In re Estate of Stone, 10–13–00285–CV.

• Decision Date: 02 October 2014
• Docket Number: No. 10–13–00285–CV.,10–13–00285–CV.
• Parties: In the ESTATE OF Henrietta Cannon STONE, Deceased.
• Court: Texas Court of Appeals

475 S.W.3d 370

In the ESTATE OF Henrietta Cannon STONE, Deceased.

No. 10–13–00285–CV.

Court of Appeals of Texas, Waco.

Oct. 2, 2014.

Marcus J. Brooks, Law Offices of Winstead, PC, Austin, Robert R. Little, Jr., Naman Howell Smith & Lee, PLLC, Waco, Thomas C. Sanders, Sugar Land, J. Timothy Sisk, J. Timothy Sisk, PC, Conroe, for Appellant.

David Hammit, Madisonville, Don W. Saunders, San Antonio, Roger Knight Jr., Roger Knight Jr., Inc., Madisonville, Andy McSwain, Fulbright & Winniford, PC, Waco, Marcus P. Rogers, San Antonio, Glen A. Yale, Yale Law Firm, San Antonio, for Appellee.

Before Chief Justice GRAY, Justice DAVIS, and Justice SCOGGINS.

OPINION

TOM GRAY, Chief Justice.

The Probate Code, now the Estates Code, provides a detailed procedure for the sale of an estate's property by a dependent administrator or executor. That was done in this case. The administratrix of Henrietta Stone's estate found one buyer for a portion of the Estate's property, and after a delay, found another buyer for the same property. The delay worked to the benefit of the Estate. A hearing was held in the trial court to determine which contract would be confirmed; and the court, not surprisingly, selected and confirmed the contract for sale of the Estate's property that was best for the Estate. Because the trial court did not err in confirming one contract and setting aside the other, the trial court's Decree Confirming Sale of Real Property is affirmed.

BACKGROUND

Henrietta Stone passed away in 2008. She gave the residuary of her estate to Trinity University and The Sons of Hermann. Pursuant to the will, Stone's tangible property was to be sold and the funds delivered to these beneficiaries. A settlement agreement which modified the percentages to be distributed to the agreed "beneficiaries" resolved a will contest.

Stone owned three tracts of land at the time of her death that were to be sold. The Dependent Administratrix, Patricia Orozco–Hardy, filed an application for sale of the three tracts, and the trial court ordered the sale. Orozco–Hardy found a buyer for one of the tracts, a 150 acre tract. That buyer was Ronald R. Johns, Sr. A contract was entered into where Johns would buy the 150 acre tract including the mineral interest. Two years later, Orozco–Hardy found another buyer for the 150 acre tract, C.M. Hadash. Hadash agreed to buy only the surface estate of the tract for a slightly higher price than the Johns contract price. The mineral interest under the Hadash contract was to remain with the Estate, and, as will be explained, ultimately distributed in-kind to the beneficiaries. A report of each "sale" was proffered to the trial court, and after a hearing, the trial court confirmed the sale of the property to Hadash and cancelled the Johns contract.

SALE OF ESTATE PROPERTY–LAW

The legislature has created a comprehensive statutory scheme that governs estate administration proceedings to sell estate property. In re Estate of Bendtsen, 229 S.W.3d 845, 848 (Tex.App.-Dallas 2007, no pet.) ; see TEX. PROB.CODE ANN. §§ 331 –358 (West 2003 & Supp. 2012), repealed by Acts 2009, 81st Leg., ch. 680 (H.B. 2502), § 10(a), effective January 1, 2014.; see also In re Estate of Hill, 2013 Tex.App. LEXIS 13975 (Tex.App.-Beaumont Nov. 14, 2013). After the filing of a report of sale, which most persons dealing with contemporary conveyances of real property would actually refer to as a contract for sale, the trial court must inquire into the manner of the sale and hear evidence for or against the report, and determine the sufficiency or insufficiency of the representative's general bond, if any.See TEX. PROB.CODE ANN. § 355 (West 2003), repealed by Acts 2009, 81st Leg., ch. 680 (H.B. 2502), § 10(a), effective January 1, 2014. This is referred to as a " section 355 hearing." If the trial court determines that the sale was for a fair price, proper, and in conformity with the law and has approved any increased or additional bond deemed necessary to protect the estate, the trial court confirms the sale and authorizes the conveyance of the property upon the purchaser's compliance with the terms of the sale. Id. Otherwise, the trial court sets the sale aside and orders a new sale. Id.

We review the action of the trial court in either confirming or setting aside a sale for an abuse of discretion. Hirshfield v. Davis, 43 Tex. 155, 161 (1875) ("much weight is due to the large discretion which is unquestionably entrusted to the District Court."). The action of the trial court should be that demanded by the equity of the case and the best interests of the estate. Id. at 161–162. If the land was sold for an unfair or inadequate price, the sale was not "fairly made," and for that reason, should not be confirmed. James v. Nease, 69 S.W. 110, 111 (Tex.Civ.App.1902, writ dism'd). Further, the purchaser has no title to the property unless the sale is confirmed; and, if there is a conflict between his interest and that of the estate, the preference must ordinarily be given in favor of the estate. Hirshfield, 43 Tex. at 162 ; Nease, 69 S.W. at 111.

THE JOHNS CONTRACT

Taking his second issue first, we note that Johns contends the trial court erred by not confirming his contract for sale of the property. Specifically, Johns argues that had Orozco–Hardy filed a report of sale in 2010, when the contract was signed, the sale would have been approved because it was for a fair price at that time.

Designation of Expert

Because it could impact the remainder of our review of this issue if sustained, we will address Johns' sub-issue that the trial court erred in allowing the testimony of Trinity's expert, James Hodges. Specifically, Johns argues that Hodges' testimony should have been excluded because Trinity, although being served with a request for disclosure early in the proceedings, waited until after the section 355 hearing was set to designate Hodges as an expert, thus failing to timely designate Hodges. See TEX.R. CIV. P. 193.5(b) ; 193.6.

Johns filed a motion to exclude evidence in the week prior to the section 355 hearing in which, among other things, he complained about Trinity's lack of timely response to Johns' request for disclosure. The motion was heard and denied immediately prior to the hearing. When Hodges testified, however, no objection to his testimony based on Trinity's untimely designation was made. Thus, because Johns did not object again at the time Hodges testified, his complaint on appeal is not preserved. See TEX.R.APP. P. 33.1 ; Wilson v. Rice, 807 S.W.2d 836, 839 (Tex.App.-Waco 1991, writ denied) (objection to testimony of witness at trial is waived by failure to object when witness testifying; motion to exclude presented and heard immediately prior to trial preserves nothing for review). See also Clark v. Trailways, Inc., 774 S.W.2d 644, 647–648 (Tex.1989) (by failing to object when an undisclosed witness is offered at trial, a party denies the trial court the opportunity to review and correct a prior ruling); Srite v. Owens–Illinois, 870 S.W.2d 556, 565 (Tex.App.-Houston [1st Dist.] 1993), rev'd on other grounds by Owens–Illinois, Inc. v. Estate of Burt, 897 S.W.2d 765, (Tex.1995).

Accordingly, we overrule Johns' sub-issue and will consider Hodges' testimony in our review of Johns' second issue.

Evidence

In 2010, the 150 acre tract had been appraised by Alex Cannon who determined the market value of only the surface interest to be $2,875 per acre, or $432,000 for the entire tract. The value of the mineral estate was not appraised and was not included in the total value of the land. Johns offered $432,000 for the fee simple property, both surface and mineral interests. Cannon testified at the section 355 hearing that, as between Johns' offer and an offer by Hadash, which was for $435,000 for the surface interest only and the minerals were retained by the Estate, the offer by Hadash was a more favorable offer for the Estate because of the mineral activity in the area. James Hodges, an oil and gas consultant who had appraised mineral interests for 15 to 20 years, analyzed the mineral formations and production in the area and appraised the minerals of the property at a range of $1,143 to $6,853 per mineral acre. He opined that if he owned a tract of land and it was going to be sold, he would not sell the minerals with it.

Johns' expert, Professor Stanley Johanson, agreed that an estate with the potential for producing minerals would be more valuable than an estate with no such potential. He also agreed that if this Estate sold the surface and mineral interests to Johns for the same price as it could sell the surface interest only to Hadash, the Estate would lose the benefit of retaining the minerals. Although Johanson testified that the will only gave the beneficiaries the right to the proceeds of the sale of the property, not a portion of the interest in the property such as the mineral interest, he agreed that it was the responsibility and power of the probate court to decide whether a sale of estate property was for a fair price.

Johns' certified real estate appraiser, Matthew Whitney, evaluated the property in 2011 and in 2012 and determined a fair market value of the property to be $3,000 an acre, or $450,000 for the entire tract. He believed Johns' offer of $432,000 to be within a reasonable range. He further testified that he adjusted the value of the land for the minerals but also agreed that he was unable to separately evaluate the mineral interest because mineral interests were rarely sold in the area. He also stated that he had no training to appraise only the value of oil and gas minerals in place.

At the section 355 hearing, Orozco–Hardy recommended that the trial court accept the Hadash offer because Hadash was willing to pay the appraised value for the surface only and the beneficiaries would be able to retain the minerals. Orozco–Hardy also testified she had never been instructed by the beneficiaries to include any part of the minerals in...