Court Opinion

ID: 9765646
Source: CourtListenerOpinion
Date Created: 2023-08-29 04:12:08.772842+00
Date Added: 2024-06-11T12:54:04.639644
License: Public Domain

MURPHY, Justice,
dissenting.
Because I believe the trial court properly granted summary judgment on the claim of constructive trust, I respectfully dissent.
As in their motion for summary judgment, appellees claim that a constructive trust is only available for breach of a fiduciary relationship and that this relationship must exist apart from and prior to the agreement made the basis of the suit. In support of this argument, appellees cite Consolidated Gas & Equipment Company v. Thompson, 405 S.W.2d 333 (Tex.1966). Appellants contend, on the other hand, that the supreme court overruled Consolidated to the extent the court relaxed the requirements for establishing a confidential relationship. Appellants cite Meadows v. Bierschwale, 516 S.W.2d 125 (Tex.1974) in this regard. I disagree with appellants’ interpretation of Meadows.
In Consolidated, the plaintiffs sought to impress a constructive trust upon an oil and gas lease to obtain their royalty interests under an alleged oral agreement. 405 S.W.2d at 334. The defendant argued that, if such an agreement existed, it was unenforceable under the Statute of Frauds and the Texas Trust Act. Id. The trial court entered judgment on the jury verdict imposing a constructive trust on the lease as to plaintiffs’ interest. See Consolidated Gas & Equip. Co. v. Thompson, 397 S.W.2d 260, 262 (Tex.Civ.App.—Amarillo 1965), rev’d, 405 S.W.2d 333 (Tex.1966). The court of appeals affirmed. 397 S.W.2d at 263.
The Texas Supreme court agreed that the Texas Trust Act does not apply to constructive trusts, but disagreed with the court of appeals’ ruling that the evidence supported the imposition of a constructive trust. 405 S.W.2d at 336-37. The court noted that a constructive trust arises if the evidence establishes “a fiduciary relationship before, and apart from, the agreement made the basis of the suit.” Id. at 336. A constructive trust does not arise where one person merely trusts another and relies upon his or her promise to carry out a contract. Id. Other than in the typical cases of fiduciary relationships, such as attorney-client, partners, close family relationships, and joint adventurers, a fiduciary relationship can arise if, over a long period of time, the parties have worked together in the joint acquisition and development of property before the agreement sought to be enforced. Id. at 336-37. Because the proof did not show such a relationship in Consolidated, the court reversed and rendered judgment that plaintiffs take nothing. Id. at 337.
Meadows involved a sale of real estate. 516 S.W.2d at 127. The seller transferred the property to the buyer in return for $40,000.00 cash plus twenty-four notes. Id. A real estate broker who represented the seller was to receive twelve notes as his sales commission. Id. at 127-28. When the notes proved worthless, the seller filed suit seeking to rescind the transaction and to impress a constructive trust on the property. Id. at 128. The broker intervened in this suit. Id. Both parties alleged misrepresentation regarding the notes. Id. The trial court entered judgment in favor of the seller and broker. Id.
On appeal, the buyer relied on Consolidated for the proposition that a constructive trust is only available for breach of a fiduciary relationship. Id. The supreme *187court disagreed with this interpretation of Consolidated, noting that a constructive trust is available as a remedy for breach of a fiduciary relationship as well as for actual fraud. Meadows involved allegations of actual fraud and not breach of a fiduciary relationship. Id. The Meadows court did not overrule the holding in Consolidated. Rather, the court reaffirmed the Consolidated holding as viable and applicable to cases involving breach of a fiduciary relationship. The court found Consolidated inapplicable, however, to cases such as Meadows that involve claims of actual fraud.
Here, appellants have not charged appel-lees with actual fraud as was the case in Meadows, but allege breach of a confidential relationship. Thus, the holding in Consolidated is applicable, requiring appellants to establish the existence of a confidential relationship apart from, and prior to, the agreement made the basis of the lawsuit. Rankin v. Naftalis, 557 S.W.2d 940, 944 (Tex.1977); Consolidated, 405 S.W.2d at 336. The pre-existing confidential relationship must involve a separate and independent relationship between the parties or a constructive trust will not be imposed. Harris v. Sentry Title Co. Inc., 727 F.2d 1368, 1370 (5th Cir.), cert. denied, 467 U.S. 1226, 104 S.Ct. 2679, 81 L.Ed.2d 874 (1984).
There are no facts showing a preexisting confidential relationship between Weaver and Stewart. Thus, the trial court properly granted summary judgment on the constructive trust claim in favor of appellees. I would overrule appellants’ second point.
I would affirm the judgment of the trial court to the extent it grants summary judgment on the claim of constructive trust. Except as to this claim, I agree with the decision of the majority to reverse the remainder of the judgment and remand the cause for trial.