Court Opinion

ID: 3903364
Source: CourtListenerOpinion
Date Created: 2016-07-06 09:33:08.794772+00
Date Added: 2024-06-11T07:42:25.062561
License: Public Domain

On Motion for Rehearing.
This opinion is on motion for rehearing. Chief Justice KEY having dissented to the majority opinion heretofore written by Mr. Justice JENKINS and concurred in by Mr. Justice BRADY, then a member of this court, and on this motion for rehearing both Chief Justice KEY and Mr. Justice JENKINS adhering to their former opinions, it therefore becomes necessary for the writer to participate in said motion. I do not agree with the majority opinion. I concur in the dissenting opinion.
This case was tried below before the trial judge, without a jury, and, upon request, he filed findings of fact and conclusions of law. There was also filed a statement of facts, prepared by the court reporter. The majority opinion adopted the findings of fact by the trial judge, with certain additional findings of their own, which were deemed necessary for a proper disposition of this case. The dissenting opinion adopted certain facts from the record as well as the findings of fact by the trial judge. There are certain portions of the additional findings of fact by the majority opinion that cannot properly be considered in this case, because some of the findings relate to a compromise, and some of the findings relate to immaterial matters in this case, since the beneficiaries to the trust agreement were not made parties to this suit. That portion of the additional findings of fact by the majority opinion, relating to a compromise, is as follows:
"The contract with Sapp for the erection of the filling station was made a few days prior to the issuance of the $2,000 certificate. (This finding is contrary to the finding of the trial judge, who found that it was made a few days after the contract to erect the filling station.) The Houston Bank, at the time the $2,000 certificate was issued, knew of the agreement of the refining company to leave the money paid by the citizens of Rosebud for stock in said company, in the Rosebud Bank, and to use the same in payment for the construction of the filling station, and for no other purpose."
The record shows that E. A. Donaldson, cashier of the Planters' National Bank of Rosebud, the secretary and president of the Columbian Refining Company, and appellant's agent, all testified that the transaction reducing the $4,100 certificate, assigned by the Columbian Refining Company to appellant, to a $2,000 certificate, was the result of a compromise. It is a rule as old as the law that evidence of a compromise cannot be considered, and it is inadmissible for any purpose. The trial court did not take the compromise evidence into consideration in his findings of fact, but the majority opinion seeks to do so, which is improper and is not binding upon appellant.
That portion of the additional findings by the majority opinion relative to Sapp's lack of knowledge of any claim of the Houston Bank on the money in the Rosebud Bank when he made the contract to erect the filling station is immaterial; also, the introduction of the $2,000 certificate, in so far as it aids appellee Sapp in proving his cause of action, is immaterial.
That portion of the additional findings by the majority opinion that E. A. Donaldson, cashier of the Rosebud National Bank, was one of the citizens of Rosebud who subscribed for stock in the Columbian Refining Company, under the agreement that the same should be deposited in said bank and expended in the construction of the filling station, is immaterial, because E. A. Donaldson was not made a party to this suit, and could not be bound by any judgment rendered herein.
The record discloses that appellee Sapp sought first to obtain a claim on the funds in question by reason of an ancillary writ of garnishment; but upon being confronted with a legal assignment of the funds in question to appellant, he then sought to establish a trust estate, which he seeks to make himself an interested party to by reason of the alleged claim that he carried out the purposes for which the trust was executed; and further that certain acts done by the agents of the Columbian Refining Company, at the time he made his contract with them, constituted an assignment of the funds to him. It is not contended that the garnishment lien is prior to the assignment to appellant of the fund; therefore, appellee Sapp must recover by reason of his trust fund contention, or not at all. We will only discuss this feature of the case.
The trial judge before whom this case was tried based his conclusions of law authorizing a recovery by appellee Sapp against appellant upon two propositions of law, both of which must be sustained by the evidence, else the judgment cannot stand; that is, neither *Page 317 
proposition standing alone can support the judgment rendered. The two propositions are as follows:
First. That by virtue of the representations and agreements between the Columbian Refining Company and the subscribers of the stock, the proceeds thereof become a trust fund in the hands of the Planters' National Bank, which fund was agreed to be expended in the construction of a filling station at Rosebud; and the parties to said agreement had a right to demand that said fund be so applied, and the Houston Bank acquired such certificate of deposit subject to the carrying out of said agreement.
Second. That the transaction between the Columbian Refining Company and appellee Sapp amounted to an assignment of the trust fund to him.
As to the first proposition, if a trust was really created, it is not even contended that appellee Sapp was a party to the trust; nor was any beneficiary to the trust made a party to this suit; and appellee Sapp, in so far as this case relates, is not a party to the trust agreement, unless he became a privy party, by reason of the assignment by the Columbian Refining Company's agents in their verbal agreement to construct a filling station. Thus it is seen that both propositions must be established by evidence or this judgment fails. By the first, no privity of contract is shown in behalf of Sapp; and his claim to the fund failed, unless by some assignment he acquired a greater interest and a better title to the fund than the appellant, the Houston Bank, acquired by reason of the prior assignment to it of the certificate of deposit. That is, the assignment to appellee Sapp must so relate back to the original agreement of deposit that he will become privy thereto. It is therefore apparent that both propositions must be sustained to support the judgment.
Then, too, if appellee Sapp relies solely for recovery herein upon the existence of the trust agreement between the Columbian Refining Company and the citizens of Rosebud purchasing stock, in that the trust fund will inure to his use and benefit by reason of the construction of the filling station, he could not recover in this suit, for the reason that he has not made any of the beneficiaries parties to this suit; and the judgment rendered herein would be void but for the additional proposition that the transaction between the Columbian Refining Company's agent and appellee Sapp amounted to an assignment of the fund to him.
For, in the case of Duncanson et al. v. Howell (Tex.Com.App.)222 S.W. 232, it is held that commissioners in whom no title to the trust estate vested, were mere agents and not trustees, which proposition we will not discuss further in this case; but this same case also holds that a plaintiff, without any title or right to property held in trust, cannot bring a suit for the use and benefit of another having title.
In the case of Barcus v. Parlin-Orendorf Co. (Tex.Civ.App.)184 S.W. 640, it is held that all parties interested in trust funds must be made parties to a suit for the recovery of such fund; else the judgment is void.
In the case of Jno. G. Williams v. Fort Worth  New Orleans Ry. Co., 82 Tex. 555, 18 S.W. 206, which is a case almost directly in point with this case both as to fact and purpose, it is held that the trustees and purchasers of the property are necessary parties to the suit, as well as the beneficiaries thereto. This rule is also announced in 39 Cyc. 606; 2 Perry, Trust and Trustee (6th Ed.) § 877; Hall v. Harris,11 Tex. 300; Cotton v. Colt, 88 Tex. 414, 31 S.W. 1061.
Hence we must conclude that a judgment disposing of a trust fund estate without making both trustee and beneficiaries of the fund parties to the suit is void, and this case could not stand but for the fact of the additional claim of appellee Sapp that the funds were assigned to him by reason of the alleged transaction at the time he entered into the contract to erect the filling station.
This case having been tried upon the proposition that a trust agreement had been entered into as pleaded, we will discuss it in this light, although generally trust agreements do not reach to bailments, pledges, claims for money had and received which the law implies a promise to pay it back, and all kinds of deposits. These are generally considered, in effect, personal trusts, with which equity does not deal.
We will discuss trusts and their creation generally, and apply them to the facts in this case. A "trust" is an obligation in which the person holding the legal title is bound in equity to hold for the benefit of the beneficiaries or cestui que trust. A trust is created in two ways: First, by intentional act and agreement; and, second, by operation of law. The expressed trust, or one created by agreement, must contain three certainties, or no trust is created: First, the intention to create a trust and the purpose of creation; second, the property to which the trust attaches must be identified; and, third, the party to be benefited must be certain, and, if several, their respective portions must be certain. It is through these certainties that we reach the intention of the parties.
In view of the above, it is clearly shown that under the third certainty required to create a trust, that is, that the party to be benefited must be certain, prohibits appellee Sapp from claiming as a beneficiary of the trust; and no expressed trust was created for his benefit. Can it be said that he, by operation of law, became a beneficiary of the trust agreement between the Columbian *Page 318 
Refining Company and the parties who purchased the stock in Rosebud, Tex., by reason of having carried out the original purpose of the trust? Trust, by operation of law, arises as all inference from the condition under which a party acquires the title or possession of property, and may be classed, first, as a resulting or implied trust, and, second, as a constructive trust. A resulting or implied trust is one which the court infers the intention to create a trust from the act, such as taking title in the name of one for property purchased with the funds of another, the equitable title being held in trust; or as to surplus of the sale of real estate pledged to pay a debt above the amount of the debt; or in any case where property is acquired under such circumstances as the court may deem it equitable to read the intention to create a trust in the act.
Is this such trust that the court would read an intention in the act to make the appellee Sapp a beneficiary because he carried out the original purpose by performing the labor to erect the filling station? If so, then does not appellant stand in the same relation, since we find from the record that the president of the Columbian Refining Company informed the trustee, Planters' National Bank, several days before the contract was entered into with Sapp to build the filling station, that it had assigned the trust fund represented by the certificate for $4,100 to appellant; this being shown by a letter introduced by appellee Sapp, dated June 28, 1920, which letter in part states this:
"In order to purchase material for which we paid cash, we have disposed of the $4,100.00 certificate, and it is not now in our possession, and it is our judgment that you should recall and pay the same." Signed by W. A. Rogers, President of the Columbian Refining Company.
This was also called to the attention of the Planters' National Bank by another letter, signed by the secretary of the Columbian Refining Company, before the contract was entered into with appellee Sapp. Then neither party has any right in the trust fund by reason of a resulting trust; or both appellee Sapp and appellant have equal rights thereto, not taking into consideration the assignment to appellant.
The only other character of trust, by operation of law, is a constructive trust, and it being one arising out of fraud is not applicable to this case. So we must conclude that neither appellee Sapp nor appellant is a beneficiary in the trust fund, unless by reason of a resulting trust, and in which event both stand in equal relations (with the exception that appellant has an assignment of the fund), one having furnished the moneys with which to purchase the materials, and the other the labor to construct the filling station.
We cite the authorities under the above propositions of law relative to trusts and their creation as follows: Sears on Trust Estate; Simkins on Equity, pp. 146-168, and cases cited therein; Murphy Land Co. v. McKibben (Tex.Civ.App.) 221 S.W. 650; Guest v. Guest (Tex.Civ.App.)208 S.W. 547; Allen v. Pollard, 109 Tex. 536, 212 S.W. 468; Baker v. Kennedy, 53 Tex. 200; Holland v. Shannon (Tex.Civ.App.) 84 S.W. 854; Vaello v. Rodriquez (Tex.Civ.App.) 218 S.W. 1082; Aaron Frank Clothing Co. v. Deegan (Tex.Civ.App.) 204 S.W. 471; Smalley v. Paine (Tex.Civ.App.) 130 S.W. 739.
The above cases are cited merely for the general law governing trusts. We do not find any case exactly in point with the case at bar, and it involves many perplexing questions.
This brings us to a discussion of the second proposition of law upon which the trial judge bases his judgment; that is, that the transaction between Columbian Refining Company and appellee Sapp amounted to an assignment of the trust fund to him. This is clearly an erroneous conclusion of the law under the facts in this case. To whom did the fund belong? Who had a right to make an assignment of the same? The trustee could not assign it; the beneficiaries of the trust might, under proper showing, assign it, but they are not made parties to this suit. Clearly the refining company could not assign it, for it had already assigned whatever interest it had to appellant. It is beyond reason to conceive how the Columbian Refining Company having parted title with whatever interest it may have had in the fund, by assignment to appellant, can again verbally assign it to appellee Sapp, and give to the second assignment a better title than it had given to the first. It would certainly be an admirable way for those of us owing debts to pay them, if this should become the law in Texas. The record clearly shows, and the trial court found, that the Columbian Refining Company had assigned whatever interest it had had in the fund to appellant by proper indorsement of the certificate for $4,100; said certificate being issued as a nonnegotiable instrument by the Planters' National Bank of Rosebud. But somebody must assign the fund, else appellee Sapp cannot recover. He is not beneficiary under the trust agreement; he does not take such by operation of the law of resulting trust; he has no proper assignment of the fund; he cannot recover herein.
Appellant had a legal assignment of the fund prior to any claim of appellee Sapp, either by garnishment or assignment. The trustee is not claiming that the fund should be assigned to appellee Sapp, neither are the beneficiaries. The beneficiaries are not parties to this suit. No claim is made that *Page 319 
either the trustee or beneficiaries had assigned any interest in the fund to appellee Sapp. The Columbian Refining Company could not assign the fund, because it had assigned whatever interest it had long prior to appellee's coming into the case. Appellant is entitled to recover.
It is therefore ordered that the judgment heretofore rendered affirming this case be and the same is hereby set aside, and the judgment of the court below is hereby reversed and rendered for appellant, Houston National Exchange Bank of Houston, and that it have and recover of and from the Planters' National Bank of Rosebud, Tex., the sum of $2,000, with interest to date of maturity of the deposit certificate at the rate of 3 per cent. per annum, and from and after that date at the rate of 6 per cent. per annum; and against appellee Sapp for all costs in this behalf expended.
Reversed and rendered.