Browning v. Holloway, 20656

• Decision Date: 13 February 1981
• Docket Number: No. 20656,20656
• Citation: 620 S.W.2d 611
• Parties: Jane H. BROWNING, et al., Appellants, v. Pat S. HOLLOWAY, et al., Appellees.
• Court: Texas Court of Appeals

Page 611

620 S.W.2d 611

Jane H. BROWNING, et al., Appellants, v. Pat S. HOLLOWAY, et al., Appellees.

No. 20656.

Court of Civil Appeals of Texas, Dallas.

Feb. 13, 1981.

Rehearing Denied May 29, 1981.

R. Jack Ayres, Kelsoe & Ayres, Dallas, for appellants.

John A. Gilliam, Jenkins & Gilchrist, Royal H. Brin, Strasburger & Price, Dallas, for appellees.

Before CARVER, STOREY and STEPHENS, JJ.

STOREY, Justice.

This appeal results from a judgment entered in accordance with the terms of a prior settlement agreement between the parties to this suit. ¹ Plaintiffs sued defendants alleging the breach of duties imposed by express and implied trusts. The subject matter of the suit involved large production payments and extensive property interests in producing as well as undeveloped oil and gas properties. Plaintiffs, among other relief sought, prayed for accounts of production payments, for actual and exemplary damages, and for imposition of constructive trusts upon certain mineral interests. Recognizing the complexity of the litigation with which they were confronted, the parties sought to settle the suit by reading into the court record a "stipulation of settlement." Plaintiffs later announced their repudiation of the settlement agreement before entry of judgment, but the trial court, after hearing, entered judgment in accordance with the agreement. ² Implicit in this action of the court is a finding that the parties had entered into a final and complete settlement agreement. We need not determine whether this finding was erroneous, because we conclude the court erred in failing to afford a jury trial on a disputed issue of fact, namely, whether there had been a repudiation of the agreement by defendants. If so, plaintiffs were entitled to a jury trial on their underlying cause of action. If not, plaintiffs could only sue on the agreement, and their remedy would be for breach, also a jury question. Accordingly, we reverse and remand for further development of and findings upon these issues, and, if made necessary by the findings, for trial of plaintiffs' underlying cause of action.

On October 17, 1979, all parties and their attorneys being present in court, announcement was made to the court that a settlement had been made. The attorneys then endeavored to dictate the terms of the settlement into the record. In general, the settlement called for plaintiffs to release all causes of action against the defendants in exchange for a lump sum payment of $2,000,000, and deferred payments to be evidenced by a note for $13,000,000 payable $1,000,000 annually over thirteen years. The note was to be secured by deeds of trust and security agreements upon specified lands and producing wells. A constructive trust in favor of plaintiffs was to be imposed upon five specific producing wells. Numerous other matters relating to operation of producing wells and development of leases not then producing were agreed upon and dictated into the record. Before their agreement was reduced to judgment, plaintiffs, claiming defendants had not paid the initial $2,000,000 when due, withdrew their consent to the agreement, and set the case for trial on the merits.

On May 30, 1980, the attorneys were before the court for the purpose of disposing of all preliminary matters preparatory to trial on the merits which was set for the following Monday, some five days hence. One of the "preliminary matters" considered was defendant's "Motion to Enforce Stipulation of Agreement." The trial court conducted a hearing and received testimony on this motion. Thereafter, it entered the judgment from which this appeal is taken.

Plaintiffs contend on appeal that the trial court erred (1) in denying them a right to trial by jury on disputed issues of fact, (2) in entering judgment on a settlement memorandum when no final agreement had been reached as to all essential terms, (3) in entering judgment on the settlement memorandum when plaintiffs had withdrawn consent, (4) in entering judgment varying the terms of the original agreement, if any, (5) in failing to consider, or in failing to submit to a jury, the question of fraud in inducing agreement to settle the case, (6) in finding agreement when defendants were estopped from asserting that a settlement agreement had been reached, (7) in entering the agreement as its judgment when defendants had repudiated the settlement agreement by their breach, and were therefore not entitled to seek enforcement of it, and (8) in finding the settlement memorandum was the final agreement of the parties when a novation involving a new agreement had supplanted the stipulation of settlement.

Defendants counter that the settlement agreement is enforceable as a contract despite any withdrawal of consent prior to the entry of judgment, and that plaintiffs were not entitled to a jury trial because they failed to request trial by jury or to pay a jury fee, and waived any right they may have had at the hearing on defendants' Motion to Enforce. Defendants also claim that their own pleadings were sufficient to put plaintiffs on notice as to the nature of the proceeding, but that plaintiffs failed to raise by pleading any issue as to estoppel, fraud, breach of the settlement agreement, or novation. Further, defendants contend that plaintiffs may not now be heard to say that there is no agreement, because they had previously filed their own motion to enforce it. Because of our conclusion stated above, we need not consider all of the contentions of the parties. We discuss the nature of the proceeding before the trial court, whether an issue of fact remained for trial, and whether plaintiffs were entitled to jury trial.

Insofar as plaintiffs rely on their withdrawal of consent prior to judgment as nullifying the settlement agreement, their reliance is misplaced. Plaintiffs read Burnaman v. Heaton, 150 Tex. 333, 240 S.W.2d 288 (1951), and Tex.R.Civ.P. 11, to require all agreements between parties entered into in the course of a legal proceeding to be in writing and signed or read into open court and the court to enter judgment thereon so long as the parties maintain consent. This is the law only as to consent judgments. A party complying with rule 11 may enforce the agreement even after the other party has withdrawn consent, despite Burnaman Consent judgments are subject to the law of contracts. We see no reason in not applying the law of contracts to settlement agreements themselves.... No onerous burden is placed on the recipient of the offer. That party merely has to decide whether to accept that offer, but once accepted, she should not be permitted to withdraw from the contract arbitrarily. Once the party elects to accept the offer, the election should be binding.

according to the law of contracts. Stewart v. Mathes, 528 S.W.2d 116 (Tex.Civ.App. Beaumont 1975, no writ). In Stewart, the Beaumont court stated the rationale:

. . . .

The party making an offer which is accepted is then permitted to enforce the agreement in a suit upon the contract, either for breach or for specific performance.

Id. at 118-19. We see no reason to disagree with this statement.

Once it is accepted that the law of contracts governs these agreements, then it obviously follows that enforcement of the agreement must be supported by pleadings and proof. ³ See Stewart v. Mathes, supra; Carter v. Carter, 535 S.W.2d 215 (Tex.Civ.App. Tyler 1976, writ ref'd n. r. e.). Nowhere do defendants' pleadings set up the settlement agreement in defense of plaintiffs' suit. Nevertheless, defendants have raised that defense in their motion to enforce the stipulation of settlement wherein they assert that the parties intended to and did settle the lawsuit and requested the court to enforce "the settlement agreement as stipulated into the record, declaring the rights of the parties thereunder, expressly denying all other relief requested in Plaintiffs' Third Amended Petition, and granting such other and further relief ...." ⁴ Further, plaintiffs anticipated this defense in their third amended petition by requesting, alternatively, damages for breach of the agreement by defendants. See Raney v. White, 267 S.W.2d 199 (Tex.Civ.App. San Antonio 1954, writ ref'd). Clearly, plaintiffs had notice of the defense of accord and satisfaction raised by defendants, and they made no objection to the lack of pleadings. Plaintiffs do object, however, to the procedure by which this defensive matter was adjudicated, and did so at the hearing on defendants' motion to enforce.

Plaintiffs objected, when defendants' motion to enforce was heard, that they were denied a jury trial on relevant factual matters, and that the hearing on the motion was some sort of quasi-summary judgment proceeding. We disagree with plaintiffs' position insofar as the issues presented are subject to determination of matters of law. The interpretation of the settlement agreement is subject to the law of contracts, and the interpretation of contracts is a legal question for the court, unless there is ambiguity or unless surrounding facts and circumstances demonstrate a factual issue as to agreement. See Scott v. Ingle Bros. Pac., Inc., 489 S.W.2d 554 (Tex.1972); Murphy v. Dilworth, 137 Tex. 32, 151 S.W.2d 1004 (1941). Here, however, the legal questions do not determine the defense, and the defense does not resolve the case. The case, therefore, never reached the point where relevant factual issues were properly resolved, and so remains The court erroneously determined that the agreement was intended to operate in accord and satisfaction of the plaintiffs' original cause of action against defendants. While the court merely entered judgment setting out substantially the agreement of the parties and made no express findings, the only theory on which the court could have correctly ruled that the affirmative defense of accord and satisfaction was established was that the agreement was intended not merely to displace the...