Johnny Carroll, Trustee and as Executor of the Estate of Ray Carroll v. H.D. Myers--Appeal from 66th District Court of Hill County

IN THE

TENTH COURT OF APPEALS

No. 10-97-175-CV

JOHNNY CARROLL, TRUSTEE

AND AS EXECUTOR OF THE

ESTATE OF RAY CARROLL,

Appellant

v.

H.D. MYERS,

Appellee

From the 66th District Court

Hill County, Texas

Trial Court # 34681

O P I N I O N

H. D. Myers sued the appellant, Johnny Carroll, // for breach of contract and fraud after discovering that taxes were owed on a tract of land Myers purchased from Carroll. Following a bench trial, the trial judge rendered judgment in favor of Myers, and Carroll appeals (1) the court s holding Carroll liable for the judgment in his capacity as executor of the estate of Ray Carroll, (2) the sufficiency of the evidence supporting the judgment, and (3) the award of attorney s fees to Myers.

I. Factual and Procedural Background

Between 1992 and 1995, Myers purchased several tracts of land from Carroll totaling 8.175 acres. The last transaction between these parties involved a 2.3 acre tract of land located in Hill County. Myers testified that he paid for the land in two installments. One payment was made to Carroll in October or November 1994 to purchase 1.3 acres, and the remaining acre was paid for in January 1995. Carroll then gave Myers a warranty deed for the whole 2.3 acre tract on January 2, 1995. In addition to the deed, Carroll also gave Myers a signed statement indicating that the parties agreed Carroll would be responsible for the real estate taxes incurred during 1994 on the one acre tract purchased by Myers in January 1995.

Myers testified that in February 1996 he discovered that property taxes had not been paid to Hill County from 1990 through 1994 when he received a final notice regarding the possible foreclosure of his 2.3 acre tract of land. Myers stated that after receiving this notice he immediately paid the $442.24 owed for past due property taxes. Furthermore, Myers learned that $1,203.99 was owed to the Aquilla Independent School District for past due school taxes for years 1990 through 1994, and he also paid these taxes.

According to Myers, he then tried to collect from Carroll the amount he had paid for the back taxes. Myers claimed he had difficulty collecting from Carroll the full amount owed and suit was ultimately filed in the justice court. The justice of the peace found Carroll liable for $2,888.24 which included the back taxes owed on the property, court costs, and the attorney s fees of Myers. Carroll appealed this ruling to the 66th District Court of Hill County for a trial de novo. See Tex. R. Civ. P. 574b. Following a bench trial in the district court, the judge ordered that Carroll, in his capacity as trustee and executor of the estate of Ray Carroll, pay Myers $3,255.24 for the back taxes, pre-judgment interest, court costs, and attorney s fees of Myers.

II. Points of Error

Carroll s second point of error contends that there is no evidence or insufficient evidence supporting the trial court s judgment. In reviewing a sufficiency point, when no findings of fact or conclusions of law have been requested or filed, the trial court s judgment will be affirmed if it can be sustained on any legal theory which is supported by the evidence. See Worford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990); In re W.E.R., 669 S.W.2d 716, 717 (Tex. 1984); Murphy v. Cintas Corp., 923 S.W.2d 663, 665 (Tex. App. Tyler 1996, writ denied); Thomas v. Thomas, 917 S.W.2d 425, 435 (Tex. App. Waco 1996, no writ); Stevens v. Snyder, 874 S.W.2d 241, 243 (Tex. App. Dallas 1994, writ denied). On appeal it is implied that the trial court made the necessary findings of fact to support its judgment when findings have not been requested or filed. Worford, 801 S.W.2d at 109; Stevens, 874 S.W.2d at 243.

Carroll argues that the evidence does not show a breach of the warranty of title, and therefore, Myers acted as a volunteer in paying the back taxes. The problem with Carroll s argument is that Myers only pled a breach of contract and a fraud cause of action. Myers could have sued for a breach of the warranty of title or the covenant against encumbrances contained in his warranty deed, but he did not allege these causes of action in his second amended original petition. See generally City of Beaumont v. Moore, 202 S.W.2d 448, 453 (Tex. 1947) (discussing the covenant against encumbrances); Natland Corp. v. Baker s Port, Inc., 865 S.W.2d 52, 60-61 (Tex. App. Corpus Christi 1993, writ denied); Simonton v. Taylor, 306 S.W.2d 775, 779 (Tex. Civ. App. Beaumont 1957, no writ) (discussing a breach of the warranty of title). Therefore, we will only review whether there is sufficient evidence of fraud or a breach of contract which supports the court s judgment.

A cause of action for fraud involving a real estate transaction is available under section 27.01 of the Business and Commerce Code or as a common law fraud claim. See Tex. Bus. & Com. Code Ann. 27.01 (Vernon 1987); Wright v. Carpenter, 579 S.W.2d 575, 578 (Tex. Civ. App. Corpus Christi 1979, writ ref d n.r.e.); see also Miles Homes Div., Insilco Corp. v. Smith, 790 S.W.2d 382, 385 (Tex. App. Beaumont 1990, writ denied); Wyatt v. Mealy, 704 S.W.2d 63, 64 (Tex. App. Corpus Christi 1985, no writ). In the instant case, Myers petition does not specify whether he is alleging a common law fraud or statutory fraud cause of action, but because Myers is seeking to recover his attorney s fees which are typically only available under the statute, we will analyze the sufficiency of the evidence showing fraud under section 27.01. See Tex. Bus. & Com. Code Ann. 27.01; Cantu v. Butron, 921 S.W.2d 344, 354 (Tex. App. Corpus Christi 1996, writ denied); Kneip v. UnitedBank-Victoria, 774 S.W.2d 757, 759 (Tex. App. Corpus Christi 1989, no writ); Kilgore Fed. Sav. & Loan Assoc. v. Donnelly, 624 S.W.2d 933, 938 (Tex. App. Tyler 1981, writ ref d n.r.e).

Proof of fraud under section 27.01 may be established by evidence showing a false promise to do an act which was:

(A) material;

(B) made with the intention of not fulfilling it;

(C) made to a person for the purpose of inducing that person to enter into a contract; and

(D) relied on by that person in entering into that contract.

Tex. Bus. & Com. Code Ann. 27.01(a)(2) (Vernon 1987). In determining whether there is sufficient evidence in the record showing fraud, we review the trial court s findings using the same standards which are applied to review a jury s answers to questions in the charge. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). A no-evidence or legal sufficiency point is decided by looking at the evidence and inferences supporting the trial court s findings to see if more than a scintilla of evidence supports the court s findings. See Continental Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex. 1996); Catalina, 881 S.W.2d at 297; see also Merrell Dow Pharm., Inc. v. Havner, 40 Tex. Sup. Ct. J. 846, 849 (July 9, 1997) ( More than a scintilla of evidence exists when the evidence supporting the finding, as a whole, [] rises to a level that would enable reasonable and fair-minded people to differ in their conclusions.[] (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995))).

Consequently, we must examine whether there is legally sufficient evidence that Carroll s conduct constituted fraud as defined by section 27.01(a)(2). See Tex. Bus. & Com. Code Ann. 27.01(a)(2). Specifically, we will examine two promises made by Carroll. At trial Carroll testified that he represented to Myers he would be responsible for paying the taxes on the 2.3 acres Myers purchased. Also, Myers testified that in negotiating the contract he asked Carroll to make sure the land was free of liens and encumbrances and Carroll agreed. From this testimony, the court could conclude that Carroll made a false promise to do an act because in February 1996 Myers was notified that back taxes were owed on the property for years 1990 through 1994.

Thus, we must analyze whether the evidence supports the court s finding that Carroll made these promises with the intention of not fulfilling them. When a promise to perform an act in the future is not fulfilled, this breach of promise coupled with slight circumstantial evidence of fraud [] is sufficient to support a finding of fraudulent intent in making the agreement. Hoechst Celanese Corp. v. Arthur Bros., Inc., 882 S.W.2d 917, 925 (Tex. App. Corpus Christi 1994, writ denied); see Spoljaric v. Percival Tours, Inc., 708 S.W.2d 432, 434-35 (Tex. 1986); Vida v. El Paso Employees Fed. Credit Union, 885 S.W.2d 177, 182 (Tex. App. El Paso 1994, no writ). The evidence introduced during the trial showed Carroll had a history of non-payment of property taxes. Janie McGee, a former employee of Carroll, testified that she knew other individuals to whom Carroll had sold land without paying the taxes owed on the property. Carroll also stated that he had been sued several times by the school district for non-payment of taxes. Furthermore, Carroll knew prior to the sale of the land to Myers that taxes were owed on the property, but he never disclosed this fact to Myers. When Myers 2.3 acre tract was divided from a larger tract of land owned by Carroll, Carroll knew from receiving tax notices that past due taxes were owed on the property for the years 1990 through 1994, but he never disclosed this or made any payments for the back taxes in the year following the sale of the land to Myers. Carroll s conduct after the sale is also relevant to his intent to fulfill the promises. Myers stated that after paying the back taxes he had difficulty getting in touch with Carroll to talk to him about being reimbursed for the payments, and when he spoke to Carroll about the reimbursement, Carroll indicated that the matter could be tied up in court for years. The trial judge, in looking at the evidence, could easily have inferred that Carroll s promises to pay the taxes and transfer the land free of encumbrances were made with the intention of not fulfilling them.

Next, we determine whether there is legally sufficient evidence that Carroll made these false promises to Myers for the purpose of inducing Myers to enter into the contract. Myers testified that in purchasing several other tracts of land from Carroll between 1992 and 1995 he always asked [Carroll] one thing: I said, Are all of the taxes paid[?] From these prior dealings between the parties Carroll knew Myers was concerned that no taxes be owed on property he was buying and that Myers would not buy property if he knew taxes were owed on it. Thus, the trial court could conclude that Carroll s representations regarding the taxes were made with the purpose of inducing Myers to enter the contract because Carroll knew Myers would not agree to the sale if taxes were owed on the property.

Finally, section 27.01(a)(2) requires the false promise to do an act be material and relied on by an individual when entering into the contract. In order to be material, a false promise to do an act must relate to a matter of importance to the transaction. See Black s Law Dictionary 976 (6th ed. 1990); see also Beneficial Personnel Serv. of Texas, Inc. v. Rey, 927 S.W.2d 157, 168 (Tex. App. El Paso 1996, writ granted by agr.), vacated, 938 S.W.2d 717 (Tex. 1997) (vacated without reference to the merits). For example, in securities cases, the United States Supreme Court believes an omission is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote. TSC Indus., Inc. v. Northway, Inc., 426 U.S. 438, 449, 96 S. Ct. 2126, 2132 (1976); see also Basic Inc. v. Levinson, 485 U.S. 224, 231, 108 S. Ct. 978, 983 (1988). Additionally, under section 27.01 the false promise to do an act must actually be relied on by a person in entering the contract. Tex. Bus. & Com. Code Ann. 27.01 (a)(2)(D) (Vernon 1987). In the instant case, there is legally sufficient evidence in the record to justify the trial court s finding that Carroll s false promises were material. Certainly, a reasonable person would consider whether back taxes were owed on a property to be a material issue in a real estate transaction, and as discussed above, Myers also believed this was an important issue which he always inquired about in purchasing land. Moreover, the evidence reflects that Myers relied on Carroll s representations in deciding to purchase the land. Myers testified during the trial that he relied on Johnny Carroll to be honest. Myers also stated that in deciding to purchase the land he relied on the warranty deed furnished by Carroll and Carroll s written statement promising to pay the property taxes incurred during 1994 for the last acre of land purchased.

In summary, we conclude that there is more than a scintilla of evidence supporting Myers fraud claim. Therefore, we must address the factual sufficiency of the evidence. A factual sufficiency claim is addressed by the appellate court reviewing all the evidence in the record to decide if the trial court s findings of fact are so against the great weight and preponderance of the evidence as to be clearly wrong and unjust. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996); Hitzelberger v. Samedan Oil Corp., 948 S.W.2d 497, 503 (Tex. App. Waco 1997, writ requested).

At trial Carroll s principal argument was that his promises were not made with the intent that he would not fulfill them. Carroll testified during the trial that he did not intentionally deceive Myers regarding the back taxes, but he believed that the tax assessor could divide the back taxes owed by Carroll so Myers would not be responsible for them. He also stated he was working to resolve his tax problems as his cash flow permitted. Furthermore, Carroll testified that, after Myers informed him that he paid the back taxes on the 2.3 acres, Carroll immediately began to investigate what taxes had been paid and it took him several months to resolve his questions about the taxes, so he was prevented from reimbursing Myers until he understood the problem with the taxes. Carroll also stated that while he was investigating the problem he offered Myers $500 as a partial payment which Myers rejected.

Another argument made by Carroll during the trial was that the promise he made to be responsible for paying the taxes was not false because he never specified when he would make the payments. During the trial Carroll also disputed that Myers relied on his representations in entering the contract because he claims Myers knew taxes were owed on the land for 1994.

After considering all the evidence in the record, we conclude that the trial court s finding of fraud is not so against the great weight and preponderance of the evidence as to be clearly wrong and unjust. The trial judge, acting as the factfinder, was able to weigh the credibility of Carroll s testimony against the other evidence in the record. While Carroll vigorously denied that he had the intent not to fulfill his promises when they were made, Myers presented evidence indicating that Carroll had sold land to other individuals without paying the taxes owed and showing that Carroll knew taxes were owed for years 1990 through 1994, but he never disclosed this or made any tax payments in the year following the sale. After reviewing the evidence, we are also unable to say that the court erred in finding that Carroll s promises were false and that Myers relied on these promises in entering the contract.

Finally, we address the legal and factual sufficiency of the evidence supporting the award of $1,646.24 to Myers as a reimbursement for the back taxes he paid. Myers introduced into evidence a final notice of tax lien foreclosure showing that $442.24 in property taxes were due to Hill County. Myers also put into evidence a receipt he received after paying the delinquent school taxes which shows that he paid $1,203.99. Consequently, legally sufficient evidence supports the trial court s award of $1,646.23 as a reimbursement for the back taxes. Carroll argues, however, that Myers was improperly billed for back taxes owed on other surrounding parcels of land. We believe the trial judge s finding that $1,646.23 was owed for back taxes on Myers 2.3 acre tract is not clearly wrong and unjust. Both the property tax notice and the school tax receipt reflect that these taxes are for a 2.3 acre tract of land in the Owens Survey with the same abstract number as Myers tract.

Carroll s second point of error attacking the sufficiency of the evidence is sustained only as it relates to the reimbursement award for the back taxes being $1,646.23 instead of $1,646.24. This point is otherwise overruled because legally and factually sufficient evidence supports the trial court s finding of fraud.

In his first point of error, Carroll contends that the trial court erred in awarding judgment against him in his capacity as executor of the estate of Ray Carroll. At trial, Myers brought suit against Carroll in his individual capacity, as trustee of the estate of Ray Carroll, and as executor of the estate of Ray Carroll. However, Carroll s second amended answer contained a verified denial stating that Carroll was not liable in the capacity in which he was sued, and thus, Myers had the burden of proof on this issue. Tex. R. Civ. P. 93; see Evans v. Kelly-Springfield Tire Co., 620 S.W.2d 737, 739 (Tex. Civ. App. Dallas 1981, no writ).

Because an estate is not a legal entity which may be sued, claims against the decedent s estate are brought by naming the executor in his representative capacity. See Henson v. Estate of Crow, 734 S.W.2d 648, 649 (Tex. 1987); Dueitt v. Dueitt, 802 S.W.2d 859, 861 (Tex. App. Houston [1st Dist.] 1991, no writ). Thus, we must determine if Ray Carroll s estate is liable for either the breach of contract or fraud claim alleged by Myers. In Texas, an estate is generally not liable for an intentional tort committed by the executor of the estate. See Able v. Chandler, 12 Tex. 88, 92 (1854); Crayton v. Munger, 9 Tex. 285, 291 (1852); Schepps v. Wilkins, 290 S.W. 909, 910 (Tex. Civ. App. Dallas 1927, no writ); see generally 28 Tex. Jur. 3d Decedents Estates 277 (1996). Therefore, Carroll cannot be held liable in his capacity as executor for fraud in a real estate transaction under section 27.01.

Next, we must decide if the estate is liable for Carroll s breach of contract. From the record, it appears that Ray Carroll owned the land at issue in this case prior to his death in 1987. Following Ray s death, Johnny Carroll testified that the land owned by Ray was placed in a trust which Johnny administered. Then, in January 1995, the 2.3 acre tract was sold to Myers and both the warranty deed and letter given to Myers list Johnny Carroll acting as a trustee. But when the dispute over reimbursement for the back taxes arose, Johnny Carroll offered Myers several checks in order to settle the matter, and these checks refer to Johnny Carroll as the independent executor of the estate of Ray Carroll.

We believe that the evidence showing Carroll was acting in his capacity as executor of the estate of Ray Carroll in forming this contract is no more than a mere scintilla of evidence which does not support a judgment against Carroll in his representative capacity as executor of the estate of Ray Carroll. The warranty deed given to Myers clearly shows that Carroll was acting as a trustee in conveying the land. Ray Carroll died over seven years prior to the sale of the land to Myers, and Myers did not present any evidence showing that his estate was still open. Furthermore, the fact that a check offered to settle the dispute lists Johnny Carroll as Ray s executor does not establish that Johnny was acting in his representative capacity as executor when the contract of sale was entered. Carroll s first point of error is sustained.

In his third point of error, Carroll contends that the trial court erred in awarding attorney s fees to Myers. In support of his position, Carroll argues that attorney s fees are not recoverable in a suit for a breach of the warranty of title. But, as we discussed above, Myers only pled a breach of contract cause of action and a fraud cause of action, he did not plead a breach of warranty cause of action. Attorney s fees are recoverable for both causes of action pled by Myers. Section 27.01(e) of the Business and Commerce Code allows attorney s fees when fraud in a real estate transaction is proved. See Tex. Bus. & Com. Code Ann. 27.01(e). Section 38.001(8) of the Civil Practice and Remedies Code provides for the recovery of attorney s fees for the breach of an oral or written contract. Tex. Civ. Prac. & Rem. Code Ann. 38.001(8) (Vernon 1997). Thus, the trial court could properly award attorney s fees to Myers. Carroll s third point of error is overruled.

Furthermore, Myers requests we award him $800 in attorney s fees for his appellate work in addition to the $1,200 of attorney s fees awarded by the trial court. A trial court may properly award appellate attorney s fees if the award is contingent upon a party s success on appeal and is supported by evidence of the reasonableness of the amount of the fee. See Fonmeadow Property Owners Assoc., Inc. v. Franklin, 817 S.W.2d 104, 106 (Tex. App. Houston [1st Dist.] 1991, no writ); see also Chilton Ins. Co. v. Pate & Pate Enter., Inc., 930 S.W.2d 877, 896 (Tex. App. San Antonio 1996, no writ). However, in the instant case, the trial court did not award appellate attorney s fees, and during trial, Myers presented no evidence showing what a reasonable attorney s fee would be for defending this appeal. Therefore, we will not order additional attorney s fees for Myers.

In conclusion, we affirm the judgment of the trial court as modified by this opinion. The judgment of the trial court is modified so that Johnny Carroll is not liable for the judgment in his capacity as executor of the estate of Ray Carroll, but he remains liable for the judgment in his capacity as trustee. The judgment is also modified to reflect that the reimbursement award for the taxes should be $1,646.23 not $1,646.24.

BOBBY L. CUMMINGS

Justice

Before Chief Justice Davis,

Justice Cummings, and

Justice Vance

Affirmed as modified

Opinion delivered and filed December 10, 1997

Do not publish