I am somewhat at a loss to know how to treat the original dissenting opinion herein. This opinion was written by Chief Justice KEY, and inasmuch as he concurs in the opinion of the majority on rehearing, it may be that the original dissenting opinion is of no further force herein. However, I will refer to the same briefly.
That opinion sets out at considerable length the testimony in the case, from which there is an apparent conclusion that the only trust relation between the original contributors to the fund which was deposited in the bank and the bank itself was that it was to hold such fund in trust until the filling station was completed, and that it having been completed the trust ceases.
The trial court found on this issue as follows:
"It was understood and agreed between the agents of Columbian Refining Company and said Rosebud purchasers of stock that their money would all be used in the erection of said filling station, and that none of said money would leave said town, but would be deposited in the Planters' National Bank, and kept there until paid out for the construction of said filling station."
The original opinion herein approved this finding of fact by the trial court. The testimony as quoted in the original dissenting opinion shows that the finding of the trial court is not only sustained by the evidence, but that there was no evidence to the contrary. For instance, O. C. Hughes, one of the subscribers, testified as follows:
"The representations that he (agent of the Columbian Refining Company) made to the prospective purchasers of that stock was that the money was to be used to put in a filling station there (Rosebud). * * * He told us to put in as much as we could; so much money and they would take hold of it and put in the balance of it. He said not a nickle would leave town, but would be deposited in the Planters' National Bank, and that we would see it spent right there on the corner, and not one cent of it would leave town."
E. A. Donaldson, one of the subscribers, testified:
"He (agent of the refining company) said he would like to leave the money there as an evidence of good faith with the stockholders in the town, and it would not be drawn out, only for the purpose of erecting a station. * * * He got up before the Commercial Club and made a bunch of utterances that the money would not leave the town."
Roy Gaither, another of the subscribers, testified as follows:
"At that time (when he subscribed) Mr. Huff (the agent) stated to me that the money would be placed in the Planters' National Bank, and would be expended in the building of the station."
The majority opinion on motion for rehearing does not disagree with the finding of the trial court on this issue, but states that the original majority opinion adopted certain additional findings which are deemed immaterial. It also states that the finding in that opinion that the "contract with Sapp for the erection of the filling station was made a few days prior to the issuance of the $2,000 certificate" is contrary to the finding of the trial judge, who found that it was made a few days after the contract to erect the filling station.
The trial court seems to have so found, but it is apparent that the question as to the contract being let to Sapp prior to the issuance of the new certificate was not a matter which the court was considering. After reciting the transactions which led up to the issuance of this $2,000 certificate, the trial court found:
"Thereafter the Columbian Refining Company, having purchased and shipped material to Rosebud for the construction of said station, a part of said fund was paid out and a new certificate for the balance of $2,000 was issued in the name of the Columbian Refining Company, and forwarded to the Houston National Bank. The Columbian Refining Company then entered into a contract with plaintiff T. M. Sapp, for the erection of the filling station."
The undisputed testimony is that this contract with Sapp was made on July 3, 1920. The $2,000 certificate was issued, as shown by the record, July 8, 1920.
The original dissenting opinion and the majority opinion herein on motion for rehearing are based upon the proposition that the trust agreement with the original subscribers was only to the extent that the money would remain in the bank until the *Page 320 filling station was erected, and that the station having been erected prior to the institution of this suit, the trust in favor of the subscribers ceased. As shown by the findings of the trial court and the undisputed testimony, the agreement with the original subscribers was not only that the money should be deposited in the bank to secure the erection of the filling station, but that it should be used in payment for the erection of such station, and for no other purpose. But it is contended, in both the original dissenting opinion and in the present majority opinion, that Sapp cannot enforce this trust, for the reason that he was not one of the subscribers; therefore not a party to such agreement. The opinion of the writer on this point as well as that of Mr. Justice BRADY, who was then a member of this court, is fully expressed in the original majority opinion herein, which may be summarized as follows:
The agreement between the agent of the refining company and the stockholders was that the money should be placed in the bank, and by the bank held in trust for the purpose of paying for the erection of the filling station. The contract not having been let when this agreement was made, the effect of the agreement was that the deposit should be held in trust for the benefit of the contractor when he became known, and it was certain that the contractor would become known, if the refining company complied with its agreement to let such contract. When the contract was let, the trust inured to the benefit of the contractor, as contemplated in the original agreement. The bank accepted the original deposit with the express agreement that it would hold the same, and not pay it out except in payment for the erection of the tilling station. There is no controversy in the evidence on this point as to the original agreement with the subscribers. E. A. Donaldson, the cashier of the bank, testified as to the original certificate as follows:
"This certificate was issued with the express understanding that the money would be used before the expiration of the certificate, to construct a filling station at this place."
He so informed the Federal Reserve Bank, which held this certificate for collection; and he so informed Mr. De Zavala, the representative of the appellant herein, prior to the issuance of the $2,000 certificate.
Reference is made in both the original dissenting and the majority opinion on rehearing to the fact that the trust agreement herein could not be enforced, for the reason that the original subscribers were not parties to this suit. It is not necessary to make any one a party to a suit who is not adversely interested. The original subscribers are not adversely interested to Sapp, nor to the bank, the trustee, nor to the appellant herein. They were not claiming the money, and the enforcement of the trust agreement could in no wise be detrimental to them. The uncontradicted evidence shows that at the time the $2,000 certificate here in controversy was issued, the appellant knew that the $4,100 subscribed by the Rosebud citizens had been placed in the Rosebud Bank, upon the express agreement that the same would be used in paying for the erection of the filling station, and for no other purpose. The majority opinion on rehearing herein treats this as immaterial, for the reason that this $2,000 certificate was issued as the result of a compromise. I quote from said opinion as follows:
"It is a rule as old as the law that evidence of a compromise cannot be considered, and is inadmissible for any purpose."
This language is not aptly chosen. There is a rule of evidence that statements and admissions made with the view of a compromise are not admissible against a party making them, but it is a rule of law as old as the law that compromise when fairly made is binding on the parties thereto.
"Numerous authorities support the doctrine that a compromise and settlement of a controversy based on sufficient consideration is as between the parties thereto, and as to the matters embraced therein, binding and conclusive when fairly made." 8 Cyc. 518.
Compromises are favored by courts. "Agreements of compromise may be impeached for any cause sufficient in equity to invalidate a contract" (8 Cyc. 573), but not otherwise.
The evidence as to the compromise in this case may be briefly summarized as follows:
The original certificate of $4,100 was issued to the Columbian Refining Company, and it transferred the same to the appellant, for a valuable consideration. This certificate stated, upon its face, that it was nontransferable. Hence, while the Houston Bank became the owner of this certificate, it took it subject to all defenses that could be made against the refining company.
It seems clear to me that if the refining company had demanded the payment of this $4,100, the Rosebud Bank should have refused to pay the same until the filling station was erected and paid for. Such being the case, the Rosebud Bank very properly refused to pay the Houston Bank this money. Thereupon there was considerable correspondence and telegraphic communication between the Rosebud Bank and the Houston Bank, the former notifying the latter that this money was held in trust, as hereinabove stated, and that it did not recognize said Houston Bank as having any interest in the matter. While this controversy was pending, the refining company bought and paid for $2,100 of material to be put into the *Page 321 filling station, and the same was delivered at Rosebud. This did not obligate the Rosebud Bank to pay out any part of the $4,100, for the reason that the same was not payable until the station was completed. By agreement between the Rosebud Bank, the Houston Bank, and the refining company, the Houston Bank surrendered this $4,100 certificate; the Rosebud Bank paid the refining company $2,100, which the Houston Bank received and agreed to issue a $2,000 certificate for the balance to the refining company, conditioned as was the former certificate. This was agreed to by all parties as a compromise of the controversy. The $4,100 certificate was surrendered and cancelled; the Rosebud Bank issued the new certificate for $2,000 to the Refining Company, which the Refining Company transferred to the Houston Bank. At this time the contract had been let to Sapp, and the Rosebud Bank had agreed to hold this $2,000 and pay it to Sapp upon the completion of the filling station. It is immaterial that the Houston Bank did not know that the contract had been let at that time. It had agreed that the new certificate should be issued to the Refining Company. Under this state of facts, it seems clear to me that the judgment of the trial court was correct in holding that the bank held this $2,000 in trust for Sapp, regardless of what might have been the relation of the Houston Bank to the deposit prior to this compromise agreement.
The last majority opinion states that the judgment of the trial court must rest upon both of two propositions of law, and that neither proposition standing alone can support the judgment. The propositions referred to, as stated by the court, are as follows:
"First: That by virtue of the representations and agreements between the Columbian Refining Company and the subscribers of the stock, the proceeds thereof became a trust fund in the hands of the Planters National Bank, which fund was agreed to be expended in the construction of the filling station at Rosebud; and the parties to said agreement had a right to demand that said fund be so applied, and the Houston Bank acquired such certificate of deposit subject to the carrying out of said agreement.
"Second: That the transaction between the Columbian Refining Company and appellee Sapp amounted to an assignment of the trust fund to him."
I do not think that the judgment of the trial court rests necessarily upon the finding that the transaction, at the time Sapp entered into the contract, amounted to an assignment of this $2,000 to him. It was not an assignment in any technical sense, for the money did not become his by virtue of the contract, but it did create a trust relation between him and the bank, by virtue of which he would become entitled to this money upon completion of the contract. The opinion referred to states that an assignment to Sapp would not be effective, because of the prior assignment to the Houston Bank. As previously stated herein, the original assignment to the Houston Bank was subject to the trust of which Sapp became the beneficiary when he entered into the contract, even had no compromise settlement been made; but the certificate herein sued on was issued under circumstances as herein related, which clearly constituted the $2,000 trust fund for the benefit of Sapp. At least two of the subscribers were present when the contract was let to Sapp, and knew of and assented to the agreement that the $2,000 should be paid to him. It was not necessary that any of them should have assented to this, for it was only carrying into effect by the bank the original agreement with the subscribers.
For the reasons stated, the case of Barcus v. Parlin-Orendorf Co. (Tex.Civ.App.) 184 S.W. 640, cited in the opinion referred to, is not in point. Neither is the case of Duncanson v. Howell (Tex.Com.App.)222 S.W. 232, cited in said opinion, applicable to the facts of this case. The same applies to the other authorities upon this point cited in the said opinion on motion for rehearing.
The general discussion in the last majority opinion, in reference to resulting and implied trusts, and the numerous authorities cited, "like the flowers that bloom in the spring, tra la, have nothing to do with the case," for the reason that the trust created in this case is an express trust.
For the reasons stated, I dissent from the last majority opinion herein, and reassert the conclusion reached in the original majority opinion, that the judgment of the trial court should be affirmed. *Page 322