Harris County v. Sellers

468 S.W.2d 950, 1971 Tex. App. LEXIS 2942
CourtCourt of Appeals of Texas
DecidedJune 3, 1971
DocketNo. 15758
StatusPublished
Cited by5 cases

This text of 468 S.W.2d 950 (Harris County v. Sellers) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harris County v. Sellers, 468 S.W.2d 950, 1971 Tex. App. LEXIS 2942 (Tex. Ct. App. 1971).

Opinion

BELL, Chief Justice.

This is an appeal from a judgment of the trial court declaring that under law the interest earned on trust funds paid into court pendente lite and invested by Harris County in the County depository in a separately designated account, pursuant to court order, did not belong to the County, but belonged to the person owning the principal of the fund.

This case originated when North American Insurance Company on July 16, 1970 filed a suit impleading Harold Sellers and Joyce Karback Watson who were adverse claimants to the proceeds of an insurance policy on the life of Thomas Douglas Watson, Jr., deceased, in the amount of $1,-000,000.00. The net proceeds amounted to $992,570.00. The net amount was tendered into the registry of the court and on the same day the court entered its order authorizing and directing the payment into the “Registry” of the court to be there retained pending further orders. It discharged the insurance company from liability.

On July 27, 1970 Sellers filed a motion asking the court to order Ray Hardy, District Clerk “to place said funds in the control and custody of the court” and that the funds be deposited in a bank in Houston and the bank be directed to invest the funds so the deposit would earn interest for the benefit of the owners of the fund.

On August 6, 1970 by order signed August 7 the court rendered its order, approved by Sellers and Mrs. Watson, directing the District Clerk and/or the County Auditor to keep and maintain a separate trust account for the use and benefit of Sellers and Watson and to invest and reinvest the fund at interest while the fund remained in the registry of the court. The order directed the parties at interest to make all reports required by law respecting income to said trust account in lieu of such duty on the part of the Clerk and relieved the Clerk of the duty to make reports to the claimants. It provided the Clerk should, on final judgment, pay the principal and interest as directed by the court and that Harris County would be entitled to a reasonable fee to be paid from the funds for keeping the funds in the registry of the court and incidental accounting expenses incurred. The order made no designation of where the fund should be invested.

On October 7, 1970, the court ordered that the fund be invested in time deposits at the Continental Bank and that the deposit be in the name of “Ray Hardy, District Clerk of Harris County, and his successors in office” and that no funds be withdrawn or transferred except on orders of the court. The fund so deposited was to be secured by United States securities to be placed at the First City National Bank of Houston.

On October 8, 1970, Harris County filed its plea of intervention. In this plea it was asserted that under Articles 1656a and 2558a, Sec. 4a, Vernon’s Texas Civil Statutes, all trust funds in possession of the District Clerk in his official capacity were to be deposited in the County depository by the County Auditor and that all interest would belong to the County to be placed in [953]*953the General Fund. Prayer was that it be determined that interest be paid into the County General Fund as it accrued. It attacked the orders of August 7 and October 7 for want of notice of the filing of or hearing on the Sellers and Watson motions.

On October 22, 1970, the court entered another order after hearing the County’s plea of intervention. It recited that the District Clerk, Ray Hardy, and County Auditor, S. Grady Fullerton, though not parties, appeared and all parties announced ready for trial. It ordered that the fund which had been deposited in the County depository be transferred to the Continental Bank when the time deposit that had been made matured. The order found that the acts of the Clerk and Auditor in transferring funds from the County Depository for Trust Funds on order of the court was ministerial. It ordered that the Clerk and Auditor transfer the fund and the interest to accrue on October 23 to the Continental Bank. Further, it provided that Sellers and Watson waived any liability of the Clerk and Auditor with regard to the principal after it was removed to and acknowledged by Continental Bank. The Court confirmed its orders of August 7 and October 7.

On November 6, 1970, both Hardy and Fullerton filed an intervention, asserting their duties under Articles 1656a, 1656b and 2558a, V.A.C.S., and contending it was their duty to deposit all trust funds in the depository bank for Harris County and to pay the interest into the General Fund of the County. They also assert that pursuant to the court's order of August 7, 1970, the fund in question had been deposited in the depository bank for Harris County.

On November 6, 1970, the court severed the cause as between Sellers and Watson, on the one hand, and Harris County, Hardy and Fullerton, on the other hand, and rendered a final judgment declaring, finding and determining that the interest earned and to be earned belonged to either Sellers or Watson whichever was finally determined to be entitled to the proceeds of the policy. The order decreed that the fund, including the interest that had been earned from September 23 to October 23, and all interest to be thereafter earned, be deposited in “The Houston National Bank, The Harris County Trust Fund Depository Bank, and that a separate Trust Account for the benefit of the claimant of such fund who is ultimately determined to be entitled thereto” be maintained. The fund was to earn interest as provided in the Harris County Trust Fund Depository Contract. The special separate fund was to be maintained in the name of “Ray Hardy, District Clerk of Harris County, Texas, and his Successors in Office.” The order also provided that Harris County would be entitled to a reasonable fee to compensate it for its accounting and administrative expenses incurred in handling the fund.

The trial court made findings of fact and conclusions of law, the material ones being as follows:

1. The court on July 16 accepted the tender made by the plaintiff in the inter-pleader suit and authorized said plaintiff to deposit the funds in the registry of the court to be retained in the registry of the court pending further orders.

2. On July 24 the auditor deposited the fund in the Houston National Bank, the Harris County Depository Bank for Trust Funds.

3. On August 24 and September 23, the auditor reinvested the funds in the same manner. The interest earned between July 24 and September 22 was deposited in the General Fund of the County.

4. That before making the deposits the auditor had actual notice of the orders of the court and their contents with respect to investment of this fund that had been entered prior to the date of the particular investment.

[954]*954There were 13 Conclusions of Law, the substance of which we will notice.

1. Harris County is not entitled to interest earned, or to be earned, but it should be paid to whichever of the claimants determined to be the rightful owner on final trial.

2. The successful claimant to the fund was entitled to all interest “as a natural increment of the Fund.”

3. Harris County would be entitled to a reasonable fee for handling the investment of the Fund.

4. The court, in the acceptance and administration of the funds deposited into the registry of the court, sits as a Court of Equity, its .jurisdiction being basically derived from Article 5, Sec. 8 of the Texas Constitution, Vernon’s Ann. St.

5.

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Cite This Page — Counsel Stack

Bluebook (online)
468 S.W.2d 950, 1971 Tex. App. LEXIS 2942, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harris-county-v-sellers-texapp-1971.