A fiduciary must "make a good faith effort to fully inform [the principal] not only of the facts, but the consequences, that is the nature and effect" of the fiduciary's act and any actions the principal takes based on the fiduciary's advice. Sorrell v. Elsey , 748 S.W.2d 584, 586–87 (Tex. App.—San Antonio 1988, writ denied) (concluding that fiduciaries did not obtain finding that they made good faith effort to fully inform principal of nature and effect of her signature on deed presented to her by fiduciaries).
When persons enter into fiduciary relations, each consents as a matter of law to have his conduct measured by "the standards of the finer loyalties exacted by courts of equity." Sorrell v. Elsey, 748 S.W.2d 584, 585 (Tex.App. — San Antonio 1988, writ denied) (quoting Johnson v. Peckham, 132 Tex. 148, 120 S.W.2d 786, 788 (1938)). Even in the case of a gift between parties with a fiduciary relationship, "equity indulges the presumption of unfairness and invalidity, and requires proof at the hand of the party claiming validity . . . of the transaction that it is fair and reasonable."
City of Port Isabel v. Pinnell, 161 S.W.3d 233, 238 (Tex. App-Corpus Christi-Edinburg 2005, no pet.) ("Capacity is a party's legal authority to sue or be sued."); see Pike v. Texas EMC Mgmt, LLC, 610 S.W.3d 763, 779-80 (Tex. 2020) (concluding that party's challenge to capacity of partner to bring claim that "actually belongs to the partnership" is "matter of capacity" and "does not implicate subject-matter jurisdiction"). Secondly, John argues that if the de facto capacity does indeed exist in Texas and the trial court determined that he acted in that capacity and therefore owed a fiduciary duty to the beneficiaries, then the burden of proof would shift from the Foundation to him, citing Gray v. Sangrey, 428 S.W.3d 311, 316 (Tex. App -Texarkana 2014, pet. denied), and Sorrell v. Elsey, 748 S.W.2d 584, 586 (Tex. App-San Antonio 1988, writ denied). He contends that such burden shifting would "substantially increase . . . the claims the Foundation may bring against [him] and . . . his potential liability."
Texas courts have applied a presumption of unfairness to transactions between a fiduciary and a party to whom it owes a duty of disclosure, thus casting on the profiting fiduciary the burden of showing the fairness of the transactions. Texas Bank Trust Co. v. Moore, 595 S.W.2d 502, 507-09 (Tex. 1980); Sorrell v. Elsey, 748 S.W.2d 584, 586 (Tex.App.-San Antonio 1988, writ denied); Gum v. Schaefer, 683 S.W.2d 803, 806 (Tex.App.-Corpus Christi 1984, no writ) (benefitting fiduciary has burden of presenting evidence and securing finding that confidential relationship was not breached). The burden cast upon the fiduciary not only includes presenting evidence but securing findings of the material issues — whether the fiduciary had made reasonable use of the confidence placed in him and whether the transactions were ultimately fair and equitable.
For example, in Williams's cited case Sorrell v. Elsey, the parties conceded that a fiduciary relationship existed; the issue instead was whether the fiduciary receiver breached his fiduciary duty in connection with a deed conveyance. 748 S.W.2d 584, 586 (Tex. App.-San Antonio 1988, writ denied). Similarly, in Miller v. Miller, the court found that the burden shifted to the fiduciary to establish fairness in challenged transaction only after the court found the existence of a fiduciary relationship.
(mem. op.) ("There is no trial by consent where a party objects to the introduction of evidence."); Sorrell v. Elsey, 748 S.W.2d 584, 589 (Tex. App.-San Antonio 1988, writ denied). The cases Matrix and OGE rely on to suggest that consent occurs when a party offers evidence on an issue are distinguished by the fact that in each of those cases, there was no objection to trial on the issue.
In transactions involving parties with a fiduciary relationship, "equity indulges the presumption of unfairness and invalidity, and requires proof at the hand of the party claiming validity and benefits of the transaction that it is fair and reasonable." Sorrell v. Elsey , 748 S.W.2d 584, 585 (Tex. App.—San Antonio 1988, writ denied) (quoting Stephens Cty. Museum, Inc. v. Swenson , 517 S.W.2d 257, 260 (Tex. 1974) ). Accordingly, we disagree with Jurgens's contention that her reimbursement claims were in the nature of a defense.
Because the Appellants properly objected to the lack of a pleading supporting Gutierrez's bona fide purchaser defense and to trial of the issue by consent, there was no trial by consent. See Tenet Health Sys. Hosp. Dallas, Inc. v. N. Tex. Hosp. Physicians Grp., P.A., 438 S.W.3d 190, 204 (Tex. App.—Dallas 2014, no pet.) (determining "there was no trial by consent" when the appellant objected to evidence of the appellee's affirmative defense and to the lack of a pleading supporting the defense); Sorrell v. Elsey, 748 S.W.2d 584, 589 (Tex. App.—San Antonio 1988, writ denied) ("[Appellant] objected to the introduction of evidence supporting th[e] affirmative defense, and thus preserved error and prevented trial by consent."). Because Gutierrez did not affirmatively plead her bona fide purchaser defense and because the issue was not tried by consent, "the trial court could not . . . award judgment based thereon."
Likewise, Ms. Wilhoite failed to prove that the house was a gift. See Sorrell v. Elsey, 748 S.W.2d 584, 588 (Tex. App.-San Antonio 1988, writ denied) (holding that when pleading a gift as an "independent reason why the plaintiff should not recover upon the case stated and proved," it is an affirmative defense). Mr. Frank testified that Ms. Wilhoite had promised to pay him for the house, and the trial court was within its discretion to believe him over Ms. Wilhoite.
-4 (Tex.App.-Houston [14th] Dec. 8, 2005, no pet. h.) (mem. op.) (requiring the fiduciary to rebut the presumption the withdrawals he made from the principal's account during her lifetime were unfair); Vogt v. Warnock, 107 S.W.3d 778, 783 (Tex.App.-El Paso 2003, pet. denied) (establishing that the fiancee fiduciary had to rebut the presumptions of unfairness regarding the testator's transfers of real property during his lifetime); Collins, 53 S.W.3d at 840 (acknowledging that the presumption must be rebutted from a deed the fiduciary received before the decedent's death); Evans v. First Nat'l Bank of Bellville, 946 S.W.2d 367, 379-80 (Tex.App.-Houston [14th] 1997, writ denied) (stating that the presumption may apply when ownership of the CDs is resolved); Townes v. Townes, 867 S.W.2d 414, 417-18 (Tex.App.-Houston [14th] 1993, writ denied) (applying the presumption after the fiduciary, and also a signatory on the CDs owned by the decedent, made withdrawals before the decedent's death); Sorrell v. Elsey, 748 S.W.2d 584, 585-86 (Tex.App.-San Antonio 1988, writ denied) (involving a suit to set aside a deed of property to her nephew, also a fiduciary, required the fiduciaries to rebut the presumption of unfairness); Tuttlebee v. Tuttlebee, 702 S.W.2d 253, 256-57 (Tex.App.-Corpus Christi 1985, no writ) (concluding that the son, as the fiduciary, needed to rebut the presumption of unfairness after receiving a deed of property during the mother's lifetime). Errors which require a reversal must be harmful. City of Brownsville v. Alvarado, 897 S.W.2d 750, 753-54 (Tex. 1995).