Court Opinion

ID: 9486783
Source: CourtListenerOpinion
Date Created: 2023-08-05 11:59:50.857536+00
Date Added: 2024-06-11T17:51:55.804605
License: Public Domain

ORDER ON REHEARING
June 24, 1994
On consideration of the petition for rehearing of appellee Durant Bank & Trust Company (the Bank), 24 F.3d 1199, the court finds and concludes as follows:
The Bank petitions for rehearing on the single issue of mootness. Having lost on this issue, the Bank now brings to our attention several orders of the bankruptcy court which it contends render this appeal moot.1 The Bank says that because distributions have been made without objection, and the proceeds of the sale of the Osborns’ homestead have been commingled with other funds, there is no res that could be recovered and “there is absolutely no means by which any relief can be afforded the Appellants.” Petition for Rehearing at 3.
The Bank cites no Texas, federal or other authority in support of its dogmatic position. Our opinion recognized that the sale itself of the Osborns’ homestead is protected by § 363(m) of the Bankruptcy Code from being set aside.2 This, however, does not destroy the possibility of the Osborns obtaining other equitable relief due to the loss of their homestead, which had the strong protection of the Texas Constitution. For example, Texas has long recognized “the flexibility of the constructive trust remedy....” Meadows v. Bierschwale, 516 S.W.2d 125, 131 (Tex.1974) (citing Magee v. Young, 145 Tex. 485, 198 S.W.2d 883 (1946)). In Meadows the Texas Supreme Court stated:
Constructive trusts, being remedial in character, have the very broad function of redressing wrong or unjust enrichment in *1210keeping with basic principles of equity and justice.... 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.... 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.
Meadows, 516 S.W.2d at 131.
When a parol trust is impressed, the rights which are protected are not destroyed by commingling, as the Bank contends. Indeed, the imposition of a trust “may properly be grounded on the doctrine of commingling. ... ‘As a general rule the cestui que trust’s equitable right of recovery is not destroyed by reason of the fact that the trustee has so commingled the trust property with his own property that it is impossible particularly to identify the trust property....’” Eaton v. Rusted, 141 Tex. 349, 172 S.W.2d 493, 498 (1943) (citing 3 Pomeroy, Equity Jurisprudence § 1076 (4th ed.), and Perry, Trusts & Trustees § 447 (6th ed.), and quoting 65 C.J. § 899). The beneficiaries may follow the trust property, and they have sufficiently traced their interests when they identify properties in which their funds have been invested. See Boettcher v. Means, 201 S.W.2d 255, 257 (Tex.Civ.App.1947); see also Sibley v. Sibley, 286 S.W.2d 657, 659 (Tex.Civ.App.1955); Farrow v. Farrow, 238 S.W.2d 255, 256 (Tex.Civ.App.1951).
We merely point out that there is a possibility of equitable relief. It is only if there is no such possibility that the appeal should be dismissed as moot. See Church of Scientology of California v. United States, - U.S. -,-, 113 S.Ct. 447, 449-450, 121 L.Ed.2d 313 (1992) (if an event occurs that makes it impossible to grant “any effectual relief whatever” to a prevailing party, the appeal must be dismissed) (quoting Mills v. Green, 159 U.S. 651, 653, 16 S.Ct. 132, 132-33, 40 L.Ed. 293 (1895)). We do not decide that the Osborns have a definite entitlement to particular equitable or other relief, and we need not do so to dispose of the claim of mootness. This is not a trial court for taking evidence or making discretionary disposition of such claims for relief. See United States v. W.T. Grant Co., 345 U.S. 629, 634, 73 S.Ct. 894, 898, 97 L.Ed. 1303 (1953) (“This surely is a question better addressed to the discretion of the trial court.”). The determination whether the Osborns may be entitled to any relief because of the loss of their Texas homestead should be made by the bankruptcy court, or perhaps another trial court in a collateral action, where any further claim by the Osborns for relief should be heard and decided in the first instance.3 By merely showing the developments indicated in the petition for rehearing, the Bank has not demonstrated that it is impossible that the courts below “can fashion some form of meaningful relief in circumstances such as these.” Church of Scientology of California, — U.S. at-, 113 S.Ct. at 450 (emphasis in original).
For these reasons and for those stated in the discussion of mootness in our opinion of May 13, 1994, the petition for rehearing is DENIED.

. The reports, notices, and orders submitted all occurred more than a year before the Bank informed us of them. As the Supreme Court has noted, when a development occurs that "could have the effect of depriving the Court of jurisdiction due to the absence of a continuing case or controversy, that development should be called to the attention of the Court without delay." See Tiverton Board of License Commissioners v. Pastore, 469 U.S. 238, 240, 105 S.Ct. 685, 686, 83 L.Ed.2d 618 (1985) (per curiam) (emphasis in original).

. The Osborns failed to meet payments required to continue in force a stay of the sale of their Texas homestead.

. In their Objection to Motion to Dismiss filed in this court at 2, the Osborns suggest that they would have an entitlement to recover the value of their homestead from the proceeds, although the property has been sold.