Magnolia Bend Volunteer Fire Department, Inc. v. John J. McDonnell and Montgomery County Emergency Services District No. 5

In The Court of Appeals Ninth District of Texas at Beaumont ____________________ NO. 09-03-051 CV ____________________ MAGNOLIA BEND VOLUNTEER FIRE DEPARTMENT, INC., Appellant V. JOHN J. MCDONNELL and MONTGOMERY COUNTY EMERGENCY SERVICES DISTRICT NO. 5, Appellees On Appeal from the 359th District Court Montgomery County, Texas Trial Cause No. 02-07-04300-CV MEMORANDUM OPINION The Magnolia Bend Volunteer Fire Department, Inc. (Fire Department) sued Montgomery County Emergency Services District No. 5 (the District) seeking the cancellation of a warranty deed transferring certain real property from the Fire Department to the District. The Fire Department further sought the cancellation of an assignment of lease transferring a leasehold interest in certain other real property from it to the District. The Fire Department also sued John McDonnell, President of the Magnolia Bend Volunteer Fire Department, alleging breach of fiduciary duty and Homer Wilson for conspiracy with McDonnell. The District counterclaimed against the Fire Department on the basis the original deed placing title to the real property in the Fire Department's name was constitutionally void and seeking the imposition of a resulting trust quieting title to the property in the District. The District further sought an order declaring it was entitled to ownership and possession of various items of all personal property and fire equipment purchased with tax funds, and seeking an order enjoining the Fire Department from damaging or removing equipment. Following a trial to the bench, the court found the placing of title to the real property in the Fire Department's name was void under the Texas Constitution and that a resulting trust existed in favor of the District. The trial court awarded title and possession of the real property and the personal property and fire equipment to the District. The trial court rendered a take-nothing judgment against the Fire Department on its claims against McDonnell and Wilson. The Fire Department brings this appeal raising three issues. The District has filed a brief as appellee. (1) The Fire Department claims in its first issue the evidence does not support the trial court's finding that McDonnell did not breach his fiduciary duty. The District counters that any error with respect to the finding was harmless because the Fire Department fails to challenge the trial court's finding that it sustained no damages from McDonnell's conduct. Generally, in the absence of a challenge on the finding of no damages, any error in the findings on issues of liability are immaterial and harmless. See Tate v. Sharp, 831 S.W.2d 899, 900 (Tex. App.--Beaumont 1992, no writ)(quoting Canales v. National Union Fire Ins. Co., 763 S.W.2d 20, 23 (Tex. App.--Corpus Christi 1988, writ denied). See also Easley v. Castle Manor Nursing Home, 731 S.W.2d 743, 744 (Tex. App.--Dallas 1987, no writ). Further, the Fire Department does not argue or demonstrate that the error complained of probably caused the rendition of an improper judgment. See Tex. R. App. P. 44.1(a)(1). Issue one is overruled. In issue two, the Fire Department contends the evidence does not support the trial court's finding that the original deed placing title to the property in its name was void as prohibited by Article 3, section 52 of the Texas Constitution, because the funds to pay for the property and building were tax funds provided by the Montgomery County Rural Fire Prevention District No. 5. (2) See Tex. Const. art. III, § 52. The Fire Department does not challenge the trial court's finding that "[f]unds for the payment of the Property . . . were provided to the Magnolia Bend VFD by the Montgomery County Rural Fire Prevention District No. 5." Rather, the Fire Department argues the money which purchased the property was not "given" to it, because there was a contract that in exchange for funding, the Fire Department would provide fire suppression services for the District. Therefore, the Fire Department contends, the payments did not violate the Texas Constitution and the placing of title in its name was not void. We first note that the Fire Department cites no authority for its position. See Tex. R. App. P. 38.1 (h). Furthermore, the Fire Department fails to discuss all of the evidence in asserting it is factually insufficient. When reviewing such a challenge, we must consider all of the evidence. See Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989). The Fire Department refers only to portions of the testimony provided by Bennie M. McKenzie, Homer Wilson, and Charlie Roe, as summarized here. McKenzie testified the tax money was in exchange for fire suppression services and "they hired us to do that." Wilson's testimony indicated there was a verbal contract for services in exchange for funds and "there was no formal written contract until 2000." Wilson further testified the money was never given to the Fire Department to "spend it any way you want to." Roe testified the District did not "just give" the Fire Department money, it was for their budget to provide fire-fighting services. The evidence set forth by the Fire Department does not show the funds were in exchange for return consideration. The Fire Department does not demonstrate the District's act--placing title to the property in its name--was in exchange for sufficient consideration so that it was not "gratuitous." See Texas Mun. League Intergovernmental Risk Pool v. Tex. Workers' Comp. Com'n, 74 S.W.3d 377, 383 (Tex. 2002). Issue two is overruled. In its third issue, the Fire Department claims the evidence does not support the imposition of a resulting trust on the property in favor of the District. Specifically, the Fire Department contends first that the District did not establish it paid the purchase price for the property; and second, that the District did not show it paid such price at the time of the inception of the title. In support, the Fire Department refers to the fact that title to the property passed to it on June 28, 1985, when the deed was executed; the down payment was paid with a cashier's check purchased by the Fire Department; and that the money received from the District was co-mingled in one account with the Fire Department's own money. The deed is void; therefore, title did not pass to the Fire Department when it was executed. Consequently, the payments were not made "subsequent to the inception of legal title" as the Fire Department argues. The trial court found that any "commingled" funds were presumed to be public funds and the Fire Department does not challenge that finding. Regarding payment, the trial court found the District provided the funds to the Fire Department to pay for the property. The record establishes that in 1985 the District approved the purchase of the property for a new fire station. At that meeting, the District authorized down payment on the land. On June 28, 1985, the District wrote a check to the Fire Department for $10,000. The District's financial report for 1986 noted as an expense for land purchase the amount of $4,666, and as a liability a note payable for land purchase in the amount of $27,965. The minutes of the District board in July 1986 show a motion carried to pay the land off at approximately $25,000. On January 13, 1987, the District wrote a check to the Fire Department in the amount of $10,000. On January 22, the District gave Check No. 469 in the amount of $20,000 to the Fire Department to pay off the land. The record contains copies of a cashier's check from the Fire Department to the title company in June of 1985 for the amount of $4,685.82, and two checks from the Fire Department to the trustee for the land in the amounts of $5,462.38 and $26,704.35, dated July 1, 1986 and January 23, 1987, respectively. Robert Burch, a member of the board of commissioners for the District from 1985 through 1987, and a member of the Fire Department from approximately 1983 to 1985, testified taxpayer funds provided by the District paid for the down payment on the land, the annual payment made in 1986, and the balance paid off in 1987. We conclude there is factually sufficient evidence to support the trial court's finding the District supplied the funds to the Fire Department to pay for the property. The Fire Department does not refer this court to any evidence contrary to the trial court's findings. "A resulting trust arises by operation of law when title is conveyed to one party, but the purchase price is paid by another. Crume v. Smith, 620 S.W.2d 212, 215 (Tex.Civ.App.--Tyler 1981, no writ)." Masterson v. Hogue, 842 S.W.2d 696, 697 (Tex. App.--Tyler 1992, no pet.). "When title to property is taken in the name of someone other than the person who advances the purchase price, a resulting trust is created in favor of the payor. Nolana Dev. Ass'n v. Corsi, 682 S.W.2d 246, 250 (Tex.1984); Cohrs v. Scott, 338 S.W.2d 127, 130 (Tex.1960)." Tricentrol Oil Trading, Inc. v. Annesley, 809 S.W.2d 218, 220 (Tex. 1991). The Fire Department refers to no evidence the District paid the purchase price in the character of anything other than a purchaser or by way of loan. See Lifemark Corp. v. Merritt, 655 S.W.2d 310, 317 (Tex. App.--Houston [14th Dist.] 1983, writ ref'd n.r.e.). See also Sahagun v. Ibarra, 90 S.W.3d 860, 863-64 (Tex. App.--San Antonio 2002, no pet.). The evidence is factually sufficient to support the imposition of a resulting trust. Issue three is overruled. The judgment of the trial court is AFFIRMED. PER CURIAM Submitted on October 28, 2003 Opinion Delivered December 11, 2003 Before Burgess, Gaultney, and Hill (3), JJ. 1. John McDonnell is listed as a pro se appellee in the District's brief but did not file a separate brief. 2. The District is the successor in interest to all of the Fire District's assets and obligations. 3. The Honorable John Hill, sitting by assignment pursuant to Tex. Gov't Code Ann. § 74.003(b) (Vernon 1998).