acquiring “a
perpetual easement.”

II. ISSUES PRESENTED

The State presents five issues on appeal. It argues in its first two issues that it
conclusively established that it owns the disputed property. In its third and fourth
issues, the State maintains that no evidence supports the trial court’s determination
that Miller Machine adversely possessed the property. The State asserts in its fifth
issue that the trial court committed harmful error by failing to issue findings of fact
and conclusions of law.4

III. STANDARD OF REVIEW

When reviewing the trial court's findings of fact and conclusions of law after
a bench trial, we are not bound by the trial court’s designation of a statement as a
factual finding or a legal conclusion but will instead apply the standard of review
appropriate to each. Tex. Outfitters Ltd., LLC v. Nicholson, 572 S.W.3d 647, 653 n.7
(Tex. 2019). We review a trial court’s factual findings under the same well-
established appellate standards that apply to a jury’s verdict. Id. at 653.5 If the trial
court made a factual finding of least one element of a ground of recovery or defense,
then omitted, unrequested elements, if supported by the evidence, are supplied by
presumption in support of the judgment. TEX. R. CIV. P. 299. We review conclusions
of law de novo. Bos v. Smith, 556 S.W.3d 293, 299 (Tex. 2018).

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This is factually incorrect. Although Texas Rule of Civil Procedure 299a states that
findings of fact and conclusions of law are not to be recited in the judgment, the trial court did so
in this case. See TEX. R. CIV. P. 299a. We give effect to such findings so long as they do not
conflict with those in a separate document. Isaac v. Burnside, 616 S.W.3d 609, 614 (Tex. App.—
Houston [14th Dist.] 2020, pet. denied). There accordingly is no need to abate the case for the trial
court to issue findings of fact. We overrule this issue.
5
See City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005) (legal sufficiency); Ford
Motor Co. v. Ridgway, 135 S.W.3d 598, 601 (Tex. 2004) (factual sufficiency).

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IV. ADVERSE POSSESSION

“‘Adverse possession’ means an actual and visible appropriation of real
property, commenced and continued under a claim of right that is inconsistent with
and is hostile to the claim of another person.” TEX. CIV. PRAC. & REM. CODE
§ 16.021(1). Here, Miller asserted its adverse-possession claim under the ten-year
limitations statute, which provides that “[a] person must bring suit not later than 10
years after the day the cause of action accrues to recover real property held in
peaceable and adverse possession by another who cultivates, uses, or enjoys the
property.” Id. § 16.026(a). To prevail under this statute, a person must prove by a
preponderance of the evidence that the possession of the disputed property by the
person, or by the person’s predecessors in interest, was (1) actual and visible;
(2) adverse and hostile to others’ claims of ownership; (3) open and notorious;
(4) peaceable; (5) exclusive; and (6) involved continuous cultivation, use, or
enjoyment for ten years. See BP Am. Prod. Co. v. Marshall, 342 S.W.3d 59, 69–70
(Tex. 2011); Castillo v. Luna, 640 S.W.3d 256, 260 (Tex. App.—Houston [14th
Dist.] 2021, pet. denied).

V. ANALYSIS

In the State’s dispositive argument, it contends that Miller cannot prove
adverse possession because he leased the premises. We agree.

To establish adverse possession, the claimant’s possession must “be
inconsistent with and hostile to the claims of all others.” Marshall, 342 S.W.3d at
70; see also Tran v. Macha, 213 S.W.3d 913, 914 (Tex. 2006) (per curiam) (same).
The “possession must be of such character as to indicate unmistakably an assertion
of a claim of exclusive ownership in the occupant.” Marshall, 342 S.W.3d at 70
(quoting Rhodes v. Cahill, 802 S.W.2d 643, 645 (Tex. 1990) (sub. op. on denial of

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reh’g). But here, there is no evidence that Miller entered or occupied the premises
with the intent to claim ownership of the property to the exclusion of the Railroad.

Franklin A. Miller signed a written lease to rent the premises from Southern
Pacific Transportation Company effective July 1, 1980. The lease was for a term of
one year, followed by a month-to-month tenancy, and specified, “Railroad reserves
for itself, its successors, assigns and licensees, the right to construct, maintain and
operate any existing tracks and existing and new or additional pipe, telegraph,
telephone and power transmission lines upon, over and beneath the leased premises.”
Miller was required to maintain the leased premises in a condition satisfactory to the
Railroad, provide proof of liability insurance, and obtain the Railroad’s written
consent to the subletting of any part of the leased premises. He agreed that the
Railroad had the right to enter the premises at reasonable times to inspect the same,
and that in the event of default, the Railroad “shall have the right to terminate this
lease forthwith and to retake possession of the leased premises.” The lease also gave
the Railroad the right to terminate the lease if Miller ceased using the premises for a
machine and welding shop for a period of ninety days.

Miller never repudiated the lease. To the contrary, Miller testified at trial,

• “The railroad leased it to me. They leased it to me.”

• “I owned the buildings and they owned the land, but we didn’t know—they
didn’t own the land . . . .”

• “[O]ccasionally they would raise the rent on me.”

• “[W]hen I received a bill, I paid it.”

• “Over the years, I would acquire lease after lease from the railroad, and then
I would sublease it out to individuals.”

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At trial, Miller stated repeatedly that the Railroad claimed to own the property
and that he leased the land, paying rent to the Railroad.6 Indeed, Miller entered into
a number of supplemental agreements with the Railroad, such as when Miller
increased the size of the premises he leased or obtained the Railroad’s consent for
Miller to sublease the property. The Railroad entered into such agreements (or
simply raised the rent pursuant to the lease’s terms) more than a dozen times over
the period of Miller’s occupancy until, by its letter of August 23, 2017, the Railroad
notified Miller that it was terminating the lease. Miller described the letter, saying,
“That was the last notice, hey, it’s time to go, you know, which I knew by
correspondence with them, and I had all my other tenants that I had to take care of,
too, to tell them, hey, you know, the railroad is kicking us all out.” Miller testified,
“I wouldn’t have ever left if they wouldn’t have canceled it.”

But one cannot exercise hostile, adverse, exclusive possession of property
under a claim of right while renting the property from the purported owner. See, e.g.,
Castillo, 640 S.W.3d at 261 (years when claimants’ family rented the premises do
not count toward limitations for adverse possession); see also La. Pac. Corp. v.
Holmes, 94 S.W.3d 834, 839–40 (Tex. App.—San Antonio 2002, pet. denied)
(“Once the landlord-tenant relationship is established, possession by the tenant will
not be considered adverse to the owner until (1) there is repudiation of the

6
At one point Miller testified that the Railroad “acquired it [i.e., the property] by eminent
domain or however you want to say they acquired it, and then when they wanted to give it up,
that’s when they came to me and said we’ll sell it to you for this amount of money, and I bought
it.” Miller appears to have been referring only to ownership of a leasehold interest, for he testified,
“once I started paying the lease payments, I considered that my, you know, lease property that I
own.” (emphasis added). In any event, Miller pleaded ownership only by adverse possession, and
because the trial court found that Miller adversely possessed the property from “the Heirs of P.E.
Nicholson,” the trial court presumably did not credit Miller’s testimony that the Railroad owned
the property and sold it to Miller.

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relationship and the assertion of a claim of right adverse to the owner, and (2) notice
of such repudiation is given to the owner.”).

The fatal flaw in Miller’s claim is that, in adverse-possession cases concerning
leased property, “possession by a tenant is considered to be the possession of the
landlord.” McShan v. Pitts, 554 S.W.2d 759, 763 (Tex. App.—San Antonio 1977,
no writ); see also Gaddis v. Junker, 29 S.W.2d 911, 920 (Tex. App.—Beaumont
1930, writ dism’d w.o.j.) (adverse possession established where the land was
occupied by claimant’s tenant). This is true even if the landlord is not the record
owner of title. As the Supreme Court of Texas explained,

[W]e hold as a matter of substantive law that in a case such as this where
title by prescription is in issue, the possession of land by an occupant
who professed to hold under another person will, in law, be the
possession of the latter if the purported landlord claimed to own the
property at the time and there is no evidence that the occupant was, in
fact, holding through or under some third person.
Sanders v. Worthington, 382 S.W.2d 910, 916 (Tex. 1964). “Where it appears that
both parties understood that the right to occupy certain premises passed under the
lease, the tenant’s occupancy thereof will be treated as that of his lessor . . . .” Id. at
918. Here, Miller admittedly signed leases on the property and paid the agreed-upon
rent and rent increases. Miller admits that the Railroad, and only the Railroad,
claimed to own the property, and there is no allegation or evidence that Miller
occupied the property through or under a third party. Thus, Miller’s possession of
the property must be considered possession by the Railroad.

Treating a tenant’s occupancy as possession by the landlord makes sense,
because adverse possession requires “possession inconsistent with title in others.”
Tex-Wis Co. v. Johnson, 534 S.W.2d 895, 902 (Tex. 1976). Leasing the property to
another meets this test; leasing the property from another does not. There
accordingly are many cases in which a landlord acquired title by adverse possession
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by proving occupancy by a tenant, but we have found none in which a tenant satisfied
the requirements for adverse possession while simultaneously paying a landlord rent
for the same property. The absence of such cases is understandable, given that the
Texas Supreme Court has said that to acquire title by limitations, “the possession
[must] be inconsistent with and hostile to the claims of all others.” Marshall, 342
S.W.3d at 70 (citing TEX. CIV. PRAC. & REM. CODE § 16.021(1)) (emphasis added).
Moreover, “[t]he possession must be of such character as to indicate unmistakably
an assertion of a claim of exclusive ownership in the occupant.” Rhodes v. Cahill,
802 S.W.2d 643, 645 (Tex. 1990) (op. on denial of reh’g) (quoting Rick v. Grubbs,
147 Tex. 267, 270, 214 S.W.2d 925, 927 (1948) (emphasis in original)). Because
Miller leased the property from the Railroad, his occupancy was not inconsistent
with or hostile to the Railroad’s claim of ownership. Were it otherwise, a landlord
could not adversely possess property occupied by a tenant, and we know that is not
the case. In addition, Miller’s possession pursuant to a lease was not an unmistakable
claim of exclusive ownership, but rather, was consistent both with the Railroad’s
representations that it owned the property and with Miller’s status as a tenant.

Because there is legally insufficient evidence that Miller held the property for
at least ten years in hostile, adverse, or exclusive possession, we sustain the State’s
third issue, in which it raised this argument.

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VI. CONCLUSION

For the foregoing reasons, and without addressing the merits of the remaining
issues and arguments, we reverse the trial court’s judgment and render judgment that
Miller take nothing.

/s/ Tracy Christopher
Chief Justice

Panel consists of Chief Justice Christopher and Justices Wise and Jewell.

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