Court Opinion

ID: 9770406
Source: CourtListenerOpinion
Date Created: 2023-08-29 16:03:59.137363+00
Date Added: 2024-06-11T07:31:17.141415
License: Public Domain

Mr. Justice Smith,
joined by Justice Griffin, dissenting.
The dissenting opinion delivered on October 5, 1960, is withdrawn and in lieu thereof the following dissent is respectfully filed.
*382The petitioner’s motion to disregard the findings of the jury and for judgment non obstante veredicto should have been granted. That motion embraced the first two points now contained in petitioner’s application for writ of error. The points are as follows:
“POINT ONE
“The trial court erred in overruling petitioner’s motion for judgment non obstante veredicto and the contentions made therein that the alleged trust which respondents seek to establish and enforce is an express trust created by parol in violation of Section 7 of Article 7425b, commonly known as the Texas Trust Act, and the Court of Civil Appeals erred in not so holding.
“POINT TWO
“The trial court erred in overruling petitioner’s motion for judgment non obstante veredicto and the contention made therein that the undisputed evidence and admissions by each and both of respondents conclusively establish that respondents used confidential information belonging to others without the consent, permission or authority of the true owners of such information, in performing the service which they claim entitles them to the trust upon which their1 recovery is based, and that respondents have not come into court with clean hands and are barred from any equitable relief by virtue of the doctrine of clean hands, and the Court of Civil Appeals erred in not so holding.”
The writ was granted on Poine One. The pertinent parts of the Texas Trust Act, Article 7425b — 2 and 7, read:
“Article 7425b-2, Definition of trust.
“ ‘Trust’ for the purpose of this Act means an express trust only, and does not include (1) resulting or constructive trusts.”
“Article 7425b-7. Requisites of a trust.
“An express trust may be created by one of the following means or methods:
“A. A declaration in writing by the owner [Omohundro] of the property that he holds it as trustee for another person, *383or persons, [Frank D. Matthews, Jr. and Ray James Thompson, Jr.] or for himself and another person or persons * * *” [Emphasis added.]
The court states that:
“* * * The question arises whether a constructive trust may be imposed to prevent unjust enrichment of one in a confidential relationship even though such person refuses to perform an unenforceable express trust?”
The court seems to attach some significance to the fact that a constructive trust is not inhibited by the Texas Trust Act. Granting that it is not, I contend that there must be evidence of probative force other than the evidence which has been rendered ineffective by the Act. The evidence simply does not support the court’s position. There is no evidence other than the verbal agreement. The verbal agreement is unenforceable in view of the Trust Act. There is substantial authority supporting my contention that: An unenforceable oral contract cannot be the basis for a constructive trust.
The legislature adopted a definite policy when it enacted the Texas Trust Act. The statute is clear. No doubt the legislature realized that in some cases to invoke the provisions of the Act an injustice would result. Nevertheless, the question of whether the legislature exercised good judgment in enacting the statute is not for us to decide. Chief Justice Hickman speaking for the court in the case of Upson v. Fitz-Gerald, 129 Texas 211, 103 S.W. 2d 147, properly said:
“Generally, when a court is called upon to enforce a plain, valid statute, it gives no consideration whatever to the question of whether its enforcement appears to work an injustice in the case before it. To determine the wisdom vel non of a statute is not a judicial function. ‘Equity follows the law,’ is a familiar maxim.”
This court cannot give an equitable remedy merely because a legal remedy has been denied the respondents by this statute, and the undisputed facts in this case. A constructive trust, as an equitable remedy is not available to the respondents for the reason that they had a clear legal remedy but for the Texas Trust Act. Principles of law can be best preserved by following prior applicable decisions of this court. Law Review articles, even though written by brilliant authors, have no precedential *384value. Justice dictates that it is our duty to follow the law in establishing a remedy. The rules must be declared in the light of the law and not according to our individual notion or sense of what constitutes abstract justice. “Law is the coin from the mint, with its value ascertained and fixed, with the stamp of government upon it which insures and denotes its current value. The act of moulding justice into a system of rules detracts from its capacity of abstract adaptation in each particular case; and the rules of law, when applied to each case, are most usually but an approximation of justice. Still, mankind have generally thought it better to have their rights determined by such a system of rules, than by the sense of abstract justice, as determined by any one man, or set of men, whose duty it may have been to adjudge them.” Justice Oran M. Roberts — Duncan v. Magette, 25 Texas 245, 253.
The court admits that under the pleadings of Matthews and Thompson an express trust was created when the parties allowed the leases (the Sharp and Owens transactions) to be placed in petitioner’s name. Respondents alleged “pursuant to the wishes of the said Sharp and the agreement between plaintiffs and defendant the respective interests of the parties were taken in the name of the defendant * * *” The respondents, however, seek to place themselves without the scope of the Texas Trust Act and the settled law established by the decisions of the courts by taking the position that even though an express trust was established in the present case,1 a constructive trust may be imposed to prevent unjust enrichment of one in a confidential relationship regardless of the fact that the pleadings and the only evidence show that the relation of trust and confidence was established by parol evidence. This evidence established only an express trust, which is expressly forbidden by Section 7 of Article 7425b of the Texas Trust Act. The respondents seek to establish an interest in land. In order to be successful, such interest must be created or evidenced by an instrument in writing or a constructive trust must be shown. Section 7 of the Texas Trust Act is in substance the same as Section 7 of the English Statute of Frauds. These stautes, as well as those of many other states, require that trusts affecting lands must be created or evidenced by a proper instrument in writing. The general rule is that where the statute of frauds requires trusts to be created or evidenced by writing, an oral agreement or promise to purchase land for another’s benefit cannot be enforced as an express trust. We have here an express trust *385which cannot be converted into a constructive trust under the evidence in this case. There was simply no basis for any fiduciary or confidential relationship between the parties at the time petitioner made the agreement with Slick Oil Corporation to assist it in the taking of new leases in the area after the Hughes lease expired on March 24, 1956. By their pleadings and the submission of Special Issue No. 1, inquiring whether or not such (oral) agreement was made, and Special Issues Nos. 2 and 3 as to its duration, respondents conceded that the admittedly oral agreement between the parties was the only basis and foundation of their claim.
The facts in our case do not show the presence of fraud. “A constructive trust generally involves primarily a presence of fraud, in view of which equitable title or interest should be recognized i nsome person other than the taker or holder of the legal title.” Our evidence shows and the jury found that under the original agreement, the only controlling agreement, the intent and purpose of the transaction was that petitioner should hold the legal title for the use of respondents and petitioner.
The facts present the exact type of situation that the Texas Trust Act requires to be in writing. In the situation we have here, equity does not intervene. This court has, since the enactment of the Texas Trust Act, drawn the distinction between constructive trusts and express trusts. The purpose of the Trust Act was to prevent unfounded claims to land. Therefore, the requirement that all interests in land and conveyances of such interests be evidenced by instruments in writing. In view of the plain language of Section 7, Article 7425b, supra, and the definition of a constructive trust, this court has drawn a fair and reasonable line between agreements to take title in the names of the members of a joint venture and agreements to take title in the name of one of the parties to hold it in trust for the others. See Fitz-Gerald v. Hull, 150 Texas 39, 237 S.W. 2d 256.
Petitioner, under the pleadings, evidence, and jury findings, had legal and equitable dominion over the Hughes lease at all pertinent times.
The “Owen” well was the last transaction between these parties. Respondents alleged in their petition that a subsequent deal was made with J. P. Owens, and further alleged that “The interests of plaintiffs (respondents) and defendant (petitioner) were taken in the name of E. G. Omohundro, defendant, in ac*386cordance with the original (oral) agreement between the parties hereto.” Clearly, the same original, broad, oral agreement between the parties constitutes the sole basis for the claim that a joint venture was still in existence after the Owen Well was abandoned. Admittedly, between the date of abandonment of the Owen well, December 28, 1955, and petitioner’s transaction with Slick in March of 1956, there were no joint efforts, and not even a claimed oral agreement, that respondents were to have an interest in the Slick Oil Corporation transaction. Respondents did claim that the original oral agreement was continuous. Hence, there is no basis for any fiduciary or confidential relationship. The trial court erred in failing to grant petitioner’s motion for judgment non obstante veredicto since the alleged trust was an express -trust created by parol in violation of and was invalid and unenforceable by virtue of Section 7 of Article 7425b, supra. Respondents do not seek to recover the reasonable value of their services (their only investment). They do not seek restitution. They are seeking specific performance of an alleged oral agreement, by the terms of which the petitioner was to take title in his name and hold it in trust for the respondents. Respondents cannot enforce performance of this express trust because of the Statute of Frauds. 1 Scott on Trusts, p. 309. See Wimberly v. Kneeland, Texas Civ. App., 293 S.W. 2d 526, wr. ref. n.r.e.
The answer to the basic question here is that the undisputed facts bring this case within the inhibition of the statute. There is no basis in fact or in law for the statement of the court in the present case:
“So, here, the Court is not enforcing the parol agreement. It is enforcing a constructive trust arising by operation of law to prevent unjust enrichment obtained through the violation of a fiduciary relationship. The fact that much the same result may be reached is not fatal.” [Emphasis added.]
How, may I ask, can a constructive trust arise by operation of law under the facts in this case? It simply cannot. Under the Texas Trust Act no fiduciary relationship- exists. If the unenforceable oral contract did not create the fiduciary relationship between the parties, then what did? Is the so-called partnership based upon a written contract? No. The contract is oral, and unless the fiduciary relationship- has been proved by facts or circumstances other than the unenforceable oral agreement, the title to the property involved cannot be legally transferred from Omohundro to the respondents. This court has never said *387until the opinion was handed down in this case that the breach of an unenforceable oral contract can be the basis for a constructive trust. The court cites the case of Smith v. Bolin, 153 Texas 486, 271 S.W. 2d 93, in support of its proposition. I agree that Smith v. Bolin is good law, as applied to the facts in that case, but certainly it can have no application here. The contract in that case did not rest on parol evidence. Here, the contract rests entirely upon parol evidence. The fact that subsequent to the oral contract, transactions were entered into whereby a farmout was obtained, royalty payments were divided, and a letter of transmittal was written, does not vary the rule that there must be a binding agreement made in advance of the acquisition of title. Clayton v. Ancell, 140 Texas 441, 168 S.W. 2d 230, 233. The contract must be an enforceable one. Whittenburg v. Miller, 139 Texas 586, 164 S.W. 2d 497, 502. In this latter case, the court correctly declared the rule by stating:
“It is the law of this state ‘that trusts in lands, as well as those which are created by express contract as well as those which are implied and result by construction of law, are not within teh statute of frauds, and consequently need not be evidenced in writing. However, where a contract must be proven as a basis for the alleged trust, and such contract rests on parol evidence, the claim to subject land to the trust will fail. * * *’ 42 T.J. Sec. 67, p. 677. In order that a trust may arise from a contract, the contract must be an enforceable one.” [Emphasis added.]
This rule was well settled oven before the enactment of the Texas Trust Act. See Sorrells v. Coffield, 144 Texas 31, 187 S.W. 2d 980; Miller v. Graves, Texas Civ. App., 185 S.W. 2d 745, wr. ref. Here we have an unenforceable oral contract to convey land. Under such circumstances, the alleged subsequent partial performance by Omohundro could not have possibly taken it out of the statute, nor could have any degree of performance given rise to a constructive trust. We do not have a factual situation such as contemplated by Mr. Huie when he said: “* * * in many of the situations where an oral express trust was enforced prior to the Act, the Courts will be able to reach the same result now [after passage of the Texas Trust Act] by classifying the trust as resulting or constructive.” Surely, Mr. Huie did not mean that a constructive trust could ever be predicated upon an unenforceable oral contract. Not one case decided since the adoption of the Texas Trust Act supports the court’s decision. The case of MacDonald v. Follett, (1944), 142 Texas 616, 180 S.W. 2d 334, was decided before *388the enactment of the Act. There can be no doubt but that a relation of trust and confidence existed. This court so held, but it must be remembered that had the Texas Trust Act been in effect, the oral agreement would have been unenforceable. If you eliminate the verbal testimony, which the Texas Trust Act and the Statute of Frauds renders ineffective, is there any evidence to support the finding that a relation of trust and confidence existed? There was no such evidence in the Follett case. Of course, the court was not deciding the question in the light of the Texas Trust Act. In view of the holdings in the cases discussed below, it is my opinion that had the Act been in force at the time of the trial of MacDonald v. Follett, supra, the court would necessarily have held that since the agreement was oral, the constructive trust arose out of an unenforceable contract. It was unenforceable [if the Trust Act had been in effect] simply because the fiduciary relationship was proved solely by the verbal agreements between MacDonald and Follett. Partnerships and joint ventures must be based on a valid enforceable contract.
The question in MacDonald v. Follett was: Did the verbal agreement raise an issue for the jury on the question of the existence of a relationship of trust and confidence? Under the then existing law, the question was pertinent. However, in view of the provisions of the Texas Trust Act, that is not the question in the present case. Our question is: Has the fiduciary relationship, the relation of trust and confidence, been established by evidence, either direct or circumstantial, other than the unenforceable oral contract? The court has failed to point out such evidence. I repeat, there is no evidence of such character for the court to rely upon.
In the case of Tolle v. Sawtells, Texas Civ. App., 246 S.W. 2d 916, 920, wr. ref., the court held that where the contract is oral and within the Statute of Frauds, it cannot be taken out of the statute on the theory of a constructive trust based merely on the breach of the contract. This court “refused” the application for writ of error. Such action gave the opinion of the Court of Civil Appeals the status of an opinion of this court. It became the opinion of this court. This is significant all the more for the reason that this court approved the construction given the case of Fitz-Gerald v. Hull, 150 Texas 39, 237 S.W. 2d 256, by the Court of Civil Appeals. In the Fitz-Gerald case, the law was clearly declared by Mr. Justice Smedley in a dissenting opinion. The court, speaking through Mr. Justice Griffin, agreed with the dissent, but held that the facts removed the case from *389the inhibition of the statute. Mr. Justice Smedley stated in his dissent that the court conceded “that if the agreement had been that petitioner should procure the lease for the three parties, taking title in his own name, it would have been an agreement for an express trust and not enforceable.”
Omohundro contends that the court in Fitz-Gerald v. Hull held that if there is an agreement between A and B that B will buy a noil and gas lease in their joint names, and B buys the lease in his own name, a constructive trust arises at the time B acquired title because of the breach of his agreement to take it in their joint names; but no constructive trust arises if A and B agree that B will buy an oil and gas lease with his own money and agrees he will later convey to A an interest therein. This court recognized the distinction between the two situations in Fitz-Gerald, and then certainly by our refusal of the writ in the Sawtelle case we recognized such distinction. In view of these positive decisions, how can this court now say that the case of Mills v. Gray, 147 Texas 33, 210 S.W. 2d 985, is controlling? That case stands principally for the proposition that the existence of a close family relationship between the grantor and the grantee is a sufficient basis alone for finding a confidential relationship. In Mills v. Gray, Mrs. Gray, the mother, conveyed to her son, Harry Mills, a house and lot on Broadway Street in Fort Worth to be held lay him in trust for the benefit of his mother and his brothers and sisters. The conveyance was made without consideration on a promise by Mills that he would reconvey the property to Mrs. Gray after a divorce was granted in a suit between Mr. and Mrs. Gray. Mills failed to live up to his agreement and suit by Mrs. Gray followed. This was simply not a constructive trust. It was a trust intentional in law and, therefore, a resulting trust. Mills v. Gray was a restitution case. One of the briefs filed in this case after the original opinnion was delivered makes an accurate analysis of the Mills v. Gray case, and I adopt the same here. The writer says:
“* * * The situation is the same as where A gives B money to buy property and B buys the property and takes it in B’s name. A having furnished the consideration is the equitable owner and B is the resulting trustee. If A conveys the property to B without consideration, A is in the same situation because in either case it is A’s property and B holds the naked legal title as trustee. There are many cases like Mills v. Gray where a man recovers land that he had formerly owned and which was taken from him through breach of promise, fraud, breach *390of agency, or some other ground which gives rise to either a suit to cancel or a constructive trust.
“For example, we quote from Faville v. Robinson, 111 Texas 48, 227 S.W. 938:
“ ‘Where a grant is made on the faith and because of a promise, a breach of the promise is necessarily a fraud, not to be tolerated in equity although the promise be only verbal. In such cases, where the circumstances are such as to deny the right to a rescission, equity will impose a trust upon the property as a means of defeating a fraudulent and wrongful acquisition of the title. In the phrase of Chief Justice Gibson, equity turns the fraudulent procurer of the legal title into a trustee, to get at him. Hoge v. Hoge, 1 Watts (Pa.) 214, 26 Am. Dec. 52’.”
See also Binford v. Snyder, 144 Texas 134, 189 S.W. 2d 471; Hall v. Miller (wr. d.w.o.j), 147 S.W. 2d 266; Kirkland v. Handrick (wr. ref. w.o.m.), 173 S.W. 2d 735; Hill v. Stampfli (Comm. App.), 290 S.W. 522; Dyer v. Hardin (wr. ref.), 323 S.W. 2d 119.
Mills v. Gray and the other cases cited above apply to a situation which compels a grantee to restore to the grantor that which the grantee received from the grantor, as the result of a promise which the grantee did not keep.
The court in Mills v. Gray reversed and remanded the case because of an error of the trial court in excluding certain proffered testimony. The court stressed the fact that although a parent and child relationship is not intrinsically one of confidence, it does, under circumstances, involve a confidence, and that the abuse of such confidence would give rise to a constructive trust in accordance with an agreement or promise of the grantee to hold in trust or to reconvey.
The court after discussing this and other pertinent principles, held:
“Under these principles, if the purported agreement and family arrangement had been established as true, a constructive trust would have arisen by reason of the confidential relationship between the parties which would not fall with in the prohibition of the stautte of frauds or the Texas Trust Act. The testimony was therefore erroneously excluded by the trial court.”
In our case, this court has reached a result that the statute *391prohibits. There are no independent facts. As said in 49 Am. Jur. Sec. 535, p. 835:
“In earlier cases, courts of equity were perhaps astute in laying hold of circumstances to enforce oral agreements and to take them out of the operation of the statute, but the modern adjudications indicate the opposite tendency as approving the wisdom of the statute and endeavoring to carry out the spirit and intention as well as the letter thereof.
“The modem rule is that before a court of equity will enforce an oral contract coming within the operation of the statute of frauds, such as an oral contract for the sale of an interest in land, or enforce or protect rights asserted on the basis of suich an oral contract, there must be collateral circumstances constituting an independent equity, imposing an obligation in conscience upon the party who seeks to invoke the protection of the statute.”
The judgments of the trial court and the Court of Civil Appeals should be reversed and judgment rendered that respondents take nothing.
Opinion delivered December 31, 1960.
Rehearing overruled December 31, 1960.

. — In fact, an express trust was not only pleaded, but was proved and so found by the jury.