Face Challenges Confidently

038 Jordan v. Exxon Corp.

Tuesday, September 1st, 2015

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of some significance to you.
Jordan v. Exxon Corp., 802 S.W.2d 880 (Tex. App.–Texarkana 1991, no writ), involves a conveyance of a mineral interest from Sam F. Jordan (3/32) and Carl Bruce (3/32) to “Sam F. Jordan, Trustee.” The only mention of a trust in the conveyance of the mineral interest was the word “Trustee,” and there was no other evidence that a trust existed. The Bank foreclosed a lien against “Sam F. Jordan” and leased to Exxon.
Held: There was no trust, and the Bank got it all. By statute, a trust concerning real property is invalid unless it is created by a written instrument. Ordinarily, when a trust is created, the property held is not liable for personal obligations of the trustee. Because no valid trust was created, the Bank’s lien against “Sam F. Jordan” caught the property acquired by “Sam F. Jordan, Trustee.” This includes the 3/32 originating with Carl Bruce. When the owner of property transfers it upon a trust which fails, and receives consideration from the transferee for the transfer as an agreed exchange, there is no resulting trust, and the transferee holds the property free of any trust.
The Texas Blind Trust Act permits purchasers to rely upon conveyances from “John Doe, Trustee” without any duty of further inquiry into the terms and conditions of the underlying trust. This has the salutary effect of reducing the risks in accepting titles out of trustees and reducing the number of documents which have to be recorded. Unfortunately, it is too often assumed that a conveyance to “John Doe, Trustee” creates a trust. It does not. This case highlights the risk to the equitable owner who permits his title to be held in the name of “John Doe, Trustee” without an underlying trust agreement. It may be convenient to hold title in that fashion, but the careful mineral owner will have a written trust agreement signed by the party acting as trustee.