Real estate hit by history

It's not every day that a lawsuit over a real-estate deal turns into a 250-year history lesson. But then, Balli v. Kerlin is not your ordinary case.

The case revolves around a land grant issued to Padre Balli back in 1765 by King Carlos II of Spain, giving the Spanish priest and his nephew ownership of a 160-mile-long barrier island that came to be called Padre Island. The Balli (bah-yee) family eventually sold the island in parcels to a Bronx lawyer named Gilbert Kerlin in the 1930s. They argue that Mr. Kerlin took advantage of the Balli heirs, many of whom did not speak English. In particular, family members charge that Kerlin did not explain the potential value of mineral rights on the island, and reportedly made a fortune from oil and gas drilling and royalties from the island.

Last week, a jury in Brownsville, Texas, ruled in favor of some 300 members of the Balli family. Today, the jury will begin to consider the family's claim of $11 million in damages, as well as additional punitive damages against Kerlin.

The court success of the Ballis could have wide repercussions, not just in Texas, but across the Southwest, where dozens of similar Hispanic land-grant cases are coursing their way through state and federal courts. In Texas alone, nearly 10 percent of all land is governed by Spanish land grants.

"It's an important decision because there is a collective Tejano memory of land loss; the Ballis were successful because they tell that story," says Armando Alonzo, a historian at the Texas A&M University in College Station, and author of the book "Tejano Legacy." "This case could encourage some of the other families who have made similar arguments."

The historical twists and legal turns in the Balli case would entice and frustrate any would-be John Grisham. In 1938, a young Harvard law school graduate named Gilbert Kerlin arrived in South Texas to buy Padre Island. He tracked down all 27 of the original titles to the land, which had been divided among Padre Balli's heirs.

It wasn't too hard to find them. South Texans joke that if you throw a rock, you're going to hit a Balli. But through a combination of droughts in the 1890s and depression in the 1930s, the powerful Balli family had fallen on hard times, and all were ready to sell. Some Ballis had little education and facility in English. No one knows how much Kerlin paid for each title, but family members say that he discussed mineral rights as an afterthought. Heirs wrote down their names and addresses, they say, and Kerlin agreed to contact them if he discovered oil or gas. Family members say he never did.

What is indisputable is that Kerlin's purchase was one of the biggest land bargains since the Louisiana Purchase. He leased the mineral rights to several oil companies, raking in royalties, and sold off the rolling sand-dune surface to developers, who turned it into a vacationland of cottages and high-rise hotels. (The unofficial motto: "Let's Padre.")

Lawyers and family members from both sides are under a gag order, but the Ballis' response to the decision by an all-Latino jury was immediate. "Today, justice has been served," said Hector Crdenas, a Balli family member and lawyer for the case.

Mr. Kerlin's lawyers, including a Balli family member named Hector Barrerra, have been less forthcoming. Some observers suggest the Kerlin team may be willing to offer a settlement, to keep Kerlin's financial records from being opened to public scrutiny.

Like similar cases, the Balli family claim is built on the Treaty of Guadalupe Hidalgo, which ended the US-Mexican war in 1848 and sold many of Mexico's territories in the Southwest to the United States. Among other things, the treaty promised that Mexican landholders would be given equal rights under the US legal system. Starting in the 1960s, Chicano activists have used this treaty to bolster their fight against discrimination. Now Latino families, calling themselves reclamantes, are using it to bolster their claims in court.

In the Los Alamos area of New Mexico, a group of Latino homesteaders are suing the federal government for compensation of land that was used in the Manhattan Project. In the early 1940s, Maria Ernestina Montoya says she and her husband were given $750 for 80 acres, with the promise that their property would be returned once the project was completed. In 1998, however, the federal government announced that it would transfer 3,000 acres to Los Alamos County and the Pueblo Indians, rather than to the original owners.

As for Padre Island, the Balli family has faced disputes over its ownership before. In the 1820s, the family spent years proving its title in the convoluted Mexican legal system. At issue was the fact that the Ballis grazed their cattle on the island, but didn't occupy it year-round. The Ballis contended that the raiding Karankawa tribe, who had a reputation for cannibalism, made life on Padre less than comfortable.

While reaction in the mainly Hispanic Rio Grande Valley has been positive, Paul Cunningham, city attorney for the town of South Padre Island, expects the decision to be reversed on appeal. "Our laws have been written to firm up ownership," says Mr. Cunningham. "If there's no certainty of your property, then you will have the whole system collapsing."

As for the overarching argument that Mexicans have lost land through discrimination and fraud, Cunningham isn't convinced. "Some of your major land grants are still occupied by those same land-grant families," says Cunningham, noting that while families like the Ballis were in decline, others actually are expanding their holdings. "Quite candidly, there's a group of heirs who are looking for a lottery, and they found a lawyer who is ready to try for the lottery."

(c) Copyright 2000. The Christian Science Publishing Society