Kahle v. Stone , 95 Tex. 106 ( 1901 )

Sarah Berkson, Joseph Berkson, Rosa Stone, Yatta Stone, and Jennie Stone instituted this suit in the District Court of Johnson County to recover of M.S. Kahle, plaintiff in error, 177 acres of land situated in that county. Briefly stated, the claim of the plaintiffs was that Isaac Stone, their father, held some real estate in Cleburne, Johnson County, in trust for them, and received from the said real estate rents which, being in his hands, he applied to the purchase of the land in question, and that on the 6th day of March, 1882, J.H. Brumley and his wife, by deed of that date, conveyed the said land to Isaac Stone as trustee for the plaintiffs, in consideration for $2500 paid and to be paid out of the funds which the said Isaac Stone held in trust for his said children. It was alleged that a cash payment of $200 was made of funds then on hand held in trust by the said Isaac Stone, and that the deferred payments were made out of the funds so held by the said Isaac Stone in trust for the plaintiffs. The deed by which the land was conveyed to Isaac Stone is in the following terms:

"The State of Texas, County of Dallas. — Know all men by these presents: That we, John H. Brumley and S.E. Brumley, husband and wife, of Johnson County, Texas, for and in consideration of twenty-five hundred dollars, viz: two hundred dollars cash in hand paid, the receipt whereof is hereby acknowledged, and two certain promisory notes, one for one thousand dollars ($1000) to become due twelve months after date of this instrument, and the other for thirteen hundred dollars to become due two years after this date, and each to draw interest at the rate of twelve per cent per annum (the same being the separate funds of Sarah Stone, Yatta Stone, and Jennie Stone) do hereby bargain, sell, alien, and convey unto Isaac Stone, in trust for the sole use and benefit of them, the said Sarah, Yatta, and Jennie Stone, of the county of Johnson, State of Texas, the following described tract or parcel of land. * * * To have and to hold the same, together with all and singular the appurtenances thereunto belonging unto him, the said Isaac Stone, as trustee, his heirs and assigns forever, in trust, however, for the sole use and benefit of the said Sarah, Yatta, and Jennie Stone. And the said Isaac Stone is hereby authorized and empowered to manage and lease or rent said premises and to collect the rents, issues, and profits of the same, and to manage, use, and invest said funds for the use and benefit of the said Sarah, Yatta, and Jennie Stone. And he is also empowered to sell the said premises, or any part thereof, and to make to the purchaser or purchasers thereof a good and sufficient deed of conveyance thereto, and to manage, use, and invest the proceeds of such sale or sales for the use and benefit of the said beneficiaries aforesaid."

The defendants in the court below denied that the funds with which the purchase was made belonged to the trust fund held by Isaac Stone, but claimed that it was his individual property, and that by the said deed the title vested in the said Isaac Stone. The evidence was conflicting upon the question as to whom the funds with which the land was purchased belonged and the court submitted that issue to the jury by proper instructions. The verdict necessarily implies that the jury found that the cash and deferred payments were made with money belonging to Isaac Stone in his own individual right and not with the trust funds. Isaac Stone conveyed this property to L. Stone, under whom the plaintiff in error claims. The Court of Civil Appeals did not express any conclusion of fact contrary to the facts which must be implied to sustain the verdict, but reversed the judgment of the District Court and rendered judgment in favor of the plaintiffs below for 2-25 of the land, upon the ground that the recital in the deed from Brumley to Isaac Stone that the $200 cash payment was made out of the trust fund held by Isaac Stone for the plaintiffs was contractual in its nature and could not be disputed.

The writ of error was granted upon the application of M.S. Kahle because this court was of the opinion that the judgment was erroneously entered; and having granted that writ, the application of Sarah Stone and others was granted as a matter of course. We find no error against the plaintiffs in that petition.

If it were true, as recited in the deed from Brumley to I. Stone, that $200 of the purchase money was paid out of the funds in the hands of I. Stone, as trustee for the defendants in error, then the latter could assert their right to the property and have it subjected to the trust declared in the deed under which the fund originated. The defendants in error would not be bound by the terms of the deed from Brumley to I. Stone, because they were not parties to it, nor would they in such case, assert any right under and by virtue of the deed itself; but their claim would rest upon the fact that the trust fund had been used in the purchase. Strong v. Glasgow, 2 Murphy, 289; Parker v. Coop,60 Tex. 118. The recital in question would establish, prima facie, the character of the fund invested. Stiles v. Giddens, 21 Tex. 784.

But the finding of the jury precludes the idea that a resulting trust arose in favor of the defendants in error from the investment of a trust fund by Stone, and the judgment of the Court of Civil Appeals can not be sustained upon that ground, but it must be upheld, if at all, by the trust created by the deed. The Court of Civil Appeals held that the recital in the deed was contractual in its character and could not be disputed by I. Stone or those claiming under him. To sustain this holding, the court refers to the case of Kahn v. Kahn, 94 Tex. 114, but there is this difference between the two cases: In that case, the transaction and the controversy were between Kahn and his wife. The husband had the power to make the property the separate estate of the wife and the language used expressed the character of the estate conveyed. The deed in this case is not made to or by the defendants in error and no contractual relation can exist between persons who do not in any way agree to nor accept the instrument unless in privity with one who was bound. The beneficiaries in the trust, not being parties to the deed, are not bound by the recital and can not assert an estoppel by those recitals against Stone or his vendees. The recital of the character of the fund paid for the land was subject to contradiction or explanation. Stiles v. Giddens, 21 Tex. 787. In the case last cited a similar question arose, and the court said: "Again, it is contended that plaintiffs are estopped from denying that the land conveyed by Hughart and wife was the separate property of the wife by this expression used in stating the consideration in land, described as `land out of her separate property.' This objection is readily obviated upon the rule that the major must include the minor proposition. If he is not estopped from explaining that that which he acknowledged to be a consideration was not a real consideration at all, he is not estopped from explaining the true character of the component parts of the acknowledged consideration."

If, however, we consider the case in the light that the recital relied upon is contractual in its nature, and, by estoppel upon I. Stone and those who claim under him, would have the same effect as if the facts had been true, then the defendants in error must rely upon the deed, and, claiming title under its terms, whether by estoppel or otherwise, they are bound by the stipulations of that deed as to the powers conferred upon the trustee over the property. They can not claim the land by virtue of the trust created under the deed, and, at the same time, repudiate the provisions which express the powers of the trustee. Roberson v. Tonn, 76 Tex. 542; Giddings v. Steele, 28 Tex. 752 [28 Tex. 752].

The terms of the deed from Brumley to I. Stone are broad enough to support the conveyance which was made by I. Stone to L. Stone and conveyed the title of the beneficiaries who claimed under that deed. Mortgage Co. v. Massie, 1 Texas Ct. Rep., 451; 60 S.W. Rep., 544.

For the errors indicated above, the judgment of the Court of Civil Appeals is reversed and the judgment of the District Court is affirmed.

Reversed and judgment of District Court affirmed.