Fitz-Gerald v. Hull
| Decision Date | 14 February 1951 |
| Docket Number | No. A-2738,FITZ-GERALD,A-2738 |
| Citation | 237 S.W.2d 256,150 Tex. 39 |
| Parties | v. HULL et al. |
| Court | Texas Supreme Court |
Turner, Rodgers, Winn, Scurlock & Terry and Carlton R. Winn, all of Dallas, Gerald Fitz-Gerald, Midland, and Lloyd Croslin, Lobbock, for petitioner.
Martin, Moore & Brewster and Arthur Lee Moore, all of Fort Worth, Dan Moody, Austin, for respondents.
In this cause the respondents herein, H. Winston Hull and Charles C. Green, as plaintiff, sued the petitioner, James Fitz-Gerald, as defendant, in a statutory action of trespass to try title to, and for an interest in, an oil and gas lease on certain described lands in Hockley County, Texas. For convenience, the lands will be called the Coble lands. Plaintiffs also alleged in detail a statement of their claims for recovery.
Generally, the allegations and proof show a joint venture entered into between respondents-plaintiffs below, and petitioner-defendant below-to aquire an oil, gas and other mineral lease on the Coble lands, in the event respondents' employer, Texas Gulf Producing Company, did not take such lease, and to develop and operate such lease as joint venturers, respondents owning one-half thereof, and petitioner owning the other one-half; expenses and losses to be shared equally. The petitioner took the lease from Coble in his own name in violation of the original agreement between the parties that it was to be taken in the names of all three. The evidence shows that respondents, as soon as they learned of the lease being taken in petitioner's name, began asking for a deed to their one-half interest, and never at any time acquiesced in, nor ratified, the act of petitioner in taking the lease in his own name. Petitioner kept putting off the request of respondents to convey their one-half of the lease, by telling respondents he was going ahead with his part of the joint venture, and as soon as he had completed certain arrangements necessary to develop the lease he would convey to respondents their one-half interest. This continued until two or three wells had been brought in on the lease by the operators to whom an undivided one-half interest had been assigned by petitioner, and then for the first time petitioner repudiated the original agreement and denied that respondents had any interest in the lease, and refused to convey any part of same to respondents. At the close of respondents' evidence, the trial court sustained petitioner's motion for an instructed verdict and judgment was entered denying respondents any recovery. The Court of Civil Appeals, 232 S.W.2d 93, held that the evidence was sufficient to raise a fact issue as to the existence of a constructive trust in said lease for the benefit of respondents and remanded the cause to the trial court for trial before a jury on the issues as set out in its opinion. Writ was granted by this Court. The Court of Civil Appeals has made a very detailed statement of the pleadings and the evidence, and we will not burden this opinion with a repetition of the same.
We must keep in mind that when an appellate court comes to consider the propriety of the trial court's having given an instructed verdict such Court must view the evidence in the light most favorable to the party against whom the verdict was instructed. Stevens v. Karr. 119 Tex. 479, 33 S.W.2d 725; White v. White, 141 Tex. 328, 172 S.W.2d 295.
These principles have long been recognized as applicable to cases of instructed verdict.
Under the previous decisions of this Court, it was not necessary for the plaintiffs to have secured a permit under the Texas Securities Act, Art. 600a, Vernon's Ann.Civ.Sts., as amended. This was conclusively decided by this Court in the case of Lewis v. Davis, 145 Tex. 468, 199 S.W.2d 146. That case was a suit by Lewis against Davis to recover an undivided one-half interest in certain oil and gas leases and other oil and gas rights, and for a division of profits. The trial court sustained an exception to the plaintiff's petition on the ground that he had pled no permit under Art. 600a as required of a dealer. This action was affirmed by the Court of Civil Appeals. This court reversed and remanded the cause, holding that the exception had been wrongfully sustained. After citing from previous decisions of this Court holding that the Securities Act was for the protection of purchasers against sellers of securities, and does not undertake to regulate purchases or to protect sellers against purchasers this Court discusses the 1941 amendment to the Securities Act, and concludes that such amendment does not 'work changes in the general purpose of the Act and so to amend it as to require the procuring of permits or licenses by those who buy securities and the registration of securities for the protection of sellers against buyers.' Loc. cit., bot. 2nd col., 199 S.W.2d at page 149. Particularly applicable to the case at hand is this language: '(13) It follows that if petitioner by reason of an agreement with or a relation to respondent became the owner or the equitable owner of a one-half interest in the oil and gas leases and other mineral interest acquired by respondent and by petitioner, he can maintain suit to establish and enforce his interest against respondent, even though neither petitioner nor respondent registered under the Securities Act. * * *'
This ground for an instructed verdict cannot apply so as to sustain the trial court's action.
Petitioner contends that the pleadings and evidence of the respondents show, as a matter of law, that they are seeking to enforce an express trust created by parol, which is specifically prohibited by Sec. 7, Art. 7425b. If such were the case, the action of the trial court in instructing the verdict must be affirmed. A reading of the respondents' pleadings and of the Statement of Facts shows beyond any question that respondents seek to recover upon a constructive trust. All the allegations are to the effect that the agreement between the parties was that the purchase of the lease was to be made by the petitioner, but that the title was to be taken in the names of the respondents and the petitioner, and that respondents were to pay one-half the consideration and to be liable for one-half of all obligations of the lease and own one-half thereof; that the petitioner, in violation of the agreement, had taken title to the lease in his name alone (which fact was unknown to respondents until after the first well came in); and that for a time after respondents discovered that the title of the lease stood in the name of the petitioner alone, he recognized the original agreement and promised to make proper conveyances to respondents of their one-half interest, but that respondents did not agree to petitioner's holding title in his name, and continued to insist that their one-half interest be deeded to them. Under such state of facts when the petitioner took title to the property in his own name in violation of his promise, and of the original agreement made between the parties, he held the title to an undivided one-half interest for the benefit of, and in trust for, the respondents. This trust arose not because there was any agreement for the title to be taken in the name of petitioner, and the property to be held by him in trust for the respondents-as would be necessary to constitute an express trust-but, because under the facts, equity would raise the trust to protect the rights of the respondents, and to prevent the unjust enrichment of petitioner by his violation of his promise and duty to the respondents to take title in the name of the three of them, and for their mutual profit and advantage.
As the Trust Act was originally passed by Acts, 48th Leg., R.S., Ch. 148, p. 232, Sec. 2 read: 'Sec. 2. Definition of trust. 'Trust', for the purposes of this Act, means an express trust only, and does not include so-called 'business trusts".
At the very next session of the Legislature the Texas Trust Act was amended in certain particulars. Sec. 2 then was made to read, as it did at the time of the transactions set forth in respondents' pleadings, and as it now reads:
The only purpose the Legislature could possibly have had in thus amending Sec. 2, was to make more definite just what trusts were covered by the Act, and to state in so many words that the Act was not meant to apply to resulting or constructive trusts, to certain other business transactions generally known and denominated as 'trusts', or whose legal effect was to create a 'trust' in law or equity. To come within the limits and prohibitions of the Act, a certain state of facts must give rise to an express trust. We must, therefore, determine just what is an express trust under the terms of this Act. It was well-settled by our decisions rendered prior to the adoption of the Trust Act that the Statute of Frauds did not prevent the establishment of a parol trust in land. These decisions applied to express, resulting and constructive trusts equally. There was no appreciable difference in the end reached as to the form, name or character of the trust involved. We think the early case of James v. Fulcrod, 5 Tex. 512, very clearly sets out that under our Statute of Frauds then existing the establishment of a trust in lands could be proven by parol evidence. Chief Justice Hemphill, in declaring...
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