Court Opinion

ID: 9769976
Source: CourtListenerOpinion
Date Created: 2023-08-29 15:10:01.325838+00
Date Added: 2024-06-11T07:31:09.572469
License: Public Domain

ON MOTION FOR REHEARING
We have carefully examined Appellee’s persuasive Motion for Rehearing, but we have concluded that our original opinion is correct. We simply do not believe from the state of this record that the findings of the jury can be relied on because of the admission of certain inflammatory, highly prejudicial and inadmissible evidence concerning the appellant’s personal habits. We have attempted to furnish the trial court certain applicable legal principles which should govern him upon retrial of the cause.
We repeat our firm belief that in a suit for an accounting brought by the beneficiary of an express trust, the trial court, without the assistance of a jury, can determine whether the trustee’s actions are in violation of the trust instrument. In this connection, we have pointed out the vital distinction between the kind of trust we have in this case (express) and a resulting or constructive trust, the very existence of which depends upon the determination of fact questions.
If the trial court should conclude that fiduciary breaches have occurred, then findings will need to be made as to the accounting aspects of the case. As stated in our original opinion, it appears that the trustee borrowed trust funds for his personal benefit and failed to invest substantial sums of trust moneys. But in view of this record, we are not prepared to so hold as a matter of law and we leave it to the trial court to resolve these questions upon retrial. Certainly the record leaves much to be desired with respect to the amount of recoveries sought by appellant and against whom such recoveries are directed but, as we previously pointed out, the pertinent accounting records should be made available by the ap-pellee upon retrial. Certainly a statement of accounts between the parties such as that sometimes performed by a court appointed auditor clearly seems appropriate. The accounts between the parties need to be stated in such a way as to permit the trial court to determine what effect the resolvement of the legal issues will have on the case. In this connection, we suggest that resort to pretrial procedure might be extremely helpful to the trial court as well as to the parties.
We are still of the opinion that the trial court’s failure to sustain the plaintiff’s motion in limine to exclude certain extraneous and prejudicial evidence constituted reversible error, especially since appellant had stipulated that no issues would be raised as to the matters covered in his motion. Counsel for appellee, however, has construed this holding in such a way as to deny him the use of any accounting information which could be used defensively on behalf of the trustee in stating the accounts between the parties. If there are any proper set-offs or credits with which the trustee is entitled, this, of course, should be taken into account by the trial court in his findings. Certainly the $4,077.04 which appel-lee says appellant owes him because of a transaction completely unrelated to the administration of the trust is one such item to be considered upon retrial. But this does not mean that appellee should be given permission to introduce evidence such as that introduced during the first trial of this case as to the appellant’s conduct which has nothing to do with the determination of the issues in the case.
For the reasons stated in our opinion, we do not believe the statutes of limitation can, under the circumstances in this case, bar recovery by appellant. But if the appellant were fully and fairly informed of the trustee’s stewardship and appellant failed to make any protest, then a fact question may be presented as to whether appellant acquiesced to the actions of the trustee. If, however, the trustee actually benefited by reason of the confidential relationship, we do not believe that appellant would be es-*447topped even though he acquiesced in the actions of the trustee unless such trustee had affirmatively made a full and complete disclosure.
Appellee again directs our attention to the exculpatory language of the trust instrument which relieves a trustee from liability except for gross negligence. Appel-lee contends that we have in effect held that such exculpatory language is unlawful, thus going contrary to the great weight of authority in this State which has upheld similar exculpatory language in other trust instruments. Our holding is not so broad and should not be so construed. What we have held is that the exculpatory language in the trust instrument here under consideration does not authorize self-dealing by a trustee. In view of the language of Section 10 of the Texas Trust Act, Article 7425b, we further express the opinion that the language of a trust instrument which specifically authorizes self-dealing by a trustee could present a serious question of public policy.
Appellee’s motion for rehearing is accordingly overruled. For the reasons stated above, appellant’s motion for rehearing is likewise overruled.