Eggers v. Hinckley

CARVER, Justice,

dissenting.

I am unable to agree with the majority opinion because the record fails to show that Sam Wright, Trustee, was an agent of principals to whom his liability could be imputed.

James A. Eggers, along with 17 other members of the “Frisco Joint Venture,” appeal from a judgment imposing upon them unpaid interest and unpaid taxes which were, admittedly, the primary obligation of “Sam Wright, Trustee” arising from his contract and his subsequently executed limited liability note and deed of trust securing his purchase of land on credit. The principal facts are not in dispute. Hinck-ley, Trustee, as Seller, and Wright, Trustee, as Purchaser, entered into a contract on August 31, 1972, covering 120 acres priced at $651,423.60, payable $97,713.60 at closing and the balance in a limited liability note for $553,710.00, secured by a deed of trust. The purchaser’s personal liability on the note was limited to unpaid interest accrued and unpaid taxes accrued to the date of any foreclosure. The contract was closed on November 28, 1972, upon the terms set out in the contract with a deed into “Sam Wright, Trustee” and the note and deed of trust executed by “Sam Wright, Trustee.” Subsequently, the note’s terms were breached, the deed of trust foreclosed, and suit was brought for accrued and unpaid interest and for accrued and unpaid taxes, together with attorney’s fees. The suit was brought against “Sam Wright, Trustee” as the party executing the note and also against the 18 members of the “Frisco Joint Venture” on the theory that Wright was the “agent” of the venturers with actual authority to bind them to the limited obligation of the note and deed of trust given to Hinckley, Trustee. Wright did not defend the suit, his case was severed, he agreed on a judgment for $38,680.05, and actually paid $21,-500.00 thereon. The remaining defendants sought, and were granted, summary judgment, but this judgment was reversed on appeal. Hinckley v. Eggers, 587 S.W.2d 448 (Tex.Civ.App. — Dallas 1979, writ ref’d n.r.e.).

Upon trial to a jury, the verdict found: (1) that Sam Wright had actual, apparent, or implied authority to act for the defendants when he signed the note and deed of trust; (2) that the note and deed of trust were part of the “initial closing” in which the Frisco Joint Venture purchased the property from Hinckley; (3) that the defendants ratified the action of Wright; (4) that the accrued interest was $41,444.18; (5) that the accrued taxes were $10,646.02; (6) that reasonable attorney’s fees to try Hinckley’s suit were $17,000.00; (7) that the note and deed of trust were not altered after Wright signed them; (8) that Hinck-ley did not waive his claim against these defendants by taking a judgment against Wright; and (9) that Hinckley was not es-topped, by his judgment against Wright, from pursuing his claim against these defendants. Upon this verdict, and the admitted collection from Wright, the trial court entered judgment in favor of Hinck-ley, Trustee, for the balance of the undischarged interest and taxes; interest after judgment; and the attorney’s fees found by the jury.

The appealing parties primarily urge the absence, or insufficiency, of evidence to support the imputation of the liability of the maker of the note to them. I would agree. The holder of the note signed “Sam Wright, Trustee” seeks to impute liability upon the theory that Wright was not a trustee, whose cestuis que trust could not be held liable, but an agent whose principals were liable; however, I conclude that the proof fails to achieve the conversion from “Trustee” to “Agent.”

While the contract to purchase, the deed, the vendor’s lien note, and the deed of trust were all in the name of “Sam Wright, Trustee,” the “designation of a party as a ‘trustee’ does not in itself create a trust,” as was held in Spiritas v. Robinowitz, 544 S.W.2d 710 (Tex.Civ.App. — Dallas 1976, writ ref’d n.r.e.). Moreover, in the absence of the existence of a trust, of which Sam Wright was in fact the trustee, “the use of ‘Trustee’ in the deed is merely a description and without legal effect. It is as if title were in Robinowitz [Sam Wright in our case] individually.” 544 S.W.2d at 715; Costello v. Hillcrest State Bank, 380 S.W.2d 780, 782 (Tex.Civ.App. — Dallas 1964, no writ). However, if a trust in fact existed, Hinckley, Trustee, was put on notice thereof and took his note subject to the trust. Studebaker Brothers Manufacturing Co. v. Hunt, 38 S.W. 1134 (Tex.Civ. App.1896, writ ref’d).

The majority erroneously holds that Sam Wright was neither a “trustee” nor an “individual,” but an “agent” with actual authority of seventeen principals, evidenced by a writing signed by the alleged principals three months after Sam Wright, Trustee, contracted to buy the property and give the note. It is an established principle that a contract to acquire land vests equitable title in the vendee with the vesting of legal title conditioned only upon the vendee’s tender of the consideration contracted. Leeson v. City of Houston, 243 S.W. 485, 488 (Tex.Comm’n App.1922, judgmt adopted); City of Garland v. Wentzel, 294 S.W.2d 145 (Tex.Civ.App.— Dallas 1956, writ ref’d n.r.e.). The record reflects that on August 31, 1978, the date the sales contract was executed, there were none of the subsequently alleged principals of Sam Wright yet known or yet recruited, and that Wright informed Hinckley of this fact. The sales contract of August 31, 1978 signed by Wright imposed upon him the very liability sought to be enforced in this suit. The liability was his and his alone when undertaken because he had no “principals” then existing. I would hold that ex post facto “principals,” if any, are not liable for acts or contracts of the “agent” antedating the principal and agent relationship.

But, the majority says, on the same day Wright received the deed under his contract, November 28, 1972, seventeen ven-turers signed an agreement naming Wright their “managing venturer” and giving him authority to accomplish the acquisition for them of the very same property. In this fashion, the majority says, what had been Wright’s individual, or trustee’s, liability became the venture’s liability. However, this reasoning fails because the opening premise is false, under our record. The venturers’ November 28 agreement does not appoint Wright as managing venturer but appoints to this office, and gives “agency” authority to, a corporation. The ven-turers agreement paragraph 5.1 provides (in part):

Management. It is agreed that the power to perform general ministerial acts relating to the daily business affairs of the Joint Venture, unless expressly provided to the contrary, shall be in the Managing Venturer, to-wit: Sam Wright and Associates, Realtors, Inc.;

The only appointment of Sam Wright by the venturers is set out in the same instrument paragraph 5.5 stating:

Trustee. Sam Wright of the Managing Venturer, Sam Wright and Associates, Realtors, Inc., is hereby appointed Trustee to act for this Joint Venture. In the event Sam Wright, Trustee fails or refuses to act, has been removed as provided herein, is incapacitated, or is deceased, fifty-one percent (51%) of the Venturers in interest, not in numbers, can appoint a substitute Trustee. Said substitute Trustee to have all powers that Sam Wright, Trustee, had under this agreement.

Since Wright was not made the venturers’ “managing venturer,” or “agent,” by the venturers’ agreement; the majority opinion on this ground is untenable, and I would hold to the contrary.

While the majority opinion does not rest upon “implied” or “apparent” authority to sustain the judgment below, I note the jury’s verdict as well as Hinckley’s arguments seeking to sustain the judgment on these grounds. I find no evidence in the record that Sam Wright had any authority in August, from those who were to become venturers in November, from which authority could be “implied” to bind these ventur-ers to a liability which was Wright’s by his August contract. Further, I find no evidence in the record of any act in August, by those who were to become venturers in November, which act could be said to have clothed Sam Wright with “apparent” authority to bind anyone else to the personal liability Sam Wright undertook in his August contract. There being no evidence in the record to support the jury’s finding on these issues, the trial court’s judgment, insofar as it may have rested on these issues, was in error, and I would so find.

Further, while the majority opinion does not rest upon ratification, I note the jury’s finding of ratification and Hinckley’s argument that the trial court’s judgment should be sustained on this ground. The record reflects that, some weeks after the execution of the venturers’ agreement on November 28, 1972, Sam Wright, Trustee, mailed copies of his contract, deed, note, and deed of trust to the other members of the Frisco Joint Venture. No replies were received, and Hinckley urged that the ven-turers’ silence ratified the acquisition by Frisco Joint Venture upon the authority of the managing venturer and the imposition of personal liability upon the venturers as a reasonable necessary term and consistent with paragraph 5.1 (above quoted) of the venturers’ agreement. However, Frisco Joint Venture never acquired any property by their managing venturer or otherwise. The documents mailed do not purport to show any act by the corporation named managing venturer; consequently, neither ratification nor repudiation was called for under the circumstances. The documents mailed did reflect acts of a Trustee, from August through November, and the same Trustee named by the venturers in November; however, notice to a beneficiary of an act of his Trustee does not call for either ratification or repudiation because, in no event, is a beneficiary liable for the acts of his Trustee. McCamey v. Hollister Oil Co., 241 S.W. 689 (Tex.Civ.App — Fort Worth 1922), affd, 115 Tex. 49, 274 S.W. 562 (1925). To the extent that the trial court’s judgment rests upon the jury’s finding of ratification, I would find the judgment to be in error.

I would reverse the trial court’s judgment and render judgment that Hinckley take nothing.