Court Opinion

ID: 3980121
Source: CourtListenerOpinion
Date Created: 2016-07-06 10:37:07.070629+00
Date Added: 2024-06-11T14:18:07.716857
License: Public Domain

My associates having differed in the disposition of this case, it has been referred to me for a determination of the proper course to give it. In the several opinions written by them the facts and governing authorities have been so fully set forth and discussed that I shall express my view of one or more of the several vital questions involved in a general way only, and this with the thought that perhaps thereby counsel representing the respective parties may the better read the mind of the court as a whole, and from all opinions trace a plain path to a correct and just result.
By reference to the declaration of trust set out in the opinion of Justice DUNKLIN, the "general" purpose of the association of shareholders was to "purchase and sell oil and gas royalties and other oil and gas properties." For the accomplishment of the purpose expressed, R. R. Robertson was designated as trustee. On January 2, 1923, Robertson was duly succeeded by G. W. Peckham. By the terms of the trust agreement, the trustee Peckham was not chargeable with any of the debts of the association. He was given power to appoint or remove agents, define their duties, fix their compensation, and generally to "have full and exclusive power and authority to conduct the business and affairs of this trust, to purchase, contract for, lease, or otherwise acquire any property necessary or proper for the trust." He was also given power to borrow money, give notes, and mortgage the property of the trust to secure the same.
If detached from all other circumstances, I would incline to the view that the trustee Peckham, under the very general powers vested in him by the trust agreement, would, as a matter of law, be authorized to make the purchase he did of the interest in the townsite addition to the city of Wichita Falls. We judicially know that at the time the city was situated in the midst of a rapidly developing oil and gas field; its citizens were doubtless buoyant and hopeful of making a commercial center of great importance; and Peckham's associates in the enterprise were presumably in the class of financial leaders. It is also common knowledge that large profits have been realized by individuals and associations in promoting and marketing additions to cities such as Fort Worth, Dallas, Houston, and others. While the trust instrument recites that the general purpose was to invest in oil and gas properties, it is evident that the final, ultimate purpose and object was the acquisition of profits to the stockholders, and there is no express inhibition of a purchase of other kinds of real estate. On the contrary, as above noted, the trustee was given power to acquire "any property necessary or proper for the trust." He was only chargeable for fraud, and the fraud, if any, as I view the case, first appears in the acts of Peckham, aided by the officers of the bank, in transferring the *Page 681 
proceeds of the association's note for $43,000 to the individual account of Peckham. This certainly seems to have been irregular, and my attention has not been called to any evidence which made the transfer necessary as a matter of convenience or otherwise. No authority therefor appears in the trust agreement, and it was followed by Peckham later conveying the interest he acquired in the addition to his principal at a price greater than it cost him; thus violating his duty as trustee in fraud of the just rights of the association. There is also evidence to the effect that Peckham, in his own name, in one or more instances, purchased oil leases or royalties with funds of the association deposited to his individual credit, and later transferred them to the association at a profit to himself.
It has been said that "coming events cast their shadows before." On the contrary, past events must leave their shadows behind, and, if analyzed, may give a clearer and more accurate view of the character of the past event. The evidences, therefore, of such purchases with funds of the association in his own name with conveyances to his principal at a greater price than he paid at least raises the fact issue of whether the transfer of the funds of the association to the private or individual account of Peckham was with the preconceived purpose and plan on Peckham's part to thereby make a profit. If so, it may well be said that the transfer of the proceeds of the association's note for $43,000 to his own name constituted a fraud, and it seems to be well settled, for the purpose of so showing, that the subsequent acts of Peckham referred to fall in the class of competent evidence. As said in section 142, vol. 1, Jones, Blue Book of Evidence:
"In the absence of any admission as to the extent of a party's knowledge of the matter In issue, or of the motives which actuated the commission or omission of his acts, or provoked his intention as to a line of conduct, evidence of his previous statements or behavior, as well as of later acts, furnishes the foundation on which an inference may be based; and experience has shown that the largest class of cases in which facts apparently collateral to the issue are admitted is that in which it becomes material to prove knowledge or intent. When it becomes material to show the motive or intent which inspired an act, or the knowledge under which one has acted, it is relevant for such purpose, under certain limitations, to prove other similar acts which explain such motive or bring home to the party the knowledge sought to be proved. Stephen thus more fully states the rule: `When there is a question whether a person said or did something, the fact that he said or did something of the same sort on a different occasion may be proved; if it shows the existence on the occasion in question of any intention, knowledge, good or bad faith, malice or other state of mind, or of any state of body or bodily feeling, the existence of which is in issue or is deemed to be relevant to the issue; but such acts or words may not be proved merely in order to show that the person so acting or speaking was likely on the occasion in question to act in a similar manner.' It frequently happens that such motive or intent can be shown in no other way, while a single act might leave the secret motives of the party in doubt. Such act, in connection with others of the same character, may afford decisive proof and remove all uncertainty. Cases of fraud present a still more stringent necessity for the application of the same principle; for fraud, being essentially a matter of motive and intention, is often deducible only from a great variety of circumstances, no one of which is absolutely decisive; but all combined together may become almost irresistible as to the true nature and character of the transaction in controversy. * * * The law is quite clear that, if the act complained of is one of a nefarious series, part of a set plan or correlated commission of fraudulent dealings which shows that the one charged has devoted a misdirected energy to the acquisition of money or property by cheating or other illegal practices, evidence of it is always relevant."
If the appellee bank had notice of the fraudulent plan or fraud, if any, of the trustee, or had knowledge of such facts or circumstances as, if pursued with due diligence and care, would have brought home to the bank knowledge of the trustee's violation of the trust imposed in him amounting to a fraud, it would, of course, be liable. Whether such be the case is to be determined by the facts and circumstances appearing at the time of the execution of the note for $43,000 and of the transfer of the proceeds thereof to Peckham, together with such further evidences as will illustrate and give light to those transactions. Of course, all intervening circumstances and relevant testimony should be looked to. Should the jury find fraud on the part of Peckham and that the officers of the appellee bank are affected with knowledge or notice thereof, then the bank should be held to suffer the loss of the Royalty Company for all profits of Peckham arising from purchases in his own name, with reconveyance to the trust *Page 682 
and also for all moneys of right belonging to the association, paid to the bank upon the individual debts of Peckham. In this connection, however, I should perhaps add that, in my view, the bank's liability in no event can extend beyond the amount of profits acquired by Peckham in fraud of his principal, and such sums, if any, as Peckham, out of the trust fund, may have paid to the bank on his individual debts or obligations, the bank of course being entitled to credit on the obligations of the association for all such part of the association funds as were actually credited on the obligations, regardless of the fact that they may have been drawn out of Peckham's personal account.
In view of a new trial and of a thorough discussion of the evidence and authorities by my associates in their several opinions, I think it only necessary to add that I concur in the conclusion of Mr. Justice LATTIMORE that the judgment below should be reversed and the cause remanded for further proceedings.