Slay v. Mary Couts Burnett Trust

• Citation: 180 S.W.2d 480
• Decision Date: 07 April 1944
• Docket Number: No. 2420.,2420.
• Parties: SLAY et al. v. MARY COUTS BURNETT TRUST.
• Court: Texas Court of Appeals

180 S.W.2d 480

SLAY et al. v. MARY COUTS BURNETT TRUST.

No. 2420.

Court of Civil Appeals of Texas. Eastland.

April 7, 1944.

Rehearing Denied May 12, 1944.

COPYRIGHT MATERIAL OMITTED

Appeal from District Court, Tarrant County; Geo. L. Davenport, Judge.

Action by Mary Couts Burnett Trust against W. H. Slay and others for recovery of alleged secret profits received by certain defendants and to recover damages for alleged losses on loans occasioned by alleged breaches of trust. From a judgment, defendants appeal.

Affirmed in part, in part modified and affirmed, and in other parts reversed and remanded.

Martin, Moore & Brewster and Otis Rogers, all of Fort Worth, for appellants.

B. V. Thompson, of Fort Worth, for appellee.

GRISSOM, Justice.

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 for the Sweatt Estate. Judgment was rendered against it by default and no appeal was taken therefrom. The other defendants answered, and, among other things, denied that they were guilty of breaches of trust. They alleged that the monies received by Slay, Simon and Sweatt were legitimate extra compensation for special services rendered and that the other defendants had a legitimate right to the monies received by them. That the loans were made in good faith; that if losses resulted, they were caused by errors of judgment, not by breaches of trust committed by said trustees and attorneys; that the fees were contracted for and fixed after applications for loans had been voted upon by the trustees and at a time when the fees could not have affected the vote of the trustees; that recovery on all transactions, except the Tex-Oil Producers loan, was barred by the statutes of limitation; that while some of the loans were in default, the Trust had taken over the security and that the Trust had suffered no loss.

The case went to trial before the court and a jury. After a trial lasting about six weeks the court submitted the case to the jury upon 105 special issues. The jury failed to answer any of the issues and was discharged. Thereafter, the court entered judgment on its own motion. Defendants have appealed.

Judgment was rendered for Slay and Simon on the O'Neill and Proctor-Ward County transactions and against the plaintiffs and for the Estate of Sweatt and for Slay and Simon for the interest paid by the Trust on the money it borrowed, while Sweatt and Slay were trustees, for the purpose of making the Lynch, Proctor-Ward County, Public Service Corporation and Tex-Oil Producers, Inc., loans. Plaintiffs do not complain of said portions of the judgment, and in said respects it is affirmed.

Defendants' first two points are that the court erred in rendering any judgment against Slay, Simon, Proctor and Longmire (1) when a jury had been demanded and had been excused for failure to agree upon any issue submitted, and (2) without notice of a hearing on plaintiffs' motion for judgment. Plaintiffs had seasonably filed a motion for an instructed verdict. It was taken under advisement, and the case submitted to the jury. After discharge of the jury plaintiffs filed a motion for judgment which was likewise taken under advisement. Thereafter, as shown by the judgment, the court concluded that plaintiff's motion for a pre-emptory instruction should have been granted in substance, and that plaintiffs were, as a matter of law, entitled to a judgment. Whereupon, the court, without notice to defendants, proceeded to render the judgment that it considered was required by the undisputed evidence.

It is evident that plaintiffs' suit asserts many divisible causes of action; that in some instances, even as to the same general transaction, there are independent grounds of both recovery and defense relating to different, separate and distinct items. We are of the opinion that reversible error was not committed by the action of the Court in discharging the jury and thereafter rendering judgment on his own motion as to some of the transactions and on some grounds of recovery, because, we think, as to them there were no issues of fact to be determined and the judgment rendered was the only judgment that could, in any event, properly be rendered. As to others, we think issues of fact were raised by the evidence. R.C.P.Tex. 434; Handy v. Olney & Ref. Co., Tex.Civ.App., 68 S.W.2d 313, writ refused; Garcia v. King, 139 Tex. 578, 164 S.W.2d 509; Clark v. Jones, Tex.Civ.App., 164 S.W.2d 62, 63; Zachary v. City of Uvalde, Tex.Com.App., 42 S.W.2d 417; Adams v. Houston Nat. Bank, Tex.Com.App., 1 S.W.2d 878, 880 and 881; Henenberg v. Winn, Tex.Civ. App., 1 S.W.2d 432, 434. See also Lawrence v. Cananea Consol. Copper Co., Tex. Civ.App., 237 S.W. 959, 962, writ dismissed; First Nat. Bank v. Corbin, Tex.Civ.App., 153 S.W.2d 979, 981; 25 Tex.Jur. 433; and, American Nat. Bank v. Sheppard, Tex. Civ.App., 175 S.W.2d 626, 628. These decisions will be hereafter made clear in our separate discussion of each of the transactions on which judgment was rendered against defendants.

In 1923 Mrs. Mary Couts Burnett executed a Trust Indenture wherein she conveyed property of the alleged value of $3,000,000 to herself, Dr. Chas. H. Harris, Mrs. Ollie Lake Burnett, Mrs. Ella Bardin, W. H. Slay and John H. Sweatt, as trustees, for the use and benefit of Texas Christian University. In their written acceptance of the trust said trustees agreed to execute the trust with fidelity and account for all monies received by them. Mrs. Ollie Lake Burnett and Mr. Sweatt were related by marriage to Mrs. Mary Couts Burnett. At the time of the execution of the trust indenture Mr. Slay and his law partner, Mr. U. M. Simon, were Mrs. Mary Couts Burnett's attorneys. Thereafter, until August, 1940, Slay and Simon were attorneys for the Trust and Mr. Slay, after Mrs. Mary Couts Burnett's death, was Chairman of its Board of Trustees. Prior to the execution of the trust indenture Mrs. Bardin had at one time been employed by Slay and Simon, and, when the trust agreement was executed, she was the private secretary of Mrs. Mary Couts Burnett, to which position she had been recommended by Mr. Slay. Mrs. Mary Couts Burnett died December 18, 1924. In accord with the provisions of the trust indenture, no trustee was elected to succeed her. Mrs. Ella Bardin died in 1931, and although the trust indenture provided for the election of her successor by the remaining trustees, no successor trustee was elected until 1940, after trustees Slay and Sweatt resigned.

The trust indenture provided that compensation of the trustees was to be fixed by the Board of Trustees. After Mrs. Burnett's death the trustees were paid monthly salaries which were changed occasionally, but, during most of the time, the trustees received monthly salaries of $200 each for administering the trust, except Slay who was paid $400 per month. Slay's salary went into the firm of Slay and Simon and was considered as also compensation for incidental legal services.

In March, 1936, the Burnett Trust began making "oil loans," and thereafter for several years made loans to persons engaged in the oil business. The Trustees did not demand nor receive financial statements from such borrowers. They made loans to persons of slight or no financial responsibility, loaning in many instances all and in others more than the purchase price of the property bought by the borrower with funds furnished by the Trust. In some instances, notably the "Big Indian" loan, the property purchased with only a part of the money borrowed from the Trust constituted the sole security for the loan. In some loans, including Big Indian, the money was loaned for the purpose of buying mineral interests owned by concerns then in the hands of a receiver. In order to make some of such "oil loans" the trustees borrowed money.

Big Indian Loan.

W. C. Proctor and Ray E. Longmire had known each other for several years prior to 1936, and were partners when the Big Indian loan was made. In 1935 Longmire introduced Proctor to Sweatt. Proctor met Slay and Simon in 1936, when he went to see Slay, as trustee of the Burnett Trust, for the purpose of obtaining a loan. Proctor and Sweatt had formed the idea of obtaining a loan for themselves, or for themselves and Longmire, for the purpose of purchasing "units", or what was in effect mineral deeds, issued by the Big Indian Syndicate, then in receivership, and attempting to obtain a majority of the units in said organization and finally securing a sale of those units at a profit, through a receiver or otherwise. Having been unsuccessful elsewhere, Sweatt suggested to Proctor that he contact Slay and see if the Burnett Trust would make a loan. The...