First Nat. Bank of Amarillo v. Bauert

• Decision Date: 23 September 1981
• Docket Number: No. 9282,9282
• Citation: First Nat. Bank of Amarillo v. Bauert, 622 S.W.2d 464 (Tex. App. 1981)
• Parties: FIRST NATIONAL BANK OF AMARILLO, Appellant, v. Joyce Elaine BAUERT, Individually and as Independent Executrix of the Estate ofAnthony Edward Bauert, Deceased, Appellee.
• Court: Texas Court of Appeals

Page 464

622 S.W.2d 464

FIRST NATIONAL BANK OF AMARILLO, Appellant, v. Joyce Elaine BAUERT, Individually and as Independent Executrix of the Estate ofAnthony Edward Bauert Deceased, Appellee.

No. 9282.

Court of Appeals of Texas, Amarillo.

Sept. 23, 1981.

Gibson, Ochsner & Adkins, John T. Huffaker, Amarillo, for appellant.

Sanders, Saunders, Brian, Finney, Thomas & Smith, Ronald D. Nickum and Paul R. McWilliams, Amarillo, for appellee.

Before REYNOLDS, C. J., and DODSON and COUNTISS, JJ.

DODSON, Justice.

In this appeal, the First National Bank of Amarillo is the appellant, and Joyce Elaine Bauert, Individually and as Independent Executrix of the Estate of Anthony Edward Bauert, deceased, is the appellee. Mrs. Bauert brought this action against the Bank and C. J. Lightfoot to recover the proceeds of a life insurance policy on the life of Mr. Bauert. Beginning in the spring of 1978 and continuing to February of 1979, Mr. Bauert and Mr. Lightfoot operated a partnership business named "Indian Enterprises d/b/a Construction Corner." The primary business endeavor of the partnership was the sale of steel buildings. Each of the partners took out a policy of insurance on his life in the amount of $200,000. Lightfoot was the named beneficiary of the insurance policy on the life of Mr. Bauert; Bauert was the named beneficiary of the policy on Lightfoot's life. The premiums for the insurance were paid from the partnership bank account. Bauert accidentally died before the insurance policies were delivered.

At the time of Mr. Bauert's death, the partnership owed the Bank $48,000.00 plus interest. Mr. Lightfoot, individually and with persons other than Mr. Bauert, owed the Bank an additional sum of approximately $400,000.00. After Mr. Bauert's death, Mr. Lightfoot assigned to the Bank the proceeds from the insurance policy on Mr. Bauert's life. Among other things, Mrs. Bauert's action is grounded on a constructive trust theory. The Bank claims the proceeds by virtue of its assignment from Lightfoot, the named beneficiary.

On the Bank's motion, the trial court rendered partial summary judgment for the Bank and decreed that the Bank recover the sum of $48,000.00 plus interest. ¹ The remainder of the action was tried by the court with a jury. In response to special issue number one, the jury found that Anthony E. Bauert and C. J. Lightfoot, as partners, orally agreed that, in the event of the death of either of them, the other, as beneficiary of the life insurance on the deceased partner, would utilize the proceeds of the life insurance to pay partnership indebtedness and pay the remaining proceeds to the widow and heirs of the deceased partner. The court rendered judgment that Mrs. Bauert recover the remaining proceeds from the insurance policy in question. The Bank appeals from this judgment. We affirm.

Initially, the Bank contends that the trial court erroneously failed to grant its motion for an instructed verdict, because an express trust is required "to alter the beneficiary designation of the insurance policy in question, and that there is no evidence of an express trust." Mrs. Bauert maintains that the court correctly overruled the Bank's motion, because she pled and proved her constructive trust theory of recovery. We agree with Mrs. Bauert's position.

From the record, it is undisputed that Mr. Lightfoot assigned the proceeds of the policy to the Bank and paid none of such proceeds to Mrs. Bauert or to Mr. Bauert's estate. In Dunn v. Second Nat. Bank of Houston, 131 Tex. 198, 113 S.W.2d 165, 171, the court stated:

It is settled by the decisions in this state and by the weight of authority in other states that a trust may be impressed upon a life insurance policy or upon the proceeds of a life insurance policy in the hands of a named beneficiary and that proof of such trust may be made by parol.

Rape v. Gardner, 54 S.W.2d 594, 595 (Tex.Civ.App. Eastland 1932, no writ), is to the same effect. The Bank acknowledges the above stated principle from Dunn. However, it argues that the principle is limited to express trusts. We disagree.

By its nature, the constructive trust remedy is broad and flexible. Meadows v. Bierschwale, 516 S.W.2d 125, 131 (Tex.1974). Being remedial in character, constructive trusts have the very broad function of redressing wrong or unjust enrichment in keeping with basic principles of equity and justice. Id. Depending on the circumstances, a transaction may provide the basis for a constructive trust where one party to that transaction holds funds which, in equity and good conscience, should be possessed and owned by another. Id. Furthermore, there is no unyielding formula to which a court of equity is bound in decreeing a constructive trust, because the equity of the transaction will necessarily shape the measure of the relief granted. Id. Given these principles, we conclude that the jury's finding in response to special issue number one supports the trial court's judgment. Thus, we overrule the Bank's first contention.

Next, the Bank maintains that the evidence was legally insufficient to support the submission of special issue number one. The legal insufficiency attack fails if there is any probative evidence to support the challenged issue. Air Conditioning v. Harrison-Wilson-Pearson, 151 Tex. 635, 253 S.W.2d 422, 425 (1952); Crisp v. Southwest Bancshares Leasing Co., 586 S.W.2d 610 (Tex.Civ.App. Amarillo 1979, writ ref'd n. r. e.). Evidence has probative force when it is more than a mere surmise or suspicion and serves to prove the asserted proposition. Gray v. Baker & Taylor Drilling Co., 602 S.W.2d 64, 65 (Tex.Civ.App. Amarillo 1980, writ ref'd n. r. e.).

The evidence shows that in October 1978 Mr. Lightfoot, Mr. Bauert, Mr. Baker (the partnership's accountant), Mr. Collins (the partnership's attorney), an official from the Bank, and the insurance agent who sold the policy in question met in Mr. Collins' office to discuss the partnership, a proposed partnership agreement, and insurance on the life of the partners. Prior to and at the meeting, Mr. Lightfoot and Mr. Bauert had different thoughts as to how the proceeds from the insurance policies should be used in the event of the death of one of the partners. However, Mr. Baker testified that the partners ultimately agreed that the survivor would use the proceeds to pay the partnership's indebtedness, with any excess funds going to the heirs of the deceased partner. In part, Mr. Baker testified as follows:

Q. (By Mr. Nickum) As best you can remember, I want you to repeat to the jury what these two gentlemen finally told you their agreement was.

A. After we had talked about it and Tom had chosen the particular type of insurance policy and the benefits, then, we got down to what would be used with the proceeds.

And so again we went over two different options, and the last option was the option where the money would go the the surviving partner, he would pay off the bank indebtedness, and then it would go to the heirs.

Q. And was that what they both told you they wanted at that time?

A. Charlie said, 'Write the policy,' and Tony agreed.

The above quoted testimony and other evidence to the same effect is legally sufficient to support the submission of special issue number one. We overrule the Bank's legal insufficiency challenge.

The Bank further contends that the evidence is factually insufficient to support the jury's answer to special issue number one. In support of this contention, the Bank argues that the imposition of a parol trust on the proceeds of a life insurance policy must be made by clear and convincing evidence and that we should decide its factual insufficiency challenge under that standard.

In Texas, it is settled that in ordinary civil cases the party having the burden of proof must establish his cause of action by a preponderance of the evidence only. See State v. Turner, 556 S.W.2d 563 (Tex.1977). In certain types of cases, the early courts imposed a stricter standard, requiring that proof be clear and satisfactory or clear and convincing. Id. at 565. These cases concerned charges of fraud and mistake when relied upon to justify reformation; rescission or cancellation of a written estimate; or actions to engraft a parol trust or conditions upon a written instrument. Id. However, the courts in more recent cases have concluded that in ordinary civil cases the requirement of clear and convincing evidence is merely another method of requiring that a cause of action be supported by factually sufficient evidence. Id.; Meadows v. Green, 524 S.W.2d 509, 510 (Tex.1975); Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401, 411 (1960); and Sanders v. Harder, 148 Tex. 593, 227 S.W.2d 206, 209 (1950).

We recognize that, in State v. Addington, 588 S.W.2d 569, 570 (Tex.1979), our Supreme Court acknowledged and adopted a clear and convincing evidence standard "in those civil proceedings brought under state law to commit an individual for an indefinite period to a state mental hospital." The court explained that the clear and convincing standard is an intermediate standard, falling between the preponderance standard of ordinary civil proceedings and the reasonable doubt standard of criminal proceedings. This standard was adopted on remand to conform with the holding of the Supreme Court of the United States in Addington v. Texas, 441 U.S. 418, 99 S.Ct. 1804, 60 L.Ed.2d 323, that, in civil commitment hearings, individuals must be afforded the protection of the fourteenth...