“Words matter, especially in real estate transactions. See Univ. Sav. Ass’n v. Springwoods Shopping Ctr., 644 S.W.2d 705, 706 (Tex.1982) (“the terms set out in a deed of trust must be strictly followed”); see also Mathis v. DCR Mortg. III Sub I, L.L.C., 389 S.W.3d 494, 507 (Tex.App. — El Paso, 2012) (“The rules of interpretation that apply to contracts also apply to notes and deeds of trust.”). Based on the words of the 2011 assignment, MERS was no more acting on its own behalf than was the bank’s own law firm.”
And here is part of what the court said in response, denying the absurd motion. judgment was based on findings and conclusions that Deutsche Bank had failed to prove chain of title back to the original lender, now defunct. The sole proof on which the bank relied — a purported assignment from “MERS as nominee for the lender, its successors and assigns” — was held void, because the assignor did not exist when the document was signed. Deutsche Bank’s first argument is based on a misrepresentation of the trial record. Deutsche Bank claims that it introduced into evidence the Burke note indorsed in blank by the original lender (IndyMac Bank), thereby establishing its right to foreclose as holder of the Note. (Dkt. 84, at 4).
This claim is baseless, because, as the trial transcript makes clear, the only version of the Note successfully introduced by Deutsche Bank at trial contained no indorsement of any kind. Prior to taking testimony, the Court sustained the defendants’ authenticity objections from the very beginning of trial, Deutsche Bank’s counsel was on notice that if it wanted to introduce its version of the Note indorsed in blank, some proof of authentication would be necessary. Based on that earlier transaction, Wells Fargo became Cornerstone’s “assign,” and MERS thereby acquired the authority to act as nominee for that entity in transferring the Deed of Trust. In this case, however, that critical element is missing.
There is simply no proof of an existing assignor with an existing right in the property capable of being assigned in 2011. It is undisputed that Indy-Mac Bank had been “dead” since 2008, several years prior to the 2011 assignment. (P. Ex. 6, at p. 1). Thus, any post-mortem transaction by that entity would be a nullity under Pool v. Sneed. [e.s.] The only apparent “successor” to IndyMac Bank was IndyMac Federal Bank, but that entity was likewise shuttered in March 2009, nearly two years before the 2011 assignment. (P. Ex. 6). Even had that entity survived to 2011, substantially all of its assets had already been disposed of by that time. According to the FDIC notice admitted as Plaintiff’s Exhibit 6, “On March 19, 2009, IndyMac Federal was placed in receivership and substantially all of its assets were sold.” (Id. at p. 4) To whom those assets were sold, and whether the Burke Note was among those assets, are matters of sheer speculation on this record. [e.s.] Logically, there are only two possibilities here, neither of which are any help to Deutsche Bank: either there was no assignee, in which case the 2011 assignment is necessarily void for reasons already given; or, there was an assignee, in which case there is necessarily another, prior assignment not found in this record. In other words, the 2011 assignment would merely be the last link in a chain of title consisting of at least two (and possibly more) links.
If indeed there is such a gap in the chain of “assigns,” Deutsche Bank’s claim fails under Texas assignment law. See e.g. Pain Control Institute, Inc. v. GEICO, 447 S.W.3d at 899 (an existing right in the assignor is a precondition for a valid assignment); Leavings v. Mills, 175 S.W.3d 301, 310 *958 (Tex.App.-Houston [1st Dist.] 2004) (party seeking to enforce note must show “unbroken chain of assignments” to the original mortgagee); Jernigan v. Bank One, Texas, N.A., 803 S.W.2d 774, 777 (Tex. App. — Houston [14th Dist.] 1991) (“possibility of an intermediate transfer” precludes judgment as a matter of law concerning bank’s capacity to sue on note). an agent is one who consents to the control of another, the principal, where the principal manifests consent that the agent shall act for the principal. First Nat’l Acceptance Co. v. Bishop, 187 S.W.3d 710, 714 (Tex.App. — Corpus Christi 2006). The party claiming agency must prove the principal has (1) the right to assign the agent’s task and (2) the right to control the means and details by which the agent will accomplish the task. Laredo Medical Group v. Lightner, 153 S.W.3d 70, 72 (Tex.App. — San Antonio 2004); Lyons v. Lindsey Morden Claims Mgmt., Inc., 985 S.W.2d 86, 90 (Tex. App. — El Paso 1998); Schultz v. Rural/Metro Corp., 956 S.W.2d 757, 760 (Tex. App. — Houston [14th Dist.] 1997). [e.s.][Editor’s note: This requirement is not fulfilled unless the principal is disclosed]. courts have long held that a party has no authority to execute a deed or contract on behalf of unnamed “heirs” or other parties not specifically named in the instrument. [e.s.] See Baldwin v. Goldfrank, 88 Tex. 249, 31 S.W. 1064, 1067 (1895) (upholding exclusion of deed where “names of heirs for whom [the attorney-in-fact] purported to act appeared neither in the body nor the signature to the instrument”); Stephens v. House, 257 S.W. 585, 591 (Tex.Civ.App. — Galveston 1923) (administrator of estate not authorized to bind unnamed heirs, despite recitation in contract that administrator acted “for myself and the heirs to the estate of the aforesaid Mary Owens”); see also Thompson v. Houston Oil Co., 37 F.2d 687, 689 (5th Cir.1930) (conveyance ineffective to pass title as to parties not named either in the body of the instrument or under signature of grantor acting under power of attorney, citing Baldwin). it was Deutsche Bank’s burden [e.s.] under Texas law to prove the existence of that principal/agency relationship in 2011. Under the precedents cited above, the mere reference to IndyMac Bank’s “successors or assigns” is insufficient, because it fails to specify the names of those persons or entities (assuming they even existed). [e.s.] Nor has Deutsche Bank submitted any extrinsic evidence which might identify MERS’s principal. [e.s.] Deutsche Bank’s third argument is a red herring.
The problem here is not a voidable defect that a defrauded assignor might choose to disregard — it is the absence of a valid assignor [e.s.] (i.e. a real entity owning the right to be assigned) in the first place. Cf. L’Amoreaux v. Wells Fargo Bank, N.A., 755 F.3d 748, 750 (5th Cir.2014) (considering homeowner’s challenge to validity of MERS assignment on its merits, implicitly rejecting bank’s “voidable” argument). Texas law is clear that a party seeking to foreclose on a home equity loan bears the burden to demonstrate its authority to prosecute the foreclosure. See, e.g., Tex.R. Civ. P. Rule 736.1(d)(3)(B) (petition must describe “the authority of the party seeking foreclosure”); Rule 736.6 (“the petitioner has the burden to prove by affidavits on file or evidence presented the grounds for granting the order [allowing foreclosure]”). When the entity seeking to foreclose was not party to the original transaction, then that entity must be able to trace its right to foreclose back to the original mortgagee. [e.s.] See e.g. Leavings v. Mills, 175 S.W.3d 301, 310 (Tex.App. — Houston [1st Dist.] 2004) (party seeking to enforce note must show “unbroken chain of assignments” to the original mortgagee); Miller v. Homecomings Financial, LLC, 881 F.Supp.2d 825, 829 (S.D.Tex.2012) (citing cases). Texas has long followed the common law rule that “in order to convey by grant, the party possessing the right must be the grantor, and use apt and proper words to convey to the grantee, and merely signing and sealing and acknowledging an instrument in which another person is grantor, is not sufficient.” Agric. Bank v. Rice, 45 U.S. 225, 4 How. 225, 242, 11 L.Ed. 949 (1846). Applying this rule in an early case, the Texas Supreme Court declared as “wholly inoperative” a deed signed by a spouse who was not named as grantor in the body of the deed. Stone v. Sledge, 87 Tex. 49, 26 S.W. 1068, 1069 (1894). The bank’s position here is less compelling than that rejected in Stone, because “MERS as beneficiary” appears neither in the signature line nor in the body of the 2011 assignment.
There remains one additional matter. In the last sentence on the last page of its last brief to this court, Deutsche Bank asks to reopen the trial record to provide “the wet ink original of the Note or testimony affirming Deutsche Bank’s status as holder of the Note.” (Dkt. 90, at 7). No authority or excuse is offered for this breathtakingly late request. Even assuming such evidence exists, Deutsche Bank does not pretend that it is “newly discovered”, nor that the bank was excusably ignorant about it until after trial despite using due diligence to discover it. See 11 WRIGHT, MILLER & KANE, FEDERAL PRACTICE AND PROCEDURE § 2808 (2012). After four years of litigation, including court-ordered mediation and trial on the merits, the time for such a deus ex machina maneuver has long since passed. The Burkes are entitled to the finality of judgment that our judicial process is intended to provide. The bank’s request for a do-over is denied.