Slay v. Burnett Trust

• Decision Date: 25 April 1945
• Docket Number: No. A-223.,A-223.
• Citation: 187 S.W.2d 377
• Parties: SLAY et al. v. BURNETT TRUST et al.
• Court: Texas Supreme Court

187 S.W.2d 377

SLAY et al. v. BURNETT TRUST et al.

No. A-223.

Supreme Court of Texas.

April 25, 1945.

Rehearing Denied May 30, 1945.

COPYRIGHT MATERIAL OMITTED

Error to Court of Civil Appeals of Eleventh Supreme Judicial District.

Suit by Charles H. Harris and others, as trustees of the Mary Couts Burnett Trust, against a former trustee, W. H. Slay, and W. C. Proctor and others, to recover alleged secret profits received by former trustees and other defendants, and to recover damages for alleged losses on improper loans of trust funds. On appeal to the Court of Civil Appeals, 180 S.W.2d 480, a judgment granting plaintiffs partial relief was affirmed in part, modified in part and affirmed, and reversed in part, and three separate applications were granted for writs of error by plaintiffs, by W. H. Slay and another, and by W. C. Proctor and another.

Judgments of the trial court and Court of Civil Appeals affirmed in part and reversed in part, and cause remanded for new trial of certain issues.

Otis Rogers, of Ft. Worth, for Proctor and Longmire.

Martin, Moore & Brewster and Wm. Pannill, all of Ft. Worth, for Slay and Simon.

B. V. Thompson, of Ft. Worth, for Burnett's Trust, and others.

SMEDLEY, Commissioner.

On December 11, 1923, Mrs. Mary Couts Burnett, by trust indenture, conveyed to herself, Dr. Chas. H. Harris, Mrs. Ollie Lake Burnett, Mrs. Ella Bardin, W. H. Slay and John H. Sweatt, as trustees, property, both real and personal, of great value, for the use and benefit of Texas Christian University. The instrument authorized the trustees to take possession of the trust property and conferred upon them, in broad terms, authority to manage, sell, assign, convey and lease the property, to re-invest the proceeds, to collect rents, dividends, interest, and other revenues and any obligations arising or accruing in the conduct of the trust. It provided that Mrs. Mary Couts Burnett should be chairman of the trustees and that upon her death or resignation W. H. Slay should become chairman, and further that if any trustee should die, resign or become incapacitated, his successor should be appointed by the settlor, Mrs. Burnett, if living, and after her death by the remaining or surviving trustees. The instrument was executed by all of the trustees as well as by the settlor, and they agreed to execute the trust according to the provisions of the indenture and with all due fidelity. Mrs. Burnett, the settlor, died December 18, 1924, and W. H. Slay became chairman of the trustees. At the time of the execution of the trust indenture W. H. Slay and his partner, U. M. Simon, were Mrs. Burnett's attorneys, and upon the creation of the trust they became its attorneys.

The nature of the suit is thus stated at the beginning of the elaborate and thorough opinion of the Court of Civil Appeals : "Plaintiffs, Dr. Charles H. Harris, E. E. Bewley, Charles F. Roeser, Mark McMahon, and W. K. Stripling, as trustees of the Mary Couts Burnett Trust, brought this suit for the use and benefit of said Trust and its beneficiary, Texas Christian University. The defendants are W. H. Slay, U. M. Simon, W. C. Proctor, Ray E. Longmire and Martha Roberta Sweatt, sole beneficiary and independent executrix of the will of John H. Sweatt, deceased, who died in July, 1941, while his depositions were being taken in this case. The original petition was filed on March 7, 1941. Plaintiffs sought recovery on nine separate and distinct transactions occurring over a period of three years, from 1936 to 1939, any one of which would constitute the basis for a law suit. These transactions may in the main be generally classified as those wherein plaintiffs sought recovery of alleged secret profits received by Slay, Simon and Sweatt, while Slay and Sweatt were trustees and Slay and Simon were attorneys for the Trust, which secret profits were alleged to have been divided with the other defendants; and those in which plaintiffs sought to recover damages for alleged losses on loans, occasioned by breaches of trust on the part of Slay, Simon and Sweatt as trustees and attorneys and in which the other defendants are alleged to have knowingly participated."

No answer was filed by Mrs. Sweatt, independent executrix of the estate of John H. Sweatt, deceased, and no appeal was taken from the trial court's judgment rendered against her. After trial before a jury for about six weeks and the failure of the jury to agree upon answers to any of the many special issues submitted to it, the trial court discharged the jury, and, having concluded that the plaintiffs' motion for a peremptory instruction should have been granted in substance, the trial court rendered judgment "on the undisputed evidence".

It was adjudged that the plaintiffs take nothing on three of their several counts or grounds of recovery, and no complaint has been made of that part of the judgment. Judgment was rendered in favor of plaintiffs against the defendants Slay, Simon, Proctor, Longmire and Mrs. Sweatt for $4,079 and $80,911.74, or the total sum of $84,990.74 "on the Big Indian Syndicate transaction of March 31, 1936"; and against defendants Slay, Simon and Mrs. Sweatt for $25,000 "on the Public Service Corporation loan of September 4, 1937". Judgment was also rendered in favor of plaintiffs against the defendants, or certain of the defendants, for various other substantial sums, on account of transactions in which profits were made by the defendants and losses were suffered by the trust estate. These transactions, or some of them, will be discussed hereinafter in the consideration of the assignments of error.

On appeal by the defendants Slay, Simon, Proctor and Longmire, the Court of Civil Appeals modified the trial court's judgment on the Big Indian Syndicate transaction by deducting from the judgment against Slay and Simon $4,079 and $5,000, and from the judgment against Proctor and Longmire $328.76 and $5,000, holding that issues of fact were raised as to those items, and affirmed the judgment as modified. For the same reason the Court of Civil Appeals modified the judgment for $25,000 on the Public Service Corporation loan by deducting $1,500 from it, and affirmed it for $23,500. The trial court's judgment against Slay, Simon and Proctor for $14,000 on the Great Plains Oil & Gas Company transaction was reversed, and the judgment against Proctor and Mrs. Sweatt for $19,000 on the same transaction was affirmed. The judgment against Proctor and Mrs. Sweatt for $143,730.98 on the Proctor-Ward County loan was affirmed. The judgment for $146,288.71 against Slay, Simon Proctor and Mrs. Sweatt on the Lynch loan was reversed as to Slay, Simon and Proctor. The judgment against Slay, Simon and Mrs. Sweatt on the Tex-Oil Producers loan was reversed as to Slay and Simon. The judgments on the loan made to Longmire and the Nantz-Wood loan were reversed. 180 S.W.2d 480.

Three applications for writs of error were filed and have been granted: one by defendants Slay and Simon, one by defendants Proctor and Longmire, and one by the plaintiffs. To avoid confusion, the parties will be referred to as they appeared in the trial court rather than as petitioners and respondents. Disposition will first be made of three questions about procedure and parties.

The first point in the application for writ of error filed by the plaintiffs presents the contention that the Court of Civil Appeals erred in overruling their motion to dismiss the appeals of W. C. Proctor and Ray E. Longmire, who for the purpose of perfecting appeals filed affidavits stating, in the language of Rule 355 of Texas Rules of Civil Procedure, that they were unable to pay the costs of appeal or any part thereof, or to give security therefor. To contest these affidavits the plaintiffs and the clerk of the trial court filed their signed statements, not verified by affidavits, that they believed that Proctor and Longmire were able to pay costs of appeal and to give security therefor, and in which they prayed the court to hear proof touching the same.

The court made an order setting the contests for hearing on November 21, 1942. Another order of the court, entered on the date last mentioned, recites that the hearing of the contests is postponed until December 7, 1942, upon the motion of the attorneys for Proctor and Longmire, to give them time within which to prepare and present proof touching the matters set forth in their affidavits. The transcript does not show that any further proceedings were had or that any other orders were made by the court with respect to the affidavits of inability to pay costs of appeal or the contests of the affidavits. The plaintiffs contend that it was unnecessary to verify the contests by affidavit and that, after the contests were filed, the burden was on Proctor and Longmire to sustain the allegations of their affidavits.

Rule 355 provides that a party who is unable to pay costs of appeal or to give security therefor "shall be entitled to prosecute an appeal by filing with the clerk his affidavit stating that he is unable to pay the costs of appeal or any part thereof, or to give security therefor"; that the clerk shall notify the opposite party or his attorney of the filing of the affidavit; that any interested officer or party to the suit "may contest the affidavit within ten days after the giving of such notice"; and that thereupon the court shall set the contest for hearing and the clerk shall give the parties notice of the setting. The rule further provides that "upon such hearing the burden of proof shall rest upon the appellant to sustain the allegations of his affidavit", and that "where no contest is filed in the allotted time the allegations of the affidavit shall be taken as true."

Rule 355 superseded Article 2266, Revised Civil Statutes of 1925, as amended in 1931 by Sec. 1, Ch. 134, Acts Regular Session, 42nd Legislature, Art. 2266, Vernon's Ann.Tex.Civ.Stats. Article 2266, before its amendmen...