Murphy v. Johnson

• Decision Date: 27 March 1969
• Docket Number: No. 15409,15409
• Citation: 439 S.W.2d 440
• Parties: Johnie C. MURPHY et ux., Appellants, v. William J. JOHNSON et al., Appellees. . Houston (1st Dist.)
• Court: Texas Court of Appeals

Page 440

439 S.W.2d 440

Johnie C. MURPHY et ux., Appellants, v. William J. JOHNSON et al., Appellees.

No. 15409.

Court of Civil Appeals of Texas Houston (1st Dist.).

March 27, 1969.

Elliott & Elliott, Loran L. Elliott, Houston, for appellants.

Schlanger, Cook & Cohn, Joel W. Cook, Houston, for appellees.

COLEMAN, Justice.

Appellees William J. Johnson and his wife, Doris Ann Johnson, instituted this suit to remove the cloud on their title to certain real estate caused by the abstracting of a judgment in favor of appellants against John Chesser and a sheriff's deed to appellants based on said judgment. Appellees had conveyed title to the land to John Chesser and his wife, Ann Chesser, their daughter, under an oral agreement to reconvey. Appellants filed a counterclaim to the property. Trial was to a jury. The trial court sustained appellees' motion to disregard certain issues and rendered judgment based on the verdict.

In answer to special issues the jury found that prior to the delivery of the deed dated October 12, 1961 from the Johnsons to the Chessers, it was agreed by all of said parties that the land described in such deed should be placed in the name of Chesser and wife to enable Chesser to obtain a loan and that after they repaid the loan the property would be conveyed back to Johnson and wife. The jury found that the property was not deeded to the Chessers as a gift. The judgment was rendered on the basis of these issues. The trial court found the other issues to be immaterial or not supported by competent evidence.

Prior to October 12, 1961, John Chesser desired to purchase an automobile body shop from Murphy. The Chessers went to the Johnsons, his wife's parents, and asked them to deed a forty acre tract of land owned by the Johnsons to the Chessers. Both Mr. and Mrs. Johnson were deaf and could not speak. They communicated with their daughter by sign language. They could read and write. It was understood by all parties that the Chessers would mortgage the land to secure money for a down payment on the business. They agreed to reconvey the land to the Johnsons after they had repaid the loan. The Johnsons executed a general warranty deed conveying title to the land to the Chessers. The loan was secured and the business purchased from the Murphys. The loan was subsequently repaid and the lien placed on the land as security discharged.

In connection with the purchase of the business Mr. and Mrs. Chesser signed notes for the balance of the purchase price. The business did not prosper and the notes were not paid as agreed. Murphy brought suit against Mr. and Mrs. Chesser for his debt. On March 23, 1964, a deed executed by John Delano Chesser purporting to convey the property in question to Faye Ann Chesser as part of a community property settlement, and dated March 20, 1964, was filed for record. At this time Mr. Chesser owed money to the Murphys and to others. He did not have assets sufficient to discharge his debts . On March 23, 1964, a judgment was rendered against John Chesser and wife, Ann Chesser, in favor of the Murphys. On March 30, 1964, the Chessers were divorced. On April 13, 1964, an abstract of the judgment of March 23, 1964, was filed and recorded. This judgment was reversed as to Ann Chesser by judgment of the Court of Civil Appeals on January 14, 1965. However, prior to the disposition of the appeal, a writ of execution was issued and, on May 6, 1964, was levied by the Sheriff of Harris County, Texas, on 'any and all right, title, interest, and claim which the said John Chesser and wife, Ann Chesser, jointly and severally, had of, in or to' the real estate in question. Prior to the sale of the land, scheduled for June 2, 1964, Faye Ann Chesser, by an instrument dated May 29, 1964, purported to convey the land back to William J. Johnson and wife Doris Ann Johnson. This deed was filed for record on May 29, 1964. On June 2, 1964, the Sheriff of Harris County sold the property in question, by virtue of the writ of execution levied on the land on May 6, 1964, to the Murphys, and issued them a deed to the property, which was recorded June 4, 1964.

The Texas Trust Act, Art. 7425b--7, Vernon's Ann.Tex.Civ.St., provides that an express trust in relation to or consisting of real property shall be invalid, unless created, established, or declared by a written instrument subscribed by the trustor, or his duly authorized agent, or by any other instrument under which the trustee claims the estate affected.

Appellants contend that the judgment of the trial court enforces an oral express trust in violation of this article. They contend that appellees failed to establish a resulting or constructive trust; that the deed from John Delano Chesser to Faye Ann Chesser was void as to appellants because they were prior creditors; that the deed from Faye Ann Chesser to William J. Johnson and wife was void as to appellants because they were prior creditors of John D. Chesser and the land was the community property of John D. and Faye Ann Chesser; that the trial court erred in rendering judgment for appellees because appellants owned a valid lien on the property superior to the claim of appellees, and because the sheriff's deed was valid and should have been sustained.

The Supreme Court of Texas in the case of Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401 (1960), determined that a constructive trust may be imposed to prevent unjust enrichment of one in a confidential relationship even though such person refuses to perform an unenforceable express trust. The Court said: '* * * The courts, so doing, will not be enforcing an oral contract but will be enforcing a constructive trust based upon the violation of a fiduciary duty and to prevent unjust enrichment.'

In reaching this conclusion the court quoted from Mills v. Gray, 147 Tex. 33, 210 S.W.2d 985 (1948), as follows: '* * * 'Under these principles (discussed in the opinion), if the purported agreement and family arrangement had been established as true, A constructive trust would have arisen by reason of the confidential relation between the parties which would not fall within the prohibition of the Statute of Frauds or the Texas Trust Act. The testimony was therefore erroneously excluded by the trial court.' 210 S.W.2d 988 and 989.'

The Court then said: 'The holding in Mills v. Gray is in accordance with the rules in other states. Most of them have provisions similar to § 7 of our Trust Act in § 7 of their Statute of Frauds.' In a footnote the Court points out that Texas did not adopt § 7 of the Statute of Frauds and refers to § 7 of the Texas Trust Act as its equivalent.

No cases have been cited determining whether the provisions of § 7 of the Texas Trust Act declaring invalid a parol trust 'in relation to, or consisting of' real property, can be invoked by a stranger to the agreement by which the parol trust was created. The wording of Section 7 of the Statute of Frauds declared such an agreement 'utterly void and of no effect.' Omohundro v. Matthews, supra.

In 49 Am.Jur., Statute of Frauds, § 589, it is stated as a general rule that the defense of the statute of frauds is a personal one available only to a party to the contract to which the statute is alleged to apply and his representatives and privies. In this Section it is stated: 'As has been said, it does not rest with a stranger to say that the parties to the oral agreement will not abide by the same regardless of the statute; it is for the party himself (or his privy) to decide whether he shall avail himself of the defense. If he feels that he should discharge the moral obligation although he may have a perfect legal defense, no stranger or third party not privy to the contract can complain. This rule applies even under statutes which provide that such agreements are void unless reduced to writing and signed by the party charged. It ordinarily prevents even creditors of a party to the contract from asserting the benefit of the contract.'

Many cases may be cited in support of this next. Among the cases holding that a stranger to the oral agreement cannot complain if a party to the agreement wishes to discharge his moral obligation by performing where the state statutes provide that such agreements are void, are Russell v. Keene, 239 Ark. 752, 394 S.W.2d 131 (1965); Schuster v. Pennsylvania Turnpike Commission, 395 Pa. 441, 149 A.2d 447 (1959), and Laverents v. Gattis, 60 Wyo. 285, 150 P.2d 867 (1944).

Of particular interest because of close...