Nettles v. First Nat. Bank of Temple, 9304.

• Decision Date: 10 February 1943
• Docket Number: No. 9304.,9304.
• Citation: 168 S.W.2d 920
• Parties: NETTLES v. FIRST NAT. BANK OF TEMPLE.
• Court: Texas Court of Appeals

168 S.W.2d 920

NETTLES v. FIRST NAT. BANK OF TEMPLE.

No. 9304.

Court of Civil Appeals of Texas. Austin.

February 10, 1943.

Rehearing Denied March 3, 1943.

Appeal from District Court, Bell County; Wesley Dice, Judge.

Action by E. E. Nettles against the First National Bank of Temple to recover a trust fund deposited by plaintiff with defendant. From a judgment of dismissal, plaintiff appeals.

Reversed and remanded.

Sam D. Snodgrass, of Temple, for appellant.

Saulsbury, Skelton, & Everton, of Temple, for appellee.

BLAIR, Justice.

Appellant, E. E. Nettles, sued appellee, First National Bank of Temple, to recover an alleged trust fund of $5,354.93, deposited by appellant with appellee bank on April 17, 1937. The trial court sustained certain special exceptions to the first amended and first supplemental petition and, upon appellant's refusal to amend, dismissed the suit; hence this appeal.

The facts alleged as establishing the trust fund, or out of which the alleged trust agreement or agreements arose, are, in substance, as follows:

That immediately after appellant became the duly elected and acting president of appellee bank, he found that one Downs owed said bank an unsecured debt of about $10,000; and that shortly thereafter Downs died without paying or securing any part of the debt. At the time of his death Downs was indebted (1) to a Dallas bank in the approximate sum of $37,000, which was secured by real estate, stocks and bonds; (2) to a Houston bank in the sum of $12,842.74, which was secured by the stock of a certain life insurance company; and (3) to Rice Institute of Houston in the approximate sum of $32,000, which was secured by a first deed of trust lien on lots 18 and 19, and the west 40 feet of lot 20, in block 21, of the original town of the City of Temple, Texas; and that the Dallas bank also had a second lien on this real estate to secure its indebtedness. That appellant obtained a list of the Dallas bank's securities, and after investigation concluded that the value thereof was greatly in excess of Downs's indebtedness to said bank; that the will of Downs was duly probated, and thereafter appellee made a deal with the executors of his estate by which appellant could acquire all of the assets of said estate, in consideration of the cancellation of the indebtedness due said three creditors, and the approximately $10,000 due appellee bank by Downs. That shortly thereafter appellant, for himself and for his own benefit, obtained from the Dallas bank an option to purchase Downs's notes and collateral held by it for a consideration of $20,000; that he called a meeting of the board of directors of appellee bank, which met at the residence of one of them, at which appellant informed them of all the aforementioned debts, options, collateral securities, and liens, and told the directors that in his opinion the securities held by the Dallas bank far exceeded in value the indebtedness due by Downs to it, to say nothing of the value of the Temple property, which also far exceeded in value the indebtedness due Rice Institute, which held the first lien on the property; and that the value of the collaterals and liens held by said three mentioned creditors of Downs was far in excess of all indebtedness owed by Downs, including the $10,000 due appellee bank. That appellant informed the directors that a deal could be made with the executors of Downs estate whereby appellee bank could acquire all of the assets of said estate so held by the creditors named, in consideration of the cancellation of all the debts due said creditors, including appellee bank. Appellant then and there offered to transfer and assign to appellee bank his option to purchase the Dallas bank's notes, securities and liens, upon condition that appellee bank would exercise it and purchase same, and would then proceed to realize thereon by enforcing the liens; which offer appellee bank declined to accept, unless appellant could sell lots Nos. 18 and 19 for enough to pay off the first lien debt due Rice Institute, and thereby leave appellee bank vested with title to the west 40 feet of lot 20, free of debt. That appellant and one Saulsbury accepted appellee bank's offer, and agreed to purchase lots 18 and 19 for enough to pay the Rice Institute debt, and thereby pay off and discharge its first lien on all of the Temple property. Appellant did then authorize appellee bank to exercise his option to purchase "said notes and securities" for his benefit and with the agreement that appellee bank would foreclose the second deed of trust lien on the Temple property, subject to the Rice Institute's debt and lien; all of which was done; the trustee conveying the property to appellee bank, subject to the first lien, paying therefor $7,500, which was credited on said notes, but with the agreement that it would hold title thereto in trust for appellant and Saulsbury, with the further understanding that in the end they would pay the Rice Institute debt and thereby clear the Temple property of all incumbrances. By paragraph 6 of the first amended original petition, to which all special exceptions sustained by the court were directed, appellant alleged:

"That pursuant to the agreement hereinbefore alleged, and from the day and date of its purchase of said lots 18 and 19, and the west 40 feet of said lot 20, all in block 21, Original Town of the City of Temple, Texas, at said foreclosure sale, and until an undivided interest in and to said lots 18 and 19 was sold to Dr. A. C. Scott, Sr., as hereinafter alleged, defendant held the title to said lots 18 and 19 in trust for said Walker Saulsbury and plaintiff in share and share alike; that on or about April 17, 1937, for and in consideration of $21,000.00 cash paid to defendant, as hereinafter alleged, plaintiff sold his one-half interest in said lots 18 and 19 to said Dr. A. C. Scott, Sr.; that the paper title being as it was in defendant, and for the purpose of vesting the full title thereto in said Dr. A. C. Scott, Sr., and said Walker Saulsbury in share and share alike, defendant did, on or about April 17, A. D. 1937, by its special warranty deed in writing of that date, convey said lots 18 and 19 to said Dr. A. C. Scott, Sr., and Walker Saulsbury; that in consideration for said conveyance, the said Scott and Saulsbury did each pay unto defendant the amount of $21,000.00; that, at the time of such conveyance, said Rice Institute debt, secured as it was by said lots 18 and 19 and the west 40 feet of said lot 20, amounted to the sum of $31,290.14, and out of said sum of $42,000.00 so paid defendant by said Scott and Saulsbury, defendant discharged said Rice Institute debt, and said defendant retained the surplus or excess of $10,709.86, which belonged to said Saulsbury and plaintiff in share and share alike, by virtue of said trust agreement; that thereafter defendant repaid one-half of such last named amount to said Walker Saulsbury, and by agreement made and entered into by and between plaintiff and defendant, at the time said $42,000.00 was so paid to defendant by said Scott and Saulsbury, said defendant held and retained one-half of such surplus or the sum of $5,354.93, in trust for and as the property of plaintiff; that plaintiff made no demand on defendant for such trust funds until after his connection with defendant had been severed, and during all the time plaintiff remained with said defendant, as hereinbefore alleged, said defendant, through its Board of Directors, recognized that it held said $5,354.93 in trust for plaintiff, and at no time prior to plaintiff's said severance of connection or at any time subsequent thereto, in so far as plaintiff knows, did defendant, through its Board of Directors or otherwise, repudiate said trust agreement; that, however, on or about the 15th day of July, A. D. 1939, plaintiff did make demand of defendant for such trust funds, and defendant failed and refused to pay same, or any part thereof and still refuses and fails to repay said funds or any part thereof."

And by first supplemental petition, in reply to appellee bank's answer, appellant alleged: "* * * and on, to-wit: about April 17th, 1937, said defendant, acting through its Board of Directors at a meeting of said Board held at defendant's place of business, in Temple, Bell County, Texas, agreed with plaintiff that said defendant would hold one-half of the excess or surplus, over and above the amount necessary to pay said Rice Institute debt, said surplus amounting to the sum of $5,354.93, in trust for and as the property of this plaintiff, and said sum and amount was so left with defendant and retained by it, with the express agreement and understanding that said defendant would hold and retain said money in trust for and as the property of plaintiff, just as it had held a one-half interest in said lots, 18 and 19, in trust for plaintiff."

All special exceptions sustained by the trial court were addressed to paragraph 6, above quoted, of the first amended original petition, and to the above quoted portion of the first supplemental petition, and in substance are as follows:

1. That the pleadings show only an unenforcible oral agreement or agreements as the basis of the trust sought to be impressed on the $5,354.93 deposited with appellee bank, because no record or minutes of the board of directors of appellee bank authorizing it to acquire and hold title to lots 18 and 19 in trust for appellant, or to deposit the $5,354.93 surplus from the sale of said lots in trust for appellant, were alleged.

2. That the oral agreement or agreements whereby appellant sought to impress a trust upon the real estate and the proceeds of the sale thereof were void as being in violation of the statute of frauds and the statute of conveyances. Arts. 3995 and 1288, R.S.1925.

3. That the pleadings failed to show a valid trust agreement as to the $5354.93 deposited with appellee bank, because it was nowhere alleged...