COURT OF APPEALS
EIGHTH DISTRICT OF TEXAS
EL PASO, TEXAS
GEORGE SNYDER, ELMA A. SNYDER )
GREENLEE, and MARTHA G. SNYDER, )
)
Appellants, ) No. 08-01-00444-CV
)
v. ) Appeal from the
)
C.C. PETE COWELL, As Trustee of The ) 394th District Court
MARY JONES (REAGAN) TRUST, VESTER )
EUGENE JONES, EDDIE RAY JONES, and ) of Culberson County, Texas
UNKNOWN CHILDREN OF EUGENE )
LALY JONES, ) (TC# 4040)
)
Appellees. )
)
MEMORANDUM OPINION
George Snyder, Elma A. Snyder Greenlee, and Martha G. Snyder (ASnyder Claimants@) appeal a final declaratory judgment, incorporating an interlocutory cross-motion summary judgment in favor of Appellees Vester Eugene Jones, Eddie Ray Jones and the descendants of Eugene Laly Jones (AJones Claimants@), in a trustee interpleader suit. Appellants raise two issues on appeal: whether the trial court erred in granting Appellees Jones Claimants= motion for summary judgment and denying the Snyder Claimants= motion for summary judgment and rendering a final judgment in favor of the Jones Claimants because (1) the trustee=s conveyance of trust property back to the settlors, his parents, without consideration was a void transaction, and (2) the Jones Claimants failed to establish a statute of limitations defense based on adverse possession or based on the four-year limitations statutes for claims of fraud, breach of fiduciary duty, or to correct technical defects in an instrument. We affirm.
FACTUAL SUMMARY
In 1946, E.L. and Elma Jones conveyed to their son W.F. Jones as Trustee for their daughter, Mary Jones Hearn (Reagan), an undivided one-fifth interest in certain real property in Culberson County, Texas by two separate Deeds in Trust. According to the terms of the Deeds, this property was to be held in trust for the balance of Mary Jones Hearn=s life and upon her death would pass to the three children of her first marriage, Appellants George Snyder, Elma A. Snyder Greenlee, and Martha G. Snyder, if then living, or to be divided among the children=s survivors. By the same 1946 Deeds, Mr. and Mrs. Jones conveyed to each of their four sons, John Calvin Jones, Charles E. Jones, Eugene L. Jones, and W.F. Jones, in fee simple undivided one-fifth interests in the same property. In 1948, two years later, the Jones= four sons, the wife of Charlie Jones, and son W.F. Jones acting as Trustee for Mary Jones Hearn (Reagan) conveyed to Mr. and Mrs. Jones by two Warranty Deeds all interests in the property granted in the earlier 1946 Deeds in Trust.
In 1950 and 1951 through a series of Deeds, Mr. and Mrs. Jones again conveyed undivided one-fifth interests (two-fifteenths interest and then one-fifteenth interest) in their property to their four sons in fee simple and to son W.F. Jones in trust for their daughter, Mary Jones Hearn (Reagan) for the balance of her life. As in the 1946 Deeds, Mary Jones Hearn (Reagan) held a life estate in an undivided one-fifth interest in her parents= property. However, unlike the 1946 Deeds, the 1950 and 1951 Trust Deeds no longer named daughter Mary Jones Hearn (Reagan)=s three children as beneficiaries of the remainder interest to the trust. According to the terms of the 1950 and 1951 Trust Deeds, upon Mary Jones Hearn (Reagan)=s death, the trust property was to be conveyed in fee and in equal shares to Mr. and Mrs. Jones= four sons then living, or to their sons= surviving children. Mary Jones Hearn (Reagan) died on March 2, 1997. She was survived by each of her children, the Appellants Snyder Claimants. In addition, Mary Jones Reagan was predeceased by each of the Jones= four sons (her brothers), whose surviving children include Appellees Vester Eugene Jones and Eddie Ray Jones, the Jones Claimants.
In 1998, Trustee C.C. Pete Cowell, the successor to Trustee W.F. Jones, filed an interpleader suit to resolve the issue of which claimants were the remaindermen to the Mary Jones Reagan Trust. On cross-motions for summary judgment, the trial court held in favor of the Jones Claimants, and later incorporated this interlocutory judgment into the final declaratory judgment with the Snyder Claimants taking nothing under the Trust.
STANDARD OF REVIEW
When both sides move for summary judgment and the trial court grants one motion and denies the other, the reviewing court should review the summary judgment evidence of each party and determine all questions presented. FM Properties Operating Co. v. City of Austin, 22 S.W.3d 868, 872-73 (Tex. 2000), citing Commissioners Court of Titus County v. Agan, 940 S.W.2d 77, 81 (Tex. 1997); Jones v. Strauss, 745 S.W.2d 898, 900 (Tex. 1988). The reviewing court should render the judgment that the trial court should have rendered. See Agan, 940 S.W.2d at 81; Members Mut. Ins. Co. v. Hermann Hosp., 664 S.W.2d 325, 328 (Tex. 1984). The movant for summary judgment must show that there is no genuine issue of material fact and that, as a matter of law, it is entitled to judgment. See Rhone-Poulenc, Inc. v. Steel, 997 S.W.2d 217, 224 (Tex. 1999). In resolving the issue of whether the movant has carried this burden, all evidence favorable to the non-movant must be taken as true and all reasonable inferences, including any doubts, must be resolved in the non-movant=s favor. See Nixon v. Mr. Property Mgmt. Co., Inc., 690 S.W.2d 546, 548-49 (Tex. 1985), citing Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex. 1984). When a trial court=s order granting summary judgment does not specify the grounds relied upon, the reviewing court must affirm summary judgment if any of the summary judgment grounds are meritorious. See Star-Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995). When a defendant moves for summary judgment on the affirmative defense of limitations, it must prove conclusively all elements of the defense as a matter of law, leaving no genuine issue of matter fact. KPMG Peat Marwick v. Harrison County Housing Finance Corp., 988 S.W.2d 746, 748 (Tex. 1999). Once the defendant establishes the right to summary judgment, the plaintiff must then put forward summary judgment evidence in avoidance of the limitations defense. Hernandez v. Furr=s Supermarkets, Inc., 924 S.W.2d 193, 195 (Tex.App.--El Paso 1996, writ denied). If the plaintiff responds with evidence creating a fact question on tolling of the statute of limitations, the defendant must negate the plaintiff=s right to tolling of the statute as a matter of law. Hernandez, 924 S.W.2d at 195.
TRUSTEE SELF-DEALING
In Issue One, Appellants Snyder Claimants argue that as trustee for the 1946 Trust, W.F. Jones had a fiduciary duty not to self-deal with respect to the trust property. Pointing to former Tex.Rev.Civ.Stat. art. 7425b-12, now contained in Tex.Prop.Code Ann. ' 113.053 (Vernon 1995), the Snyder Claimants assert that W.F. Jones violated that fiduciary duty in 1948 when he conveyed the undivided one-fifth interest held in trust for Mary Jones Hearn (Reagan) to his parents, the settlors of the 1946 Trust. Since the 1948 transaction violated the statute, the Snyder Claimants argue it is a void transfer such that title to the trust property remained as granted in the 1946 Trust and under the terms of that trust, specifically the provisions designating the Snyder Claimants as holders of the remainder interest in the trust property. Alternatively, the Snyder Claimants also argue that the 1946 Trust was irrevocable by express terms in the
trust-creating document.
Tex.Prop.Code Ann. ' 113.053(a)(the Texas Trust Code) provides:
[A] trustee shall not directly or indirectly buy or sell trust property from or to:
(1) the trustee or an affiliate;
(2) a director, officer, or employee of the trustee or an affiliate;
(3) a relative of the trustee; or
(4) the trustee=s employer, partner, or other business associate.
Section 113.053(a) prohibits trustee self-dealing and dealing by entities closely related to the trustee. InterFirst Bank Dallas, N.A. v. Risser, 739 S.W.2d 882, 898 (Tex.App.--Texarkana 1987, no writ). The Snyder Claimants ask this Court to find that the 1948 transactions between W.F. Jones as trustee and Mr. and Mrs. Jones, his parents, fall within the statutory prohibitions of trustee self-dealing. We will assume, without deciding, that W.F. Jones committed a breach of fiduciary duty, and turn our attention to whether the 1948 transactions are therefore void transfers.
The Snyder Claimants rely on Steves v. United Services Automobile Ass=n, 459 S.W.2d 930 (Tex.Civ.App.--Beaumont 1970, writ ref=d n.r.e.) to support their contention that all transfers of trust property that violate Tex.Prop.Code Ann. ' 113.053(a)(3) are void, and thus subsequent transfers of that property are ineffective. In Steves, a trustee of a profit-sharing trust purchased real property from the trust and later sought specific performance of a contract for sale against a third-party purchaser. The Steves Court denied specific performance based on the equitable doctrine of unclean hands and on the purchaser=s potential liability for defective title based on notice of trustee wrongdoing. Steves, 459 S.W.2d at 937. Following DeEverett v. Henry, 67 Tex. 402, 3 S.W. 566 (1887), the Steves Court noted in pertinent part that DeEverett established the following general principles:
If there are any circumstances connected with the sale which validate it, these are matters of proof on the part of the trustee or purchaser. If not proved, and nothing appears but the fact of sale to himself by the trustee, and of purchase by a third party from him with notice, the sale must be held void, and if the purchaser asserts title against the Cestui que trust, the latter may recover the property from him.
Steves, 459 S.W.2d at 935, citing DeEverett, 3 S.W. at 567. The Steves case does not support the Snyder Claimants= argument that trustee self-dealing renders a transaction void per se. Rather, such transactions are subject to challenge and are voidable in that Athe cestui que trust has an election to either follow the res or to hold the trustee personally liable for the breach of trust . . ..@ Steves, 459 S.W.2d at 937.
As a general rule, a trustee has a duty of loyalty which prohibits using to his advantage his position to gain any benefit for himself at the expense of his cestui que trust and from placing himself in any position where his self interest will or may conflict with his obligations as trustee. Slay v. Burnett Trust, 187 S.W.2d 377, 387-88 (Tex. 1945). Self-dealing transactions may be attacked by the beneficiary even though he has suffered no damages and even though the trustee has acted in good faith. Id. at 389. In this case, if W.F. Jones acting as trustee violated his fiduciary duty not to self-deal, the beneficiary may have had a cause of action to repudiate the 1948 transaction or to hold the trustee personally liable. See Harvey v. Casebeer, 531 S.W.2d 206, 208 (Tex.Civ.App.--Tyler 1975, no writ)(AThe rule that >a trustee cannot purchase at his own sale= really means that such a sale is subject to attack by the cestui.@).
In support of their argument, the Snyder Claimants also point to cases in which Texas courts have held that County attempts to convey government property were void for failure to comply with statutory requirements prescribed in Tex.Loc.Gov=t Code Ann. ' 263.007 (Vernon Supp. 2002), formerly contained in Tex.Rev.Civ.Stat.Ann. art. 1577. See Jack v. State, 694 S.W.2d 391, 397 (Tex.App.--San Antonio 1985, writ ref=d n.r.e.)(authority of the county=s commissioner=s court is limited to that conferred by the constitution and laws of this state); Wilson v. County of Calhoun, 489 S.W.2d 393, 397 (Tex.Civ.App.--Corpus Christi 1972, writ ref=d n.r.e.)(county=s conveyance of land in any mode other than that prescribed by statute is void). These cases, however, do not address nor suggest that all transfers of property in violation of the Trust Code in Texas are per se void. The Snyder Claimants have presented no case law nor has this Court found case law to support this argument on appeal. We overrule this portion of Issue One.
REVOCABLE OR IRREVOCABLE TRUST
Alternatively, Appellants complain that the trial court erred in finding that the 1946 Trust was a revocable trust and that the 1948 transactions revoked, rescinded, and effectively terminated the 1946 Trust. A settlor may revoke the trust unless it is irrevocable by the express terms of the instrument creating it or of an instrument modifying it. Tex.Prop.Code Ann. ' 112.051(a). AIt would be a strained and unwarranted construction to hold that the statutory form of general warranty in a trust deed has the effect of expressly making it irrevocable. To make a trust irrevocable the act requires express terms of irrevocability.@ Butler v. Shelton, 408 S.W.2d 530, 534 (Tex.Civ.App.--Austin 1966, writ ref=d n.r.e.). The trust-creating document, however, need not contain specific terms of art to create an irrevocable trust. Rather, the trust document must reflect the trustor=s intent to make the trust irrevocable. Austin Lakes Estates Recreation Club, Inc. v. Gilliam, 493 S.W.2d 343, 347 (Tex.Civ.App.--Austin 1973, writ ref=d n.r.e.).
The Snyder Claimants contend that the 1946 Trust was irrevocable because in each 1946 Deeds in Trust E.L. and Elma Jones conveyed the property to the four sons and AW.F. Jones, Trustee, their heirs and assigns forever@ and would AWarrant and forever Defend@ their title. The habendum and warranty clause of each 1946 Deed in Trust provides in relevant part:
TO HAVE AND TO HOLD the above described premises, together with all and singular, the rights and appurtenances thereto in anywise belonging, unto the said CALVIN JONES, CHARLIE JONES, EUGENE L. JONES, W.F. JONES, AND W.F. JONES, TRUSTEE, their heirs and assigns forever; and we do hereby bind our heirs, executors and administrators, to Warrant and forever Defend all and singular, the said premises unto the said CALVIN JONES, CHARLIE JONES, EUGENE L. JONES, W.F. JONES, AND W.F. JONES, TRUSTEE, their heirs and assigns, against every person whomsoever lawfully claiming or to claim the same, or any part thereof.
The Snyder Claimants rely on Austin Lakes Estates Recreation Club, Inc. v. Gilliam, in which the Court found that certain language in a deed created an irrevocable trust. In Austin Lakes, the Austin Lakes Recreation Club conveyed property held in trust for the benefit of nearby residents. Plaintiff residents later challenged the trustees= conveyance on grounds that the trust was irrevocable. The granting clause of the Austin Lakes deed conveyed the property to the trustees, A>their heirs and assigns forever, so that neither said corporation nor its successors and assigns shall have any right or title or interest in such property, premises or appurtenances or any part thereof at any time hereafter.=@ [Emphasis added]. Austin Lakes, 493 S.W.2d at 347. The Austin Lakes Court held that the deed language reflected the trustor=s intent to make the trust irrevocable. Id. The Austin Lakes case, however, is distinguishable. Here, the 1946 Deeds in Trust incorporated ordinary statutory forms of conveyance and warranty provisions. Nothing on the face of the 1946 documents suggests that the settlors intended to create an irrevocable trust.
Whether characterized as Trustee W.F. Jones= independent act or as the settlors= method of revocation, the 1948 recorded Warranty Deeds had the effect of revesting title in the trust property to E.L. and Elma Jones. If the trust was created by a written instrument, a revocation, modification, or amendment of the trust must be in writing. Tex.Prop.Code Ann. ' 112.051(c). AWhere no procedure for termination is stated in the trust instrument, any reasonable method may be used. The instrument claimed to be in exercise of the power of revocation must show an intent to use the power, although it need not necessarily refer expressly to the power.@ Starcrest Trust v. Berry, 926 S.W.2d 343, 353 (Tex.App.--Austin 1996, no writ). Even assuming that W.F. Jones= act was a breach of an irrevocable trust, the 1948 transactions are not per se void. Rather, the trustee=s act gave rise to a cause of action, if any, at the time of breach. We overrule Issue One in its entirety.
STATUTE OF LIMITATIONS
In Issue Two, the Snyder Claimants assert that their cause of action is not precluded by any of the statutes of limitations that Appellees Jones Claimants raised as affirmative defenses in the trial below, including the four-year statute of limitations for a trustee=s breach of fiduciary duty, Tex.Civ.Prac.&Rem.Code Ann. ' 16.004(a)(5)(Vernon 2002). Specifically, the Snyder Claimants argue that they had no right to bring any suit to enforce their interest as remaindermen until the death of Mary Jones Hearn (Reagan), the beneficiary to the life estate, and until that time the Snyder Claimants= interest in the trust property was contingent upon outliving Mary Jones Hearn (Reagan). We disagree.
The general rule is that a remainder vests when there is a person in being who has an immediate right to possession of property upon termination of an intermediate estate with only the right of possession postponed. Caples v. Ward, 179 S.W. 856, 857-58 (Tex. 1915). The law favors the vesting of estates at the earliest possible period, and will not construe a remainder as contingent where it can reasonably be taken as vested. Eversole v. Williams, 943 S.W.2d 141, 143 (Tex.App.--Houston [1st Dist.] 1997, no writ), citing Trimble v. Farmer, 305 S.W.2d 157, 160 (Tex. 1957). Section 115.011 of the Texas Trust Code provides:
(a) Any interested person may bring an action under Section 115.001 of this Act [Jurisdiction];
(b) Contingent beneficiaries designated as a class are not necessary parties to an action under Section 115.001 of this Act. The only necessary parties to such an action are:
(1) a beneficiary on whose act or obligation the action is predicated;
(2) a person designated by name in the instrument creating the trust; and
(3) a person who is actually receiving distributions from the trust estate at the time the action is filed.
Tex.Prop.Code Ann. ' 115.011(a)-(b)(Vernon 1995).
The Trust Code defines Ainterested person@ as: Aa trustee, beneficiary, or any other person having an interest in or a claim against the trust or any person who is affected by the administration of the trust.@ Tex.Prop.Code Ann. ' 111.004(7). Further, the Trust Code defines Ainterest@ to mean Aany interest, whether legal or equitable or both, present or future, vested or contingent, defeasible or indefeasible.@ Tex.Prop.Code Ann. ' 111.004(6). Vested remaindermen are Ainterested persons@ under the Trust Code and can bring a cause of action for breach of fiduciary duty. See Moody v. Pitts, 708 S.W.2d 930, 934 (Tex.App.--Corpus Christi 1986, no writ)(vested remainderman can maintain an action against trustee for the acts of the trustee); Yturri v. Yturri, 504 S.W.2d 809, 812 (Tex.Civ.App.--San Antonio 1973, no writ) (remainderman under a testamentary trust was an interested party within the meaning of the Trust Code provision relating to persons with standing to bring suit for removal of trustees).
Pointing to Estate of McWhorter v. Wooten, 622 S.W.2d 844 (Tex. 1981) and Ferguson v. Johnston, 320 S.W.2d 906 (Tex.Civ.App.--Texarkana 1959, writ ref=d n.r.e.), the Snyder Claimants assert that remaindermen have no right of possession until the termination of the life estate, therefore a right of action cannot accrue and the limitations period cannot begin until that date. The footing for such reliance is slippery in that both Estate of McWhorter and Ferguson were suits brought for trespass to try title, a cause of action for recovery of property by an owner who has an immediate and present right to possession.
In the present case, the 1946 Deeds in Trust specifically named each of the Snyder Claimants as remaindermen of the property held in trust for the life of Mary Jones Hearn (Reagan). The terms of the 1946 Deeds did not make Aoutliving@ Mary Jones Hearn (Reagan) a condition precedent to vesting of the Snyder Claimants= remainder interest, but rather their right of possession was postponed until that date. The Snyder Claimants had a vested future interest in the trust property and under the provisions of the Trust Code had an interest in that trust and the capacity to bring a cause of action for any trustee breach of fiduciary duty. Tex.Civ.Prac.& Rem.Code Ann. ' 16.004(a)(5) provides a four-year limitations period for suits brought for a trustee=s breach of fiduciary duty. At the time in question, suits to enforce a trust or suits arising out of a breach of trust were ordinarily governed by the four-year residual statute of limitations, Tex.Rev.Civ.Stat. art. 5529, now contained in Tex.Civ.Prac.&Rem.Code Ann. ' 16.051 (Vernon 1997). See Peek v. Berry, 184 S.W.2d 272, 275 (Tex. 1944). Assuming that W.F. Jones as trustee breached his fiduciary duties in 1948 by reconveying the trust property to his parents/settlors, the 1946 Trust named the Snyder Claimants as vested remaindermen and as such their cause of action accrued as of the date the 1948 Deeds were recorded. Based on the evidence stipulated on summary judgment, we conclude that the trial court=s final declaratory judgment can be affirmed on statute of limitations grounds. We overrule Issue Two.
We affirm the trial court=s judgment.
April 10, 2003
DAVID WELLINGTON CHEW, Justice
Before Panel No. 5
Barajas, C.J., Chew, J., and Hill, C.J., (Ret.)
Hill, C.J. (Ret.)(Sitting by Assignment)