Opinion ID: 2459497
Heading Depth: 1
Heading Rank: 2

Heading: appeal of meadows

Text: The trial court gave judgment against Oakes to Meadows which attached to the trust res. [3] The court of civil appeals sustained Meadows' judgment but reduced the amount thereof. In addition, the court of civil appeals opinion made Meadows' judgment inapplicable to the trust res. The court of civil appeals allowed meadows only a money judgment and subtracted the amount thereof from the money judgment awarded Bierschwale. [4] Meadows contends that the judgment of the court of civil appeals is erroneous in two respects: (1) the judgment deprived Meadows of a share of the constructive trust res; and (2) the judgment reduced Meadows' damages from $23,280 to $14,260. Meadows received twelve of the fifty-nine Black Hardware notes in lieu of a cash commission and now claims the same fraction of the trust res as his twelve notes bear to the total of the notes. For the reason to be hereafter stated, we determine that the judgment in the sum of $23,280 favoring Meadows should not have been reduced by the court of civil appeals. Further, we agree that Meadows should share in the trust res. In opposition to the judgment in favor of Meadows, Bierschwale first complains that a broker is not entitled to a commission on a sale rescinded because of fraud. A majority of jurisdictions have adopted such a rule. See Wright v. Buzzine, 180 Cal.App.2d 426, 4 Cal.Rptr. 482, 79 A.L.R. 2d 1047 (1960); Restatement of Agency 2d § 445, Comment g at 351. See also Webb v. Durrett, 136 S.W. 1189 (Tex.Civ.App. 1911). However, error was not preserved on this point. The effect of this omission is to waive the finding that Meadows was entitled to a commission on the sale. This being so, the only remaining, yet central, issue to be resolved is whether Meadows may share in the constructive trust res. It is Bierschwale's position that a constructive trust in Meadows' favor is precluded under the facts presented. First, Bierschwale asserts that the remedy of constructive trust is unavailable to Meadows since Meadows never held a proprietary interest in the apartment complex which formed the basis of the constructive trust res. Second, he argues that a constructive trust is never available to one, such as a broker, who renders services only. We feel that these arguments presume an unduly restrictive view of the remedy of constructive trust. Constructive trusts, being remedial in character, have the very broad function of redressing wrong or unjust enrichment in keeping with basic principles of equity and justice. Fitz-Gerald v. Hull, supra ; Crumpton v. Scott, 250 S.W.2d 953 (Tex.Civ.App.Fort Worth 1952, writ ref'd n.r.e.). A transaction may, depending on the circumstances, provide the basis for a constructive trust where one party to that transaction holds funds which in equity and good conscience should be possessed by another. Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401 (1960); Grand Trunk Western R. Co. v. Chicago & W. Ind. R. Co., 131 F.2d 215 (7th Cir. 1942). See Dobbs, Handbook on the Law of Remedies, § 4.3 (1973). Moreover, there is no unyielding formula to which a court of equity is bound in decreeing a constructive trust, since the equity of the transaction will shape the measure of relief granted. Magee v. Young, 145 Tex. 485, 198 S.W.2d 883 (1946). See 89 C.J.S. Trusts § 139 at 1020; 54 Am.Jur.Trusts §§ 218, 219, 220. In Magee v. Young, supra , this court, indicating the flexibility of the constructive trust remedy, stated, [i]n order to satisfy the demands of justice, courts of equity will indulge in presumptions and even pure fiction. 198 S.W.2d 883 at 885. It is thus apparent, considering the broad and flexible nature of the constructive trust remedy, that this court may not only properly impose a constructive trust on the proceeds of the Goldman sale in favor of Bierschwale but also extend its applicability to Meadows as well. This becomes even more apparent when the facts of the transaction are examined. Meadows, as the broker who put together the Oakes-Bierschwale transaction, was entitled to a cash commission under his agreement with Bierschwale. It was pursuant to a subsequent two-party agreement between Bierschwale and Meadows, which was suggested by Bierschwale, that Meadows agreed to accept the Black Hardware notes, rather than cash, as his commission. The Black Hardware notes turned out to be worthless and Bierschwale now asks this court to do equity and impose a constructive trust on the proceeds of the sale of the apartment complex, a sale which will result in a substantial profit for Bierschwale. At the same time Bierschwale attempts to defeat Meadows' claim against him even though Meadows' claim is based upon the same equitable principles Bierschwale affirmatively asserts. It is axiomatic that when a party resorts to equity to obtain relief not available legally, his actions are measured by equitable standards and he may not invoke the strict letter of the law to deny equity to another who has been harmed, at least in part, by the original party's action. Omohundro v. Matthews, supra ; Deep Oil Development Co. v. Cox, 224 S.W.2d 312 (Tex.Civ.App.  Fort Worth 1949, writ ref'd n.r.e.). We believe that application of the above principles underlying the remedy of constructive trust requires that Bierschwale share the constructive trust res with Meadows. Bierschwale cannot obtain the benefits of the equitable theory of constructive trust without, in turn, sharing those same benefits with his agent. Meadows and Bierschwale will share in the constructive trust res in the same proportion that the notes held by them individually bear to the total of the notes transferred to them by Oakes. [5]