IN THE SUPREME = COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS

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No. 06-0913

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Patricia Wilz, Guardian of Jon Patrick Flournoy, an Incapacitated Person, = Petitioner,

Kenneth W. and = June Flournoy, Respondents

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On Petition for Review from = the

Court of Appeals for the Tenth = District of=20 Texas

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PER = CURIAM

=20 On behalf of her son, Jon Flournoy, = Patricia=20 Wilz sought to impose a constructive trust = on property=20 purchased by her ex-husband and his new wife. The trial court imposed a=20 constructive trust on the entire property, but a divided court of = appeals=20 limited the trust to a 35 percent undivided interest. Given the evidence = presented at trial and the jury=92s findings, the court of appeals erred = in=20 limiting the constructive trust, and we reverse.

=20 Patricia Wilz and Kenneth Flournoy divorced in 1973, and Kenneth was awarded = custody=20 of their son, Jon. In 1987, Jon suffered incapacitating injuries in an=20 automobile accident. Kenneth, individually and on Jon=92s behalf, sued = Ford Motor=20 Company. In a 1991 settlement, Kenneth received $379,300 on Jon=92s = behalf and=20 $95,000 personally. As guardian of Jon=92s person and estate, Kenneth = purchased=20 stocks and bonds for Jon=92s benefit. Subsequently, Kenneth and his new = wife,=20 June, purchased a 110-acre farm for $153,049, paying $49,365.50 in cash = and=20 executing a note for the balance. The note called for monthly payments = of $961.=20 Between 1991 and 1999, the Flournoys = withdrew several=20 thousand dollars from Jon=92s account, many installments of which were = roughly=20 $960. By the end of 2001, the Flournoys had = depleted=20 Jon=92s account, and they institutionalized him in a state mental health = facility.

=20 In 2005, Jon=92s biological mother, Patricia Wilz, became his guardian, and she sued the Flournoys on Jon=92s behalf for conversion, breach = of=20 fiduciary duty, and constructive fraud. = Patricia=20 traced several checks drawn on Jon=92s account to the Flournoys=92 personal account. When questioned = about these=20 checks, the handling of Jon=92s funds, and the source of the funds used = to=20 purchase the farm, the Flournoys each = invoked the=20 Fifth Amendment privilege against self-incrimination. The Flournoys=92 sole evidence regarding the funds = consisted of=20 Kenneth=92s pretrial deposition, where he said he used his settlement = money for=20 the farm=92s down payment and that $50,000 remained outstanding on the = note. When=20 questioned about the truth of this testimony, Kenneth again invoked the = Fifth=20 Amendment.

=20 The jury found that Kenneth breached his fiduciary duty and = committed=20 constructive fraud and that the Flournoys = converted=20 Jon=92s property with malice. The trial court therefore imposed a = constructive=20 trust on the entire farm.

=20 The court of appeals agreed that Wilz = had met=20 her burden to impose a constructive trust on the entire farm, and the = burden=20 shifted to the Flournoys to show which funds = came from=20 their own accounts. 201 S.W.3d 833, 836=9637. = Nonetheless, it held that the trial court abused its discretion because=20 Kenneth=92s deposition testimony proved he paid the down payment from = personal=20 settlement funds and that $50,000 was outstanding on the note. The court = of=20 appeals estimated Jon=92s interest in the farm as the initial purchase = price minus=20 the down payment minus the amount outstanding. Thus the court of appeals = concluded that Jon was entitled to a constructive trust on an undivided = 35=20 percent of the farm.

=20 A party seeking to impose a constructive trust has the initial = burden of=20 tracing funds to the specific property sought to be recovered. Meyers = v.=20 Baylor Univ., 6 S.W.2d 393, 394=9695 (Tex. Civ.=20 App.=97Dallas 1928, writ ref=92d); see = Eaton v. Husted, 172 S.W.2d 493, 498 (Tex. 1943) = (=93[T]he=20 beneficiary may follow the trust property, and claim every part of the = blended=20 property which the trustee cannot identify as his own.=94) (emphasis in original). Once that burden is met, = =93the entire .=20 . . property will be treated as subject to the trust, except in so = far as the=20 trustee may be able to distinguish and separate that which is his = own.=94=20 Eaton, 172 S.W.2d at 498=9699 (emphasis in=20 original). The trial court and court of appeals agreed that = Patricia=20 traced Jon=92s funds to the farm; thus, the burden shifted to the Flournoys to demonstrate what portion of the = farm=92s purchase=20 price came from their own funds. See 201 = S.W.3d=20 at 839.

=20 The Flournoys bet the farm (as it = were) when=20 they failed to obtain a jury finding on their affirmative claim that = part of the=20 purchase money came from personal funds. Therefore, this claim is waived = on=20 appeal unless they =93conclusively established=94 it. See T.O. = Stanley Boot Co.=20 v. Bank of El Paso, 847 S.W.2d 218, 222=9623 (Tex. 1992) (citing Tex. R. Civ. P. 279). The = Flournoys=92 only evidence on this point was = Kenneth=92s=20 deposition testimony. Kenneth, however, was an =93interested witness,=94 = so his=20 testimony, even if uncontradicted, =93presents an issue to be determined by the trier of fact.=94 Gevinson v. = Manhattan=20 Constr. Co., 449 S.W.2d 458, 467 = (Tex. = 1969). The=20 factfinder may treat an interested = witness=92s testimony=20 as conclusive if it is =93clear, direct, and positive and there are no=20 circumstances tending to discredit or impeach the same.=94 Id. = But=20 here, Wilz attempted to contradict = Kenneth=92s=20 testimony, and the jury in this civil case was free to draw negative = inferences=20 from the Flournoys=92 repeated invocations = of the Fifth=20 Amendment. See TEX. R. EVID. 513(c);=20 Tex.=20 Dep=92t of Pub. Safety Officers Ass=92n v.=20 Denton, 897 S.W.2d 757, 760 (Tex. = 1995)=20 (citing Baxter v. Palmigiano, 425=20 U.S. 308, 318 (1976)). The = Flournoys failed to secure a jury finding on their = claim,=20 and the jury was free to disregard Kenneth=92s deposition testimony as = not=20 credible. Therefore, the trial court did not abuse its discretion in = imposing a=20 constructive trust on the entire farm.

=20 Accordingly, we grant Patricia Wilz=92s petition=20 for review, and without hearing oral argument, Tex. R. App. P. 59.1, reverse = the court=20 of appeals=92 judgment and render judgment that the entire farm is = subject to a=20 constructive trust, see Tex.=20 R. App. P.=20 60.2(c).

OPINION DELIVERED: June 29, = 2007