Estate of Townes v. Townes

• Decision Date: 23 December 1993
• Docket Number: No. C14-92-01011-CV,C14-92-01011-CV
• Citation: 867 S.W.2d 414
• Parties: ESTATE OF Aileen Copley TOWNES, Deceased, John Charles Townes, IV, and Susan Townes Parker, Successor Independent Co-Administrators With Will Annexed of the Estate of Aileen Copley Townes, Deceased, Appellants, v. Donna Lou TOWNES, Independent Executrix of the Estate of William Michael Townes, Deceased, Donna Lou Townes, Individually, Jerry S. Payne, Individually, and Payne & Associates, Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 414

867 S.W.2d 414

ESTATE OF Aileen Copley TOWNES, Deceased, John Charles

Townes, IV, and Susan Townes Parker, Successor Independent

Co-Administrators With Will Annexed of the Estate of Aileen

Copley Townes, Deceased, Appellants, v. Donna Lou TOWNES, Independent Executrix of the Estate of

William Michael Townes, Deceased, Donna Lou

Townes, Individually, Jerry S. Payne,

Individually, and Payne &

Associates, Appellees.

No. C14-92-01011-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

Dec. 23, 1993.

Rehearing Denied Jan. 27, 1994.

Loyd H. Wright, Houston, for appellants.

Robert K. Loper, Jerry S. Payne, Houston, for appellees.

Before ROBERTSON and CANNON, JJ., and ROBERT E. MORSE, Jr., Former Justice.

MAJORITY OPINION

ROBERTSON, Justice.

This is an appeal from a take nothing judgment entered in favor of appellees on appellants' claims of breach of fiduciary duty and conversion. Appellants bring eight points of error challenging the sufficiency of the evidence supporting the jury's findings on liability, challenging the trial court's refusal to submit a jury issue on their claim of unjust enrichment, and challenging the trial court's admission of certain evidence. We reverse and remand.

Aileen C. Townes had five children: Aileen Townes McHenry, John Charles Townes IV, Susan Townes Parker, William Michael Townes, and George Copley Townes (who died in 1966). Aileen Townes was the primary beneficiary of her husband's estate. After the death of her husband, Aileen Townes' brother, George Copley, assisted with the management of her financial affairs until his death. Testimony indicated that Aileen Townes did not compensate her brother for his assistance. Upon George Copley's death, Aileen Townes' son, Michael Townes began assisting in the management of her financial affairs.

In 1985, the "Aileen C. Townes Special Account" was opened at First Interstate Bank. Although both Aileen Townes and Michael Townes were signatories on this account, the funds in this account belonged to Aileen Townes. Michael Townes also possessed the authority to write checks on his mother's Merrill Lynch Cash Management Account. The funds in this account also belonged to Aileen Townes. From 1985-89, Michael Townes made the following withdrawals from Aileen Townes' accounts and deposited the funds in his own account or used the funds to his benefit: $60,598.60 in 1985-86; $100,410.50 in 1987; $80,000.00 in 1988; and $200,787.40 in 1989. All of the withdrawals, except the last one, were from the special account. In September 1989, Aileen Townes lapsed into a coma and later died. The last withdrawal by Michael Townes, of $83,650.00 from the Merrill Lynch account, occurred while his mother was in a coma.

Michael Townes was appointed the executor of Aileen Townes' estate. From 1985-90, Michael Townes had a serious heart condition, of which his mother had been aware. In April 1990, Michael Townes died of a heart attack. The individual appellants were then appointed as Successor Independent Co-Administrators. Under the terms of Michael Townes' will, his wife Donna was appointed independent executrix of Michael's estate. Michael Townes left his entire estate to his wife, Donna.

The estate of Aileen Townes had an approximate fair market value of $1,200,000.00. The following represents the approximate distributions from this estate: Appellant, Charles Townes--$431,095.00; Appellant, Susan Parker--$431,095.00; George Copley Townes (Michael's son)--$215,547.00; Elizabeth Brandt (Michael's daughter)--$215,547.00; and Aileen McHenry--$1,000.00. Aileen McHenry testified that she received only $1,000.00 under her mother's will because her uncle, George Copley, had left her his entire estate.

The E.E. Townes Trust Number 4, of which Aileen Townes was the beneficiary, terminated upon her death. Under the terms of that trust, it was to be distributed in equal portions to the following four persons: Charles Townes, Susan Parker, Aileen McHenry, and Michael Townes. The value of this trust is approximately $3,052,532 to $4,117,325.60. Each of the four individuals will receive approximately $763,133 to $1,029,331.30.

Donna Townes, widow of Michael Townes, testified that she did not have any involvement in Michael's financial business. Donna claimed that she never saw any of the checks Michael withdrew from his mother's account and she never signed or endorsed them for deposit. Donna also testified that, while Michael was in the hospital, appellant, Charles Townes requested all of the paperwork regarding Aileen Townes' estate. Donna refused to respond to those requests at that time. After Michael's death, Donna collected all of the paperwork and gave it to her attorney, who in turn, made them available to appellants.

Upon reviewing the documentation, appellants learned of Michael's withdrawals from their mother's accounts from 1985-89. Appellants then filed this suit, alleging breach of fiduciary duty, conversion, fraud, and unjust enrichment. Appellants sought the imposition of a constructive trust and sought actual damages of $400,000.00 and punitive damages of not less than $1,200,000.00. The case went to the jury only on the issues of breach of fiduciary duty and conversion. The jury found no liability on the part of Michael Townes and the trial court entered a judgment dismissing appellants' claims with prejudice.

In points of error one and two, appellants claim there was legally and factually insufficient evidence to support the jury's finding that Michael Townes did not breach his fiduciary duties to Aileen Townes. Where a party challenges the legal sufficiency of an adverse finding on an issue on which he had the burden of proof, he must demonstrate that the evidence conclusively established all vital facts in support of the issue. Sterner v. Marathon Oil Co., 767 S.W.2d 686, 690 (Tex.1989). In reviewing a matter of law challenge, we must first examine the record for evidence that supports the finding, while ignoring all evidence to the contrary. Id. at 690. If there is no evidence to support the finding, we must then examine the entire record to determine if the contrary proposition is established as a matter of law. Id. If a party is attacking the factual sufficiency of an adverse finding on an issue on which he had the burden of proof, he must demonstrate that the adverse finding is against the great weight and preponderance of the evidence. Hickey v. Couchman, 797 S.W.2d 103, 109 (Tex.App.--Corpus Christi 1990, writ denied). In reviewing such a challenge, we must examine the entire record to determine if there is some evidence to support the finding, if the finding is so contrary to the overwhelming weight and preponderance of the evidence as to be clearly wrong and manifestly unjust, or if the great preponderance of the evidence supports its nonexistence. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986). Whether the great weight challenge is to a finding or a nonfinding, we may reverse and remand a case for a new trial if we conclude the jury finding or nonfinding is against the great weight and preponderance of the evidence. See Ames v. Ames, 776 S.W.2d 154, 158 (Tex.1989), cert. denied, 494 U.S. 1080, 110 S.Ct. 1809, 108 L.Ed.2d 939 (1990).

The parties stipulated that Michael Townes occupied a fiduciary relationship with his mother regarding her estate. When persons enter into fiduciary relations, each consents as a matter of law to have his conduct measured by "the standards of the finer loyalties exacted by courts of equity." Sorrell v. Elsey, 748 S.W.2d 584, 585 (Tex.App.--San Antonio 1988, writ denied) (quoting Johnson v. Peckham, 132 Tex. 148, 120 S.W.2d 786, 788 (1938)). Even in the case of a gift between parties with a fiduciary relationship, "equity indulges the presumption of unfairness and invalidity, and requires proof at the hand of the party claiming validity ... of the transaction that it is fair and reasonable." Sorrell, 748 S.W.2d at 585. The fiduciary must show that the transaction was "fair, honest, and equitable." Miller v. Miller, 700 S.W.2d 941, 947 (Tex.App.--Dallas 1985, writ ref'd n.r.e.). In establishing the fairness of a transaction involving a fiduciary, some of the most important factors are: (1) whether there was full disclosure regarding the transaction, (2) whether the consideration (if any) was adequate, and (3) whether the beneficiary had the benefit of independent advice. Id. Another crucial inquiry is whether the fiduciary has benefited at the expense of the beneficiary. Id. The transaction is unfair if the fiduciary significantly benefits from it as viewed in light of circumstances existing at the time of the transaction. Id.

Because the parties stipulated to the existence of a fiduciary relationship and that Michael withdrew funds from his mother's account, the burden was on appellees to rebut the presumption that Michael's transactions were unfair. Appellees contend the following evidence supports the jury's finding that Michael Townes did not breach his fiduciary duty: Aileen Townes was very generous to her family. During the years in question, Aileen Townes gave appellant, Charles Townes and his family approximately $148,000.00, and gave appellant, Susan Parker and her family approximately $101,000.00. The parties stipulated that Aileen Townes had a close relationship with her son, Michael, and was aware of his health problems. Michael Townes lived close to Aileen, visited her often and spoke with her several times a day. Testimony also indicated that Aileen Townes was alert and aware of her financial condition until her death. Although appellant Charles Townes testified that Michael's lifestyle improved after he began managing Aileen Townes' estate, other testimony indicated that Michael and Donna Townes lived an average lifestyle. They did purchase at least one automobile and they took some trips, but Donna Townes testified that these trips were taken with Aileen's knowledge and...