First Nat. Bank in Dallas v. Zimmerman

• Decision Date: 11 June 1969
• Docket Number: No. B--1366,B--1366
• Citation: 442 S.W.2d 674
• Parties: FIRST NATIONAL BANK IN DALLAS, Independent Executor, Petitioner, v. S. M. ZIMMERMAN et al., Respondents.
• Court: Texas Supreme Court

Page 674

442 S.W.2d 674

FIRST NATIONAL BANK IN DALLAS, Independent Executor, Petitioner, v. S. M. ZIMMERMAN et al., Respondents.

No. B--1366.

Supreme Court of Texas.

June 11, 1969.

Rehearing Denied July 16, 1969.

Fred H. Benners, Dallas, for petitioner.

Goldberg, Alexander & Baker, Steven B. Strange, Eugene L. Smith, Dallas, for respondents.

GREENHILL, Justice.

This action for damages for breach of contract was instituted by First National Bank in Dallas as executor of the estate of Murray Samuell, deceased. Samuell and his associate, Hugh McLaughlin, undertook negotiations in 1962 to purchase the minerals in 20,000 acres of land in the State of Tennessee owned by a Mr. Shook. As a result of these negotiations, Shook's agent Dillon A. Green, sent Samuell a letter dated April 10, 1962, in which he stated: 'I herewith offer to sell to you approximately 20,000 acres of mineral interest land lying in Grundy, Sequatchie, Bledsoe and Cumberland Counties in the State of Tennessee for the sum of $5.50 per acre, upon the following terms: * * *' After enumerating the terms, the letter concluded, 'The land to be conveyed hereunder known as the Shook lands.'

Subsequent to their receipt of this letter, Samuell and McLaughlin entered into the contract which is the subject of this action. The other parties to the agreement were S. M. Zimmerman, William C. Huls, and A. F. Scott. The agreement reads in pertinent part as follows:

'Samuell is offeree in a certain letter dated April 10, 1962, from Dillon Green of Sherwood, Tennessee, for the purchase of approximately twenty thousand (20,000) mineral acres lying in Grundy, Sequatchie, Bledsoe and Cumberland Counties, Tennessee, and wishes, upon the following considerations, to assign to said Zimmerman, Huls and Scott or to a corporation to be formed by the latter, which corporation will probably be named Blue Sewanee Development Corporation and which is hereinafter referred to as Blue Sewaree all the rights of said Samuell and McLaughlin under said letter dated April 10, 1962, a photostatic copy of which is attached hereto as Exhibit A and incorporated herein by reference;

'The considerations above referred to are as follows:

'1. Second Parties (Samuel and McLaughlin) shall receive one hundred thousand (100,000) shares of the common stock of American Hydrocarbon Corporation. * * *'

Zimmerman, Huls and Scott thereafter purchased the property through the Blue Sewanee Development Corporation which was formed for that purpose. However, they allegedly breached their contract with Samuell and McLaughlin by failing to deliver to them the agreed consideration of 100,000 shares of American Hydrocarbon Corporation common stock.

McLaughlin sued Zimmerman, Huls and Scott for breach of contract, and the First National Bank in Dallas intervened in behalf of the estate of Murray Samuell, who had died prior to the filing of McLaughlin's suit. The trial court entered a pre-trial order severing the two causes, and we are concerned in this appeal only with the trial of First National Bank's action as executor against the three defendants.

On the trial of the case, the jury's verdict was favorable to Samuell's estate; I.e., the jury found in answer to the special issues that Samuell and McLaughlin had performed their part of the bargain and that Samuell was damaged in the amount of $49,000 by the defendants' failure to deliver the 100,000 shares of American Hydrocarbon Corporation common stock. The trial court entered judgment on the jury's verdict. The Court of Civil Appeals reversed and remanded on the ground that the action was barred by the Statute of Frauds, Article 3995(4). ¹ 436 S.W.2d 401. We reverse the judgment of the Court of Civil Appeals and affirm the judgment of the trial court.

Generally speaking, a contract for the sale of real estate is required by the Statute of Frauds to be in writing and to be so definite that the land to be conveyed can be identified with reasonable certainty. And as will be discussed below, Rule 94, Texas Rules of Civil Procedure, requires that if the Statute of Frauds is to be interposed as a defense, it must be affirmatively pleaded. The defendants did not plead the statute in this case. When the plaintiff sought to introduce the contract into evidence, the defendants objected to its admission because of the Statute of Frauds. The objection was overruled, and a recovery was allowed on the contract in the trial court.

On appeal, the Court of Civil Appeals held (1) that the contract sued upon was a contract for the sale of real estate; (2) that the description of the 20,000 acres in the contract is too indefinite to satisfy the Statute of Frauds; and (3) that the defendants did not waive their right to assert the Statute of Frauds as a defense by failing to plead it as an affirmative defense under Rule 94. We have concluded that under Rule 94 the defendants did waive their right to assert the Statute of Frauds as a defense, and therefore we do not reach the other questions presented by the Court of Civil Appeals' first two holdings. To be more specific, we do not reach the question of the applicability of the Statute of Frauds to the contract here involved.

Rule 94 provides as follows:

'In pleading to a preceding pleading, a party shall set forth affirmatively accord and satisfaction, arbitration and award, assumption of risk, contributory negligence, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, Statute of frauds, statute of limitations, waiver, and any other matter constituting an avoidance or affirmative defense. * * *' (Emphasis added.)

The second sentence of Rule 94, hereinafter discussed, reads:

'Where the suit is on an insurance contract which insures against certain general hazards, but contains other provisions limiting such general liability, the party suing on such contract shall never be required to allege that the loss was not due to a risk or cause coming within any of the exceptions specified in the contract, nor shall the insurer be allowed to raise such issue unless it shall specifically allege that the loss was due to a risk or cause coming within a particular exception to the general liability; provided that nothing herein shall be construed to change the burden of proof on such issue as it now exists.'

Although the defendants did not plead the Statute of Frauds in accordance with the mandatory directive of Rule 94, they contend that they nevertheless preserved the right to assert the defense by objection to the admission into evidence of the contract on the basis that its enforcement would violate the Statute of Frauds.

Prior to the adoption in 1941 of our present Rules of Civil Procedure, the defendants' position would have been sound. The defense could be interposed by an objection to the evidence. League v. Davis, 53 Tex. 9 (1880); Cude v. Vaughn, 111 S.W.2d 1155 (Tex.Civ.App. 1937, no writ); International Harvester Co. v. Campbell, 43 Tex.Civ.App. 421, 96 S.W. 93 (1906, no writ). But the adoption of Rule 94 was intended to change the old practice. Shortly after it was adopted, the court in Reid v. Associated Employers Lloyds, 164 S.W.2d 584, 585 (Tex.Civ.App. 1942, writ ref'd), stated the purpose of Rule 94 as follows:

'That purpose is to require the...