183/620 Group Joint Venture v. SPF Joint Venture

• Decision Date: 22 February 1989
• Docket Number: No. 3-88-063-CV,3-88-063-CV
• Citation: 765 S.W.2d 901
• Parties: 183/620 GROUP JOINT VENTURE, et al., Appellants, v. SPF JOINT VENTURE, Appellee.
• Court: Texas Court of Appeals

Page 901

765 S.W.2d 901

183/620 GROUP JOINT VENTURE, et al., Appellants, v. SPF JOINT VENTURE, Appellee.

No. 3-88-063-CV.

Court of Appeals of Texas Austin.

Feb. 22, 1989.

Rehearing Denied March 22, 1989.

Jack C. O'Donnell, Shapiro, Edens & Cook, Austin, for appellants.

Anne S. Wynne, Jenkens & Gilchrist, Austin, for appellee.

Before POWERS, GAMMAGE and ABOUSSIE, JJ.

POWERS, Justice.

On the application of appellee, "SPF Joint Venture," the district court ordered the issuance of a temporary injunction restraining appellants, "183/620 Group Joint Venture" and "183/620 Regional, Inc.," from certain actions pending final hearing in a suit brought against them by appellee. Appellants complain on appeal that the order was erroneous for the reasons given below. We will affirm the district-court order.

THE CONTROVERSY

Under the terms of various contracts, appellee and other landowners entrusted to appellants' control large sums of money, to be expended by appellants in improving the landowners' properties through the construction of roads and facilities for water, wastewater, and drainage. Appellants, as "project manager," also supervised and directed construction of the improvements. A dispute arose between appellants and appellee, culminating in the present lawsuit in which appellee alleged that appellants failed properly to manage the construction projects.

In addition to allegations referring to the merits of its claim, appellee included in an amended petition an allegation that appellants had expended about $25,000, in defense of the present suit, from the sums entrusted to them by appellees and the other landowners. Appellee requested a temporary injunction that would require appellants to repay the funds so expended, and restrain appellants from any future Following an evidentiary hearing on appellee's application for temporary injunction, the district court ordered the issuance of an injunction, effective pendente lite, that would restrain appellants "from any further expenditure of monies placed in their care and control ... for any expenses related in any manner to their defense of this lawsuit, including ... attorney's fees, consulting fees," and "engineering fees." The order is silent regarding repayment of any sums allegedly expended heretofore in defense of the lawsuit.

expenditures for the same purpose, pending final hearing in the lawsuit.

In findings of fact and conclusions of law, the district court determined that appellants had paid from the funds given them some $60,000, in defense of the lawsuit, and would expend additional sums for the same purpose unless enjoined; that the sums given appellants were held by them as fiduciaries, to be expended according to the contracts, which did not authorize them to use the sums for their defense in appellee's lawsuit; and that the temporary injunction was necessary to maintain the existing status of the trust funds pending a final hearing, even though there was no showing that appellants would be unable to pay a judgment for damages that might be based on their misappropriation of the funds.

Appellants contend we must reverse the district-court order because appellee failed to show: (1) the absence of an adequate remedy at law; (2) the threat of irreparable harm; and (3) a probable right to recover on the merits. Appellants argue that a showing of each factor was essential before a temporary injunction might issue. In the discussion that follows, we shall refer only to the matter of an "adequate remedy at law," so as to avoid the "patent redundancy" between that term and "irreparable harm." 6 Lowe, Remedies § 114, at 157 (Texas Practice 2d ed. 1973).

ADEQUATE REMEDY AT LAW

Appellants' point of error, relative to appellee's failure to show that its remedy at law was inadequate, is determined at the outset by the fact that appellants do not challenge the district-court determination that they held the sums in question as fiduciaries.

The principles of equity govern all forms and occasions of injunctive relief, notwithstanding the apparent independence of the statutory grounds for such relief set out in Tex.Civ.Prac. & Rem.Code Ann. § 65.011 (1986 & Supp.1989). See Powers v. Temple Trust Co., 124 Tex. 440, 78 S.W.2d 951 (1935). Consequently, it is usually necessary to show, as appellants contend, even in cases of temporary injunctions maintaining the status quo pending final hearing, that the applicant has no adequate remedy at law. Lowe, supra, § 113 at 149. But the requirement is only an ordinary requirement; it is not universal or invariable. The showing need not be made "where the usages of equity require the granting of injunctive relief despite the existence of a remedy at law...." Id. at 150. The present case is one where the principles and usages of equity do not require an applicant to show the absence of an adequate remedy at law in order to invoke the jurisdiction of equity, or the equitable powers of a court having law and equity jurisdiction.

Appellants hold legal title to the funds, as fiduciaries, while appellee and the other landowners hold equitable title. Courts of law do not enforce, because they do not recognize, fiduciary duties and equitable titles; hence, in a proceeding to enforce either, or protect the latter, it is meaningless to require the applicant to demonstrate that his remedy at law is inadequate. Because a court of law cannot give a remedy in such cases, the ordinary requirement does not apply. 4 Pomeroy, Equity Jurisprudence § 1339, at 937 (5th ed. 1941) (the issue of an adequate remedy at law does not even arise in such cases); 1 Restatement of Trusts 2d §§ 197-199, at 433-439 (beneficiary's remedies are exclusively equitable except where trustee is under duty to deliver money or chattels immediately and unconditionally); 3 Scott on Trusts § 199.2, at 1639 (3d ed. 1967) (where reasonable likelihood exists that trustee will Even where the requirement is mentioned, in a case like the present, it is held to be satisfied on a rationale that the legal remedy is "inadequate" because the funds will be reduced, pending final hearing, so that they will not be available in their entirety, in the interim, for the purposes for which they were delivered to the holder in the first place. Minexa Arizona, Inc. v. Staubach, 667 S.W.2d 563 (Tex.App.1984, no writ); see also McDonnell v. Campbell-Taggart Associated Bakeries, 376 S.W.2d 915 (Tex.Civ.App.1964, no writ); Weiner v. Weiner, 245 S.W. 474 (Tex.Civ.App.1922, writ dism'd); ...