Pete Rozelle, Jr. v. E. Edd Pritchett ( 2008 )

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MEMORANDUM OPINION
No. 04-07-00600-CV
Pete ROZELLE, Jr.,
Appellant
v.
Barbara K. FELLOWS, David Brock, and E. Edd Pritchett,
Individually and as Trustee,
Appellees
From the 216th Judicial District Court, Kendall County, Texas
Trial Court No. 06-007
Honorable Stephen B. Ables, Judge Presiding
Opinion by: Catherine Stone, Justice
Sitting: Alma L. López, Chief Justice
Catherine Stone, Justice
Sandee Bryan Marion, Justice
Delivered and Filed: November 5, 2008
AFFIRMED
Pete Rozelle, Jr. appeals the trial court’s orders granting summary judgment in favor of
Barbara K. Fellows, David Brock, and E. Edd Pritchett and declaring that Fellows and Brock are the
owners of a tract of land in Kendall County. Because Rozelle’s claim of ownership as the alleged
beneficiary of an alleged express trust is barred by the statute of frauds, we affirm the trial court’s
orders.
04-07-00600-CV
BACKGROUND
In 1975, Erma Rozelle conveyed a tract of land in Kendall County to Fellows (the “Boerne
Property”). In 1977, Fellows conveyed the Boerne Property to “E. Edd Pritchett, Trustee.” Erma
died in 1995. In 2004, Pritchett conveyed the Boerne Property to Fellows and Brock. Rozelle is
Erma’s grandson.
The procedural history of the underlying litigation, including the consolidation of lawsuits,
presents somewhat of a quagmire. For purposes of this opinion, however, we need only focus on the
claim by Fellows and Brock seeking a declaration of their ownership of the Boerne Property. In
opposition to this claim, Rozelle asserted rights as an alleged beneficiary of an alleged express trust
for which Pritchett was trustee when the Boerne Property was conveyed to him. The trial court
granted summary judgment in favor of Fellows, Brock, and Pritchett, and Rozelle appeals.
STANDARD OF REVIEW
Fellows and Brock filed a motion for a traditional summary judgment, while Pritchett filed
a motion for both a traditional and no evidence summary judgment. We review both traditional and
no evidence summary judgments de novo. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150,
156 (Tex. 2004). We consider the evidence in the light most favorable to the non-movant and
indulge all reasonable inferences and resolve any doubts in the non-movant’s favor. Id. at 157. We
will affirm a traditional summary judgment only if the movant established there are no genuine
issues of material fact and it is entitled to judgment as a matter of law on a ground expressly set forth
in the motion. Id. We will affirm a no-evidence summary judgment only if the non-movant fails
to produce more than a scintilla of probative evidence raising a genuine issue of material fact on a
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challenged element of the cause of action. Ford Motor Co. v. Ridgway, 135 S.W.3d 598, 600 (Tex.
2004).
DISCUSSION
At the time the Boerne Property was conveyed to Pritchett as trustee, the Texas Trust Act
provided:
A trust in real property is invalid unless the trust is established by an instrument:
(1) that is signed by the trustor or by an agent of the trustor who has
written authority to sign for the trustor; or
(2) under which the trustee claims the trust estate.
Act of May 26, 1983, 68th Leg. R.S. ch. 576, § 1, 1983 Tex. Gen. Laws 3658 (re-codifying article
7425b-7 of the Texas Civil Statutes without any substantive change in the law). The effect of the
statute is to prohibit the creation of an express parol trust in realty. Klein v. Sibley, 203 S.W.2d 239,
243-44 (Tex. Civ. App.—San Antonio 1947, no writ). Although Rozelle asserted in his response
to the motions for summary judgment that a trust instrument existed at one time but was lost,
Rozelle’s brief focuses on whether a genuine issue of material fact was raised with regard to the
existence of an enforceable oral trust.1
The first exception to the statute of frauds defense relied upon by Rozelle is the proposition
that “the statute of frauds applies to executory trusts” and “any partial or full performance takes [a
trust] out of the statute of frauds.” Neither of the cases cited by Rozelle supports the application of
this exception in this case.
1
… Both of the appellees’ briefs contend that Rozelle’s response to the motions for summary judgment failed
to raise the exceptions to the statute of frauds asserted in his brief. Although raised in the portion of the response
requesting the imposition of a constructive trust, the response does refer to the exceptions addressed in Rozelle’s brief.
Any confusion about what issues Rozelle was expressly presenting would have needed to be resolved by an exception,
and the record does not reflect that any such exception was made. See McConnell v. Southside Ind. Sch. Dist., 858
S.W .2d 337, 343 (Tex. 1993).
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In Frost Nat’l Bank v. Burge, 29 S.W.3d 580, 584-85 (Tex. App.—Houston [14th Dist.]
2000, no pet.), Burge orally agreed to pledge a certificate of deposit (“CD”) as additional security
for a loan to H & H. At the closing of the loan, Burge signed an “Owner’s Consent to Pledge” (the
“Pledge”) the CD as additional security. Id. at 584-85. When H & H subsequently sued Burge for
breaching his agreement to pledge the CD as security, Burge asserted that the claim was barred by
the statute of frauds which requires a promise to pay the debt of a third party to be in writing. Id. at
595. Although no written agreement to act as surety was signed by Burge, H & H argued that Burge
fully performed his oral agreement to pledge the CD by signing the Pledge. Id. Noting that the
statute of frauds does not apply to a fully executed contract, the court held that the statute of frauds
was not applicable because Burge had fully performed his oral promise by executing the Pledge. Id.
Unlike Burge, no evidence was presented in this case that Pritchett executed any document
recognizing that Rozelle was a beneficiary of a trust for which Pritchett was the trustee.
The second case cited by Rozelle is Pappas v. Gounaris, 301 S.W.2d 249, 254-55 (Tex. Civ.
App.—Galveston 1957), rev’d and reformed, 311 S.W.2d 644 (Tex. 1958). Ignoring for the moment
that the Texas Supreme Court reversed the appellate court with regard to the analysis in its opinion
relied upon by Rozelle, in Pappas, the issue before the appellate court was whether the statute of
frauds, which requires a partnership agreement to be in writing, prevented Bell from claiming that
certain property was partnership property. 301 S.W.2d at 254. The appellate court noted that the
two partners, Bell and Pappas, had dissolved the partnership, agreeing that Pappas would retain the
property and would give Bell a note secured by a deed of trust lien against the property. Id. The
appellate court held that by executing the note and deed of trust, Pappas recognized the existence of
Bell’s interest in the property and the partnership agreement became a fully executed agreement. Id.
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Even assuming this analysis survived the subsequent reversal by the Texas Supreme Court, the case
is clearly distinguishable from the instant case because Pritchett never executed any document
recognizing Rozelle as a beneficiary of a trust for which Pritchett was the trustee.
Unlike Burge and Pappas, the only document in this case is the deed to Pritchett as trustee.
The use of the word “trustee” in a deed, in and of itself, however, does not create a trust; it is merely
a description and of no legal effect. Nolana Dev. Ass’n v. Corsi, 682 S.W.2d 246, 249-50 (Tex.
1984); McAnally v. Friends of WCC, Inc., 113 S.W.3d 875, 882 (Tex. App.—Dallas 2003, no pet.);
Fred Rizk Const. Co. v. Cousins Mortgage & Equity Invs., 627 S.W.2d 753, 757 (Tex.
App.—Houston [1st Dist.] 1981, writ ref’d n.r.e.). In his reply brief, Rozelle contends that the deed
is sufficient to create a trust in this case based on the holding in Neeley v. Intercity Mgmt. Corp., 623
S.W.2d 942 (Tex. App.—Houston [1st Dist.] 1981, no writ). The court in Neeley, however,
expressly distinguished the facts in the instant situation from the facts present in that case noting:
In our case DPC assigned the property to DPC, Trustee; a situation in which
A conveys to B, trustee, is not the same situation in which A conveys to A, trustee.
While the former example is susceptible to construction as descriptio personae, the
latter is less so. In the absence of evidence tending to show that no trust was
intended, it is illogical to assume that A would convey to A, trustee, if his intent
merely was to retain the title he already possessed. Moreover, when the grantor and
the grantee are the same entity except for the use of the word describing the grantee’s
capacity, it is not reasonable to say that the descriptive word was used merely to
identify or point out the person intended.
623 S.W.2d at 948. The court then held that the legal test for the existence of a trust was met by the
use of the term “trustee” in the deeds in addition to all of the following evidence: (1) testimony by
an attorney with regard to the purpose in making the deeds to DPC, Trustee; (2) numerous
investment agreements; (3) payment by the investors, whose interest the deeds sought to protect, of
the consideration called for in the investment agreements; (4) the actual conveyance of the subject
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property to a named trustee; and (5) the fact that DPC was an operating company for the benefit of
the various investors. Id. Rozelle seeks to compare these facts to those of the instant case arguing
that in addition to the deed to Pritchett as trustee, there is evidence that Pritchett assumed trustee
powers and asserted authority as trustee, paid himself trustee fees, and made reference to the Rozelle
Family Trust. Even apart from the fact that this case involves “a situation in which A convey[ed]
to B, trustee” which the Neeley court itself distinguishes, we disagree that the additional facts
presented apart from the deed are comparable.
In order to create a trust, there must be reasonable certainty as to the property, the purpose
or object, and the beneficiary. Perfect Union Lodge No. 10 v. Interfirst Bank of San Antonio, N.A.,
748 S.W.2d 218, 220 (Tex. 1988); In re Estate of Berger, 174 S.W.3d 845, 848 (Tex. App.—Waco
2005, no pet.); Hubbard v. Shankle, 138 S.W.3d 474, 484-85 (Tex. App.—Fort Worth 2004, pet.
denied); McAnally, 113 S.W.3d at 882; Fred Rizk Const. Co., 627 S.W.2d at 757. In Neeley, the
testimony by the attorney established the object or purpose of the trust and the investment
agreements and nature of DPC’s operations established the beneficiaries with reasonable certainty.
In this case, no evidence was presented of any document or circumstances that provided reasonable
certainty as to the purpose/object or beneficiary of any intended trust. Moreover, the record is void
of any evidence describing Pritchett’s duties and responsibilities as trustee. Corsi, 682 S.W.2d at
249.
Finally, Rozelle cites Muhm v. Davis, 580 S.W.2d 98 (Tex. App.—Houston [1st Dist.] 1979,
writ ref’d n.r.e.), in support of the following contention, “Once outside the statute of frauds because
the oral trust involving real property has been partially or fully executed, the question then is whether
a beneficiary can establish the terms of that express trust by parol. The answer is yes under the
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holding of [Muhm].” In Muhm, Perry Reese McNeill conveyed certain land to “Cleveland Davis,
Trustee.” 580 S.W.2d at 100. “Cleveland Davis, Trustee” later conveyed the land to five grantees.
Id. The plaintiff in Muhm sought to set aside the deed to Davis as an invalid attempt to create an
express parol trust and asserted that the second deed also should be set aside because it was executed
for the purpose of carrying out the invalid trust. Id. The evidence presented in Muhm, including the
testimony of Davis, the attorney who prepared the deed, and McNeill’s wife, established that
McNeill conveyed the property to Davis, as trustee, pursuant to an oral agreement that Davis would
reconvey the property to McNeill’s three grandchildren and two children when his youngest
grandchild turned eighteen. Id. at 102. After acknowledging the general rule that an oral agreement
establishing an express trust is invalid, the court held, “The rule that such an express trust cannot be
enforced is subject to an exception in cases where at the time of the transfer the transferee was in a
confidential relationship to the transferor, and the conveyance was made in reliance on an oral
promise to reconvey.” Id. at 103. Unlike the evidence presented in Muhm, however, there is no
evidence in this case that the conveyance to Pritchett was made in reliance on an oral promise to
reconvey the Boerne Property to anyone. As a result, the exception applied in Muhm is not
applicable in this case.
The only other exception to the statute of frauds raised by Rozelle is his contention that
equity will not permit the statute of frauds to be invoked where the result would be to perpetuate a
fraud. Other than stating this general rule, the sum total of Rozelle’s argument in reliance on this
exception is the following sentence, “The record is clear that the parties who rely on the statute of
frauds to bar Rozelle from establishing his interests in the Rozelle Family Trust seek to perpetuate
a fraud of immense proportion against the trusts, and, after having undertaken such a fraud, defend
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themselves against it by asserting the statute of frauds.” This argument, however, is based on the
faulty premise that a trust of which Rozelle was a beneficiary ever was created. Because the record
is void of any evidence that such a trust was created, Rozelle’s argument fails.
CONCLUSION
The trial court’s judgment is affirmed.
Catherine Stone, Justice
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