Bayoud v. Bayoud

• Decision Date: 12 September 1990
• Docket Number: No. 05-89-01219-CV,05-89-01219-CV
• Citation: 797 S.W.2d 304
• Parties: Paige B. BAYOUD and North Central Investment Corporation, Appellants, v. George S. BAYOUD, Appellee.
• Court: Texas Court of Appeals

Page 304

797 S.W.2d 304

Paige B. BAYOUD and North Central Investment Corporation, Appellants, v. George S. BAYOUD, Appellee.

No. 05-89-01219-CV.

Court of Appeals of Texas,

Dallas.

Sept. 12, 1990.

Rehearing Denied Oct. 23, 1990.

Mark M. Donheiser, P. Michael Jung, Dallas, for appellants.

B. Prater Monning III, Carol Wolfram, Dallas, for appellee.

Before McCLUNG, BAKER and THOMAS, JJ.

OPINION

McCLUNG, Justice.

Paige B. Bayoud (Paige) and North Central Investment Corporation (NCIC) appeal from an adverse judgment rendered in favor of George S. Bayoud (George) in which the trial court made a final determination of damages and a final distribution of funds to conclude a receivership which grew out of a shareholder derivative suit. In thirty-eight points of error Paige and NCIC raise issues involving the trial court's jurisdiction, its division of the corporation's liquidated assets, and its charges against Paige individually. George raises two cross-points. Finding no merit in any of Paige and NCIC's points of error or George's cross-points, we affirm the judgment of the trial court.

This case has a long and convoluted history, the details of which we shall not repeat here. See Bayoud v. North Central Inv. Corp., 751 S.W.2d 525, 527 (Tex.App.--Dallas 1988, writ denied). The essential facts are as follows. Paige and George are brothers who have been involved in a protracted argument concerning the ownership and operation of NCIC since 1978. The legal activity began when George filed a shareholder derivative suit after Paige allegedly refused to allow him access to the corporate records. The litigation escalated as the brothers argued about whether or not George was a shareholder and whether Paige was liable to George for damages for tortious interference with business relations, for fraud and for conversion, and, ultimately, about the fate of the corporation, which was placed in receivership in 1979. The lawsuit became trifurcated in 1981. A judgment of September 17, 1981, disposed of all issues except ownership and the receivership. That judgment was affirmed by this Court in 1982. In a May 1986 judgment, the trial court held George and Paige to be equal co-owners of NCIC. That judgment was affirmed by this Court on January 28, 1988. The receivership continued until this Court's judgment of March 22, 1988, in which it was held that the receivership had persisted longer than allowed by statute. Id. The trial court was then left with the task of clearing away the debris of what once was NCIC by assessing damages and distributing the liquidated assets. This was done, and a final judgment was entered on June 23, 1989. Any further necessary explanations of the facts will be included where appropriate during discussions of particular points of error.

In their first sixteen points of error, Paige and NCIC assert that the trial court lost jurisdiction over the receivership on February 5, 1982, and, therefore, all orders and judgments relating to the receivership which were rendered after that date are void. This contention is based on this Court's judgment of March 22, 1988. There, a panel of this Court reviewed the statutory limits placed on administration of a receivership. A court may not administer a corporation in receivership for more than three years unless there is an application for extension, notice to the parties, and a hearing on the extension. Following that, the trial court must enter an order extending the receivership. The extension is limited to no more than five years. TEX.CIV.PRAC. & REM.CODE ANN. § 64.072 (Vernon 1986). Since the record revealed no such application or order for extension, this Court concluded that, by law, the trial court lost jurisdiction over the receivership at the latest by February 5, 1987, eight years after the receivership began. The Court did not attempt, in that opinion, to determine if the receivership had been terminated since 1982, the end of the statutory three year period. Neither did that opinion address whether the trial court's orders issued between February 5, 1982, and February 5, 1987, were void for lack of jurisdiction. Paige and NCIC are now arguing that the receivership ended, and the trial court lost jurisdiction, on February 5, 1982, because the statutory requirements for extension were never met.

A judicial act is void only when it is apparent that the court rendering judgment had no jurisdiction of the parties or of the subject matter, no jurisdiction to enter the judgment, or no capacity to act as a court. Browning v. Placke, 698 S.W.2d 362, 363 (Tex.1985). Errors other than lack of jurisdiction render the judgment merely voidable and must be attacked within prescribed time limits. Id. The distinction between a void and voidable judicial act is as follows:

A void act is one entirely null within itself, not binding on either party, and which is not susceptible of ratification or confirmation. Its nullity cannot be waived.

A voidable act is one which is not absolutely void within itself, but which is binding until disaffirmed, and which may be made finally valid by failure within the proper time to have it annulled, or by subsequent ratification or confirmation.

Brazzel v. Murray, 481 S.W.2d 801, 803 (Tex.1972) (quoting Murchison v. White, 54 Tex. 78, 81 (1880)).

The provisions of Texas Civil Practice and Remedies Code section 64.072 requiring an application for extension, notice to the parties, and a hearing on the matter are procedural in nature. Judgments rendered without observance of statutory requirements which are purely procedural are not void, however irregular or erroneous they may be. Id.; Ex parte Coffee, 160 Tex. 224, 328 S.W.2d 283, 291 (1959). Thus, after February 5, 1982, the receivership was unauthorized. It was, however, valid until disaffirmed. The record affirmatively discloses, and no one disputes, that the trial court had jurisdiction of the parties and subject matter, and it had capacity to act as a court. Hence, the continuation of the receivership was merely voidable, not void. There is nothing in the record, however, to indicate that Paige and NCIC complained in 1982 that the section 64.072 requirements were not met. Their untimely complaint was waived. Therefore, the trial court did not lose jurisdiction in 1982. See Payne v. Snyder, 661 S.W.2d 134, 141 (Tex.App.--Amarillo 1983, writ ref'd n.r.e.). Further, a voidable act of the court, the continuation of the receivership in this instance, should not be set aside at a party's request after that party has actively procured its rendition and subsequently requested, acquiesced in, and consented to many orders handed down in conjunction with that act, as Paige has done. See Spence v. State Nat'l Bank, 5 S.W.2d 754, 756 (Tex.Comm'n App.1928, judgm't adopted); Lauraine v. First Nat'l Bank, 204 S.W. 1022, 1025 (Tex.Civ.App.--Galveston 1918, no writ). We hold that all acts of the trial court concerning the administration of the receivership of NCIC, enacted between February 5, 1982 and February 5, 1987, were valid, and not void for lack of jurisdiction.

This Court's judgment proclaiming the nullity of the receivership became law on March 22, 1988. It instructed the trial court to "take no future actions regarding the receivership." Bayoud, 751 S.W.2d at 529. The trial court did sign and enter several orders, as well as the final judgment in the case, after March 22, 1988. Paige and NCIC claim that those orders and the final judgment are all void for want of jurisdiction. We disagree with this contention.

After this Court's March 22, 1988 judgment, the trial court had no choice but to perform those ancillary acts necessary to implement that judgment and dispose of all matters still pending in the case. The trial court properly proceeded in accordance with article 7.06 of the Texas Business Corporation Act. Section A of that article states in pertinent part:

A. The district court for the county in which the registered office of a corporation is located may order the liquidation of the assets and business of the corporation and may appoint a receiver to effect such liquidation, whenever circumstances demand liquidation in order to avoid damage to parties at interest, but only if all other requirements of law are complied with and if all other remedies available either at law or in equity, including the appointment of a receiver of specific assets of the corporation and appointment of a receiver to rehabilitate the corporation, are determined by the court to be inadequate and only in the following instances:

. . . . .

(3) If the corporation is in receivership and no plan for remedying the condition of the corporation requiring appointment of the receiver, which the court finds to be feasible, has been presented within twelve (12) months after the appointment of the receiver.

TEX.BUS.CORP. ACT ANN. art. 7.06 (Vernon 1980).

On August 25, 1988, the trial court signed an order implementing liquidation of assets and distribution of funds and appointing a liquidating receiver. In its final judgment, signed June 23, 1989, the trial court made its final distribution of funds including, among other things, distributions for attorneys' fees and damages for the injunction undertaking, discussed below, as well as an assessment of the costs of the receivership against Paige. All of this, we hold, the trial court was entitled to do. A rehabilitating receiver had been in place for many years. The parties were still unable to agree about how to conduct the business affairs of the corporation. There certainly is nothing in the record constituting a feasible plan for remedying the problems which led to implementation of the rehabilitating receivership. Under these circumstances, the trial court was authorized to order liquidation of NCIC and distribution of its remaining assets. Leck v. Pugh, 676 S.W.2d 180, 181 (Tex.App.--Waco 1984, no writ).

Additionally, this Court has held that "[h]...