Gaines v. Hamman

ASSOCIATE JUSTICE WALKER,

dissenting.

I respectfully dissent. The majority holding rests entirely on petitioner’s unsupported general statement, made in the affidavit, which is simply his conclusion as to the nature of the agreement and understanding of the parties. This is the ultimate issue to be decided by the trier of fact upon the remand. If the case had been tried in the conventional manner, petitioner’s statement of such a conclusion from the witness stand would be entitled to no weight in the face of his deposition testimony regarding the details of the agreement. I do not think it should be given the effect accorded to it by the majority in this summary judgment proceeding. In the testimony of a witness as in the findings of a jury, the general must always yield to the specific.

Petitioner’s deposition testimony makes it clear that, contrary to the statement made in his affidavit, he was not to own an equal interest in any lease on which he prepared the geology and which was purchased by respondent. It was understood that the lease would be taken in the name of respondent, who would either pay for it or get it financed. The principal details of the agreement are disclosed by the following excerpts from petitioner’s deposition:

“Q. But he would take it in his name and then try to get it financed where he would recoup the money he had put in it and then pay for getting a well drilled.

“A. Yes, sir.

“Q. Now, that was the basic deal?

“A. That was the basic deal.

*628 “Q. And then after that was done you were to get an assignment of half of what he had left?

“A. Yes, sir.

“Q. And if he ended up with nothing but an override, why, you got half of that?

“A. Half of that.

“Q. And if he ended up with a working interest you got half of the working interest?

“A. Yes, sir.

“Q. And if he ended up with nothing —

“A. Why, we just forgot it.”

Sjí $

“Q. And if he was able to turn it and clear it where he retained any interest, whether it was a working interest or carried interest, or an override, you were supposed to get an assignment from him of half of what he had left?

“A. Yes, sir.

“Q. But you weren’t supposed to get the assignment until after it was determined how much he had left?

“A. I believe you stated that right, yes, sir. In other words, he would give me an assignment then.”

* * *

“Q. Now, the only thing, the only fraud or only promise that Blake ever has broken, if he has broken any, is his failure to give you an assignment after he got this Logan deal financed and drilled ?

“A. Yes, sir, that’s right.”

% % %

“Q. Suppose that he turned it and made $50,000 in cash, would you get part of the cash?

“A. That wasn’t the understanding.”

*629 # ijt ❖

“Q. In other words, getting down to it: If you worked up the geology and he took a deal on that same tract, and if he was able to turn it where he retained any interest in the lease you were to get half of what he retained?

“A. Yes, sir.”

Petitioner did not testify that he was to own a one-half interest in the property as soon as it was purchased by respondent, or that he would be responsible for any of the expenses thereafter incurred. Respondent was at liberty to sell any interest he desired to such persons, for such prices and upon such terms as he deemed proper. If he received all cash and retained nothing in the way of an override, oil payment or working interest, petitioner was to receive nothing.

Both parties testified that there was no character of general partnership between them. Each made deals during the five-year period in which the other did not participate. It is equally clear that they did not agree to engage iñ a joint venture. Petitioner had no control whatsoever, and there was no agreement that he would share in either profits or losses. When all of the underbrush and window dressing are removed, we have a suit to enforce an agreement that in return for petitioner’s geological services, respondent would, after buying and paying for the lease and selling part of it to other parties, convey to petitioner one-half of whatever interest had been retained. In other words, the action is brought to recover an interest in real estate which respondent promised to convey in consideration for services rendered by petitioner.

In my opinion enforcement of the contract is plainly precluded by the statute of frauds. Sorrells v. Coffield, 144 Texas 31 , 187 S.W. 2d 980 ; Tolle v. Sawtelle, Texas Civ. App., 246 S.W. 2d 916 (wr. ref.). The facts of the Sorrells case are quite similar to those involved here. The plaintiff there testified, and the jury found, that land was purchased in the name of and paid for by the defendant pursuant to a previous agreement that as and when a part of the minerals thereunder were sold sufficient to repay him therefor, the remaining interest in the land, if any, would be owned jointly by the plaintiff and defendant. In holding that the agreement was unenforceable under the statute of frauds, the Court pointed out that the jury’s finding was that the plaintiff would become invested with his equitable title as and when mineral interests were sold sufficient to reimburse *630 the defendant. That is precisely the effect of the agreement which petitioner is attempting to enforce in the present case.

According to petitioiner’s testimony, he was entitled to no specific interest in the property unless and until respondent had disposed of a part on such terms as enabled him to recoup his investment and expenses. Then and only then could the interest which petitioner was to receive be determined. Then and only then was respondent obligated to convey an interest to petitioner. If respondent sold the entire property for cash, petitioner was entitled to nothing. How can it be said then that petitioner was invested with the equitable title at a time when the nature and extent of the interest he would receive was unascertained and unascertainable ? Under the agreement of the parties, respondent necessarily became the legal and equitable owner of the property when it was purchased. His promise was that he would thereafter convey an interest to petitioner in consideration of the latter’s services. This is nothing more nor less than a contract for the sale of real estate.

The term “constructive trust” is not a magic phrase that makes the statute of frauds go away when it is uttered. It does not refer to a substantive relationship, legal or equitable, but to a remedial device which courts of equity use when they decide to compel a person holding title to property to convey it to another on the ground that the former would be unjustly enriched if permitted to retain it. In the words of Judge Cardozo, it “is the formula through which the conscience of equity finds expression. When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee”. See Beatty v. Guggenheim Exploration Co., 225 N.Y. 380 , 122 N.E. 378 . “He is not compelled to convey the property because he is a constructive trustee; it is because he can be compelled to convey it that he is a constructive trustee.” Scott on Trusts, 2nd ed. 1956, Vol. IV, Sec. 462, p. 3103. It seems to me, therefore, that courts should be somewhat slow to compel a conveyance in situations where the Legislature has declared that the defendant shall not be compelled to convey. Bogert says that when the fiduciary obligation happens to be identical with the obligation required to be manifested by writing under the statute, the fact that it is a fiduciary obligation should not exempt it from obedience to the statute any more than if it were a nonfiduciary contract. Bogert, Trusts and Trustees, 1960 ed. Sec. 488, p. 188. In such a situation, enforcement of the promise on the “constructive trust theory” does not render the statute of frauds in *631 applicable; it is simply a polite way of saying that the court will not abide by the statute.

It is no answer to say that compelling performance of the contract in the present case is merely an extension of the holdings in Fitz-Gerald v. Hull, 150 Texas 39 , 237 S.W. 2d 256 ; Omohundro v. Matthews, 161 Texas 367 , 341 S.W. 2d 401 ; Mills v. Gray, 147 Texas 33 , 210 S.W. 2d 985 ; and McDonald v. Follett, 142 Texas 616 , 180 S.W. 2d 334 . Omohundro and McDonald were “reacquisition” cases. The parties in Fitz-Gerald had entered into a joint venture for the acquisition, development and operation of an oil and gas lease, and the defendant took the lease in his own name in violation of such agreement. In all three of these cases the defendants were compelled to convey interests which they had wrongfully acquired in breach of a fiduciary duty owing by them to the plaintiffs. Mills was a pure restitution case in which the constructive trust was predicated on a confidential relation that was in no way dependent upon the agreement sought to be enforced. These four decisions should not now be homogenized so as to justify a decree requiring performance of an oral promise to convey where there is no relationship of trust and confidence apart from the agreement made the basis of the suit and no acquisition by the defendant of an interest in the land in breach of a duty owing by him to the plaintiff.

A person in petitioner’s position who has made a contract that is unenforceable under the statute of frauds is entitled, of course, to restitution. Alworth v. Ellison, Texas Civ. App., 27 S.W. 2d 639 (wr. ref.). But restitution could not give petitioner an interest in land he had never owned. It would entitle him to the reasonable value of the services rendered. Respondent acquired no interest in the land by breaching a fiduciary duty owing by him to petitioner. His only obligation was to convey to petitioner one-half of whatever interest remained after the lease had been sold to others. By enforcing that obligation, the Court gives to petitioner the full benefit of a contract which the statute of frauds declares shall not be enforced. If this trend continues indefinitely, the statute will finally become meaningless. It is my opinion that the present case opens an avenue which should remain closed. Petitioner has not sought restitution of that to which he is entitled, and I would affirm the judgments of the courts below.

ASSOCIATE JUSTICES GRIFFIN

and CULVER join in this dissent.

Opinion delivered June 13, 1962.