Fisher v. Kerlin, 12774

• Decision Date: 04 May 1955
• Docket Number: No. 12774,12774
• Citation: 279 S.W.2d 637
• Parties: Thomas Hart FISHER et al., Appellants, v. Gilbert KERLIN, Appellee.
• Court: Texas Court of Appeals

Page 637

279 S.W.2d 637

Thomas Hart FISHER et al., Appellants, v. Gilbert KERLIN, Appellee.

No. 12774.

Court of Civil Appeals of Texas, San Antonio.

May 4, 1955.

Rehearings Denied June 1, 1955.

Cox, Wagner, Adams & Wilson, Brownsville, for appellants.

Davenport & Ransome, C. S. Eidman, Jr., Brownsville, for appellee.

POPE, Justice.

The following is substituted for our original opinion:

Two principal points are presented by this appeal. (1) Did a trust exist in favor of appellants, with reference to properties taken in the name of appellee? (2) If a trust did exist, what lands were held by appellee, as trustee for appellants? The trial court held that no trust existed and that appellants had no title to any lands in question. We reverse and render that judgment.

In 1941, Gilbert Kerlin filed a trespass to try title suit in Cameron County against the King Ranch, which is not a party to this suit, and appellants, for title to 6,000 acres of land located in the southern end of Padre Island. During the pendency of that suit, the United States Government commenced condemnation proceedings and took title to all of the lands involved in the suit between Kerlin, King Ranch, and appellants, and also took what we shall call the Jones lands, immediately to the north of the 6,000-acre tract.

Kerlin and King Ranch, during 1943, settled the trespass to try title suit as between themselves. On March 19, 1945, appellants, Edwin K. Atwood, Alice B. Atwood and Thomas Hart Fisher, hereafter called Atwoods, also settled the trespass to try title suit with Gilbert Kerlin. The Atwoods-Kerlin settlement agreement is set forth in the footnote, but the paragraph numbers and italics have been added for easier reference. ¹

By the terms of the settlement, Kerlin, individually and as trustee, assumed the duty of prosecuting Atwoods' claims for an award in the pending government condemnation proceeding. He fully managed all claims theretofore asserted by Atwoods, King Ranch, and himself, and during 1950 arranged a revesting of title to the lands instead of the payment of a cash award for the value of the lands. Kerlin, Trustee, the value of the lands. Kerlin, trustee The trial court refused Atwoods' claim for their share of the returned land, but upheld Kerlin's contentions, and construed the 1945 instrument to mean that if Kerlin, trustee, in the future should sell the tract, then he should account to Atwoods for their share of the proceeds from such sale. Atwoods urge that the 1945 instrument imposed upon Kerlin the obligation of handling their claim for an award, and that one-half of what was gained in the condemnation suit belonged to them.

A simplified statement of Kerlin's contention is that he was obligated to Atwoods to press for a money award, a part of which would be theirs; he failed to do that, and instead pressed for and obtained a return of land; therefore, at this time, he owes Atwoods neither land nor money. Kerlin contends he owes them money only if and when he sells the land.

The 1945 instrument must be examined. Paragraph (3) recites that the lands had already been taken by the government, that commissioners were appointed to appraise the damages, but they had not yet made an award. Paragraph (4) recites that King Ranch had already settled with Kerlin, by which Kerlin would have 'full right to receive and receipt for the proceeds payable to it from the condemnation of said premises and to divide same between himself and said King Ranch * * *.' Paragraph (5) recites the desire of Kerlin and Atwoods to make a similar settlement. Paragraph (8) empowered Kerlin 'to prosecute all claims in connection with the determination of the amount of the ward and the recovery thereof * * *.' Paragraph (9) stated the proportion in which Kerlin and Atwoods would share in 'the sums of money so paid as compensation or damages for the lands or interest in lands hereby conveyed to Gilbert Kerlin, Trustee * * *.' The same paragraph goes further and provides that Kerlin, Trustee, could deduct certain costs incident to his necessary proof of the value of the lands.

The above matters show that the parties contemplated that Kerlin, Trustee, in the performance of his obligations, would seek a money award. Paragraph (10) again vested Kerlin, Trustee, with full control and management of the condemnation suit, but then significantly provided: 'but any money or other thing of value received by him by virtue of an award in said Civil Action No. 142, or by virtue of any other judicial proceedings or by voluntary settlement or conveyance, same being for and on account of any land and interest in land heretofore claimed by said grantors * * shall be applied solely as hereinbefore provided * * *.' Paragraph (14) provided:

'It is agreed by and between them, the said grantors, that their respective claims and rights in, to, and in respect of said lands, shall hereafter be limited to, and satisfied out of, the payments of money, deliveries of oil and other benefits resulting from the performance of this contract by Gilbert Kerlin, Trustee.'

At the time this instrument was executed the government had already taken the legal title to the property. 40 U.S.C.A. Chapter 3, § 258a; United States v. 53 1/4 Acres of Land, 2 Cir., 176 F.2d 255; United States v. .8677 Acre of Land, D.C., 42 F.Supp. 91. Atwoods at that point had a claim to some part of the award deposited by the government for the land. To protect that claim, Atwoods by paragraph (13) of the instrument undertook to reserve a vendor's lien upon 'all the rights and interest hereby conveyed.' That reservation is seized upon by Kerlin as destructive of an express trust, it being a reservation of the legal title. There probably was no legal title upon which the vendor's lien could then operate, since the legal title was already in a third person, the government. Moreover, Kerlin eradicated the vendor's lien by his trade with the government by which Atwoods received nothing. If there were a reservation of the legal title in the form of the vendor's lien, then Atwoods would be entitled to judgment for one-half of their lands for that reason. Collins v. Republic Nat. Bank of Dallas, 152 Tex. 392, 258 S.W.2d 305; Yates v. Darby, 133 Tex. 593, 131 S.W.2d 95; Barker v. Temple Lumber Co., 120 Tex. 244, 37 S.W.2d 721; Johnson v. Smith, 115 Tex. 193, 280 S.W. 158; 41 Tex.Jur., Trespass to Try Title, § 19.

We rest our decision upon a constructive trust rather than an express trust. Kerlin assumed and recognized certain duties toward Atwoods with reference to the protection of their rights and interest. Atwoods, by the settlement instrument, certainly had rights to and interests in something out of the award. What happened to their rights, and how did they disappear? Atwoods empowered Kerlin to protect those rights and interests, and he exchanged them for land in lieu of cash. He took the land in his own name. Kerlin, by changing a prayer for cash to a prayer for land, claims that Atwoods now own neither cash nor land. He urges that by his surrendering rather than prosecuting Atwoods' claims, their rights are lost.

A constructive trust is raised by construction of equity and not by intent, actual or presumed. Lipsitz v. First National Bank, Tex.Com.App., 293 S.W. 563, 567. Chief Justice Smith, speaking for this Court, in Gates v. Coquat, Tex.Civ.App., 210 S.W.2d 614, 615, stated:

'There are no set and rigid rules as to constructive trusts. Pomeroy states that;

"Equity has followed the true principle of contriving its remedies so that they shall correspond both to the primary rights of the injured party, and to the wrong by which that right has been violated. It has, therefore never placed any limits to the remedies which it can grant, either with respect to their substance, their form, or their extent; but has always preserved the elements of flexibility and expansiveness, so that new ones may be invented, or old ones modified, in order to meet the requirements of every case, and to satisfy the needs of a progressive social condition, in which new primary rights and duties are constantly arising, and new kinds of wrongs are constantly committed.' 1 Pomeroy, Equity Jurisprudence, 5th Ed., 143, § 111.

'In Beatty v. Guggenheim Exploration Co., 225 N.Y. 380, 381, 122 N.E. 378, 381, Mr. Justice Cardoza said:

"A court of equity in decreeing a constructive trust is bound by no unyielding formula. The equity of transaction must shape the measure of the relief."

Cawthon v. Cochell, Tex.Civ.App., 121 S.W.2d 414, 416, states:

'In the class of cases to which this case belongs an accurate definition would be that it is a trust which is not expressed but is imposed upon a person by a court of equity upon the ground of public policy so as to prevent him from holding for his own benefit and advantage that which he has gained by reason of a fiduciary relation subsisting between him and those for whose benefit it is his duty to act.'

Such use of another's property gives rise to a constructive trust on the principles stated in 4 Pomeroy, Equity Jurisprudence, 5th Ed., § 1051, which states:

'* * * A constructive trust arises whenever another's property has been wrongfully appropriated and converted into a different form. If one person having money or any kind of property belonging to another in his hands wrongfully uses it for the purchase of lands, taking title in his own name; or if a trustee or other fiduciary person wrongfully converts the trust fund into a different species of property, taking to himself the title; or if an agent or bailee wrongfully disposes of his principal's securities, and with the proceeds purchases other securities in his own name,-in these and all similar cases equity impresses a constructive trust upon the new form or species of property, not only while it is in the hands of the original wrong-doer, but as long as it can be followed and identified in whosoever hands it may come,...