In re Waggoner Estate

• Citation: 163 S.W.3d 161
• Decision Date: 07 March 2005
• Docket Number: No. 07-04-0308-CV.,07-04-0308-CV.
• Parties: In re The W.T. WAGGONER ESTATE.
• Court: Supreme Court of Texas

163 S.W.3d 161

In re The W.T. WAGGONER ESTATE.

No. 07-04-0308-CV.

Court of Appeals of Texas, Amarillo.

March 7, 2005.

E. Glen Johnson, Bart A. Rue, John T. Wilson, IV, Kelly, Hart & Hallman, Fort Worth, for Appellant.

Lonny D. Morrison, Morrison & Shelton, Wichita Falls, William J. Boyce, Fulbright & Jaworski L.L.P., Houston, Appellee.

Before JOHNSON, C.J., and REAVIS and CAMPBELL, JJ.

OPINION

JAMES T. CAMPBELL, Justice.

This is an interlocutory appeal of an order appointing a receiver for the W.T. Waggoner Estate and giving the receiver "the duty, responsibility and power," subject to the court's supervision and direction and subject to other provisions of the order, to "sell all assets" of the Estate. We will affirm the trial court's order.

Background

The W.T. Waggoner Estate is an entity formed by Articles of Agreement and Declaration of Trust (hereinafter, the "Articles") dated March 31, 1923, among W.T. Waggoner and members of his family. The Estate sometimes has been referred to in this litigation as a business or Massachusetts trust.¹ Originally, and at other times, the Estate has had a trustee. It also has shareholders and directors. It apparently is treated for federal tax purposes as a corporation. The parties agree the Texas Trust Code does not apply to the Estate,² and for purposes of this appeal under Texas law it is to be treated as a partnership subject to the Texas Revised Partnership Act.³

The Estate was created for an original term of twenty years but its term was extended by subsequent amendments to the 1923 Articles. By a 1948 amendment, the Estate's existence was extended through March 31, 1983. By 1981, half the outstanding shares of the Estate were owned by A.B. Wharton, III (the "Wharton shares"), and half by Electra Waggoner Biggs and the trustees of trusts created by her parents E. Paul Waggoner and Helen Buck Waggoner (the "Biggs shares"). On April 1 of that year, the Articles were further amended and Bylaws for the Estate were adopted. The amended Articles extended the term of the Estate through March 31, 2003, subject to prior termination by any shareholder "pursuant to agreement of the Shareholders." The Bylaws spelled out that "[n]otwithstanding the intention and desire of the shareholders that the Estate continue in existence for the full term" [through March 31, 2003], either the holders of a majority of the Wharton shares or the holders of a majority of the Biggs shares had the "absolute right, with or without cause," to terminate the Estate as of any one of three dates, on written notice of intention to terminate.

In February 1989, Wharton gave written notice of his intention to terminate the Estate, selecting March 31, 1991, as the termination date. Charles M. Prather, who had served as the Estate's trustee since April 1, 1981, resigned as trustee in April 1989. The office of trustee has been vacant since Prather's resignation. On March 13, 1991, the Biggs shareholders filed suit seeking the appointment of a receiver for the Estate. By agreement, the termination date of the Estate was extended to a date later in 1991, but the parties made no express agreement for its extension beyond that date. The Estate nonetheless has continued to operate its properties,⁴ under the supervision of its directors.⁵

The trial court entered an agreed scheduling order in September 1992 that abated the case for 120 days, requiring the parties to explore an agreed resolution of the matters in dispute, and set the case for trial a year later. A 1997 agreed order noted that the case had been continued on the court's docket without a specific resetting so the parties could pursue settlement, and provided either party could request a trial setting at any time if settlement prospects no longer justified further postponement.

Electra Waggoner Biggs died in April 2001. In January 2003, the Biggs shareholders⁶ filed a third amended petition for appointment of a receiver, and followed that in March 2003 with a motion for partial summary judgment. That motion stated Wharton "has sometimes contended in this litigation that the assets of the W.T. Waggoner Estate should be divided in kind or partitioned between the parties." The motion asserted undisputed evidence established that the governing documents require liquidation of the assets of the Estate and distribution of the proceeds in the absence of agreement of the shareholders to a division in kind of particular assets. The evidence submitted by the Biggs included the 1923 Articles, and amendments to that document including the 1981 amendments, and the 1981 Bylaws. The evidence also included a May 2002 deposition given by Wharton.

Wharton opposed the Biggs' motion. After an April 2003 hearing, the court signed an order of partial summary judgment dated May 8, 2003, decreeing that an event had occurred requiring the winding up of the Estate; that there then was no agreement among the shareholders for partition or division in kind of any particular assets of the Estate; and that except to the extent such an agreement was reached, all of the assets of the Estate would be sold in liquidation and the proceeds distributed to the shareholders after satisfaction of obligations of the Estate.

In February 2004, the Biggs shareholders filed a motion for the appointment of John M. Greer as receiver. Wharton filed a response opposing Greer's appointment and filed a motion to "correct" the court's May 8, 2003, order of partial summary judgment. The motion to correct urged the court to delete the language requiring all Estate assets to be sold absent agreement among the shareholders.

The court conducted an evidentiary hearing on March 17, 2004, on the Biggs' motion for Greer's appointment as receiver and Wharton's motion to correct. Wharton testified at that hearing. By a March 29 letter, the court notified the parties of its decision not to appoint Greer as receiver. Noting that the parties had stated in open court that a receiver was necessary, the court stated in the letter its intention, subject to objection, to appoint Wilson D. Friberg as receiver. The court set a hearing for May 4 to hear objections to Friberg's appointment, and to hear further "argument and authorities" on Wharton's motion to correct. Neither side voiced objection to Friberg's appointment at the May 4 hearing, but the parties presented extensive argument concerning the powers that should be given him.

On May 14, the court signed the order made the subject of this appeal. It appointed Friberg as receiver. The order states that the receiver "shall have, subject to the Court's continued supervision and direction, the duty, responsibility and power, subject to [a later provision of the order], to sell all assets of the W.T. Waggoner Estate, except to the extent that the [shareholders] agree to a partition or division in kind of particular assets," and states the appointment is made in accordance with Art. 6132b-8.03 of the Texas Revised Partnership Act.⁷ The later provision of the order states that the receiver shall consummate no sale, irrespective of value, of any real or personal property of the Estate without the court's approval, after notice and hearing.

Notwithstanding the appointment of the receiver, the order directs that day-to-day operation of the Estate is to remain, subject to further order of the court, under the control and direction of the shareholders through the directors.

Issue on Appeal

On appeal, Wharton challenges neither the necessity for a receiver nor the selection of Friberg to serve in that capacity. He acknowledges the parties agreed the appointment of a receiver was necessary because of their inability to reach any other agreed course for winding up the Estate. Wharton states his single issue as follows:

The trial court erred in ordering a receiver for the W.T. Waggoner Estate to sell all of the assets of the Estate in liquidation when, as a matter of law, neither the Estate's governing documents nor the controlling law provide for or allow a sale of all of the assets.

The preliminary statement in his brief restates the relevant issue as "How should the assets of the W.T. Waggoner Estate be transferred to the Waggoner family when the Estate is wound up?" It succinctly states the parties' positions: "Appellees [the Biggs shareholders] suggest that the entire corpus of the Estate, including 520,000 acres of real property, be sold and the cash proceeds distributed among the shareholder groups. Appellant Wharton insists he has a legal right, after the liabilities of the Estate are extinguished, to receive his share or, at a minimum, some portion of the Estate `in kind' without a forced sale of all the Estate's assets."⁸

Applicable Law

We review the court's order appointing a receiver under an abuse of discretion standard. See Balias v. Balias, Inc., 748 S.W.2d 253, 256 (Tex.App.-Houston [14th Dist.] 1988, writ denied); Carroll v. Carroll, 464 S.W.2d 440, 447 (Tex.Civ.App.-Amarillo 1971, writ dism'd); Strategic Minerals Corp. v. Dickson, 320 S.W.2d 882, 884 (Tex.Civ.App.-Austin 1959, writ ref'd n.r.e.). A court may abuse its discretion by ruling arbitrarily, unreasonably or without reference to any guiding rules and principles, or without supporting evidence. Bocquet v. Herring, 972 S.W.2d 19, 21 (Tex.1998); Morrow v. H.E.B., Inc., 714 S.W.2d 297, 298 (Tex.1986); Downer v. Aquamarine Operators, Inc., 701 S.W.2d 238, 241-42 (Tex.1985). When conducting an abuse of discretion review, we examine the entire record. Mercedes-Benz Credit Corp. v. Rhyne, 925 S.W.2d 664, 666 (Tex.1996); Simon v. York Crane & Rigging Co., 739 S.W.2d 793, 795 (Tex.1987).

The law applicable to construction of contracts has been applied to partnership agreements, Park Cities Corp. v. Byrd, 534 S.W.2d 668, 672 (Tex.1976), and we will apply it here. Neither side contends the governing documents are ambiguous. We agree they are not ambiguous. The construction of an unambiguous...