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LOUIS I. GUION v. MARY LOUISE GUION (12/03/71)

December 3, 1971

LOUIS I. GUION, JR., ET AL, APPELLANTS
v.
MARY LOUISE GUION, ET AL, APPELLEES



From a District Court of Dallas County, Texas

Author: Williams

The sole question presented by this appeal is the validity vel non of a summary judgment in favor of appellees in appellants' suit against appellees for cancellation and rescission of a compromise and settlement agreement allegedly brought about and procured through fraud, misrepresentation and conspiracy. We hold that the summary judgment proof establishes as a matter of law that appellees are entitled to judgment. Gibbs v. General Motors Corporation, 450 S.W.2d 827 (Tex.Sup. 1970).

In August 1955 Mary Louise Guion and Louis I. Guion, Jr. were divorced. As a part of the property settlement and child support arrangements between them and incident to the divorce a trust had been established by the parties in which Mary Louise Guion and John Burst were named trustees. In 1967 Louis I. Guion, Jr. brought an action in the district court against Mary Louise Guion, John Burst, Marvin Jones, Dale R. Eberly, Dewey L. Lawhon, J. B. Hutchinson, Judge B. Fite, M-H Equipment Co., Inc., and Southern Discount Corporation, in which he sought revocation of the trust instrument dated August 22, 1955 and for accounting with respect to the operation of the trust. He also sought damages resulting from alleged breach of duty by the trustees and conspiracy by the named defendants to deprive him of the trust assets. In this action he was represented by David Gibson and Rudy Groom, attorneys of Houston, Texas.

After answers were filed and issues joined the parties entered into extended negotiations for settlement of the dispute. On July 2, 1968 these negotiations resulted in a written agreement of settlement being prepared and signed by the attorneys for the parties. On July 26, 1968 the parties and the attorneys for the parties. On July 26, 1968 the parties and the attorneys met and signed the documents consummating the settlement. Contemporaneously the balance of the monetary consideration for the settlement was transferred and accepted.

After this settlement agreement had been consummated but prior to the time the district court entered an order dismissing the original action, as contemplated by the settlement agreement, appellant John Allen, who alleged that he had been assigned an ownership interest in the Guion trust, filed a plea of intervention complaining of all of the defendants in the original suit and asked for cancellation and rescission of the purported settlement agreement and an accounting as to the trust properties. In addition, Allen instituted a third party action against David Gibson and Rudy Groom, alleging that they had been employed to represent him as his attorneys in the original suit but that such attorneys had engaged in a conspiracy with the attorneys for the defendants with respect to the purported settlement agreement for which he sought damages. In the alternative Allen alleged negligence and misrepresentation on the part of Groom and Gibson in representing him as his attorneys, breach of fiduciary duty and conspiracy among themselves with intent to defraud Allen of the trust properties for which he sought to recover actual and exemplary damages. Thereafter, Louis I. Guion, Jr. filed an instrument designated "Motion for Trial on the Merits and Motion to Bring Additional Parties" in which he alleged that Gibson and Groom should be made parties in that each of said attorneys breached the fiduciary relationship and duty owed to him in making certain misrepresentations and being guilty of conspiracy among themselves and with the attorneys for the adverse parties which rendered the alleged settlement agreement to be void. In this instrument Guion withdrew his consent to the compromise settlement agreement which he had signed, contending that the same was void because of fraud on the part of Gibson and Groom.

All of the defendants and third party defendants filed motions for summary judgment based upon the pleadings, depositions and affidavits of the respective parties to which Allen and Guion both made reply. In Allen's answer to the motion for summary judgment he, for the first time, stated that while he did receive certain funds and properties following the settlement agreement he did not feel obligated to return same to the defendants but that if he was mistaken in this respect he would tender to the court such money and properties and requested that the court give him permission to amend his pleadings accordingly. On the same day that the trial court heard and considered the motions for summary judgment, Allen filed a supplemental petition in which he stated, inter alia, that: "Without arguing the contention that the plaintiff and the intervenor have waived any right to cancel and rescind the settlement agreement, the intervenor joins the plaintiff in accepting the terms of the settlement agreement and seeking relief thereon and insisting that the agreement be carried out and performed by the defendants to all intents and purposes as in accordance with its terms."

The trial court granted all the motions for summary judgment and entered judgment denying Allen and Guion any relief. As a part of its judgment the trial court made detailed and extensive findings of fact and legal conclusions which resulted in the summary denial of the cancellation and rescission of the settlement agreement sought by Guion and Allen.

The court found, inter alia, that Guion and Allen expressly authorized their attorneys, Gibson and Groom, to negotiate the settlement agreement; that subsequent to the agreement, Guion and Allen knowingly and willfully accepted the fruits thereof, exercised volitional dominion over the various properties which comprised the settlement proceeds, and conveyed a substantial portion of such properties to third parties. Because of these admitted acts on the part of Guion and Allen the trial court made, among others, the following conclusions: (1) The settlement agreement was made by Gibson and Groom with the prior and express authorization and consent and full knowledge of Guion and Allen; (2) the settlement agreement was fairly negotiated and supported by consideration and mutual assent of all parties; (3) Guion and Allen ratified the settlement agreement; (4) Guion and Allen made a binding election to affirm the agreement; (5) Guion and Allen failed to make restoration of the trust properties received under the settlement agreement, and were unable to do so; (6) Guion and Allen waived all rights to rescind the agreement; and (7) Guion and Allen were "without equitable standing, and have unclean hands."

Guion and Allen perfected an appeal from this adverse judgment but do not complain of the summary judgment in favor of Dewey L. Lawhon.

Appellants submit to us one principal point of error in which they say: "The trial court erred in granting the defendants' motions for summary judgment because they failed to meet their burden of proof and establish that there is no genuine issue as to any material fact that would entitle them to a judgment as a matter of law." Immediately following this point appellants set out six subheadings in which they say: (A) the evidence does not conclusively establish that all of the terms and conditions of the agreement of July 2, 1968 have been carried out or performed; (B) the evidence shows that Gibson and Groom breached their fee contract with Allen by failing to represent him and by failing to obtain his approval of the settlement; (C) since Allen did not have knowledge of all of the terms of the settlement agreement he did not waive his rights thereto and is not estopped to challenge or set the same aside; (D) that Guion and Allen have alleged a conspiracy which allegation is supported by evidence in the record thus raising a fact issue which would defeat a motion for summary judgment; (E) there is evidence to show that the compromise settlement of July 26, 1968 was obtained by fraud sufficient to raise a fact issue which would defeat a summary judgment; and (F) the fee agreement between Guion and Allen on the one hand and Gibson and Groom on the other is illegal and will not support a summary judgment.

All of the appellees urge counterpoints to the effect that appellants have waived their right to appeal the summary judgment denying rescission because of their failure to assign and brief error as to all of the dispository findings of the trial court. They contend that each of the findings and conclusions of the trial court, set forth above, would be dispository and that each could be the basis of judgment as a matter of law. They contend that appellants have not challenged, by points of error, all of these findings but only challenge the finding of "waiver". They point to the rule of law that where summary judgment is based upon more than one ground, and not all grounds are challenged by points of error, the judgment must stand on the unchallenged ground. Malooly Brothers, Inc. v. Napier, 461 S.W.2d 119 (Tex.Sup. 1970). In that case the Supreme Court observed that the trial court's summary judgment could have been based either upon the affirmative defense of release or limitation, or both. By making a challenge against only one of these defenses by assignments of error the Supreme Court held that the remaining point was waived and the summary judgment was allowed to stand. See also City of Deer Park v. State, 154 Tex. 174, 275 S.W.2d 77 (Tex.Sup. 1954) and LeJeune v. Gulf States Utilities Co., 410 S.W.2d 44 (Tex.Civ.App., Beaumont 1966, writ ref'd n.r.e.). The Supreme Court in Malooly, by way of dictum, pointed out that in such a case on appeal the best approach would be to present a general point of error simply complaining that the trial court erred in granting a motion for summary judgment. It was said that such a point would be sufficient to comply with Rule 418, Vernon's Texas Rules of Civil Procedure, "and to allow argument as to all the possible grounds upon which summary judgment should have been denied." In the case before us we do have a general point of error, separated into and discussed in "splintered" points. We think that the doctrine of Malooly is applicable here, even though a general point of error was asserted, for the simple reason that appellants have not argued or briefed one or more of the grounds asserted by the trial court in support of its judgment. For example, the court's findings concerning ratification, election, restitution, and lack of equitable standing are not briefed by appellants even though such arguments might be justified under the general point of error asserted.

Should we be mistaken concerning the applicability of the Malooly rule we have proceeded to review the record in the light of the statement of the Supreme Court, also included in the Malooly decision, as follows:

"If it affirmatively appeared from the record that there can be

no issue as to a material fact upon which the outcome of the litigation

depends, a summary judgment would be affirmed notwithstanding

that it was insupportable on the grounds stated in the motion or

the non-movant's Points of Error. In re Price's Estate, 375 S.W.2d

900 (Tex.Sup. 1964)."

Having examined the record in the light of these rules we are convinced that appellees have demonstrated, as a matter of law, that appellants could not recover the relief sought by them so that had the case proceeded to trial on its merits an instructed verdict in favor of appellees would have been proper.

The primary legal bar to appellants' claim for equitable relief of cancellation and rescission of the compromise and settlement agreement entered into between the parties on July 26, 1968, as to all appellees, is the undisputed ratification of the settlement agreement by Guion and Allen in accepting, retaining and exercising dominion over the settlement proceeds and by failing and refusing to restore or make restitution of the proceeds of the settlement.

One seeking the equitable remedy of cancellation must, as a condition precedent, allege the facts relied upon to avoid the agreement and must allege the fact of a return or tender of the benefit or consideration received by virtue of the settlement agreement. 15A C.J.S., Compromise & Settlement, § 42, p. 270. "Until restoration or offer to make restoration is made, there is ordinarily at law no rescission * * *." Williston on Contracts, 3d Ed., § 1460, p. 117. See also Casualty Reciprocal Exchange v. Bryan, ...


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