Court Opinion

ID: 9664908
Source: CourtListenerOpinion
Date Created: 2023-08-24 00:33:47.981561+00
Date Added: 2024-06-11T18:15:03.716990
License: Public Domain

*709PARKER, Chief Justice
(dissenting).
I respectfully dissent.
The majority opinion sustained appellant’s Point of Error No. 1:
“The trial court’s judgment is erroneous because the election to have the claim allowed, approved, and fixed as a preferred debt and lien against the specific property securing the indebtedness had the effect under Section 306(c) of the Probate Code of precluding the making of any further claim whatsoever against other assets of the estate.”
A claim on the $10,000.00 note was presented to the independent executor on or about the 10th day of September 1963. On the 11th day of September 1963, the executor allowed such claim in full and classified the same as a preferred debt and lien against the specific property securing it. Prior to presentation of the claim, the executor notified Willie Oneida Brassell that the estate did not own enough assets to pay all of its creditors. This being an independent administration under Sections 145 and 146 of the Probate Code, it was the duty of the independent executor to receive presentation of and classify, allow, and pay, or reject claims against the estate in the same order of priority, classification, and proration prescribed in this Code. It was under Section 146 that the independent executor classified the claim as above stated and not under Section 306 of the Probate Code, for there is nothing in the Probate Code explicitly and specifically making Section 306 applicable to an independent executor. Sections 306(a), (b), (c), and (d) are not applicable to an independent executor which was directly held in Bunting v. Pearson, 430 S.W.2d 470 (Tex.Sup., 1968), and on page 473, the court held, referring to Sections 309, 310 and 313 of the Probate Code:
“If, then, we are not compelled to substitute the words ‘independent executor’ for the term ‘representative’ in the three sections above discussed, they may not be made applicable to the ‘independent executor’ unless some provision of the Probate Code explicitly and specifically makes them applicable. It is argued that Section 146 does this very thing. We cannot agree with that argument. Prior to the adoption of the Code the courts had held that ‘independent executors’ were required to handle claims in accordance with provisions of the statute dealing with classifications, priority and proration of claims. It appears to us that Section 146 carries forward the law in this respect, as it existed prior to the adoption of the code. The phrase “in the same order of priority, classification, and proration prescribed in this code’ refers to Sections 322 dealing with classification; 321 dealing with proration; and 320 dealing with priority. The only other part of the Code that this section could have reference to is the section dealing with exempt property and allowances. No language in Section 146 can reasonably be construed to refer to Sections 309, 310, and 313, in such a way as to make them applicable to an ‘independent executor.’ ”
I refer to Section 3(1) of the Probate Code, as follows:
“(1) ‘Estate’ denotes the real and personal property of a decedent or ward, both as such property originally existed and as from time to time changed in form by sale, reinvestment, or otherwise, and as augmented by any accretions and additions thereto and substitutions therefor, and as diminished by any decreases therein and distributions therefrom.”
The majority opinion cites Wyatt v. Morse, 129 Tex. 199, 102 S.W.2d 396, 399 (1937). Such opinion is not applicable for the reason that Morse was an administrator and not an independent executor.
Appellee’s claim in full remained a preferred debt and lien against the specific property securing it. I would overrule appellant’s Point of Error No. 1.
*710The majority opinion sustains appellant’s Point of Error No. 2 as follows :
“The trial court erred in granting a judgment for damages because production started before the deeds of trust were given and the open mine doctrine prevents Appellant from being liable for waste.”
Since there is no life estate or life tenancy involved in this case, the ordinary conception of the open mine doctrine is not applicable. Until the appellee foreclosed her lien through the trustees sale, on April 7, 1965, no cause of action had accrued to her against appellant for his depleting the value of the oil royalty, because, until such sale, it could not be known that she did or did not have full satisfaction of her note, originally in the sum of $10,000.00. See Humble Oil & Refining Co. v. Andrews, 285 S.W. 894 (El Paso, Tex.Civ.App., 1926, error ref.) on page 896:
“No cause of action for damages is complete, and does not accrue to an attaching creditor against one converting a part of the attached property or depleting the value thereof until a sale of the part remaining has shown that the creditor has not full satisfaction of his judgment. Deaton v. Rush, 113 Tex. 176, 252 S.W. 1025; Paxton v. Meyer, 67 Tex. 96, 2 S.W. 817; Sherwood v. Sherwood (Tex.Civ.App.) 225 S.W. 555.” (Emphasis added.)
Such sales of April 7th, 1965 realized $7,-850.00, leaving a balance owing on said note of $3,831.00. The sales by the trustee related back to the fixing of the liens on February 16th, 1959, so as to exclude adverse interests arising subsequent to the fixing of the liens.
The deeds of trust to W. O. Bowers, Jr. contained no provision for the assignment of oil runs to appellee. Before foreclosure, appellant had the right to continue receiving the payments from the oil production in the form of money. As to the royalty involved in the cause, the instrument creating the mineral royalties in issue provided :
“No change of ownership of said royalties or any part thereof, however accomplished, ever shall operate to impose any additional obligation or burden upon Grantee, or to diminish its rights hereunder ; and Grantee shall not be required to take notice for any purpose of any such change or devolution of ownership until Grantee has been furnished with the original instrument, a certified copy, or other legal evidence showing such change of ownership.”
During Lawrence E. Montague’s lifetime, he received the royalties that belonged to his divorced wife, as well as his one-half of the royalties covered by the deed of trust securing the payment of $10,000.00 to his former wife. The appellant continued to receive $1,089.50 of the royalties to which title was vested in appellee. The judgment provides for the recovery of said sum and there is no appeal therefrom. Also, Lawrence E. Montague, Jr., as independent executor, received $2,346.95 in money from the royalties pledged to secure the payment of the $10,000.00 note, which he was able to trace and admitted to be correct. After the death of Lawrence E. Montague, the independent executor of his estate rightfully received the monies in payment of the oil runs from the property before foreclosure. To this extent, I agree with the majority opinion. However, we do continue to have in Texas a blended system of equity and law.
The majority opinion cites Donley v. Youngstown Sheet and Tube Company, 328 S.W.2d 192, 196 (Eastland, Tex.Civ.App., 1959, error ref. n. r. e.) as supporting the reversal and rendition of the judgment of the trial court. In that case, Youngstown Sheet and Tube Company was the owner of an abstract of a judgment against Sa-bens, filed for record in Taylor County on May 19, 1951. An abstract of a judgment against Sabens, filed for record on July 13, 1951, was owned by Claude S. Holly. *711Sabens owned royalty interest in Taylor County. Neither of the owners of abstract of judgments attempted to levy upon and sell under execution or otherwise the real property owned by Sabens in Taylor County. Sohio deposited into the registry of the court an amount of money equal to the value of the oil produced attributable to Sabens’ and Youngstown’s interests in the royalty produced after the filing of the abstract of judgments. The Eastland Court of Civil Appeals held that said abstract of judgment liens, with no pleadings for damages or conversion, did not follow the money paid in the court by Sohio, and reversed the trial court’s judgment and remanded the cause for proceedings in accordance with its opinion. On page 197, the Eastland Court said:
“Humble Oil & Refining Company v. Andrews, Tex.Civ.App., 285 S.W. 894 (Writ Ref.) and State ex rel. Attorney General v. Hatcher, 115 Tex. 332, 281 S.W. 192, are, apparently, urged as supporting the lienhholder’s judgment for the money. In Humble Oil & Refining Company v. Andrews plaintiff’s cause of action was for damages for conversion. It was there held that a cause of action for conversion of attached property or for depleting the security did not accrue until a sale of the remaining security showed the creditor could not collect his judgment therefrom.”
Only one meaning can be had from the opinion in Donley v. Youngstown Sheet and Tube Company, supra, remanding the cause for proceedings in accordance with its opinion. That meaning is that Youngstown should first proceed under its abstract of judgment and sell the property subject to its lien, and if the lien was not fully satisfied, then Youngstown could sue for the money deposited into the registry of the court by Sohio for depleting the value of the real property covered by the lien, which is waste, to the end that the creditor, Youngstown, had full satisfaction of its abstract of judgment.
Appellant’s argument on the law of waste, in discussing the trial court’s conclusions of law, which appellant contends are erroneous, states:
“The open mine doctrine which the courts of this state follow, 42 Tex.Jur.2d, Oil and Gas, Sec. 27, P. 67-70, keeps him from being impeachable for waste.”
This Section 27 has no application to the question before this court. Then the appellant states:
“The rule the trial court violated was stated some 36 years ago in the following manner:
“ ‘The mortgagor of gas, oil or mining lands may extract the oil or gas or remove the minerals, and convert them into money, if the gas or oil wells or mine operated were dug or opened at the time the mortgage was placed upon the premises; but if they were not, then the lands cannot be so worked, for it is waste as against the mortgagee to permit it, even though the land was purchased as mineral land.’ Thornton, Oil and Gas, Vol. 2, 1932, P. 1048, Sec. 746.
“Appellant submits that the trial court’s judgment cannot stand in view of the well settled open mine doctrine of this state and should therefore be reversed.”
The foregoing is the entire argument of the appellant in this case. But appellant does not quote all of Section 746, as follows :
“To remove and convert into money minerals underlying the soil is not waste, unless it was necessary to penetrate the soil to secure such minerals. The only restriction on the mortgagor is that he must not endanger or seriously impair the lien of the mortgage. In one case, after decree of foreclosure and execution issued, the mortgagor quarried stone from a quarry, already open; and it was held that as between him and the *712mortgagee, the latter was entitled to the stone.”
But Thornton cites no Texas opinions. On page 1049, under Section 747 of.Thornton’s text, it is said:
“But if the operations proceed so far as to endanger the security, then the holder of it is entitled to an injunction restraining the further operation of the mine.”
The majority opinion also cites Federal Land Bank of New Orleans v. Mulhern, 80 La. 627, 157 So. 370, 95 A.L.R. 948 (1934). On page 375 of 157 So., on page 955 of 95 A.L.R. from that opinion, we would quote:
“But, when production is reached and gas and oil are abstracted and reduced to possession and ownership, the fee is diminished and impaired to the extent of the value of the gas or oil abstracted and used. The use of the gas or oil extracted is a 'conversion of the fee pro tanto, or, as expressed at common law, waste,’ which was prohibited under these mortgages.”
Significantly, the Louisiana Supreme Court cites no authority involving oil land mortgages in arriving at its judgment.
The majority opinion cites Texas Co. v. Kent, 60 S.W.2d 857 (Waco, Tex.Civ.App., 1933, no writ). Contrary to the construction of such case by the majority opinion, such decision supports the judgment of the trial court in the instant case.
Central Texas Refining Company was an insolvent corporation. R. L. Wheelock was appointed receiver of said corporation, and all its properties were placed in his hands, and he thereafter operated the same under orders of the court. All its creditors intervened to establish their respective claims, to the end that his holding might be liquidated, and the proceeds thereof distributed among them according to their respective rights.
One-half of the properties of the corporation was conveyed by Kent to the predecessor in title of the corporation. Kent had a note in the sum of $345,000.00, secured by a vendor’s lien and deed of trust lien, upon such half interest. An agreed judgment was entered in the District Court of Navarro County, providing the property covered by Kent’s mortgages, then in the hands of the receiver, should be immediately conveyed by the receiver to him, and a credit of $125,000.00 on his indebtedness al1 lowed therefor; that the receiver should pay to Kent, as a further credit on such indebtedness, the proceeds of all properties covered by his liens; and further provided that the net value of the crude oil taken by the receiver from the mortgage leases should be paid to Kent, as a secured creditor, amounting to $14,272.69, which sum the receiver was ordered to pay to said Kent. This agreed judgment was approved and entered on the minutes of the court.
Unsecured creditors, including Texas Co. and Humble Oil & Refining Company, moved that the agreed judgment be reformed, urging as a matter of law and fact, Kent did not have, nor was he entitled to, a lien on the crude petroleum taken by the receiver from the wells on the mortgaged premises.
The Waco Court of Civil Appeals, with opinion by Chief Justice Gallagher, affirmed the judgment of the trial court, holding:
“The appointment of the receiver herein terminated the possession of the corporation as between it and appellee. The receiver, on taking possession of the properties, was not the mere successor of the corporation. He was the representative of the court, holding and operating such properties for the preservation thereof and for the benefit of such parties as might ultimately establish an interest therein.
******
“The court being, through its receiver, in possession of the entire properties of the *713insolvent corporation, and having before it all the interested parties, could promptly determine and effectively enforce the rights of each of them, and thereby avoid the unnecessary expense and delay incident to other and further actions.
⅜ ⅜ ⅜ ⅜ ⅜ i|c
“The trial court had, under his general equitable powers, full discretion and authority to protect appellee from loss from the action of the receiver in operating said leases and taking and appropriating such oil, as the essential principles of right and justice demanded. He heard the evidence, and, in the exercise of such discretion and authority, found the amount of injury resulting to appellee from the depletion of his security by the receiver, and ordered that he be compensated therefor out of the funds, which were augmented to the extent of the net value of the oil so taken." (Emphasis added.)
The syllabi 4 and 5 on page 8S8 succinctly state the holding of the Court of Civil Appeals.
In conclusion, after the foreclosure of appellee’s lien by the trustees sale, and not until then, the appellee had her cause of action against appellant in equity because the security of the note of $10,000.00 was diminished by the money received from the royalties from the mortgaged property by appellant, which was waste, and the independent executor of the estate is not entitled to same as an unjust enrichment thereof.
The primary duty of the independent executor was to wind up the estate by paying its debts and distributing the property to those taking under the will as speedily as possible. Fidelity and the utmost good faith are always required of a personal representative in the performance of his duties in transactions in regard to the estate. The independent executor occupies a position of trust to all parties with an interest in the estate. He is a trustee. Bell v. Still, 389 S.W.2d 605, 607 (Waco, Tex.Civ.App., 1965) opinion expressly adopted by Supreme Court of Texas, 403 S.W.2d 353 (1966). Not only is it his duty to disclose fully and fairly all pertinent facts as candidly as possible, but he may not take advantage of those whom he represents, including a creditor. 18 Tex.Jur. 2d, p. 302, § 346. In Cartwright v. Minton, 318 S.W.2d 449 (Eastland, Tex.Civ.App., 1958, writ ref. n. r. e.), on page 453, the court held that an independent executor is a fiduciary in this language:
“This evidence conclusively demonstrates that appellant was the executor under his father’s will and continued to discharge his duties as executor after he obtained the deeds from appellees. 'The term “fiduciary” is derived from the civil law. It is impossible to give a definition of the term that is comprehensive enough to cover all cases. Generally speaking, it applies to any person who occupies a position of peculiar confidence towards another. It refers to integrity and fidelity. It contemplates fair dealing and good faith, rather than legal obligation, as the basis of the transaction. The term includes those informal relations which exist whenever one party trusts and relies upon another, as well as technical fiduciary relations. 25 C.J. p. 1118; Peckham v. Johnson, Tex.Civ.App., 98 S.W.2d 408; Johnson v. Peckham, 132 Tex. 148, 120 S.W.2d 786, 120 A.L.R. 720; Swiney v. Womack, 343 Ill. 278, 175 N.E. 419; Abbitt v. Gregory, 201 N.C. 577, 160 S.E. 896; Niland v. Kennedy, 316 Ill. 253, 147 N.E. 117; Lindholm v. Nelson, 125 Kan. 223,264 P. 50; Roecher v. Story, 91 Mont. 28, 5 P.2d 205; Roberts v. Parsons, 195 Ky. 274, 242 S.W. 594; Seely v. Rowe, 370 Ill. 336, 18 N.E.2d 874; Bliss v. Bahr, 161 Or. 79, 87 P.2d 219.’ Kinzbach Tool Co. v. Corbett-Wallace Corp., 138 Tex. 565, 160 S.W.2d 509, 512.”;
and quoted from Murphy v. Cartwright, 202 F.2d 71 (U.S. Court of Appeals, 5th Cir., 1953), a part of which is here quoted:
“As executor of the estate, appellee occupied a position of trust to all parties having an interest in the estate. Because *714of his confidential and fiducial relationship to appellant he owed her the highest degree of fidelity. Strates v. Dimotsis, 5 Cir., 110 F.2d 374. It was his duty to fully and fairly disclose to her all of the pertinent facts as candidly as possible. The law will not permit him to take advantage of those whom he represents. Thaw v. Thaw, 2 Cir., 27 F.2d 729; Collier v. Collier, 137 Ga. 658, 664, 74 S.E. 275. When a person sustains toward another a position of trust and confidence, his failure to disclose facts that it is his duty to disclose, is as much a fraud as an actual misrepresentation of the true facts.”
Such principles are not new. As early as 1873, in Cock, Adm. v. Carson & Lewis, 38 Tex. 284, 285 (1873), on page 287, our Supreme Court held:
An administrator, no more than an individual acting for himself, will be allowed to pursue such a course in the management of the trust in his hands as to do gross injustice to other parties. Our laws regulating the settlement of the estates of deceased persons will allow no such thing, much less do they require it.”
In Corpus Juris Secundum, Executors and Administrators, Vol. 33, it is said:
“H. WASTE, CONVERSION, OR EMBEZZLEMENT OF ASSETS
“§ 242. Liability and Extent Thereof in General
“a. In general
“b. Extent of liability
“a. In General
“An executor or administrator is personally liable for waste, or conversion or similar loss to the estate, in some instances even where the misconduct is that of a third person; and a third person may be liable for the misconduct of the representative, where such third person knowingly acquired the property or participated in the misconduct.
“An executor or administrator is personally liable to those who are interested in the estate as heirs, distributees, creditors, or otherwise, for waste, or for conversion, misapplication, or embezzlement of the assets of the estate.”;
and again on page 1250, § 243:
“§ 243. Waste
“Waste is any mismanagement of the estate of a decedent, or other breach of duty resulting in loss, by an executor or administrator. In a proper case a representative may be restrained from committing waste.”
I would overrule appellant’s Point of Error No. 2.
In Palmer v. Bizzell, 229 S.W. 971 (Galveston, Tex.Civ.App., 1921, no writ), the following statement in the syllabus recites the holding:
“Where remedies were alternative and concurrent and not inconsistent, the pursuit of one will not exclude the other until a satisfaction is had.”
To the same effect is the decision in Rick v. Farrell, 266 S.W. 522 (Dallas, Tex.Civ.App., 1924, no writ).
The above holding is cited with approval in Moseley v. Fikes, 126 S.W.2d 589 (Ft. Worth, Tex.Civ.App., 1939, affirmed by Supreme Court in Fikes v. Moseley, 136 Tex. 386, 151 S.W.2d 202 [1941]).
Appellant did not contend in the trial court, nor in this court, that he had any defense of estoppel by election of remedies. That question is not before us. Holland Texas Hypotheek Bank v. Broocks, 266 S.W. 183 (Beaumont, Tex.Civ.App., 1924, error ref.); Betty v. Tuer, 292 S.W. 271 (Beaumont, Tex.Civ.App., 1927, no writ).
I agree with the majority opinion that appellant’s other points of error are without merit and would overrule them.
It is frustrating to write an opinion when all facts are not before this court.
I would affirm the judgment of the trial court.