*1 Felker judgment favor of versal of the against F&D. STEVES, Aрpellant, Marshall T. and, dismissed; appeal of Johnston trial as between judgment of the UNITED SERVICES AUTOMOBILE ASSOCIATION, Appellee. things inis all Felker and F&D No. 7161.
Affirmed. Texas, Appeals Court Civil Beaumont. EXHIBIT 22, 1970. Oct. 12, 1966 “January Rehearing Denied Nov. Second Enterprises, “To: Center Inc. Court Gonzales Groves, Texas materials, agree
“I all or we to furnish
tools, labor, to construct and facilities
building proposed with the in accordance gen- consisting of documents conditions, specifications, drawings
eral prepared by Lowell
and addenda thereto as
Lammers, Architect. revision, agree per-
“Based on the following
form in or- amount work building on site put
der to an enclosed Shopping
of the Groves Center.
“Sitework, including drain-
age 11,000.00 $ 30,000.00
Roof and Roofdeck 35,000.00
Structural Steel 12,000.00
Glass, including doors (including park-
Electrical 35,000.00
ing) 28,000.00
Masonry 45,000.00
Structural Concrete and Slab 8,000.00
Plumbing (roughed in)
‡ A. R. “ /sJ n Johnston, A, R. Johnston_ [*] General Contractor ‡ n ‡ Street, Groves, 32nd Texas
“ Don Woods /s/ Enterprises,
Center Inc. Woods,
Don President T. C. Miller_
“/s/
Center Enterprises, Inc. Miller, Secretary C. and Treasurer”
T.
Statement Case of president Steves is and principal stock- private corporation holder aof as known Company, Steves Sash & Door Inc. Some years prior events, to our series of corporation had established prоfit-sharing a trust known our record as “Steves Sash Sharing & Door Inc. Profit designated Trust” (hereinafter simply as “Trust”), Steves, company of which attorney, company comptroller and the were acquired three trustees. Trust of 212.354 acres land of northwest San Antonio, approximately for per $800.00 acre or a for recited consideration of approximately $169,000.00,payable over a Thereafter, years. term of for reasons record, undisclosed in our the income of appreciably February Trust declined and in 1968,its auditor commented that the Trust probably insolvent. The auditor noted that with the install- principal ment of and interest due land, given purchase for the note obliga- Trust would be unable to meet its during coming year. suggest- He tions Beckmann, Stanard, Keene, Wood & dispose ed that the the non-revenue Trust of Antonio, appellant. San for Steves, producing leading land. actor Matthews, Nowlin, Bar- Macfarlane & corporation pro- in both the and the rett, Antonio, appellee. San for land, appraisal April cured an dated 25, 1968,showing it have a market value $1,000.00 $1,100.00 “from per acre.” KEITH, Justice. About November 8 or an archi- Appellant’s counsel, able true the tradi- approached concerning pur- tect tions of advocacy, effective takes us to task principal chase a then undisclosed in his motion for rehearing for some of the tract of land mеntioned earlier. Steves language we used in describing legal orally agreed upon and the architect a effect of the conduct appellant in this cash for the tract. is, case. The criticism perhaps to some money written earnest contract was entered extent, justified; and, to the end that the into between dated No- opinion may be as fair alike parties to all vember of the land. sale possible record, under our we with- In the intervening period (between Novem- prior draw the September procured ber 9 and 19), November 1970and substitute lieu thereof. delivery of a deed Steves, plaintiff below, appeals himself, bearing April from a the deed a date summary judgment еntered suit acknowledged by but it specific performance against defendant, grantors until This November 1968. United Services Automobile Association was filed for November record on (hereinafter called “USAA”). trustees, including three Authority, political Antonio River sub- the deed execution of
joined power cash eminent $212,354.00. No division vested with consideration total domain, him- had determined to take about 64 hands, obligated but changed purpose acres tract for out of the vendor’s pay to the holders self to public constructing making other dam on the the balance due liens *3 improvements in the the Trust area. Steves denies remainder Trust; and the due any of knowledge plans of San personal promissory by a represented Authority, and makes no Trust, bearing Antonio River given to the note Steves had that such knowl- and contention USAA per cent rate of at the interest 5½ entering into edge subject the before the in of except for the lien retained unsecured our of disposition of contract. Because best, prop- deed, on the at a second lien give grounds, on do cause other erty. of to this facet further consideration be- days later, formal Six case, parties although large devote both into was entered tween and USAA Steves part respective of their briefs to discus- to the land sell agreed wherein Steves sion of the matter. of consideration gross for the to USAA 1969, 1, tendered Before to June pause in to note $500,000.00 cash. We grantor him as a deed executed USAA of the earnest at the time the execution of and joined therein his wife and was ready pay money USAA Trust. He also tendered three trustees of immediately upon tender the consideration policy compliance in with his a title binder compliance by of deed and USAA obligation policy. a title furnish remaining agreement. in conditions pay or to accept the deed refused immediately, of taking Instead cash consideration, whereupon sued to sought of procured agreement the con- compel specific performance of closing the deal until USAA defer sрecially dis- doing, tract. so 1969, 1, attempt he might in order that June accept the alternate avowed qualify the transaction for consideration money in lieu of deposit earnest long-term capital Fed- gain as a under the performance. compelling specific regulations eral Income in Tax then effect. summary parties Both filed motions affidavits, At the time of the docu- making judgment supported the con- etc., ments, admissions, parties, forty- depositions, tract between the there were employees active that of granted nine that of Steves Sash & USAA was while Inc., judg- is participat- Door who It were Steves was denied. brings appeal. members in and ing beneficial owners of ment Trust; and, an exam- Opinion report ination of the auditor’s mentioned previously discloses that tract of land specific remedy performance involved herein accounted bulk of gov strictly is equitable is nature remark, the assets the Trust. We principles of erned the maxims and passing, that next annual installment 547, Bender, equity. Bergstedt 222 v. S.W. note grantors owed Trust to its Campbell (Tex.Com.App., 1920); 549 December, 1968, was not due until after the McFadden, 379, Tex.Civ.App. 31 S.W. 9 date of the contract between Steves and 436, ref.); Conat (1895, 442 error Nash v. USAA. ser, 512, 410 519 (Tex.Civ.App.— S.W.2d apparently Early spring Dallas, 1966, writ); Ferguson v. von no generated by the result publicity the Seggern, (Tex.Civ. 434 385 transaction, ref., App. Dallas, 1968, e.); notice came that the n. r. errоr — Service, 1, 408; Soil agency p. Conservation an 81 Specific Performance § C.J.S. government States, Performance, p. 6; the United Am.Jur., Specific San 49 § Performance, benefit, Specific is said to be uni- Tex.Jur.2d, absolute and § is subject qualifications versal. It no pp. 522-523. exceptions. gov important maxims of the more One “An of a trust rights “He seeks abuse can confer no erning remedy is that: who it, or, party equity”; abusing as sometimes equity must do those who equity privity claim in prin- comes into with him. It is a expressed: “He who ciple recognized cases, Riggins v. at clean hands.” law all must come with sus- ceptible being Trickey, Tex.Civ.App. brought ground 102 S.W. out as a Pomeroy, law, of action or of (1907, ref.); error defense in a suit at Ed., aрplication while Equity Jurisprudence 1941) its (5th equity courts of ” * ** 51; 44; Specific universally p. adopted 4 A.L.R. 81 C.J.S. 606; Tex.Jur.2d, p. Performance language Merriman, broad used in *4 Performance, 18, Specific p. 536. The § supra, has not been diluted during many rule was stated this court in Inman v. years following instance, its utterance. For Parr, (Tex.Civ.App. 311 709 Smedley Slay Trust, in v. Burnett Justice —Beaumont, 1958, ref., e.), error in n. r. 143 Tex. 187 S.W.2d (1945), 387 language: says that the general rule “is in its use specific is per- And, “In order to be entitled to fundamental.” on page 388 he formance one seeking remedy must continues: come into court with clean hands and the “ is ‘It a well-settled rule that a trustee equitable, contract must be perfectly fair profit can make no out of his trust. The in all its terms and frеe misrep- from rule in springs duty such cases from his resentations, fraud, misappre- mistake or protect estate, the interests of the hension.” not to permit personal his in interest to USAA contends that at the time Steves duty wise conflict his in that with accepted the deed from Trust the land respect. provide The intention is to suit,
involved in this
he
duty
breached his
against any possible selfish interest ex-
trustee; and,
as a
so it
argued,
he comes
ercising an influence
interfere
which .can
into court with unclean
agree.
hands. We
duty
discharge
with the faithful
At a time when the Trust was not in default
fiduciary
owing
capacity.’
which is
in a
on its obligations
grantor,
to its
Steves Magruder
Drury,
35
U.S.
S.
entered into a contract with
to sell
77,82,
151,156.”
Ct.
59 L.Ed.
the land for a sum
bring
which would
him
personal
a
profit
approximately $288,-
long
considered
list of authorities
supplementa-
so doing,
Slay
000.00.
in
needs
violated
most
the court
little
elementary
do, however,
governing
rules
the conduct
call attention
tion. We
Texas
adoption
trustee.
the fact that in the
Act,
incorporated
Legislature
The rule of
prohibiting
law
a trustee
Article
the statute.
this rule of law into
profiting
self-dealing
from his own
V.A.C.S.,
amended,
7425b-12,
pro-
now
corpus
with the
is set
of the trust estate
part:
vides
Russell,
out in the case of Merriman v.
(1873),1
39 Tex.
from which we
sell,
buy
shall not
or
either
“A trustee
quote:
directly
indirectly, any property owned
or
estate,
belonging
not deal
or
“The rule that a trustee shall
the trust
* * *
affiliate;
subject
with the
trust for
own
or to itself or an
of-the
or
Court”,
(1959).
1. The
fact
Tex.Law Rev.
ipso facto,
not,
Greenhill,
also,
“Semicolon
does
Court”
See
“Uniform Citations
deprive
precedential
Briefs”, Appellate
Texas,
Nor-
it of
value. See
Procedure
vell,
Appendix,
“Oran M.
and the Semicolon
Roberts
A.l
[3-4].
rigidity has been the at-
himself,
relative, employer,
Uncompromising
from or
associates;
equity
petitioned
titude of
when
courts
other business
partner or
y> n
n n
loy-
to undermine the rule of undivided
alty by
‘disintegrating erosion’ of
pro--
statutory prohibition echoes
This
*
* *
Only
particular exceptions.
Law
of the Restatement
visions
thus
the level of conduct
fiduci-
has
b,
Ed.)
p.
Comment
(2d
Trusts
kept
higher than that
aries
at a level
been
rеading:
trodden
the crowd.”
prop-
trust
to sell
power
“A
trustee
fiduciary
having violated
himself
sell to
erty
duty
is under a
relationship with
now invokes
auction,
or at
sale
by private
either
profit.
to collect his
aid of
chancellor
has a market
whether
inordinately
may appear
fact that such
not,
the trustee
or not
and whether
the fact that he now
large does not alter
thereby.
It
is immate-
profit
makes a
into court
unclean hands. We
comes
good
faith
the trustee acts
rial that
however,
not,
upon this
turn the case
do
himself,
property for
purchasing trust
alone, although
war
point
such would be
pays a fair consideration.”
and that he
ranted.
rule
applicability of the
The universаl
which the ac-
of Sale
The Contract
listing
brief
noted from this
may be
*5
required
tion is
to furnish
based
subject, each
upon
the texts
few of
insurance,
an owner’s
of title
policy
USAA
in
noted
standing
proposition
for the basic
good
warranty
“conveying
general
Bogert,
Trustees
Trusts and
Slay. See:
The
property.
title” to the
and marketable
;
p. 482
(2d
1960), 543(A),
90
Ed.
§
C.J.S.
ten-
title
binder which
insurance
303,
Am.Jur.,
seq.;
Trusts
471
54
p.
et
§
language:
dered contained
Trusts,
Trusts,
452,
359;
Tex.Jur.2d,
p.
57
§
Malinak,
162,
543;
Dealing
p.
“Self
accepted
and
“This Binder is delivered
Survey,”
Tex.Law
Texas
39
Fiduciaries —A
you
understanding that
upon the
[US
(1961).
Rev. 330
knowledge or in-
personal
have
AA]
lien,
defect,
any
objection,
timation of
America’s most
judges,
One of
illustrious
affecting
premises
said
encumbrance
while
the Nеw York
Cardozo
Justice
other than those shown under Schedule
Salmon,
in
Appeals,
Meinhard v.
Court
hereof,
your
B
failure to disclose
458, 464,
545, 546-547,
249
164
62
N.Y.
N.E.
render
personal
such
information shall
1,
concept
expressed
(1928),
A.L.R.
5
any policy
issued based
Binder
in
apt
these
words:
defect,
thereon,
such
null and void as to
lien,
objection,
or encumbrance.”
forms
in
“Many
permissible
of conduct
workaday
acting
world for those
at
length,
to those
arm’s
are forbidden
deed from the
to Steves
is held
fiduciary
bound
ties.
trustee
chain
title which would
a link
was
something
USAA; and,
stricter than
morals of
being
acquired
have been
alone,
place.
honesty
record,
the market
Not
but
charged
notice
with
punctilio
an
honor
most sen-
legal
and “the
effect
thereof.”
thereof
sitive,
Co.,
is then the
Royalty
standard of behavior. Cherry
Holding
Farmers
v.
908,
576,
As to this
developed
(1942).
there has
a tradi-
911
Tex.
160
138
Thus,
tion that
and inveterate.
unbending
charged with notice
USAA was
ref.,
1967,
Worth,
App.
2. Meinhard is cited
Hick
error
Chief Justice
— Port
reported
companion
Peckham,
e.),
man in Johnson
case
v.
132
n. r.
and the
Tex.
148,
Shamburger,
Langford
F.2d 939
392
120 S.W.2d
935 dis- in a latter a plain- the Trust constructive trustee for the with had dealt tiff, knowledge, manner; and, place Henry and to having posi- the same loyal consequences of tion after purchase. plain- his own charged with an- tiff question is had the wrongdoing. property tо have the Steves’ taken involuntary DeEverett v. from the hands early of this by the case swered trustee, claiming against : (1887) who was it Henry, S.W. 67 Tex. equitable (Emphasis by owners.” sell, trustee, can- power to “That a with Court.) himself, to divest so not sell as trust, ac- The text writer in Trusts is an que cestui title of C.J.S. p. need out the rule this lan equity, sets knowledged principle guage purchaser : property, “A with no purchase If does not be discussed. wrongfully acquired tice that his it himself, vendor a constructive he becomes from trustee, fraud; from as property himself takes the trustee, by his own made such subject equities to the same in the him, pur- as when and all equity treat will also, notice, trustee’s hands.” Humble holding See Oil from him with chasers Refining Campbell, original & Cо. v. 69 F.2d in trust for the Comment, Cir., 1934); (5th If 3 South beneficiary. [Citing authorities.] seq. western (1949). Law 209 et connected circumstances there are Journal Husted, it, Cf. Eaton v. 172 S. Tex. these are which validate sale (1943). W.2d part trus- proof matters proved, and purchaser. If not tee or The deed from the sale to nothing appears the fact of but record, being of notice to USAA of a trustee, himself “objection”, “defect” and as mentioned notice, him party a third binder, the title insurance in the title. void, and, if the sale must be held Thus, excepted the binder tendered purchaser against title the cestui asserts operation its very point under discus- que may the latter recover *6 here, invalidity sion the title as Steves’ * * * property from Therе him. a matter law. allegation the that knew of Henry ap- parties, decree created In the between the which the himself, pointed obligated individually, his had co-defendants trustees sale, property Warranty trust to deliver “a disposing by to USAA General * * * conveying and that he that had knew trustees Deed and mar- good these property sold the trust one of their ketable title” to the land. The to deed which number. But he these facts were in the tendered and which he force seeks to title, Henry’s line of by and he could not this action executed USAA was being Steves, it to grantors: trace back its source these “Marshall In- without T. directly wife, dividually, informed of their To existence. Allierose Patricia Galt allege Steves, Henry under Steves, Tracy the title which claim- and Marshall F. T. Kampmann, ed charge was therefore to him with Smith and Ike Jr., S. as Trus- trustee, Inc., that he bought notice had from a tees of Company, Steves Sash & Door sell, power purchased Sharing to who had the Profit Fund.” deed dat- This was property May trust ed from himself. It was some months after six charge him knowledge of the fraud recorded the deed which he had by procured committed Collins that rendered the from the trustees.3 Appellee’s points (Tex.Civ.App. counsel that to the fact writ — Amarillo dism’d).” language the tendered deed was not There is to he found (at pp. syllabus 854-866, alone but was from Steves and other in the cited case grantors. says Thus, 16) tending support he thе “is tender the contention so inadequate according law, However, particular holding as a matter of made. Huffhines, appear ap- to Bourland v. 244 S.W. does not to have received the disputes recognized fact that the three the of these beneficiaries No one the profits trustees, could have en- to the would realize from including Indeed, dealing with affi- tered into a contract with USAA. binding support davit in the trial court in convey consideration set filed the land for the contract, his motion summary judgment just (con- forth in tried the response to sidered the trial court as a to do for his own benefit. USAA, summary the judgment), USAA motion pursuant trustees to says this: entirely been have within would power authority the lawful of the trus- closing “Prior date as set But, posture tees. that is not the 1, 1969, meeting contract on was June Instead, pre- case as it reaches us. are myself held between the Trustees picture sented the as an indi- of Steves of the Steves Sash & Door vidual, negotiating a contract of sale Sharing Fund it Inc. Profit wherein was belonging land procuring to the agreed the Trustees of the Prof- between himself, deed from the and then trustees to they it Sharing join Fund would contract for his attempting to enforce the in as in- in the Deed with me Grantors personal profit. own convey dividually to this tract of land record not reflect uncon- Our does Automobile Association United Services recognition part ditional of Steves agreed necessary and it if rights beneficial owners of proceeds sale of this presented not with a Trust. We are registry paid would into the be reconveyed situation wherein had Court for a final determination as sought— the land Trust and then to the I, individually, whether or not representative as a the Trust and for its Profit Fund should Sharing receive benefit—to enforce the contract the de- proceeds of sale.” livery At of the deed from the trustees. best, perform- deed which he tendered interpleader proposed action obligation convey ance of his merchant- unequivocal recognition an title, may attempt- able considered as an Steves that the entitled beneficiаries were ed prior ratification profits to the bargain from his with USAA. deed, or a ratification the trustees of forty- It could in no manner bind the other attempted personal gain Steves’ at the ex- eight beneficiaries to the unaúthorized pense que But, of the cestui trust. sought pocket transaction wherein Steves beneficiaries, equitable owners of the prevented profits unless a court *7 land, did not therein join and we find the interpleader We have men action. judgment Steves seeking requiring USAA tioned earlier in this the rule pay to to him—and not to the Trust—a application universal that trustee’s prof the half million dollars. it the property the dealing with beneficiaries, Trust is property the It undisputed is that fоrty- there were not In proposing the an inter- trustee. nine beneficial owners of the corpus the pleader action, sought uni to make a Trust, of By which one. lateral determination that the beneficiaries token, same forty-eight there were benefi- accept prof would affirm the sale and corpus cial owners of the who had not in But, right any its. to he had make manner ratify been called to or binding upon the determination members disavow the acts of trustees in con- sharing Steves; and, profit plan veying the land was for to more im- —it there portantly showing was no decision, beneficiaries to make that proval writing upon holding. weight haps, overly is, per- the sub- to Bourlwnd ject support scоpe the authorities cited in in broad do not entirely statements there made do not base our add decision thereon. The chancery grant to the relief. in text writer As the Steves. C.J.S. spe- granting matter of decree for says: Trusts, p. 848 439§ performance cific of a contract rests rule, trust general where “As a This the sound discretion of court. traced, diverted, may be still has been judicial and must be con- discretion to an election has que trust the cestui set- trolled doctrines and established the trus- to hold res or follow the either equity. will tled relief principles of Such breach liable for the personally tee withheld, upon or a consid- granted, power trustee is without and the eration of all circumstances trust que deprive the cestui particular case.” supplied.) (Emphasis option.” Supporting rule enunciated above see: very have might well These beneficiaries Annotation, Tex.Jur.2d, 7; 52 65 A.L.R. transaction, although an un- repudiated this Performance, 21, 541; 49 Am. Specific p. § pursue event, determine likely Performance, 13; Specific p. Jur., knowledge of purchaser (USAA) Specific pp. Performance 417- C.J.S. See: the land itself. their to recover rights Wilson, 418; Fisher v. 185 S.W.2d DeEverett, supra, and the comment 1944), affirm (Tex.Civ.App. Dallas, — earlier. noted Law Southwestern ed, (1945). Journal 144Tex. 188 S.W.2d learned, bringing They may before have cause, arising In our consideration of this action, he be- learned before what Steves summary judgment, we as it does from a gan for this suit: USAA preparing laid down guided precepts have been the land for its home office intended to use American R. Great Greenhill Justice contemplated improvements building. Co., Sup. Antonio Ins. Pl. Co. v. San than would have cost far more USAA 1965). For (Tex.Sup., 46-47 and, land; obviously, if the benefici- instance, dispute tunately, in there is no accruing accept profit aries declined to as to the material facts. the record self-serving dealings, from his individually case is his keystone of Steves’ delayed the uti- would either be specific per claimed to a decree of pending lization of the land decision of and, crystal formance; clear that he it is suit, proposed subject interpleader or be seeks, is not entitled to the relief which brought by to direct action the benefici- ?,sneHr-,h3 (-erne t 6s consequence aries. No such should be purchaser visited on a when invokes upon the which declared specific equitable remedy perform- he, individually, negotiated had with US ance. AA, sought the aid of the court him, individually pay
compel USAA
plaintiff
per
suing
specific
accept
one-half million dollars and
formance of a contract is not entitled
grantors, even
showing
as one of the
him
right.
granting
relief as a matter of
by his
being joined
therein
the extent of
withholding
of the relief
rests
Steves, having
upon this
declared
wife.
*8
the sound discretion of the court. The
judicial
а
admission
has made
concisely
ap
rule is stated
in the second
attacking its
precluded from
and is now
Huffhines,
peal in Bourland v.
For,
269 S.W.
had oc-
recitals.
Walker
as Justice
1924),
(Tex.Civ.App. Amarillo,
186
recently in
v.
casion to observe
Gevinson
—
affirmed,
Oklahoma,
(Tex.Com.App.,
validity very he respectfully which I It must dissent. be remem sued and he tendered. which not bered was a trial on the merits be court, judgment fore summary but a USAA, replying Counsеl to Steves’ Both the trial court case. and this court rehearing, motion for takes issue aptly rules, obligated many are to follow the dissenting our brother question which are restated Green Justice Joe equities, any, may if which exist between hill in Great American Ins. R. Co. v. San co-trustees, the beneficiaries. or Sup. Co., Antonio Pl. paraphrase adopt such We comment. (Tex.Sup., 1965). opinion In that refer balancing equities theory does not ence is first made to Rule 166-A which touch, tangentially, even the issues involved provides judg is entitled to movant presented in this case. The case isus genuine ment if it is shown that there is no one in sought specific per- which Steves any issue as to material fact. formancе equi- contract. Whatever ties exist between and other parties, movant, “The burden proof is on the either his co-trustees or the beneficiaries of and all doubts as to the existence of a profit sharing are in- not matters genuine issue as to a material fact are parties volved this case. None are against [citing resolved him. cases] authority this suit and words, we have no juris- other the evidence must be viewed diction to light make determination thereof. party in the most favorable adjustment equities such must opposing [citing the motion. cases] * * * await a having determination a court All in the are conflicts evidence necessary parties before it the disregarded, and the whiсh tends evidence Thus, adjustment. the dissenting support position party op- true, point issue, does relating out what fact accepted posing the motion specific performance of Steves’ contract [citing cases]” USAA, presented could be or would summary In passing upon the motion for be presented for determination by the trial court, judgment by USAA, filed the trial court. above, obligated accept as stated say here, Suffice it to the uncontroverted as true the contained in the af- evidence record shows that not and is opposition fidavits filed not entitled to the sought. relief which summary judgment. such motion for So holding, the points brought other Tracy for- affidavit of in sub- F. Smith stated ward lose their so, effect. Even after an stance: That he is one of trustees for examination of such other points, re- Comptroller the Trust and Sash *9 main convinced that Inc., Steves was not entitled Company, charge & and in Door to any relief 1967, below and that the trial financial records. 1966 and made a disposition correct of the cause. Trust unable to make installment was year. due within was one statement payments due on 1, period of income for the of March question. Steves tract of land 212 acre 29, February advance- a net Company, made 1968 shows loss Door Inc. &Sash $7,539.09. such He advised sell it could make the trustees to the Trust so ments to $18,- producing such land totaled and invest advancements income payments. Such 22, 29, 1968, Addition- assets. In his letter of March February 705.26 as of 1968. stated, year thought on given “Some should payments al were due within one $17,144.20, transferring property the farm owned in the amount of notes financially the Profit Trust Sharing able out of the Profit which the Trust was CPA, Montag, Sharing Trust to either Marshall to make. Miller wrote or the 22, 1968, Company, stat- Sash Door a letter dated March Steves & Inc.” Smith ing removed such real estate should be The affidavit of Steves contained sub- recommendation, from the Trust. On that stantially following: That ishe Presi- Steves, conveyed land to Inc., dent Company, & Door Steves Sash individually. land The trustees had such he, wife, and and children all owned Leslie, $1,000.00 appraised Roy Jr., at 1, 1960, of the stock. March he executed per agreed transfer the title acre and the instrument creating the Trust. Febru- $212,367.00 30, April 1968. Steves 13, 1964, ary purchased the Trust April al- The deed was dated $169,885.60, $15,448.41 acre tract for paying though actually signed it was not until cash, a note assuming which there due on later. assumed the balance $43,340.70, awas balance of and executed $126,988.- the land and executed a note for $110,950.00. a new note in the amount of 77, 1969, paid January 30, plus which he The combined total due on both notes each $5,714.48 in told interest. Smith year $17,144.20. personally trustee) Kampmann, and Ike (the other Jr. guaranteed the new note executed. proposed they about the sale to USAA and Trust did not have sufficient funds to make urged proceed him tо executed payments February and as of the contract of sale to Before USAA. Sash & Door Inc. had date) (the the trus- closing June made advances to the Trust so *10 $500,000.00,
made an offer of positive which Steves tee. He stated that and irretriev- accepted later and the contract of sale was able part Guaranty commitments on the Co., prepared and Before executed. the exe- Abstract agent, & the to Title escrow contract, pay cution of such discussed Steves the registry into the the money trustees, court, the sale with the other and two court to determine what they urged go him ahead with any, the sale sums of money, if paid were be 1, 1969, and the Before Trust; contract. him and the arrange- that the June trustees meeting agreed had a and it was 1, 1969; ments had been made before June the trustees join would with as and Guaranty that Abstract & Title Co. grantors in a deed to USAA and if neces- had interpleader been instructed to file such sary proceeds of the paid expense. sale would be at signed Steves’ The trial court registry into the for a final and granting court entered an order defendant’s determination as get summary to who judgment would motion December proceeds. making After this Steves, personally, incurred an indebted- agree majority I with the that a paid ness and his off note the Trust for profit trustee self-dealing cannot with
this land. and not permitted Steves must Wood, However, аffidavit to do many H. con- so. equi- there are John Jr. tained the following, in adjusted That ties which substance: must be between Steves he is the attorney First, and this by representing Steves. Trust. the affi- shown 1, 1969, Prior to above, Steves and the davits personally guaranteed other June trustees regular meeting agreed pur- by note purchas- executed the Trust in price chase in the contract with this ing USAA was land. Then the & Steves Sash fair, reasonable and and by that the Door (wholly owned Inc. join would individually family) and in exe- Steves made advances cuting warranty deed to the Trust so the 1966and installments USAA. trustees knew the agent, Guaranty escrow on the paid. notes could be be- The Trust Co., Abstract & Title pay would came pro- insolvent and the trustees sold the ceeds land to jointly to them and a payment cash and made, severally draft, Trust, check or the note assumed and that it would be necessary note purchas- the trustees executed the Trust in land, Steves to tender proceeds ing paid were each At the sale full. into court to adjudicated point, have has some respec- rights tive Steves and the invested land. Steves executed a Trust. agent escrow had repeatedly sale advised under the and the trustees that proceeds obligated terms of which himself to fur- would be paid to the trustees nish an Policy Owners of Title Insurance Steves could get any part good and a money marketable title the land without ob- taining question. acquired order. If Steves title under the deed from the such December judge trial entered conveyed by title would be the deed ex- an order permitting Steves to sup- file a individually ecuted him and tendered plemental petition in reply to defendant’s If the title USAA. Trust still had answer and defendant’s motion for sum- this land after the deed mary judgment. This supplemental peti- conveyed title would be deed ex- tion contained an signed affidavit by Steves ecuted the trustees and tendered to in which he swore personal that he had provided USAA. The Trust Indenture knowledge of all the alleged facts that the title to all the assets were same true and correct. Trust would be vested in the trustees. Among allegations, other Stevеs denied Such Trust specifically Indenture gave any breach of his fiduciary duty as a trus- rights, trustees all of the powers and au- *11 provisions of Section thority under V.A.C.S., 7425b, which include
of Article dispose of real estate. to sell and reads Indenture
Paragraph Hof such
as follows: the Trustees dealing with
“H. Persons applica- see the required
are not the Trustees by
tion made property received
funds or other persons.”
Trustees from such in- my opinion the deed from Steves
dividually Binder, complied
together with the Title plead-
with the terms of the contract. arrangements
ings and the affidavits show pay made to
had been registry
into the escrow Linden, Birmingham, appellant. Neal Guaranty agent, Abstract & Title Co. be- adjust equities could Such court Lee, Boston, Sidney appellee. New parties to it that tween and see profit self-dealing did not from his FANNING, Justice. and remand this trust. I would reverse corpus pro- original This is an habeas for trial. case Arledge
ceeding filed in this court. Gussie proceedings in this court original filed the custody when she of the Sheriff Texas, admitted County, and was Cass This cause was to bail this court. regularly set down submission Re- argument for oral 1970. October lator, duly filed her brief Arledge, Gussie Re- opposing —no has been filed. parte brief Ex Gussie ARLEDGE. orally attorney duly appeared lator’s No. 8017. appeared argued Relator relator’s cause. Texas, Appeals Court of Civil appearance person. There was Texarkana. petition of relator. anyone to contest Nov. provides: Rule Tex.R.Civ.P. by appellant in “Any statement made or the original as to the facts brief as may accepted by the court record by opposing challenged correct unless Sept. party. Amended order 1941.” effective Dec. quote from said Rule In view of brief, part, as follows: relator’s a child arises out of proceeding “This Arledge filed Gussie suit custody notes tees had a meeting agreed join would not be foreclosed. About March grantors in a deed to if USAA and Montag Miller advised him necessary proceeds from the sale Leslie, Roy should sell the 212 acres. Jr. said property paid regis- would be into the appraised $1,000.00 the land at per acre try of the court for a final determination April letter of “Shortly there- by the court as to the allocation of the after,” trustees decided to sell to Steves proceeds between individually, and $212,357.00, attorneys and their were requested the Trust. April to draw a deed and it date plans 1968. Steves had no or inten- An affidavit оf Miller Montag, indicated to sell land tions but intended de- the following, in substance: That he is velop it himself. time after Some the close CPA and personal has knowledge Hemisfair, but Olympics, before the financial condition of the Trust. A bal- Ayers, Robert real agent, estate called ance sheet of the Trust February as of and said he had someone interested in the 1968 showed current $6,320.37 assets of land, but was told it was current $40,072.73. liabilities of In his not for sale. After Steves went opinion, the Trust was insolvent in that it Olympics home, in Mexico and returned was unable to pay current they bills as came Ayers again called it was told could be due. The 212 acres of land involved is bought per Ayers acre. shown on the balance sheet at a value of Steves drove over the and Steves $169,939.50, against which there was a bal- was told for the first time that ance $95,812.60, due $17,144.- of which Ayers’ Shortly thereafter, client. Ayers