Peirce v. Sheldon Petroleum Co.
| Decision Date | 31 October 1979 |
| Docket Number | No. 9004,9004 |
| Citation | 589 S.W.2d 849 |
| Parties | Polly F. PEIRCE, Appellant, v. SHELDON PETROLEUM COMPANY, a Delaware Corporation, Appellee. |
| Court | Texas Court of Appeals |
William B. Browder, Jr. and James V. Hammett, Jr., Stubbeman, McRae, Sealy, Laughlin & Browder, Austin, for appellant.
Donald M. Hunt, Key, Carr, Evans & Fouts, Lubbock, R. Keith Drummond, Strasburger & Price, Dallas, for appellee.
This is a constructive trust case. 1 Polly Peirce sued Charlotte Carter, Charles Carter, Sheldon Petroleum Company of Texas and Sheldon Petroleum Company of Delaware alleging various causes of action against them. The trial court granted summary judgment in favor of Sheldon Petroleum Company of Delaware (hereafter Sheldon), and severed the suit against Sheldon from the other causes of action alleged by Peirce against the remaining defendants. In this court, Peirce contends that granting summary judgment was reversible error, because she had established material disputed fact questions relative to her attempt to impose a constructive trust on assets of Sheldon. We disagree and affirm the judgment of the trial court.
Peirce and Charlotte Carter became close personal friends in 1947 when both resided in Maine. Soon after the inception of the friendship, Mrs. Carter solicited $5,000 from Peirce on the representation that the money would be invested in oil properties in Texas by Mrs. Carter's son, Charles, who was attempting to get started in the oil business. Peirce and Mrs. Carter agreed that, in return for the money, Peirce was to share equally with Mrs. Carter in money and properties that would be paid to Mrs. Carter by Charles. Mrs. Carter later moved to Texas to live with her son and the friendship continued, with Peirce visiting the Carters in Texas frequently but realizing no return on her investment. In 1955, Peirce met with the Carters at their home in Texas, and they engaged in a discussion about money and the oil business which culminated in a letter agreement between Peirce and Mrs. Carter. There is a dispute concerning the agreements that were reached during the meeting, but Peirce's version is that she was to assume and pay a $5,000 indebtedness of Mrs. Carter's and give the Carters an additional $15,000 in cash. She was to be credited with a $25,000 investment and, in return for this, Charles was to convey to Mrs. Carter one-half of his interest in his oil company, Carter and Mandel, and Mrs. Carter was to convey one-half of that interest to Peirce. Peirce subsequently gave the money to Mrs. Carter and paid the indebtedness she had assumed. She never received any interest in Carter and Mandel, however, and Charles denies ever receiving any of the money Peirce gave to Mrs. Carter. The Carters and Peirce remained friends until 1972. The relationship then began to deteriorate when Peirce was told by Mrs. Carter that, for her $25,000 investment, she would receive 1,000 shares of stock in Sheldon, valued at six or seven dollars a share. Peirce made several requests of Charles in 1973 for a settlement but to no avail. She then filed suit in 1974 claiming she was entitled to a much larger sum.
Appellee Sheldon, a Delaware Corporation, is the end product of a series of business entities that began in 1948 when Charles Carter and Sam Mandel formed the partnership of Carter and Mandel in order to invest in oil and gas properties. Since the formation of the initial partnership, Charles has maintained primary control of the business and has general powers of attorney from Mandel and other investors. In 1952, in conjunction with an investment counselor, the partnership developed a program for investors seeking tax shelters. An agency account format was used whereby the partnership invested each client's funds in oil and gas properties. After the initial payout period for the investment, Carter and Mandel received as its fee twenty-seven and one-half percent of the properties acquired while the investor retained the balance. In 1963, Sheldon Petroleum Company of Texas was formed and the property owned by the agency account investors, along with most of Carter and Mandel's property, was transferred to the corporation in return for shares of stock. In 1969, all remaining property of Carter and Mandel was transferred to Sheldon of Texas in return for a credit for money owed by Carter and Mandel to the corporation and cash. Charles Carter, individually, received none of the stock in the newly formed company. Carter and Mandel's assets were then comprised solely of shares of stock in Sheldon of Texas. In 1970, Sheldon of Texas became a publicly owned corporation, and in 1973, Sheldon of Texas merged with and became Sheldon Petroleum Company of Delaware, the appellee in this case. This merger was accomplished through an exchange of stock that resulted in the extinguishment of Sheldon of Texas for all practical purposes. Charles Carter has at all times, throughout the history of the companies, remained in an executive and managerial capacity. He has never made any capital contribution to the partnership nor to either corporation. His sole contribution to the companies has been his services.
The controversy now before the court revolves around Peirce's attempt to impose a constructive trust on assets of the final corporation, Sheldon of Delaware. Her theory, essentially, is that the various promises given to her by Mrs. Carter and Charles made Charles a constructive trustee with regard to the Carter and Mandel property they promised to convey to her. Peirce also contends that the partnership and successive corporations operated as constructive trustees for the property because of Charles' control of those companies. Two of the three points of error presented by Peirce contend that material disputed fact questions exist with regard to her constructive trust theory. Her third point of error contends that the trial court applied an incorrect standard of review in evaluating the summary judgment evidence.
When Sheldon moved for summary judgment on the cause of action alleged against it by Peirce, it assumed the burden of establishing by summary judgment proof that, as a matter of law, there was no genuine issue of material fact. Gibbs v. General Motors Corp., 450 S.W.2d 827, 828 (Tex.1970). Sheldon (as the defendant) had the burden of showing by uncontroverted evidence, that Peirce had no cause of action against it on the theory or theories alleged in her petition or that it had a complete affirmative defense to the cause of action. The City of Houston v. Clear Creek Basin Authority, 23 Tex.Sup.Ct.J. 7, 11, Tex., 589 S.W.2d 671 (1979). We are required to view the summary judgment evidence in the light most favorable to Peirce...
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