*1 Ray, Law Texas under this rule. 1 McCormick admissible The lum- 797, pp. (2nd ed., 1956), 589-591. section of Evidence testimony limited. The company request that the made no ber point is overruled. admissibility points on the company has other The lumber not, arise not, probably will points need
evidence. These upon here. considered case and hence will a retrial of the judgments and the Court Civil of the District Court the District Appeals reversed, remanded to are and the cause is a new trial. Court for
Opinion delivered November 1960. Rehearing December 1960. overruled Al. D.
E. v. Frank G. Matthews, Jr., Et Omohundro A-7115. Decided October 1960. No. Rehearing December Overruled (341 401) 2d Series *2 Whitworth, Jasper, Fulbright, Crooker, Freeman, B. F. Vaugh, Jr., peti- Houston, Bates & Jaworski and W. H. tioner.
Lloyd Fellbaum, N. Matthews and Ernest S. Houston for respondents. opinion delivered the of the Court.
Mr. Justice Greenhill Matthews, Jr., Jr., Ray Thompson, Frank D. and James brought against suit E. G. Omohundro to recover an undivided overriding royalty interest each in a interest which l/16th l/3rd acquired Corporation. Omohundro from The Slick Oil trial court decreed that a constructive trust existed in favor of Thompson they Matthews to the interests claimed. The Appeals judgment. has Court Civil affirmed that judgments. here those 771. We affirm possibility record shows that Omohundro learned of the obtaining assignment (commonly “farmout”) called a Refining gas Company from Humble Oil of oil and leases Jasper County promise drilling opera- in return Thompson April, tions. He contacted Matthews and thought sufficiently pros- area inquired whether acquisition interests. Matthews and pective to of such merit geologists Omo- Thompson had been associated with were who investigation Upon previous data hundro in transactions. them, they promising. There decided the area available orally agreed testimony use their efforts to that three men development exploration of leases and to divide the obtain equally. profits agreed May
Humble, request, in a letter of at Omohundro’s assign rights gas leases several oil rights important area to Omohundro. reserved here. Humble Hughes One of B. such leases was N. lease. It was this principal operations conducted. were hereto then undertook to find a who con- *3 drilling drilling operations duct or finance the a well. Thompson Sharp. found such a Thomp- in Mr. Frank agreed Sharp son introduced him to Omohundro. to drill a well Hughes assigned on the Sharp tentatively lease. The leases were to overriding royalty being with an reserved 1/16th Omohundro’s name. 1955, acknowledged
In June of Omohundro the interest of Frank Ray Thompson Matthews and in a letter which read: Ray, “Dear This letter is written evidence the fact that you and interest, Frank each own one third and that I own a remaining overriding third interest in the royalty that is re- served to me my under the terms of Sharp letter to Frank W. under date of agreement June 1955. This letter and there- under were made under the terms of letter of Humble May letter to me under date of proper time, 1955. At the I necessary assignments will make the you upon your each to request.” Thompson alleged Matthews and petition that, their “Pur- suant Sharp wishes of and the between the Plaintiffs and Defendant [Omohundro], respective interests Sharp were [in taken in transaction] the name of the [Omohundro], Defendant and the well drilled was known Hughes the Omohundro No. 1 well.” Sharp dry well was and was July abandoned in of 1955. Thereafter, Omohundro, Thompson sought and Matthews others explore who would the land. This time it pro- Matthews who agreed pay who Mr. P. Owen He met with J. driller.
cured a assignment leases, at own to drill well his $5,000 for an overriding the reservation of expense, and to allow l/16th part in these took no name. Omohundro royalty in Omohundro’s negotiations. original York. was then in New who called Omohundro Matthews Matthews, mby ap- explained to hi he the matter was
When $5,000 paid Owen proved of the transaction. The agreed who, expenses, paying after his Matthews Omohundro ways. Matthews testified three to divide the balance money, royalty “as in the area with purchased other three getting agreed profit always up split from wells we had here, royalty it is not involved area.” That but drilled purchased paid actually it and Matthews is relevant placed check, royalty name had the Omohundro’s his but together good keep group and to show faith.” “to again alleged Thompson pleadings of Matthews assigned conditionally “and leases had Owen that Humble been * * *” partners override and that retained 1/16th plaintiffs defendant were taken “in the name interests original agreement in accordance of E. Omohundro G. parties hereto.” between executed a written as- December Omohundro On assignee Thompson’s signment to Matthews’ l/3rd overriding" royalty and in reserved the re- each interest *4 acknowledging
versionary interest in the Owen transaction reversionary royalty equally interest were owned that such by the three them. contention that this ended his associa-
It Omohundro’s was Thompson, jury found other- with Matthews and but tion agreement was not terminated mutual It found that the wise. 14, 1955, and on March on December existence consent 23,1956. dry abandoned on December well was Owen Sharp nonproductive, wells in- Owen were
1955. Since substantially. All of leases in the area declined Humble’s terest lapse, parti of the farmout area were allowed to with in this consent, delay as their rental dates were reached. Omohundro’s The Hughes expire due on March lease was expiration 1956, prior in March of Humble’s Earlier tract, Corporation Hughes Oil on the Omohundro Slick lease agreed (hereafter Slick) that would obtain called Omohundro overriding return an leases in the area Slick in l/16th royalty decided to receive. Later Slick which Omohundro was agreed to use its the leases. Omohundro own landmen obtain to assist them. consent, 24, 1956, Humble, March On with Omohundro’s days Hughes 28, 1956, expire. allowed its March four lease On Hughes
later, Slick secured a lease on the and other tracts which assignment had been contained in the farmout from Humble assisting Slick, May in its Omohundro letter of 1955. In Omohundro used information he had obtained in his association negotiating Thompson. with Matthews and He used in copy well-log Sharp Slick of a of the which he well borrowed Thompson. Thompson from formed in- Neither nor Matthews were negotiations between Omohundro and Slick. 28, 1956, overriding On June Slick transferred in- l/16th terest Thompson these tracts to Omohundro. Matthews and point nothing they out that since knew of the transaction Slick consummated, agreement until was there could have been no between them and Omohundro whose name as to such interest Thompson would be taken in. Matthews and claim in this suit they that are each entitled to a one-third of the interests thus acquired by among allege, pleadings Omohundro from Slick. Their things, joint venture, other breach of confidential relationship, knowledge use of joint obtained in the venture to private advantage, obtain a paid by and that the consideration overriding royalty Omohundro for the from Slick was l/16th knowledge acquired joint enterprise from the which was the joint enterprise. among jury found, things, Omohundro, other Mat- Thompson thews April, entered to use development
their efforts obtain of the area described letter, in the profits Humble farmout and to share all and bene- equally; fits did not separate enter into a series of agreements; solely equally was not to share overriding royalty in the interests Sharp reserved in the *5 wells; agreement Owen length that such was to extend for such any parties of time as of the owned interests in the Humble leases; farmout that the parties between the had not agreement, been terminated mutual had performed, not been was in 23, 1956; force December and on March purpose fully efforts had not been com- abandoned; dry pleted well found be when Owen Hughes expire to Humble to lease that Omohundro allowed comply by nonpayment of rentals in order to with his n Slick; and materials that Omohundro used information Thompson to induce acquired in his activities with Matthews and him; failed to and that Omohundro make the deal with Slick negotia- give Thompson of his a full account to Matthews tions after March with Slick until Act, here, provides applicable in section Trust The Texas as consisting of, to, shall a trust in or real 7 that relation created, or declared a written be invalid unless established The Act in section 2 defines trust as follows: instrument.1 “ express purposes this Act means an ‘Trust’ (1) or trusts only, resulting does not include [*] * * express, resulting, con- Act not define terms does express provide section trusts It does
structive trusts. ways, particularly specified none of which may in six be created of this case. fits the fasts assume, pleadings however, under the of Mat- shall
We express Thompson created when that an thews transactions) Sharp parties (the and Owen allowed leases agree- “pursuant their placed name in Omohundro’s be question the matter then arises whether that ends ment.” The says oral trusts shall the Texas Trust Act which under apply says to construc- also that it does not That Act be invalid. resulting trusts. A constructive trust is not inhibited tive or nothing or limits the in the Act which restricts it. There meaning trusts” under the of “constructive law had by the courts. previously defined been may a constructive trust question arises whether So unjust of one in imposed prevent enrichment confidential though relationship perform an un refuses to even Taking step further, case one trust? enforceable prohibit Act to courts from de intention of the Trust it the claring when, a constructive trustee had the Omohundro agreed, declared to been con not so Omohundro Gray that under Mills v. other trustee? We think structive below, such is not the intention of out the Act. set authorities enforcing courts, doing, will not be an oral so contract but 7425b, Civil Statutes Texas Annotated. Vernon’s 1.—Article
373 enforcing the violation a constructive trust based will be of unjust fiduciary duty prevent to enrichment. not, trust, arise like an A constructive trust does to It im of a manifestation of intention create it. because holding posed by property the title to law because profit wrong unjustly if by a or enriched he were would would be among things, permitted used, keep property.2 other to It is rights rules, adjust partners.3 to The same basic in situations here, apply as we to venturers.4 allegation of, of, presence That the imposition property prohibit to to title does not (if imposed) illus constructive trated it would otherwise be Gray (1948), the decision of this in Mills v. Court 33, applicable here, 147 Texas 210 2d 985. As the facts S.W. there these: Eva and Ben were Mills had a homestead on Broad way They daughter: Ben, Jr., Mabel, had 3 sons Street. George, Harry died, Mills. The mar husband and Eva then .Gray. Gray ried LJ. Thereafter Eva and J. L. had marital diffi They culties. conveyed and the other three children the Broad way house, condition, son, Harry without written fourth Eva’s Harry. Mills. There was no written Eva and Gray L. divorced, J. they were then later but remarried. While divorced, Harry Broadway were sold the house on purchased a pur house Riverside. The Riverside house was part chased in with funds from the received sale of the Broad way house and funds opinion furnished Eva. The of this says: Court then respondents “The Gray alleged and J. L. et [Evan al.] attempted prove, Broadway property conveyed Harry only Mills plan settling G. accordance with the community Gray, affairs Mr. and Mrs. and that it was understood all property concerned that held by him in trust for the benefit of his mother and the other children, and that after reconvey divorce he would * * her, sold, or if he proceeds would divide the *. petitioners [Harry
“The Mills et denied the existence al.] Restitution, 2.—Restatement 194; Law of section 160 and section Restate- 44, ment of Trust Statement 45. —Logan Logan, (1941), 40, 507; 3. v. 138 Texas 2d S.W. Murrell v. Mandle- 22, (1892), 880; 282-284, haum 85 Texas Partnership, Texas Jur. section 200, Partnership, 103; 507, 40 Am. Jur. Partnership, section 68 C.J.S. section 72. Hull, 39, v. 265; —Fitz-Gerald at 30 Am. Jur. quoted Hull, supra. section in Fitz-Gerald conveyed alleged Broadway a trust and support Harry that he would Mills under an G. *7 * * * the a her home and furnish and maintain his mother * * * willing ; ready, that was able of her life he remainder * * agreement carry out his existed, alleged any the same Harry “if Then Mills that under was unenforceable was an trust” which void In the of Frauds. of the Texas Trust Act and Statute section 7 Gray prove the existence al. tried to jury the Eva et trial before agreement by offering and under- the the evidence of of standing “prior conveyance the at the of of to and time the testimony ex- was Broadway property Harry The Mills.” G. conveyed property cluded, jury the and the found mother, promise Harry to care his in return for his Mills opinion then Gray. of this states: Court Eva the remanded Appeals reversed and of Court Civil “The * ** testimony was theory upon that the excluded the judgment agreement, if es- that the that court concluded since admissible not af- tablished, and thus was created a constructive trust at 987. by the Texas Trust Act.” 210 S.W. 2d fected discussion, judgment of this Court affirmed After full agree- “Ordinarily parol Appeals and said: of Civil the Court grantee grantor property con- and a between ment ** * can- veyed trust which held in trust shall be * ** exceptions. . has But rule its not be enforced principles these concluded: “Under The Court [discussed arrange- family purported opinion], if the true, a trust would had ment been established relation between arisen reason have confidential of prohibition not fall within the of Statute testimony therefore Act. The of Frauds or the Texas Trust erroneously trial 210 2d 988 and excluded court.” holding Gray rules is in accordance in Mills v. provisions of to section in other states. Most them similar 7 of their of Frauds.5 of our Trust Act in section Statute 7 adopt reason, of Texas did not or enact section of Statute 5.—For some Gittard, Texas,” “Express 21 Texas Law Rev. Frauds. Oral Trusts Land courts, Frauds, (1943). our Texas did not have section of the Statute Since Act, equivalent, hesitate enactment of its Texas Trust did not before the of a venturer hold for the benefit of enforce an oral App. 1940, Sec., (Texas 598, ref., e.g., v. Gardner Civ. S.W. 2d all. Newton part: of Frauds reads Seeton 7 Statute ** * trusts, declarations, all “That or creations or con- tenements, fidences, any lands, shall mani- or hereditaments writing signed by party proved fested and by some who * * * law or else shall enabled to declare such trust utterly void and none effect." Among approved by authorities cited this Court light Gray, Mills v. in the of the Statute of Sections 7 Frauds Act, following: and the Texas Trust are the “There are numerous cases to the effect that where at time of the transfer the transferee was in confidential relation transferor, promise and the transferor relied his oral *8 land, reconvey chargeable to he is of constructive trustee the land for the transferor. In is con- these cases it held though imposed structive trust will be at even the time when acquired he promise perform the transferee intended to his guilty acquiring it; and was not therefore of fraud though advantage and even of the improper the transferee did not take procuring confidential relation in the transfer and was guilty using not therefore of undue The of the influence. abuse confidential relation in merely these cases consists in his failure perform promise.” 253, his 1 Scott on Trusts section 44.2. opinion The quotes also Jurisprudence 178, 54 American section 233: conveyance “A constructive trust arises where is induced agreement fiduciary on aof or confidant hold in trust reconveyance purpose, fiduciary or other where the or con- relationship
fidential upon grantor is justifiably one rely agreement can and does and where the breached, is since the breach of confidence, is an abuse of the and it necessary is not to establish such a trust to show fraud or intent perform not to tendency when it made. The is courts to construe the term ‘confidence’ or ‘confidential relationship’ liberally against in favor of the confider and confidant, purpose raising of a constructive trust on a betrayal violation or thereof.” n.r.e.; Thompson Corbin, App. 1940, 157, history; v. Texas Civ. 2d no writ Forgerson, App. 1937, 885, dis’d.; Grennan Civ. Texas 101 S.W. 2d err. Martin Co., 1935, App. Texas agr., v. Looney, Texas Civ. 89 2d dism’d and Lanier v. App. 1928, 2 Comment, Texas Civ. S.W. 2d err. ref’d. See also “Con- Act,” structive Trusts Under (1952), Texas Trust 6 Southwestern L. J. 99 Comment, “Resulting Realty,” Baylor and Constructive Trusts 1 L. Rev. (1949). quotes 44 of the Restatement opinion section also
Trusts which is to same effect. d., following the Restate- Comment from section pertinent: particularly of Restitution ment purchase orally land one undertakes “Where urged enforce another, may that the other cannot behalf a constructive trust because the is no undertaking is and there oral of Frauds. compliance provisions with the Statute enforcing objection is that other is not The answer to this contract, enforcing based but is a constructive trust oral duty. fiduciary the violation of per- applicable one “The in this where rule stated Section another, agrees purchase whether property on son behalf other, purchase or in his it in name of the he undertakes added.) name, (Emphasis or in their names.” own in- jurisdictions in cases from Illustrative cases other (Miss. 1942), volving Sample similar facts are v. Romine 1928), P. Kirkpatrick (Okla. v. Baker So. apply there trusts held to where Constructive have been spite promises, a number promises, oral or in of oral been *9 conspicuous Perhaps of such cases the most related situations.6 dealing partnership property.7 those with are many legal Act, that husband as and an Law of law, p. 6. 45.2. Oral —See, writing, VII, resulting “Since 1943 the “Accordingly, W. 0. makes the the courts will the wife title Trust of at express e.g., conveyed community Texas” p. in trust but Huie, XII. or constructive.” Ames, had situations where following Land,” trust (appearing in for the community. orally although Act does not apply be able “Constructive discussing Texas Trust Act in favor of the 20 Harvard L. Rev. 549 observations: agreed it was held land to the (Emphasis reach the same the influence of trust an oral at Vol. Trusts has community time that added.) resulting Vernon’s Texas Civ. Stat. Ann. wife, Based required a result now (1907); gift Upon trust was Huie, could be established conveyance and constructive presumption would law on “The [1] Scott by Breach of enforced Community classifying community that presumed trusts could be rebutted she would Trusts, trusts, prior by an of land be when the trust Property evidence Express section 1951), hold in it supra members 7. regarded —See, has been Note e.g., as held in trust as cotenants 3. brought 32 Texas into the Jur., 282, for the some partnership firm at 283, Partnerships, and not all of [**] * though or them.” See also by operation section 40: "Land will title be held of law cases cited where cir exists when and confidence relationship of trust a That MacDon under clearly established present here is cumstances 334, Fitz- 2d 616, 180 S.W. (1944), 142 Texas Follet ald v. 256, 2d 39, 237 S.W. (1951), 150 Texas Hull v. Gerald 2d 93. S.W. (1954), Bolin Smith the enactment decided before Follett was MacDonald v. constructive that a However, holds case Texas Trust Act. and stands similar are arises under facts which fiduciary similarly are parties situated proposition that Follett, MacDonald There of trust and confidence. status gas procured for negotiated lease agents, an oil and as agreed overriding royalty themselves l/32nd agreed the two expired. testified that Follett The lease to share. to sharing the same the lease with for a renewal of work got took the override renewed but the lease MacDonald ovrride. expired. But also before name. The second lease in his own procured a did, up “top leases” and MacDonald worked l/32nd Hickman there held for Court: override. Justice arriving experience difficulty at the conclusion no “We * * * relation of establish that a the facts narrated above and MacDonald Follet trust and confidence existed between top at 337. prior the 1938 leases.” 180 2d to the execution of that, here, relation held, applicable “If a then The Court Follett MacDonald and of trust and confidence existed between leases, overriding royalty under the 1937 reference to the with relationship' leases executed then such was carried into during relationship.” at the existence of that Jurispru- approval Pomeroy’s Equity quoted The Court dence, (4th ed.) in a the effect that section lease, fiduciary not, during of a relationship the existence could the exclusion of his take renewal thereof for his own benefit fellows, all. The that a taken but lease so inures to benefit alleged trust. held that facts raise Court relationship and a constructive A of trust and confidence together to exist went were also held where gas procure exploration oil and leases of “farmout” obtain *10 (1954), Texas under a v. Bolin 153 written Smith 93, leading the of Meinhardt which cited case S.W. Salmon, N.E. 62 A.L.R 1 249 N.Y. an- the result above contends that Omohundro’s counsel (1951), Hull nounced v was foreclosed Fitz-Gerald opinion. 2d 256. do not so Because We construe the trust, the court there held that un- there was no it was necessary question presented. to decide the the here Moreover principles are, large measure, set out herein in a the same those relied in that case. case, dealing joint
In the Fitz-Gerald adventurers were gas in oil fiduciary duty, and In leases. violation of his of one appropriated gas the members to himself an oil and lease only that, exclusion of his associates. Not his own name in violation of his he took the lease in
promise to his associates that affixing he would take it in their names. In a constructive trust, this held: Court petitioner “Under such state of facts when the took title to property in his promise, own name in violation of his original agreement parties-, made between he held the title to an of, undivided one-half interest for the benefit for, respondents. This trust arose not because there any for peti- the title to taken in be the name of tioner, property to be held him in trust for the re- spondents necessary be to constitute an —as —but, protect facts, because under equity would raise the trust rights respondents, prevent unjust and to of petitioner by enrichment promise his duty violation his respondents to the and to take them, title in the name the three profit their mutual advantage.” (Emphasis added.) 2d, at 259. here, So enforcing agreement. parol Court is not It enforcing1 arising by operation constructive trust of law prevent unjust through enrichment obtained the violation of fiduciary relationship. The fact that much the same result may be itself, reached is not fatal. The Texas Trust Act as in the case of Frauds, provides Sec. 7 of the Statute that it does apply arising by operation law; i.e., to trusts to construc- resulting tive and In the trusts. The authorities set out above so hold. Fitz-Gerald, cases of Omohundro and were joint adventurers relationship. and both were in a confidential duty in each acquired instance is that profit advantage. mutual instances, In both the one would unjustly wrongful above, enrich his own act. As stated “This rule stated in this applicable Section where one agrees purchase property another, he behalf whether purchase undertakes to other, in the name of or in his- *11 Trusts Restatement name, joint names.” in their own or 194. Sec. a leases as Having holds that Omohundro decided of the extent to the trustee, question as arises constructive courts Thompson the leases. interest of Matthews equally participate they to are tntitled held that
below have result reached partners This as in the venture. Hull, and Fitz-Gerald in MacDonald v. Follett this Court oil-and-gas-lease affixed in supra, trusts were where constructive argues Matthews situations. But' Omohundro farmout they i.e., any cash Thompson to restitution: should be limited might the reasonable value put and to into the venture sub none of the services; entitled to their and that are in trust. property held appreciation in of the stantial value assets restitution of many There are situations equity quo and does amounts to restoration of status that, among hold parties. are authorities which the event, And there money limit of the any is the restitution of advanced recovery permitted.8 says p. 248: who at
Omohundro cites 1 Trusts Scott express performance trust because “A cannot enforce ought retain allowed to of the statute of frauds. But B not to be enrich himself at A’s land thus his of faith to breach trust, should expense perform he reconvey- If he not A. will A, it until recovery land and to hold made to be true, may by A, means A. it is ance a constructive trustee for get that he of this the same relief this is a trust. But secure the enforcement of the specific per- purely His is not for accidental coincidence. bill express trust, formance of the for the restitution but quo.” status by Ames.9 But quotes an article here the above from
Scott points injustice the trustee is able out is done if Ames great profit materially upon appreciation in value of the statutes, where, despite Likening land. to that situation reconveyance is found require deed the courts to of land when money), mortgage merely (and the credit or return Ames, Upon Breach of Trusts Based 8.—See authorities an cited in “Constructive Land,” seq. Express Ames L. Rev. 549 et Professor Oral Trust of Harvard disagrees with limitation. this —Ibid., at 551. grantor amount due pays tenders the says, if Ames “But grantee to shockingly unjust grantee, it would grantee, cannot says ‘We keep Equity therefore the land. you recovery, if will your promise compel you perform but *12 grantor you word, received keep your the what not surrender to Obviously this reason your promise.’ him the faith of from on mortgage equally cases, ing, is justifies the result in which upon trust cogent conveys an oral in A to B in the cases which * *10 reconvey to general any rule lay unnecessary find it to down We case, quo of regard restitution, in this status to because sharing. only The value equal an joint is that of adventurers overriding roy- given an to Humble for the farmout leases alty joint venture to obtain it efforts of the retained and the than it did production. This came no more from Omohundro knowledge potential value of the the others. from Omohundro’s two Thompson and Matthews. Those came from leases Hughes drilling Sharp who did the obtained and Owen log showed to Sharp The well which Omohundro tract. any of Thompson. from There is no evidence came Slick put any money Indeed three into the venture. Omohundro received repaid expenses $5,000 the three his from the concept assignment by A fundamental from the them to Owen. unjust prevention is enrichment. constructive trust case, peculiar circumstances of this facts and Under trust the courts upon imposition think we constructive correctly to share adjudged the venturers entitled below sharing venture, equal equally profits in the from deriver overriding royalty were in the derived from Such Slick. imposition in results of the of constructive trusts Fitz-Gerald Follett, supra. Hull, Bolin, in v. Smith v. and MacDonald failure of objection next relates Omohundro’s requested inquiring special issues he trial court to submit which Thompson informa used confidential as to whether Matthews or argument belonging their consent. tion to others without hands” and Thompson have “clean is that Matthews do not employed Thompson had so cannot recover. and Matthews been investigated purpose area for the by companies had Ibid., only money paid p. question into a venture 553. The of restitution 10. — is money example, gives beneficiary pays nothing. complicated A For where convey purchase upon promise land A owns to to C. Or B to land B’s oral to promise convey conveys to hold it B’s to it to C or it to B oral says can if a confidential C enforce a for C. The Restatement Restitution, relationship section 183. A and B. Restatement of exists between of Civil ascertaining Court possible productivity. its any informa- show that Appeals held there was no evidence for- acquired and used was Thompson or Matthews tion which It also held it. made use of them at the time bidden them, Omohundro if it that even were forbidden position complain. no properly Appeals holding of Civil The latter Court asserts, that one who true, It states the law. is Omohundro seeking rule is hands. The equity must with clean comes come Pomeroy page at 99: in 2 however. As stated absolute opponent party suit, complaining that his “The the latter’s conduct court with ‘unclean hands’ because of litigation arose, or with which it transaction out of which connected, injured must that he himself has been show *13 principle conduct, justify application of the wrong himself case. The must have done to the defendant been party.”11 and not to some third
Any improper em- use of information from their obtained by injured ployers Thompson rather than Matthews or aided recovery prevent here. Omohundro and will not Finally, jury’s it is contended find Omohundro ings special supported by clear certain issues and are convincing jurisdiction evidence. of these This court has no questions. sufficiency evidence, The far as of the in so measur ing weight fact; preponderance, question its is a and jurisdiction questions. this court has no The over fact clear convincing measuring is test but another method of weight evidence, question. of the credible and thus is also fact Harder, Sanders v. 2d 206. judgments
The of the courts are affirmed. below Opinion delivered October dissenting. Smith, joined by Griffin,
Mr. Justice Justice dissenting opinion 5, 1960, delivered on is with- October following drawn and respectfully in lieu thereof the dissent filed. 328, Equity, 474; Equity,
11. —See also 19 Am. Jur. section 30 C.J.S. section 98. findings jury disregard petitioner’s motion to judgment been and for non obstante veredicto should granted. points now con- first That motion two embraced points petitioner’s application of error. The tained in for writ are follows: ONE
“POINT overruling petitioner’s motion for “The trial court erred in judgment made and the contentions non veredicto obstante alleged respondents seek estab- therein trust which by parol in violation lish and created enforce is 7425b, commonly the Texas Article known as Section 7 of Act, Appeals in not so Trust and the erred Court of Civil holding. TWO
“POINT overruling petitioner’s motion for “The trial court erred in judgment made non obstante veredicto the contention undisputed each therein that and admissions evidence respondents respondents conclusively and both of establish that belonging used confidential to others without information consent, permission authority of such of the true owners information, performing claim en- the service which based, recovery titles them to the trust their1 respondents clean hands have not court with come into any of the doc- equitable are barred from relief virtue hands, Appeals trine of erred in clean Civil Court holding.” not so *14 granted parts of pertinent The writ was on Poine One. The Act, Texas Trust read: Article 7425b—2 7425b-2, “Article trust. Definition of “ purpose an trust ‘Trust’ Act means for the of this resulting only, (1) or trusts.” does not include constructive Requisites “Article a trust. 7425b-7. following by may created one
“An or means methods: by writing the owner A in “A. declaration [Omohundro] person, another he as trustee that holds it for Thompson, Ray persons, Matthews, or James D. and another Jr. [Frank *” * * persons person or [Em- Jr.] for himself
phasis added.] The court states that:
“* * * may question a arises whether constructive imposed prevent unjust confidential of one in be relationship enrichment perform an though even refuses express trust?” unenforceable significance to the fact
The court seems to attach some a Granting not Trust Act. constructive trust is the Texas inhibited not, it I contend that there must be evidence probative force than has ren- other been evidence sup- simply dered does ineffective the Act. The evidence port position. the court’s no than the There is evidence other agreement. verbal The verbal is unenforceable authority support- view the Trust Act. There is substantial ing my An contention that: contract cannot oral unenforceable be the basis constructive trust. legislature adopted policy a definite it when enacted legis- the Texas Trust Act. The statute is clear. No doubt the lature realized provisions some cases invoke the injustice Nevertheless, the Act an question would result. legislature good enacting whether the judgment exercised the statute is not for us to speak- decide. Chief Justice Hickman ing Upson for the court Fitz-Gerald, in the case 147, properly said: “Generally, when a plain, court is called to enforce statute, gives valid question no consideration whatever of whether its appears injustice enforcement to work an case before it. To determine the wisdom vel non of a statute judicial not a ‘Equity law,’ function. familiar follows the is a maxim.” give This equitable merely court cannot an remedy because legal remedy statute, respondents has been denied the this undisputed and trust, facts in this case. A equitable remedy respondents is not available
reason legal that remedy had a clear but the Texas Trust Principles Act. preserved by lawof can best be follow- ing prior applicable articles, decisions of this court. Review Law though even by authors, written precedential brilliant no have duty the in to follow law
value. Justice it is our dictates that light establishing remedy. in a rules declared the The must be according notion or sense of the law and not to our individual coin justice. of what is the from constitutes “Law abstract fixed, stamp mint, of with its value ascertained and government its current value. it which insures and denotes moulding system from justice The act of into rules detracts of case; capacity particular adaptation its of abstract in each usually law, case, applied the rules of are most to each when generally approximation justice. Still, but an thought of mankind rights by it better to have their determined rules, system justice, by as de- than the sense of abstract by any duty may man, men, termined set of whose one or adjudge have been to M. Roberts —Duncan them.” Justice Oran Magette, pleadings The court admits under the of Matthews that parties Thompson express an al trust when was created transactions) (the Sharp lowed the leases to be Owens alleged “pursuant Respondents placed petitioner’s in name. Sharp agreement between to the wishes of the said and the plaintiffs respective interests of defendant * * *” respondents, were taken however, the name The defendant place scope of
seek to the Texas themselves without by Trust Act and the decisions the settled law established though express by taking an position the courts that even case,1 present trust was trust established in the a constructive imposed may unjust con prevent be of one in a enrichment pleadings regardless relationship fidential of the fact only trust and con evidence show relation by parol fidence was established lished This evidence estab evidence. only trust, expressly express an forbidden which is respond 7 of Act. Section ents seek to Article 7425b of the Texas Trust In to be success establish an interest land. order ful, by an instrument such interest created or must be evidenced writing or trust must shown. Section the Texas Trust is in same Section 7 Act substance the English stautes, as those as well Statute of Frauds. These affecting many states, must lands require other trusts writing. proper created or instrument evidenced requires general rule of frauds is that where statute writing, an oral trusts to be created or evidenced cannot be promise purchase land another’s benefit express an as an have here enforced trust. We only proved fact, pleaded, found so was not but 1.—In by jury. *16 the trust under a constructive which cannot converted into any fiduciary for simply no in this There was basis evidence or case. peti- parties at time relationship the the between confidential Corporation to assist tioner made the it in Oil Slick Hughes taking after the in the area the new leases By pleadings and expired lease their on March 1956. or Special inquiring not submission of such Issue No. whether (oral) agreement Special made, Issues Nos. was duration, admitted- respondents and 3 as to its ly conceded only parties oral between the was the basis foundation of their claim. presence
The facts of fraud. in our do not show the case presence generally primarily “A constructive trust involves fraud, equitable in title interest view should be recognized i nsome other than the taker or holder of legal jury title.” evidence and the found that Our shows original agreement, only controlling agreement, under the purpose petitioner intent and transaction was that legal respondents peti- should hold the title for the use of tioner. present type
The facts the exact of situation that the Texas requires writing. Trust Act In we the situation here, equity has, does court enact- intervene. This since the ment Act, of the Texas Trust drawn the distinction between constructive purpose trusts and trusts. The the Trust prevent Act Therefore, was unfounded land. claims to requirement conveyances that all interests in land and of such writing. interests be evidenced instruments In view of plain language 7425b, supra, Section Article and the trust, of a definition this court has a fair drawn agreements and reasonable line between to take title in the agreements names of the joint members of a venture and to take title in parties the name of one of it in hold Hull, others. See Fitz-Gerald v.
Petitioner, pleadings, evidence, jury findings, under the equitable legal Hughes had dominion over the lease at all pertinent times.
The “Owen” well was last transaction between these parties. Respondents alleged petition subsequent their that a Owens, alleged deal made with J. P. and further that “The plaintiffs interests of (respondents) (petitioner) and defendant were taken in E. Omohundro, defendant, the name of G. in ac- parties original agreement between the (oral)
cordance with the agreement be- original, broad, oral Clearly, the same hereto.” claim that sole basis constitutes the tween Owen Well venture was still existence after Admittedly, the date of abandonment abandoned. between petitioner’s well, 28, 1955, transaction December the Owen *17 efforts, 1956, there were no in March of Slick agreement, respondents to were even claimed oral not Corporation Re- transaction. an in Oil interest the Slick have spondents con- original oral was did claim that the any fiduciary or Hence, confidential tinuous. there is no basis grant failing petition- relationship. in to The trial court erred al- the judgment non veredicto since er’s motion for leged obstante by parol in violation -trust created by 7 of of and was virtue Section invalid unenforceable 7425b, supra. Respondents the do not seek recover Article They investment). only (their of their reasonable value services seeking performance They specific not do seek restitution. are alleged agreement, peti- the of an oral the terms of which it in trust for the tioner was respondents. take title in his name hold Respondents performance this enforce cannot the trust because of Statute Frauds. 1 Scott Trusts, p. Wimberly Kneeland, App., v. 293 309. See Texas Civ. 526, 2d ref. wr. n.r.e. S.W. question is that undis- answer here the basic bring
puted facts this statute. case within inhibition There is no in or in for the statement the court basis fact law present in the case: enforcing agreement.
“So, here, parol not Court is enforcing operation arising by law It is a constructive trust prevent unjust through the enrichment obtained violation of fiduciary relationship. that much the same result fact may be [Emphasis reached added.] fatal.”
How, ask, may by operation I can a trust arise simply of law under the in this It facts case? cannot. Under fiduciary relationship- Texas Act no If the un- Trust exists. fiduciary enforceable relation- oral contract did not create the ship parties, part- between the then did? what Is so-called nership oral, based a written contract? No. The contract is unless fiduciary relationship- proved has facts been agreement, or circumstances other than the oral unenforceable legally the title to the involved cannot transferred respondents. from Omohundro to has said This never court
387 in case that the breach opinion down this was handed until be the construc- contract can basis of an oral unenforceable Bolin, Texas v. cites the case of Smith tive trust. The court agree I 93, support proposition. 486, of its 2d S.W. case, good law, facts in that applied v. Bolin is Smith as The contract certainly application here. it can but have no parol Here, contract rests that case did not rest on entirely evidence. subsequent upon parol The fact evidence. contract, whereby a farmout oral into transactions were entered obtained, divided, a letter of royalty payments were written, vary rule that there must transmittal was be a does not binding agreement acquisition of made advance Clayton Ancell, title. 2d v. Texas Miller, Whittenburg The contract must be an enforceable one. case, latter 502. In this correctly stating: court declared the rule lands,
“It is the of this well law state ‘that trusts as *18 by express those which are well as created contract as those implied law, which are not result construction of are frauds, within teh consequently statute of need not be evi- writing. proven However, denced in where a contract must be alleged trust, as a basis parol the and such contract rests on * * *’ evidence, subject the claim to land to the trust will fail. p. may T.J. In Sec. order a trust a that arise from contract, the contract [Emphasis must be an one.” enforceable added.] This rule was well settled oven before the enactment of the Coffield, Texas Trust Act. See Sorrells v. 144 Texas 980; Graves, 2d App., S.W. Miller v. Texas Civ. 2d 745, wr. ref. Here we have an unenforceable oral contract convey circumstances, alleged land. subsequent Under such the partial performance by possibly Omohundro could not have it statute, degree taken out of any per- the nor could have given rise a formance factual said: constructive trust. do not have We contemplated by situation such as Mr. Huie when he “* * * many in the situations where an oral prior trust was Act, enforced the will Courts be able reach passage the same result now of the Texas Trust [after by classifying resulting the Act] trust or constructive.” Surely, Mr. Huie did not mean constructive trust could predicated ever be upon an oral contract. unenforceable Not one case adoption decided since the of the Texas Trust Act supports the court’s Follett, decision. The case of MacDonald v. (1944), was decided before that a no doubt but There can be
the of the Act. enactment held, but so existed. This court relation of trust and confidence in Texas Trust Act been that had the it must be remembered agreement If effect, unenforceable. the oral would been Act testimony, Trust the Texas you eliminate the verbal any ineffective, there renders Frauds the Statute finding support a relation of evidence to Follett no evidence confidence existed? There was deciding question course, case. the court was Of holdings light In view of of the Texas Trust Act. opinion below, my had the Act been cases discussed supra, Follett, of MacDonald v. in force at the time of the trial necessarily that since the have held court oral, out of unenforceable was the constructive trust arose Act had been contract. It was unenforceable Trust [if proved relationship simply fiduciary because effect] agreements and Follett. solely MacDonald the verbal between Partnerships on valid en- must be ventures based contract. forceable Did the verbal question in MacDonald v. Follett was: question jury for the raise an issue relationship Under
existence of confidence? existing law, However, question pertinent. in view then Act, provisions question not the of the Texas Trust that is present fiduciary question relation- in the case. Our is: Has ship, confidence, the relation trust and been established evidence, circumstantial, other than the un- either direct or point out enforceable oral contract? The court has failed to repeat, such evidence. I there is evidence of such character no upon. rely *19 for the court to Sawtells, App.,
In the case of Tolle v. Texas Civ. 920, 916, ref., court that where contract 2d wr. the held the Frauds, taken out oral and within the of it cannot be Statute theory merely statute of a the on the based applica the on the breach of contract. This court “refused” the gave opinion tion for writ error. Such action of the Court Appeals opinion of an of this It be Civil status court. significant opinion came the of this court. all the more This given approved for the reason that this court the construction Hull, the case of Fitz-Gerald v. 2d 150 Texas S.W. by case, Appeals. In the law Court of Civil Fitz-Gerald dissenting clearly Smedley was Mr. in a declared Justice court, agreed opinion. speaking through Griffin, Mr. Justice dissent, with the but held that the facts from removed case Smedley in stated statute. Mr. Justice inhibition agreement had “that if the dissent that the court conceded his procure lease for the three petitioner been that should name, taking parties, have been title in his own would agreement not enforceable.” for an trust and v. Hull
Omohundro contends that the court Fitz-Gerald agreement B that B will held that if there is an buy A and between buys gas names, joint a noil their and B lease in name, at the time lease in his own a constructive trust arises take acquired B title of the breach of his because names; it in their if but no constructive trust arises A agree gas buy and B that B an oil own will lease his agrees money convey he will later A an interest therein. recognized This court the distinction the two between situations Fitz-Gerald, certainly by refusal then our of the writ recognized in the case such distinction. In Sawtelle we view of decisions, positive say these how can this court now Gray, case of Mills v. is con- trolling? principally proposition That case stands for the family relationship grantor the existence a close between the grantee finding and the is a sufficient basis alone for a confi- relationship. Gray, dential In Gray, mother, Mills v. Mrs. conveyed son, Mills, Harry her Broadway a house lot lay Street in Fort to be held him in trust for Worth the benefit of his conveyance mother and his brothers and sisters. The promise made without on a Mills that he consideration reconvey property Gray granted to Mrs. a after divorce was Gray. suit Mr. up between and Mrs. Mills failed to live his Gray and suit Mrs. followed. This was simply constructive trust. It was a trust intentional and, therefore, resulting law Gray trust. Mills v. resti- tution case. original One of the briefs filed in this case after the opinnion analysis was delivered makes an accurate of the Mills Gray case, adopt and I says: the same here. The writer “* * * gives money situation is the same as A where B buy property buys and B property in B’s takes it having name. A equitable furnished the is the consideration resulting owner and B is the conveys property If trustee. A B consideration, to without isA in the situation because same in either case legal it is A’s and B holds the naked title as trustee. many Gray There are cases like Mills v. where *20 a man recovers formerly land that he had owned and which through was taken from him fraud, promise, breach of breach gives a ground either rise to agency, some which or other a trust. or
suit to cancel
Robinson, example,
v.
quote
we
from Faville
“For
938:
227 S.W.
“
a
grant
faith
because
a
is made on the
‘Where
fraud,
necessarily a
promise
not
promise,
a breach of the
although
only
In
equity
promise
verbal.
tolerated in
deny the
cases,
as to
are such
where the circumstances
prop-
right
rescission,
impose a
equity
a
trust
will
wrongful
erty
defeating
acquisi-
a
as a means of
fraudulent
Gibson, equity
phrase
tion of the title. In the
Justice
Chief
trustee,
legal
a
procurer
title into
turns the fraudulent
get
Hoge Hoge,
(Pa.)
The court after other this ciples, held: purported principles, agreement and
“Under these if true, family arrangement a constructive had been established relation- arisen reason of confidential would have pro- ship which would fall with between the Trust Act. The hibition of the stautte frauds the Texas erroneously testimony excluded the trial court.” was therefore case, In this reached result that statute our court has *21 independent 49 Am. prohibits. facts. As said in There are no 535, p. Jur. Sec. 835: perhaps cases, equity astute in
“In earlier courts of were agreements laying hold of circumstances oral to enforce statute, operation take modern them out of the but approving adjudications opposite tendency indicate the endeavoring carry spirit wisdom of out the the statute and and intention as well as the letter thereof. equity
“The will modem rule is that a court en- before coming operation force an oral contract statute within the frauds, such as an oral contract for the sale of an interest land, protect rights enforce or asserted on the basis contract, an oral there must collateral circumstances suich constituting independent imposing obligation equity, an party protection conscience who seeks to invoke the of the statute.” judgments of the trial court and the Court Civil
Appeals judgment should be reversed and rendered that re- spondents nothing. take Opinion delivered December 1960.
Rehearing overruled December 1960. Company
Pan American Life Insurance Et Al v.
Mrs. Elizabeth Cotton Et Andrews Vir. No. A-7335. Decided November 1960.
Rehearing Overruled December (340 787) Series