pjc-family-2024-lib

E XPRESS T RUSTS

PJC 235.10

740 (Tex. 1964); Estate of Townes v. Townes , 867 S.W.2d 414, 417 (Tex. App.—Hous ton [14th Dist.] 1994, writ denied); Miller v. Miller , 700 S.W.2d 941, 947 (Tex. App.— Dallas 1985, writ ref’d n.r.e.). Item 3 in the foregoing submission differs from that in PJC 104.2 because it is based on the requirement in Tex. Prop. Code § 113.051, which applies specifically to trustees. Additionally, it focuses the issue on the particular self-dealing transaction. Item 5 differs from that in PJC 104.2 in three respects. The Committee believes that the term “material facts” is more frequently used in case law. The fiduciary’s duty to disclose in conjunction with a self-dealing transaction is limited to the facts known to the fiduciary. Huie , 922 S.W.2d at 923; Montgomery , 669 S.W.2d at 313. See PJC 105.4 for an instruction on common-law fraud for failure to disclose when there is a duty to disclose. If it is alleged that the fiduciary should have known certain facts that were not disclosed, a negligence question may be appropriate under PJC 235.9. The last clause in item 5 is included to recognize that the information required to be dis closed must be related to the rights of the particular beneficiary. The definition of “good faith” is based on cases under Texas Probate Code section 243 (codified as Tex. Est. Code § 352.052) (will contests). See Ray v. McFarland , 97 S.W.3d 728, 730 (Tex. App.—Fort Worth 2003, no pet.); Collins v. Smith , 53 S.W.3d 832, 842 (Tex. App.—Houston [1st Dist.] 2001, no pet.). Although the foregoing cases use the disjunctive standard (intention or reasonable belief), the Committee has chosen the conjunctive standard (“and”) because the Committee believes that both the subjec tive standard of intention and the objective standard of reasonableness are appropriate to measure the conduct of a fiduciary. See Lee v. Lee , 47 S.W.3d 767, 795 (Tex. App.— Houston [14th Dist.] 2001, pet. denied) (executor could recover attorney’s fees in removal action despite breaches of fiduciary duty as long as he subjectively believed his defense was viable and his belief was reasonable under existing law). But note that in other contexts—for example, forfeiture and attorney’s fees—the disjunctive stan dard (“or”) is used. The Committee expresses no opinion on whether the definitions are appropriate for use in other contexts. Presumption of unfairness shifts burden of proof. When a fiduciary profits or benefits in any way from a transaction with the beneficiary, a presumption of unfair ness arises that shifts the burden of persuasion to the fiduciary or the party claiming the validity or benefits of the transaction to show that the transaction was fair and equitable to the beneficiary. Keck, Mahin & Cate v. National Union Fire Insurance Co. , 20 S.W.3d 692, 699 (Tex. 2000); Texas Bank & Trust Co. v. Moore , 595 S.W.2d 502, 508–09 (Tex. 1980); Archer , 390 S.W.2d at 739. A presumption of unfairness also arises and the burden of proof shifts to the fidu ciary if the fiduciary places himself in a position in which his self-interest might con flict with his obligations as a fiduciary. Stephens County Museum, Inc. , 517 S.W.2d at 260–61 (fiduciary’s positions as attorney for donors and as director and officer of

279