Beaty v. Bales

• Decision Date: 05 September 1984
• Docket Number: No. 04-83-00366-CV,04-83-00366-CV
• Citation: 677 S.W.2d 750
• Parties: Vivian Bales BEATY, Appellant, v. Gregory BALES, Appellee.
• Court: Texas Court of Appeals

Page 750

677 S.W.2d 750

Vivian Bales BEATY, Appellant, v. Gregory BALES, Appellee.

No. 04-83-00366-CV.

Court of Appeals of Texas,

San Antonio.

Sept. 5, 1984.

Rehearing Denied Oct. 2, 1984.

Donald O. Ferguson, Gardner, Ferguson, Sommers & Dorr, San Antonio, for appellant.

Cooper G. Dibrell, Dibrell, Dodson, Dibrell & Dibrell, San Antonio, William T. Liddell, Houston, for appellee.

Before CANTU, REEVES and TIJERINA, JJ.

OPINION

TIJERINA, Justice.

This lawsuit concerns a demand for an accounting, removal of the trustee, and money damages filed against appellee individually and as trustee of Ella and L.O. Carter Trusts. The appeal is from a take-nothing judgment based on the jury's answer to special issues. The trial court overruled the motion for judgment non obstante veredicto.

A brief setting of the facts is essential. Appellee was the named trustee under the codicils of Ella Carter and L.O. Carter, deceased. The trust corpus consisted of a ranch with improvement situated in Uvalde County, ranch equipment and machinery, personal property, and livestock. Appellant is a beneficiary under the trust created by the will of decedents. Initially, appellee administered the trust estate as ranch foreman with a salary of $850.00 per month, but he subsequently hired a full-time ranch foreman, and functioned as the ranch manager. When the Trust's cattle business became unprofitable appellee sold the cattle and leased part of the land, but kept 3,500 goats for the production of mohair. The ranch lands were mortgaged to the Federal Land Bank to secure the payment of a loan for $350,000.

Appellant claims that she has received no income as a beneficiary under the trust, that appellee has received personal benefit from the trust, and that he has made expenditures and use of the property for purposes unrelated to the trust. The Certified Public Accountant submitted an unaudited accounting and financial report on the trust estate. The codicils of Ella Carter and L.O. Carter created the trust as follows:

... I give, devise and bequeath all the rest, residue and remainder of my estate, real, personal or mixed, separate or community, of every description and wherever situated unto GREGORY BALES, as Trustee, and his successors in trust, to be held, administered and distributed as follows: My Trustee shall hold, manage and control the corpus of my estate then remaining on hand for the use and benefit of the children of WILBURN S. BALES, SR., Deceased, and VIVIAN BALES BEATY, for the lifetime of the said VIVIAN BALES BEATY, one-half ( 1/2) of the net income from said trust to be paid to VIVIAN BALES BEATY annually; and the remaining one-half ( 1/2) of the net income from said trust to be paid annually to the children of WILBURN S. BALES, SR., Deceased, namely, GREGORY BALES, WILBURN S. BALES, JR., MARY LEE KINDRED and NANCY BALES, in equal shares until the death of VIVIAN BALES BEATY; and following the death of VIVIAN BALES BEATY this trust shall continue for a period of ten (10) years before any distribution or division of the corpus of my estate shall be made; the net income from said trust after the death of VIVIAN BALES BEATY to be equally divided annually between GREGORY BALES, WILBURN S. BALES, JR., MARY LEE KINDRED, NANCY BALES and ROY GLEN BEATY, and after the lapse of ten (10) years from the date of the death of VIVIAN BALES BEATY, my estate shall go to the following named beneficiaries, to share and share alike, GREGORY BALES, WILBURN S. BALES, JR., MARY LEE KINDRED, NANCY BALES and ROY GLEN BEATY.

Appellant asserts that the trial court committed reversible error in refusing to grant judgment non obstante veredicto. Points of error one through eight, eleven and fourteen involved questions on the motion for judgment non obstante veredicto; point of error ten is related to point one. These will all be addressed jointly. In the first complaint, she argues that she is entitled to an accounting, paid by appellee, as a matter of law, because appellant failed to account for his expenditures with original source documents showing the amount of each expense and the items procured as authorized by Article 7425b-24(A), Texas Trust Act. The Certified Public Accountant prepared an unaudited accounting and financial report which was admitted in evidence. Appellant alleges that the report was prepared without the availability of receipts, paid bills, invoices, or other original source documentation.

A judgment non obstante veredicto will be granted only when there is no evidence to support the jury's findings on the special issues. San Antonio Independent School District v. National Bank of Commerce of San Antonio, 626 S.W.2d 794, 795 (Tex.App.--San Antonio 1981, no writ) and TEX.R.CIV.P. 301. The rule requires that more than a scintilla of evidence must be found on which the jury predicated its findings before the trial court's judgment non obstante veredicto can be reversed. Arrechea v. Arrechea, 609 S.W.2d 852, 854 (Tex.Civ.App.--Houston [14th Dist.] 1980, writ ref'd n.r.e.). On the hearing of the motion for judgment notwithstanding the verdict, all testimony must be considered in light most favorable to party against whom the motion is sought and every reasonable intendment deducible from the evidence is to be indulged in that party's favor. Bowie v. G.P. Plastics, 572 S.W.2d 42, 44 (Tex.Civ.App.--Eastland 1978, writ ref'd n.r.e.)

The trustee is required to keep full, accurate, and orderly records concerning the status of the trust estate and of all acts performed thereunder. Shannon v. Frost National Bank, 533 S.W.2d 389 (Tex.Civ.App.--San Antonio 1975, writ ref'd n.r.e.). In Texas, unless there are provisions under the terms of an express trust, the Texas Trust Act generally grants to the district court original jurisdiction to require an accounting by the trustee. TEX.REV.CIV.STAT.ANN. art. 7425b-24(A) (Vernon 1960). Under TEX.R.CIV.P. 172 the trial court can appoint an auditor to investigate accounts or examine vouchers and can require that a report be made to the court. The trial court has the power to appoint a master in chancery in an appropriate case. TEX.R.CIV.P. 171. In this case appellee as the trustee had the power to hold, manage, and control the corpus of the estate and was required to pay the named beneficiaries the net income in accordance with the terms of the trust. The problem was that the trust estate was beset by heavy debts and the ranch business was not financially successful because of the market conditions. The trial court ordered appellee to give an accounting but further provided as follows: "Plaintiff is not prejudiced to reurge her motion in the event that the accounting is inadequate or not consistent with accepted accounting standard as prescribed by the Texas Trust Act ... or Plaintiff is dissatisfied with the documentation thereof." The trial court was concerned with the financial burden on the trust corpus and did not order an audited accounting or a verified accounting. The Certified Public Accountant testified that unaudited accounting is accepted by banks and the Internal Revenue Service. An appellate court cannot substitute its discretion for that of trustees and can interfere with their exercise of discretionary powers only in cases of fraud, misconduct, or clear abuse of discretion. Coffee v. William Marsh Rice University, 408 S.W.2d 269, 284 (Tex.Civ.App.--Houston 1966, writ ref'd n.r.e.). Appellant herein has not shown misconduct or fraud. Where the language of the trust instrument is unambiguous and expresses the intentions of the maker, the trustee's powers are conferred by the instrument and neither the court nor the trustee can add or take away such power. The trust is entitled to that construction which the maker intended. See Jewett v. Capital National Bank, 618 S.W.2d 109, 112 (Tex.Civ.App.--Waco 1981, writ ref'd n.r.e.). We therefore conclude that the accounting of record sufficiently complies with statutory requirements. Points of error one and ten are overruled.

In the second point of error, appellant claims that she was entitled to one-half of the oil and gas bonus money after deducting 27 1/2% to be retained for principal plus 50% of all delay rentals as required by Section 7425b-33 of the Texas Trust Act. The statutory act provides in pertinent and relevant part, viz:

[S]uch proceeds, if received as delay rentals on a lease shall be deemed income, but if received as consideration, whether as bonus or consideration for the execution of the lease or as royalties, overriding or limited royalties, oil payments of other similar payments, received in connection with the physical severance of such natural resources shall be apportioned to principal and income as follows: 27 1/2% of the gross proceeds (but not to exceed 50% of the net, after deducting the expense and carrying charges on such property) shall be treated as principal and invested or held for the use and benefit of the remainderman, and the balance shall be treated as income subject to be disbursed to the tenant or person entitled thereto. Such disposition of proceeds shall apply whether the property is producing or non-producing at the time the trust becomes effective.

Where the trust instrument does not provide for the disposition of the proceeds received from oil and gas producing interests, the provisions of the Texas Trust Act govern the ascertainment of principal and income, and the apportionment thereof. Commercial National Bank in Nacogdoches v. Hayter, 473 S.W.2d 561, 564 (Tex.Civ.App.--Tyler 1971, writ ref'd n.r.e.). In this case, the trust instrument clearly provided that the beneficiaries were to receive a specified amount from the net income of the trust estate, and the powers given to the trustee to hold, manage, and control the trust corpus gave him the sole discretion to make financial disbursements. The record reflects that the trustee in accordance with the provisions of Article...