Bright & Co. v. Holbein Fam. Mineral, 050599

• Decision Date: 05 May 1999
• Docket Number: No. 04-98-00674-CV,04-98-00674-CV
• Citation: Bright & Co. v. Holbein Fam. Mineral, 050599, 995 S.W.2d 742 (Tex. App. 1999)
• Parties: (Tex.App.-San Antonio 1999) BRIGHT & COMPANY, Appellant v. HOLBEIN FAMILY MINERAL TRUST,Appellee
• Court: Texas Court of Appeals

Page 742

995 S.W.2d 742 (Tex.App.-San Antonio 1999)

BRIGHT & COMPANY, Appellant v. HOLBEIN FAMILY MINERAL TRUST,Appellee

No. 04-98-00674-CV

In the Fourth Court of Appeals San Antonio

May 5, 1999

Rehearing Overruled June 14, 1999.

From the 229th Judicial District Court, Jim Hogg County, Texas Trial Court No. 4466, Honorable Ricardo Garcia, Judge Presiding

Sitting: Tom Rickhoff, Justice, Paul W. Green, Justice, Karen Angelini, Justice

AFFIRMED

OPINION

Opinion by:Karen Angelini, Justice

Nature of the case

Bright and Company appeal from a judgment awarding Holbein Family Mineral Trust ("Holbein") the sum of $34,156.55. Holbein's suit alleged breach of contract and statutory nonpayment of gas royalties. See TEX. NAT. RES. CODE ANN. 91.404(c) (Vernon 1993). Specifically, Holbein alleged that Bright had failed to pay royalties on gas production from October of 1987 to August of 1995. In its first through fourth issues on appeal, Bright alleges that the evidence is legally and factually insufficient to support the award of unpaid royalties, attorney's fees, costs and expenses, and pre-judgment interest. In its fifth issue, Bright argues that the court erred in decreeing that Bright take nothing by way of its affirmative defenses and counterclaim. In the sixth and seventh issues, Bright alleges that the evidence is legally and factually insufficient to support the court's findings of fact and conclusions of law. We affirm the trial court's judgment.

Factual Background

Under the terms of an oil, gas and mineral lease and a mineral partition, Holbein was entitled to a one-sixteenth non-participating royalty interest in all of the oil, gas and other minerals produced under the lease. In 1980, Bright drilled a gas well on the property which has produced gas continuously. Bright paid a one-eighth royalty for gas production from 1980 to September of 1987.¹ Beginning in October of 1987, however, Bright ceased all royalty payments to Holbein.

According to testimony, Dick Holbein contacted Bright in July of 1995 about the nonpayment of royalties. Holbein was referred to Jack Manaugh who was employed as a landman for Bright. According to Holbein, Manaugh told him that he would look into the nonpayment. On August 11, 1995, Holbein's attorney sent a letter to Manaugh requesting that Manaugh check the records to determine Holbein's interest in the lease and the reason for termination of royalty payments. Bright's attorney also requested that Manaugh provide production data from the lease for the period commencing January 1987 to the present. On September 22, 1995, Manaugh sent a letter to Holbein's attorney which stated that he would search for a possible explanation for the nonpayment of royalties and determine the amount of production involved. Manaugh also wrote that he would try to determine the exact date the royalty payments stopped and noted that Holbein had advised him that the payments stopped in 1987. On October 10, 1995, Manaugh faxed production and distribution summaries to Holbein's attorney. The summaries were in the form of a chart and the last column showed that the "net due Holbein" from production for the years 1987 through 1995 was the sum of $22,268.20. Holbein's attorney then sent a letter to Manaugh in December of 1995 requesting the amount of $22,268.20 plus interest and reimbursement for CPA services. On January 5, 1996, Bright's attorney sent a letter to Holbein's attorney stating that Holbein's claim for royalty payments on gas sold prior to October 1991 was barred by the four year statute of limitations. Bright then tendered a check for $11, 239.36 which represented payment of royalties from October of 1991 through September of 1995.² Holbein refused to accept the check and filed suit on February 5, 1996.

In its second amended original petition, Holbein alleged breach of contract and statutory nonpayment of gas royalties for the period of October 1987 through August 1995. See TEX. NAT. RES. CODE ANN. 91.404(c) (Vernon 1993). In response to Bright's amended answer alleging limitations, Holbein invoked the doctrine of acknowledgment. The case was tried to the bench and the court found in favor of Holbein. The court entered judgment awarding Holbein $34,156.55 in damages.³

Standard of review

A trial court's findings of fact are reviewable for legal and factual sufficiency of the evidence to support them by the same standards that are applied in reviewing the sufficiency of the evidence supporting jury findings. See Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). To determine whether there is legally sufficient evidence, all the record evidence and inferences must be viewed in a light most favorable to the finding. Formosa Plastics Corp. USA v. Presidio Engineers & Contractors, Inc., 960 S.W.2d 41, 48 (Tex. 1998). Anything more than a scintilla of evidence is legally sufficient to support the finding. Id. In reviewing factual sufficiency issues, the reviewing court considers all of the evidence to determine whether the findings are so against the great weight and preponderance of the evidence as to be manifestly unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951). Conclusions of law are reviewed de novo as legal questions. See Hitzelberger v. Samedan Oil Corp., 948 S.W.2d 497, 503 (Tex. App.-Waco 1997, writ denied). When the trial court's findings involve questions of law and fact, the appellate court reviews the court's decision for an abuse of discretion. See Pony Express Courier Corp. v. Morris, 921 S.W.2d 817, 820 (Tex. App.-San Antonio 1996, no writ). The reviewing court defers to the trial court's factual determinations and reviews its legal determinations de novo. Id.

Unpaid royalties

In its first issue, Bright argues that the evidence is legally and factually insufficient to support the award of damages for unpaid royalties. Bright also attacks the findings of fact and conclusions of law concerning damages. Specifically, Bright complains that the four-year statute of limitations bars Holbein's claim for unpaid royalties from October 1987 through February 5, 1992.⁴

Holbein agrees that the four-year statute of limitations would ordinarily bar recovery for royalty payments from October 1987 through February 5, 1992. Holbein, however, pled that Bright had acknowledged the debt. See TEX. CIV. PRAC. & REM. CODE ANN. 16.065 (Vernon 1997). Section 16.065 provides the following:

An acknowledgment of the justness of a claim that appears to be barred by limitations is not admissible in evidence to defeat the law of limitations if made after the time that the claim is due unless the acknowledgment is in writing and is signed by the party to be charged.

Id. "[I]n order for a written instrument to be sufficient to take a debt otherwise barred out of the operation of the statute of limitations, it must acknowledge the justness of the debt and express a willingness to pay. Where the debt is clearly acknowledged, however, the promise to pay is implied." MMP, Ltd. v. Jones, 695 S.W.2d 208, 209 (Tex. App.-San Antonio 1985), rev'd on other grounds, 710 S.W.2d 59 (Tex. 1986); see also House of Falcon, Inc. v. Gonzalez, 583 S.W.2d 902, 905 (Tex. Civ. App.-Corpus Christi 1979, no writ) (finding clear acknowledgment of the existence of a debt implies a promise to pay the debt); Mandola v. Oggero, 508 S.W.2d 861, 863 (Tex. Civ. App.-Houston [14th Dist.] 1974, no writ) (finding that promise to pay can be implied from acknowledgment of debt). Whether a written instrument sufficiently acknowledges a barred debt is a question of law. MMP, 695 S.W.2d at 210.

Holbein relies on Manaugh's letter of September 22, 1995 as an acknowledgment of the debt. Manaugh's letter, addressed to Holbein's attorney, is set forth in its entirety below:

To update you with our progress, this will advise that we have conducted a search of the records of Jim Hogg County. We found no record of any conveyance out of the Holbein family that would cause their 1/2 (of 1/4) royalty to diminish. As a result, I have consulted with a representative of the Major family (owner of the other 1/2 of the royalty) for a possible explanation. In addition, we are searching our records for other possible explanations. We are also accruing information as to the exact month and year, (Mr. Holbein advised us it was 1987), that royalty payments ceased and further, the amount of production/income that is involved. Please bear with us as we have every intention of seeing that this matter is resolved. Please forward a copy of this letter to Mr. Holbein with our appreciation for his patience. Should you have any questions, please let me know.

Holbein also points to Manaugh's fax of October 10, 1995 as support that Bright acknowledged the debt. The fax contained production figures from 1987 to 1995 and showed "net due Holbein" to be the sum of $22,268.20. In the findings of fact, the court found that Manaugh, Bright's agent, acknowledged in writing the justness of the debt and made a new promise to pay the debt. In the conclusions of law, the court found that Bright acknowledged in writing the justness of the debt for unpaid royalties and made a new promise to pay the unpaid royalties from October of 1987 through July of 1995. In conclusion of law number six, the court found that Bright made an implied promise to pay the debt by its signed writing acknowledging the debt.

We agree with the court's conclusions of law that Bright acknowledged the debt. Manaugh's letter acknowledged the justness of the debt and implied that the Holbein family was entitled to the unpaid royalty payments. The letter also stated that Bright had found nothing to indicate that the Holbein's interest had diminished. It further stated that Bright had every intention of resolving the matter, which implies a willingness to pay the debt. Further, the production charts showing the "net due Holbein" to be...