Fitz-Gerald v. Hull

Mr. Justice Garwood,

concurring.

An initial approach to this case may not unnaturally be one unfavorable to the plaintiffs because of the vast discrepancy between the present money value of the property in controversy and the apparently insignificant money value of what the plaintiffs put into it. Another reason for such unfavorable impression is that .the alleged agreement is proved only by oral testimony of those who have much to gain by their suit and concerns the ownership of land. However natural these predisppsitions and however relevant they may be to the fact-finders who will deteremine whether the plaintiffs’ testimony is true, they do not bear analysis when one has to assume, as we do now, that the testimony is true.

Clearly the point of legal significance is not that the alleged agreement was oral, but that, being oral, it is said to establish an interest in land. The difficulty of the defendant here, however, is that not all oral agreements which go to establish such an interest are even presumptively suspect in our law. It seems that oral uses and uses imposed by the law on the basis of oral transactions were recognized as normal and valid institutions before the English statute of frauds was enacted. That measure required ‘written evidence to establish contracts for the sale of land, as does our own subdivision 4 of Article 3995 of the civil statutes. It made the same requirement with regard to what, generally speaking, we now call “express trusts”. But it left unchanged the legal situation as to uses or trusts which the law itself might impose upon the basis of oral transactions and without reference to the intent of the parties to create a trust. This being sb, if there is' question of whether "the latter type *57 of trust shall or shall not be adjudicated to exist, I think we cannot rightly say that, legally speaking, we are considering the recognition of an exceptional or doubtful type of evidence any more than in the case of recognizing as valid proof the oral testimony of a witness that a traffic accident occurred. This seems to be the effect of our Texas decisions, which, since early times, have consistently held that trusts in land may be established by parol. Some of those decisions do, indeed, speak of situations like the present in terms of “express” trusts, but whether this expression was used discriminatingly or lightly, we undoubtedly held that subdivision 4 of the statute did not apply to trusts in land resting in parol. Certainly the court did not mean to imply that, while parol “express”trusts were valid, trusts could yet not be raised by the law itself upon the basis of a parol transaction. The validity of these trusts was accordingly no special exception to the general policy of our law. It was — for good or ill — simply one part of that policy like any other. It .was not a special exception to subdivision 4 of the statute but simply something with which the subdivision is not concerned.

The new Trust Act changed the then existing situation in the state only to the extent of providing — in a manner somewhat different from the English statute — that “express” trusts must be evidenced by writing. And though, like the English statute, it did affirmatively exclude from its operation trusts established by operation of law, this precautionary disposition did not serve to make the latter class of trusts any more exceptional or suspect, when founded in parol, than did the English statute, but simply reaffirmed the law in this respect as it had existed since before the English statute. What the Trust Act did do, however, was to emphasize, more than did the English statute, that a writing is required only where the intent and purpose of the transaction were for one person to hold a legal title for the use of another person. This seems so plain from a full reading of Article 7425b-7, that even if our earlier decisions should be taken as defining an express trust in a broader way, the “express trusts” which they had in mind are not “express trusts” within the ban of the Trust Act. The agreement now before us plainly does not contemplate that any party was to hold all or part of the legal title of the mineral lease for the use of another. There was no intent to create a trust and therefore no express trust within the statutory provision. We need not say what changes in the agreement would have made it one for an express trust or discuss under what circumstances an oral agreement in the form of an express trust *58 may yet be enforcible as a constructive or resulting trust. It is enough to say that the agreement here did not purport to create an express trust.

Since, therefore, the oral agreement is not banned by any law, it should be enforcible either in damages or, as sought here, by suit to establish ownership through a constructive trust. While there is authority outside the state to the contrary, there is no less respectable authority, I think, that such a trust arises under the circumstances here involved. It is said that if A, who is no professional broker, orally volunteers on a day to purchase property for B upon B’s credit and as B’s representative, and B orally agrees, and on that same day A proceeds to make the purchase for himself and with his own funds, a constructive trust arises in favor of B, subject to his tender of the purchase price to A. Restatement, Restitution Sec. 194(2), Comments d and e; see also 2 Corbin, Contracts Sec. 401, n. 61. The point is not that the agency may rest on an oral transaction, but that the confidential relationship may arise in the same transaction, which is the basis of the suit, and at almost the same instant as the unfaithful purchase by the agent in his own name. It is said that the' same rule applies whether the agent agrees to be agent for a principal and himself or merely for the principal. Restatement, supra, Comment e. I am unable to distinguish these situations from the instant one. I say the point in question is not that the “agency” may arise in parol. This is true, and yet I cannot at the same time escape the thought that if the agreement before us had been admittedly written and signed, few would have questioned the fact that a confidential relationship then and there arose. If so, is it logical to say it could not arise in an oral coffee-shop conversation, without at the same time invoking the statute of frauds, which, as stated, does not apply to the case? There is no statute requiring all confidential relationships to be evidenced by writing. Decisions such as the recent one in Berenson v. Nirenstein, 326 Mass. 285 , 93 N. E. 2d 610 , which emphasize the distinction between an agent who is a broker or agent by occupation and one who is not, seem somewhat arbitrary in so doing. The case named cites the above-mentioned section of the Restatement, and one may imagine that, but for earlier holdings of the same court, it would have rested the constructive trust upon a broader ground.

I agree fully with the part of the majority opinion supporting the holding that the Securities Act has no application.

Opinion delivered February 14, 1951.