Equity will construct a trust in order to satisfy the demands of justice when one who occupies a fiduciary or confidential relationship abuses it and, by fraud or overreaching, gains some advantage to himself. Moreover, the courts will prevent one from holding for his own benefit that which he has gained by reason of a breach of a fiduciary relationship. 65 C.J. Trusts Sec. 14, pp. 223, 224, Sec. 226, pp. 476-479; Cawthon v. Cochell, Tex.Civ.App., 121 S.W.2d 414; Vann et al. v. Calcasieu Trust Savings Bank, Tex.Civ.App., 204 S.W. 1062; Kreis v. Kreis, Tex.Civ.App., 57 S.W.2d 1107. An administrator is not permitted to purchase directly or indirectly property belonging to the estate.
Where a trustee or agent makes unauthorized improvements he may or may not be reimbursed to the extent the property is benefited, depending upon whether he acted in good faith or in bad faith. (Scott on Trusts (1939 ed.) sec. 245.1; Kiesendahl v. Ganoe, 94 Ore. 283; Harrison v. Miller, 124 W. Va. 550; Dickel v. Smith, 42 W. Va. 126; Cawthon v. Cochell, Tex. Civ. App., 121 S.W.2d 414.) As stated in Dickel v. Smith, 42 W. Va. 126, "A trustee cannot improve his cestui que trust out of the estate, nor can he ordinarily charge the corpus of real estate with improvements."
Cranes held the land in trust for Mrs. Snyder, and in taking a deed from Cranes with that knowledge, Traweek became a trustee for Mrs. Snyder. And by accepting a deed for Traweek, with knowledge, Binford also became a trustee for her, and therefore they could not divest her of her equitable title by asking her to sign a deed, without disclosing to her a full and complete statement of all the facts relating to the disposition of her land by Carnes. Hall v. Miller, 147 S.W.2d 266; Cawthorne v. Cochell, 121 S.W.2d 414; Hughes v. Hughes, 191 S.W. 742; 42 Tex. Jur. 729; 65 C.J. 777. MR. JUDGE SLATTON, of the Commission of Appeals, delivered the opinion for the Court.
A constructive trust is a device equity uses to remedy a wrong. See Meadows v. Bierschwale, 516 S.W.2d 125 (Tex. 1974); Cawthorn v. Cochell, 121 S.W.2d 414 (Tex.Civ.App. Amarillo 1938, writ dism'd). When property has been acquired under circumstances where the holder of legal title should not in good conscience retain the beneficial interest, equity will convert the holder into a trustee.
As this Court has declared, it is imposed to prevent a person from holding something that he has gained "by reason of a fiduciary relation subsisting between him and those for whose benefit it is his duty to act." Cawthon v. Cochell, 121 S.W.2d 414, 417 (Tex.Civ.App. โ Amarillo 1938, writ dism'd); see also Hull v. Fitz-Gerald, 232 S.W.2d 93, 99 (Tex.Civ.App. โ Amarillo 1950) aff'd, 150 Tex. 39, 237 S.W.2d 256 (1951). Even without a confidential relationship, actual fraud by one party may also justify the imposition of a constructive trust, Meadows v. Bierschwale, 516 S.W.2d 125, 128 (Tex. 1974), but Consolidated did not plead fraud.
"is a trust which is not expressed but is imposed upon a person by a court of equity upon the ground of public policy so as to prevent him, from holding for his own benefit and advantage that which he has gained by reason of a fiduciary relation subsisting between him and those for whose benefit it is his duty to act." Hull v. Fitz-Gerald, 232 S.W.2d 93, 99 (Tex.Civ.App.-Amarillo 1950) affirmed, 150 Tex. 39, 237 S.W.2d 256 (1951), citing Cawthon v. Cochell, 121 S.W.2d 414, 416 (Tex.Civ.App.-Amarillo 1938, writ dism'd); see Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401 (1960); 57 Tex.Jur.2d Trusts ยงยง 54 et seq. (1964). The circumstances existing in the case at bar satisfy this description.
The equity of transaction must shape the measure of the relief.'" Cawthon v. Cochell, Tex.Civ.App., 121 S.W.2d 414, 416, states: "In the class of cases to which this case belongs an accurate definition would be that it is a trust which is not expressed but is imposed upon a person by a court of equity upon the ground of public policy so as to prevent him from holding for his own benefit and advantage that which he has gained by reason of a fiduciary relation subsisting between him and those for whose benefit it is his duty to act."
Jairus Ward Perry, a Treatise on the Law of Trusts and Trustees, 6th Ed. p. 261. In the case of Cawthon v. Cochell, Tes.Civ.App., 121 S.W.2d 414, 416, err. dis., this court defined a constructive trust as follows: "A constructive trust * * * is a trust which is not expressed but is imposed upon a person by a court of equity upon the ground of public so as to prevent him from holding for his own benefit and advantage that which he has gained by reason of a fiduciary relation subsisting between him and those for whose benefit it is his duty to act.
" In the case of Cawthon v. Cochell, 121 S.W.2d 414, writ of error dismissed, the facts were similar in all material respects to those in the instant case in that the evidence established that Mrs. Cochell, a widow, 83 years of age, knew very little about business. She could read only with difficulty and had no one on whom to rely in transacting her business.