Humble Exploration Co., Inc. v. Fairway Land Co.

• Decision Date: 23 July 1982
• Docket Number: No. 05-82-00673-CV,05-82-00673-CV
• Parties: HUMBLE EXPLORATION CO., INC., Appellants, v. FAIRWAY LAND COMPANY, Appellees.
• Court: Texas Court of Appeals

Page 934

641 S.W.2d 934

HUMBLE EXPLORATION CO., INC., Appellants, v. FAIRWAY LAND COMPANY, Appellees.

No. 05-82-00673-CV.

Court of Appeals of Texas Dallas.

July 23, 1982.

Rehearing Denied Aug. 24, 1982.

Louis P. Bickle, Bickel & Case, James H. Keahey, Rex A. White, Jr., Oneill, Haase & White, Austin, for appellants.

David Musslewhite, Akin, Gump, Strauss, Hauer & Feld, Kenneth Stohner, Jr., Jackson, Walker, Winstead, Cantwell & Miller, Michael V. Powell, Rain, Harrell, Emery, Young & Doke, R. Jack Ayres, Jr., G.H. Kelsoe, Jr., Kelsoe & Kelsoe, Dallas, Kenneth D. Johns, Jr., G. Michael Curran, Kenneth C. Raney, Jr., Houston, for appellees.

Before TED Z. ROBERTSON, CARVER and WHITHAM, JJ.

CARVER, Justice.

Humble Exploration Company, Inc., prosecutes this interlocutory appeal under the authority of Article 2250, Tex.Rev.Civ.Stat. (1971) seeking to vacate the appointment of a receiver for itself, and its assets and its business, granted upon the application of Fairway Land Company, a Texas limited partnership, and eleven other Texas limited partnerships. ¹ We vacate the receiver's appointment because the evidence failed to support the existence of the specific statutory grounds set out in Article 7.05, Tex.Bus.Corp.Act Ann. (Vernon 1980) and because the appointment was inconsistent with the usages of equity.

After the appeal of the receivership and the additional application of the Browning interests, the trial court in a second order, "modified" and re-imposed the receivership of Humble, as well as imposed a receivership upon other parties. ² We hold that the trial court was without jurisdiction to enter the second order, which modified and reimposed the receivership of Humble after the perfection of Humble's appeal on the propriety of the initial appointment of the receiver, and we vacate the second order insofar as it includes Humble within its terms.

The record reflects that Fairway, and twenty other named plaintiffs, filed their original petition against Humble, and seven other defendants on May 26, 1982. The essential dispute in the sixty-six page petition, with exhibits, related to Humble's performance, as operator, under a series of operating agreements among the working interest owners of producing oil wells in the Giddings oil field. The prayer of the plaintiffs, as to the merits of the dispute, was: (1) that Humble be removed as operator; (2) that Humble render a full accounting of its operations; and (3) that the court award to each plaintiff his rightful share of the net proceeds of any oil sold. The plaintiffs also sought attorney's fees and such other relief as they might be entitled to receive. Additionally, the plaintiffs sought the appointment of a receiver of Humble, itself, not of the wells which were the subject of the operating agreements.

Humble was notified orally of the plaintiff's petition and, on the same day, May 26, 1982, filed its petition to remove the case to the bankruptcy court where Humble was a debtor under a Chapter 11 proceeding (rehabilitation with debtor in possession). On the same day, May 26, 1982, the bankruptcy court remanded the plaintiff's cause and the trial court commenced a hearing of the application for the appointment of a receiver. On May 28, 1982, at 3:44 p.m., while the first witness offered by the plaintiffs had not yet been examined by both sides, the trial court entered the questioned order which appointed a receiver of Humble and mandatorily enjoined Humble, its agents, servants, employees, officers, and all other persons, to submit itself, and themselves, to the receiver.

The court fixed the bond of the "applicants" for the receivership at $100,000 and for the injunction at $1,000; however, only twelve of the original twenty-one applicants signed the bonds. Two additional parties originally named as defendants, the Browning interests and Columbia Gas, were realigned as plaintiffs and applicants, but they also failed to sign either of the applicant's two bonds.

On June 1, 1982 (the first business day following the receiver's appointment due to the Memorial Day week-end), Humble perfected its interlocutory appeal to this court by cash deposit in lieu of appeal bond under Rule 356(a) Tex.R.Civ.P.Ann. (Vernon Supp.1982). Humble also filed an application to this court for injunctive relief suspending the receiver's authority during the pendency of this appeal and for acceleration of this appeal. This court denied injunctive relief but accelerated this appeal, and the merits of the interlocutory appeal were argued on June 18, 1982.

The brief evidence tendered to support the appointment of the receiver showed that Humble and the applicants held the working interests, in various proportions, in 151 wells and that Humble was the named operator in as many as nine identical (except for property description and fractional ownership interests) operating agreements. Humble was accused, by the single witness permitted to testify, of failing to operate the wells in a "good and workmanlike manner" (no breach of the operating agreement's more specific terms was shown) because Humble had shut-in the producing wells after receiving the applicants' written notice that: "[E]ffective immediately, your authority, if any, to purchase and/or sell the share of crude oil from those wells attributable to the undersigned is revoked." The evidence also showed that the working interest owners, had voted to remove Humble as operator, as provided in the operating agreements, but such removal was to become effective 90 days thereafter.

The trial court was not requested to, nor did it, file its findings under Rule 296 Tex.R.Civ.P.Ann. (1982). In an appeal from interlocutory orders the trial court may, but is not required to, make such findings. Southwestern Newspapers Corp. v. Curtis, 584 S.W.2d 362, 366 (Tex.Civ.App.--Amarillo 1979, no writ). However, where findings are set out in the order itself, they may be treated as findings under Rule 296. Cottle v. Knapper, 571 S.W.2d 59, 64 (Tex.Civ.App.--Tyler 1978, no writ). The trial court's order appointing the receiver contains four pages, single spaced, of narrative-style findings. The significant findings are:

1. ... "that Humble has unilaterally, without cause, without authorization from Plaintiffs and in an illegal manner "shut in" substantially all of the oil and gas wells in which the Plaintiffs have an interest which are operated by Humble, ceasing any further production therefrom."

2. ... "that such precipitant, unauthorized (sic), and illegal acts have severely injured Plaintiffs and others because "shutting in" such wells will in all probability cause permanent and irreparable physical damage to the formations from which the wells are producing and may prevent some of the wells from being restored to full production."

3. ... that "all parties, ... will be irreparably harmed ... in that the longer the oil and gas wells remain shut in, the more likely it is that such damage and/or impaired production will result, and because the longer the wells remain shut in, the greater the loss of production rights under the terms of the leases presently held by the production."

4. ... that "such oil and gas wells will in all probability be subject to drainage the longer they remain shut in."

5. ... that "Humble's actions in shutting in the wells have deprived Plaintiffs of their clear contract rights to receive the production of oil and gas in kind and the proceeds from such production."

6. ... "that Humble has in many respects breached its duties as Operator and failed to operate the wells in a good and workmanlike manner."

7. ... "that the apointment (sic) of a Receiver is required in order to get the oil and gas wells in production and preserve such assets."

8. ... that "all of the capital, bank accounts, assets, staff, employees, records, lease files, payable files, financial and accounting records, reporting files, Railroad Commission files, litigation files, lease files, and all other documents, files, equipment and materials of Humble are necessary and indispensable to a Receiver's ability to manage, control and operate the oil and gas wells."

Our initial issue on appeal is whether the appointment of the receiver shall be tested under Articles 2293-2320c Tex.Rev.Civ.Stat.Ann. (Vernon 1971 & Supp.1981) or under Articles 7.04-7.08, Tex.Bus.Corp.Act Ann. (Vernon 1980 & Supp.1982). Humble urges that Articles 2293-2320c are inapplicable to corporations because such statutes are "general" in nature and must be disregarded since the Legislature subsequently passed the more specific Texas Business Corporation Act, which included the receivership of corporations, and is found in the Act as articles 7.04-7.08. Fairway insists that it is entitled to rely on both statutes as they are of equal dignity. The positions taken by the parties in the applicable statutes anticipate their arguments on the merits of the appeal. If the receivership is to be tested under Articles 2293-2320c, proof alone of the statutory facts compel the appointment of a receiver without regard to whether a lesser equitable relief might adequately serve the circumstances or whether there was an adequate legal remedy. See Hughes v. Marshall Nat. Bank, 538 S.W.2d 820, 823-824 (Tex.Civ.App.--Tyler 1976, writ dsmd.). To the contrary, if the receivership is to be tested under Articles 7.04-7.08 of the Texas Business Corporation Act, a receiver may be appointed on appropriate facts, but only:

"if all other remedies available either at law or in equity, including the appointment of a receiver for specific assets of the corporation, are determined by the court to be inadequate."

Tex.Bus.Corp.Act Ann. art. 7.05(A) (Vernon 1980). The trial court's order appointing the receiver directed the receiver to take possession of Humble,

"including all its operations, business, affairs, properties, files, records, bank accounts, employees, facilities, real and personal...