Opinion ID: 423929
Heading Depth: 2
Heading Rank: 1

Heading: Prior history of unrelated dealings.

Text: 29 To show a constructive trust, a plaintiff must first show, by a preponderance of the evidence, Putaturo v. Crook, 653 F.2d 1027 (5th Cir.1981), that the parties had a long-standing fiduciary or confidential, trusting relationship unrelated to the subject transaction. E.g., Panama-Williams, Inc. v. Lipsey, 576 S.W.2d 426, 432 (Tex.Civ.App.--Houston [1st Dist.] 1978), aff'd after remand, 611 S.W.2d 917 (Tex.Civ.App.--Houston [14th Dist.] 1981, writ ref'd n.r.e.); Tyra v. Woodson, 495 S.W.2d 211 (Tex.1973). Whether or not a fiduciary relationship exists is a question of fact, Smith v. Bolin, 153 Tex. 486, 271 S.W.2d 93, 97 (1954), but whether a relationship is sufficiently long-standing to support imposition of a constructive trust is a question of law. Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256, 263 (1951). We find as a matter of law that the dealings between Ward and Whatley in this case were not sufficiently longstanding to support the district court's application of a constructive trust. 30 First, it is clear from the undisputed evidence that the acquisition of the Dyckman tract was part of the overall scheme to acquire the 490 acres. It is of compelling significance in this case that the dealings between Ward and Whatley were not prior, unrelated dealings in real property. Rather, they were all part of a single master plan to acquire the 490 acres. Ward and Whatley had had no business dealings with each other prior to the arrangements to acquire the 490 acres. The findings of the district court confirm that the confidential relationship between Whatley and Ward first arose when Ward became interested in the 490 acres, and that the agreement to buy the Dyckman property was clearly within the scope of that prior agreement and made in furtherance of the prior agreement. Under such a view, it was clearly erroneous for the district court to suggest that there was any confidential or fiduciary relationship between the two parties before the overall scheme developed. See Panama-Williams, Inc. v. Lipsey, 576 S.W.2d 426, 432 (Tex.Civ.App.--Houston [1st Dist.] 1978), aff'd after remand, 611 S.W.2d 917 (Tex.Civ.App.--Houston [14th Dist.] 1981, writ ref'd n.r.e.) (contemporaneous business agreements cannot support imposition of a constructive trust). The evidence in this case cannot satisfy the requisite history of prior relationships. See Note, Imposition of a Constructive Trust Based Upon a Breach of a Fiduciary Duty in Joint Venture Situations, 21 S.Tex.L.J. 229, 232-36 (1981). 31 Even if the Dyckman tract transaction were independent and not part of the single, overall plan to acquire the 490 acres, it would still be erroneous to create a constructive trust. Ward and Whatley discussed business for the first time in early 1970, their first meeting over the 490 acres. Their plan to acquire the Dyckman tract began in July, 1970, less than six months later. Admittedly, there were several meetings, guarantees of loans, transfers of property, and cash payments flowing between the parties during the first months of 1970. However, no matter how intertwined the parties' financial scheming might have been during that period, a six month old plan to acquire properties does not meet the kind of ongoing, confidential relationship required under Texas law to support imposition of a constructive trust. See Tyra v. Woodson, 495 S.W.2d 211 (Tex.1973) (business relationship from June to October insufficient to support imposition of constructive trust). Cf. Meadows v. Bierschwale, 516 S.W.2d 125 (Tex.1974) (constructive trust may not require long-standing relationship where fraud is proven). Even if one were to count the additional time during which Whatley's companies held the tract, it would be difficult on the facts of this case to find a long-lasting, independent relationship between Ward and Whatley or his companies. 32 The district court found as a fact that Whatley acquired the Dyckman tract on behalf of Ward and with the understanding that it would be transferred to Ward. It is unclear if this finding actually is meant to cover the situation where the overall attempt to obtain the 490 acres failed. Ward, indeed, was calling the shots in mid-1970 as part of the general scheme to get the 490 acres. Ward also provided the down payment money with which Whatley bought the Dyckman tract. The district court recognized that many of the dealings between Ward and Whatley appeared to be interdependent. Most businessmen, for example, would not provide a $20,800 down payment on real estate to a virtual stranger, as Ward did for Whatley and the Athens property dealings, without some hope of personal gain. 33 Whatley's own company name, however, was on the Dyckman tract deed and the mortgage. Whatley's firm, not Ward, made the mortgage payments and managed the Dyckman property, at least until the firm became insolvent. 4 We accept, nonetheless, the finding of the district court that there was an oral contract under which Whatley would hold the title to the Dyckman tract on behalf of Ward. Yet such an agreement is unenforceable under the statute of frauds for the very reason we have statutes of frauds: to formalize dealings in land so as to avoid the inexactness and possible abuses in proving oral land contracts. Even adding the additional finding of the district court that there was a fiduciary relationship between the two, we conclude that the duty to transfer the property is still unenforceable under the Texas Trust Act as an oral trust to convey real property. Tex.Rev.Civ.Stat.Ann. art. 7425b-7 (Vernon 1960). The business dealings between Ward and Whatley, whatever their nature, were not of sufficient duration or intensity to justify the imposition of a constructive trust. The first of the two requirements to establish a constructive trust was not met. 34