In In re Poe Trust, there were three co-trustees of a trust, and the trust required them to act jointly. No. 20-0179, 2022 Tex. LEXIS 548 (Tex. June 17, 2022). One of those trustees (Dick) effectively acted as a sole trustee during his life. After Dick died, his executors and one of the other trustees (Richard) became embroiled in litigation. The co-trustees could then not agree on trust decisions, and one of the trustees filed suit to modify the trust to appoint additional trustees, to remove the unanimity requirement, and other trust modification requests. The trial court granted the relief after it denied Richard’s demand for a jury trial. The court of appeals reversed the trial court’s order, holding that Richard had a right to a jury trial on underlying fact issues.
The Texas Supreme Court reversed the court of appeals and held that parties to trust modification proceedings were not entitled to a jury trial under the statute, but reversed and remanded for the court of appeals to consider whether the statute passed constitutional muster. The Court first discusses the authority of a trial court to modify a trust:
Before the enactment of the Trust Code, courts derived authority to modify trusts under the “rule or doctrine of deviation implicit in the law of trusts.” Under this doctrine, a court had the power to “order a deviation from the terms of the trust if it appears to the court that compliance with the terms of the trust is impossible, illegal, impractical or inexpedient, or that owing to circumstances not known to the settlor and not anticipated by him, compliance would defeat or substantially impair the accomplishment of the purpose of the trust.” In enacting Section 112.054, the Legislature essentially codified the doctrine of deviation. Section 112.054, titled “Judicial Modification, Reformation, or Termination of Trusts,” currently provides that “[o]n the petition of a trustee or a beneficiary, a court may order” certain changes to a trust. Tex. Prop. Code § 112.054(a). But, before a court may do so, one or more enumerated statutory predicates must be shown: (1) the purposes of the trust have been fulfilled or have become illegal or impossible to fulfill; (2) because of circumstances not known to or anticipated by the settlor, the order will further the purposes of the trust; (3) modification of administrative, nondispositive terms of the trust is necessary or appropriate to prevent waste or impairment of the trust’s administration; (4) the order is necessary or appropriate to achieve the settlor’s tax objectives or to qualify a distributee for governmental benefits and is not contrary to the settlor’s intentions; or (5) subject to Subsection (d): (A) continuance of the trust is not necessary to achieve any material purpose of the trust; or (B) the order is not inconsistent with a material purpose of the trust. If one or more of these predicates is established, a court is empowered to order “that the trustee be changed, that the terms of the trust be modified, that the trustee be directed or permitted to do acts that are not authorized or that are forbidden by the terms of the trust, [or] that the trustee be prohibited from performing acts required by the terms of the trust.” But this statutory power is not unbounded. Section 112.054(b) requires a court to exercise its discretion to order a modification “in the manner that conforms as nearly as possible to the probable intention of the settlor.”
Id. The Court then held that Section 112.054 does not grant a right to a jury trial in the statute:
Unable to discern a right to a jury trial from the text of Section 112.054, the court of appeals reasoned that the Trust Code “generally provides for jury trials.” For that proposition, it relied on Section 115.012, which is titled “Rules of Procedure” and states: “Except as otherwise provided, all actions instituted under this subtitle [the Trust Code] are governed by the Texas Rules of Civil Procedure and the other statutes and rules that are applicable to civil actions generally.” According to the court of appeals, the rules “outline how one requests a jury” and “[c]ompliance with those rules would thus give Richard a right to a jury trial.” We disagree. Nothing in the text of Section 115.012 can be understood to establish a jury right. Section 115.012 simply states that actions brought under the Trust Code are controlled by the ordinary procedures for civil actions. The court of appeals correctly noted that the rules articulate procedures for requesting a jury. But as we have explained, these procedural requirements are “prerequisites to a jury trial, not guarantees of one.” Such rules merely reflect that a jury right in a civil case is “not self-executing” and that a litigant must take certain steps “to invoke and perfect” his jury right. They presume that the litigant has a jury right to invoke in the first place. The Trust Code’s incorporation of the Rules of Civil Procedure cannot be construed to create a jury right where one does not already exist. The procedures established by those rules are “not meant to alter the parties’ . . . right to a jury trial.” In short, no right to a jury trial in a judicial trust-modification proceeding was created by Trust Code Section 112.054, Trust Code Section 115.012, or the Texas Rules of Civil Procedure, whether they are viewed alone or in combination.
Id. The Court then reversed and remanded to the court of appeals for a determination of whether Richard had a right to a jury trial based on the Texas Constitution, whether or not Section 112.054 provided an express right to a jury trial:
The Texas Constitution provides “two guarantees of the right to trial by jury” in civil proceedings. The Bill of Rights ensures that the “right of trial by jury shall remain inviolate.” Our cases have said, and the parties here do not dispute, that this provision maintains a jury right for the sorts of actions tried by jury when the Constitution was adopted and, thus, “only applies if, in 1876, a jury would have been allowed to try the action or an analogous action.” At the time of the Constitution’s adoption, there was no common-law right to a jury trial in equitable actions and, consequently, our courts have held that the Bill of Rights did “not alter the common law tradition eschewing juries in equity.” However, to provide a jury right in equitable actions, “a special clause was introduced.” In our present Constitution, that guarantee is found in Article V, the Judiciary Article. It provides: “In the trial of all causes in the District Courts, the plaintiff or defendant shall, upon application made in open court, have the right of trial by jury; but no jury shall be empaneled in any civil case unless demanded by a party to the case, and a jury fee be paid by the party demanding a jury, for such sum, and with such exceptions as may be prescribed by the Legislature.” We have held, and no party here disputes, that the Judiciary Article “covers all ’causes’ regardless of whether a jury was available in 1876.” … The court of appeals confronted none of these constitutional arguments, which were first presented on rehearing. By that time, the court of appeals had concluded that the Trust Code’s incorporation of the Rules of Civil Procedure conferred a right to a jury trial. That holding made in-depth treatment of the constitutional arguments unnecessary. Our holding today, however, changes that… Following our preferred practice, we remand the case to the court of appeals to address petitioners’ constitutional arguments in the first instance. And we echo the concurrence’s view that amici input could greatly aid the court of appeals’ decisional process.
Interesting Note: The Court would like the court of appeals to opine on whether underlying fact issues should be submitted to a jury before a trial court can modify a trust. First, in many trust modification proceedings there are underlying fact issues. The Court called them “statutory predicates.” These include: whether the purposes of the trust have been fulfilled or have become illegal or impossible to fulfill? Whether the proposed modification will further the purposes of the trust because of circumstances not known to or anticipated by the settlor? Whether modification of administrative, nondispositive terms of the trust is necessary or appropriate to prevent waste or impairment of the trust’s administration? Whether the modification is necessary or appropriate to achieve the settlor’s tax objectives or to qualify a distributee for governmental benefits and is not contrary to the settlor’s intentions?
True, a district court or a probate judge may be better in terms of education or experience to determine these issues. However, there are many issues where a district court or probate court judge are more educated or experienced, yet the parties have a right to a jury trial. City of Garland v. Dallas Morning News, 22 S.W.3d 351, 367 (Tex. 2000) (a jury should determine the amount of damages at law that should be awarded to a plaintiff where there is a fact issue). Historically, in Texas, a jury’s verdict has a “special, significant sacredness and inviolability.” Crawford v. Standard Fire Ins. Co., 779 S.W.2d 935, 941 (Tex. App.—Beaumont 1989, no writ). The Texas Supreme Court has already acknowledged that a right to a jury is a constitutional right that can only be waived by a voluntary, knowing, and intelligent act based on full awareness of the legal consequences:
[A] waiver of constitutional rights must be voluntary, knowing, and intelligent, with full awareness of the legal consequences. We echo the United States Supreme Court’s admonition that “waivers of constitutional rights not only must be voluntary but must be knowing, intelligent acts done with sufficient awareness of the relevant circumstances and likely consequences.” Under those conditions, however, a party’s right to trial by jury is afforded the same protections as other constitutional rights.
In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 127-28 (Tex. 2004). See also David F. Johnson, The Enforcement of Contractual Jury Waiver Clauses in Texas, 62 Baylor L. Rev. 649, 653-54 (2010). So, courts that care about the United States or Texas Constitutions should bend over backwards to find that a party has a right to a jury on fact issues.
The Texas Supreme Court would like the court of appeals to analyze whether the modification of a trust, which is founded in equity, should have fact issues decided by a jury. A court, in its equitable jurisdiction, should determine whether an equitable remedy should be granted. See Wagner & Brown, Ltd. v. Sheppard, 282 S.W.3d 419, 428-29 (Tex. 2008) (“As with other equitable actions, a jury may have to settle disputed issues about what happened, but “the expediency, necessity, or propriety of equitable relief’ is for the trial court ….”). The Texas Supreme Court stated: “Although a litigant has the right to a trial by jury in an equitable action, only ultimate issues of fact are submitted for jury determination. The jury does not determine the expediency, necessity, or propriety of equitable relief. The determination of whether to grant an injunction based upon ultimate issues of fact found by the jury is for the trial court, exercising chancery powers, not the jury.” State v. Texas Pet. Foods, Inc., 591 S.W.2d 800, 803 (Tex. 1979); Bostow v. Bank of Am., No. 14-04-00256-CV, 2006 Tex. App. LEXIS 377 (Tex. App.—Houston [14th Dist.] Jan. 17, 2006, no pet.); Shields v. State, 27 S.W.3d 267, 272 (Tex. App.—Austin 2000, no pet.). The jury’s findings on issues of fact are binding; however, equitable principles and the appropriate relief to be afforded by equity are only to be applied by the court itself. Shields, 27 S.W.3d at 272.
For example, the Texas Supreme Court previously held: “A jury does not determine the expediency, necessity, or propriety of equitable relief such as disgorgement or constructive trust.” Energy Co. v. Huff Energy Fund LP, 533 S.W.3d 866 (Tex. 2017) (citing Burrow v. Arce, 997 S.W.2d 229, 245 (Tex. 1999)). “Whether ‘a constructive trust should be imposed must be determined by a court based on the equity of the circumstances.’” Id. “The scope and application of equitable relief such as a constructive trust ‘within some limitations, is generally left to the discretion of the court imposing it.’” Id. (citing Baker Botts, L.L.P. v. Cailloux, 224 S.W.3d 723, 736 (Tex. App.—San Antonio 2007, pet. denied)). “If ‘contested fact issues must be resolved before a court can determine the expediency, necessity, or propriety of equitable relief, a party is entitled to have a jury resolve the disputed fact issues.’” Id. (citing DiGiuseppe v. Lawler, 269 S.W.3d 588, 596 (Tex. 2008). “But uncontroverted issues do not need to be submitted to a jury.” Id. (citing City of Keller v. Wilson, 168 S.W.3d 802, 815 (Tex. 2005)). See also Wilz v. Flournoy, 228 S.W.3d 674, 676-77 (Tex. 2007) (noting that in the underlying trial, the jury found that no personal funds were used to purchase the farm, which justified the award of a constructive trust on the farm.); Paschal v. Great W. Drilling, Ltd., 215 S.W.3d 437, 445 (Tex. App.—Eastland 2006, pet. denied) (“The jury found that all of the premiums on the four policies were paid with funds that Alan stole from Great Western. Accordingly, the trial court imposed a constructive trust on all of the funds remaining in existence from the life insurance proceeds.”).
So, traditionally, if a party seeks an equitable remedy, the trial court normally has the sole right to resolve that request, but if there is some underlying fact issue that must be resolved with regard to the equitable remedy, then that fact issue should be submitted to a jury. The court of appeals in Poe will have to determine whether facts, such as a settlor’s intent, should be determined by a judge or a jury. Traditionally, courts would hold that such a determination should be determined by a jury due to Texas’s strong preference for upholding a party’s right to a jury trial. However, the Texas Supreme Court has seemingly not been that concerned about a party’s right to a jury trial in other contexts. See, e.g., In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 127-28 (Tex. 2004) (enforcing contractual jury waiver for the first time); In re Gen. Electric, 203 S.W.3d 314, 316 (Tex. 2006) (placing the burden of a voluntary, knowing, and intelligent waiver on its head by making an almost irrebuttable presumption that a jury-waiver clause that is not inconspicuous is enforceable); In re Bank of Am., 278 S.W.3d 342, 343 (Tex. 2009) (oddly issuing a writ of mandamus directing the court of appeals to vacate and withdraw the opinion and judgment entered by the court of appeals, which enforced a party’s right to a jury trial, where the complaining party had an adequate remedy by appeal which it waived).