McKinney v. Ferguson, No. 03-03-00576-CV (TX 6/24/2004), 03-03-00576-CV.
| Decision Date | 24 June 2004 |
| Docket Number | No. 03-03-00576-CV.,03-03-00576-CV. |
| Parties | H. HAL McKINNEY, Appellant v. WILLARD L. FERGUSON, Appellee. |
| Court | Texas Supreme Court |
Appeal from the District Court of Milam County, 20th Judicial District, No. 27577, Honorable Edward P. Magre, Judge Presiding.
Affirmed.
Before Justices KIDD, B. A. SMITH and PEMBERTON.
H. Hal McKinney sued Willard L. Ferguson to recover money damages for checks written by Ferguson to purchase an oil and gas lease from McKinney. After tendering two separate checks in the amount of $57,500 each to McKinney, Ferguson cancelled payment on the checks. McKinney sued Ferguson, who asserted several affirmative defenses. After a bench trial, the district court entered a take-nothing judgment against McKinney, who appeals in eleven issues, contesting several of the district court's findings of fact and conclusions of law. We will affirm the judgment of the district court.
On Thursday, January 6, 2000, McKinney met with Ferguson regarding Ferguson's interest in investing in or purchasing the Harber/Bille well, which McKinney had drilled on Kenneth Harber's land in 1988. During this meeting, McKinney represented to Ferguson that (1) McKinney owned the oil and gas lease, the oil well located on the lease, and all of the oilfield equipment located on and associated with the Harber/Bille lease; (2) Harber, the landowner, who had been contentious in the past with McKinney and other neighbors, "was changed," would be a "happy camper," and was satisfied with McKinney and McKinney's operations on the Harber/Bille lease; (3) Harber wanted more wells drilled on the property; and (4) there were no disputes between McKinney and Harber regarding the lease, well, or equipment. Ferguson agreed to purchase the entire lease for $85,000.
McKinney left the meeting and decided that $85,000 was not a sufficient purchase price. He called Ferguson the same day and suggested $125,000 as a more appropriate price. The parties eventually agreed that Ferguson would purchase the lease for $115,000. Later that same day, McKinney returned to Ferguson's office, and Ferguson gave McKinney two checks, each in the amount of $57,500. The first check was dated January 6, 2000, and the second check was dated January 25, 2000.
The next day, Ferguson called the landowner, Harber, to discuss Ferguson's purchase of the lease. Ferguson testified that one of Harber's first statements was: "You know Hal [McKinney] don't own that [oil field] equipment." Harber also told Ferguson that he (Harber) owned the equipment and did not want any more wells drilled on his property. After the conversation with Harber, Ferguson called McKinney multiple times. Unable to reach McKinney, Ferguson left several messages on McKinney's answering machine informing McKinney that Ferguson had spoken to Harber, that Harber claimed he owned the equipment and did not want any more wells drilled, and that "the deal was off."1
By Monday morning, January 10, McKinney had still not returned Ferguson's telephone calls, and Ferguson cancelled payment on both checks and returned McKinney's production information.2 Meanwhile, McKinney traveled to Bryan, Texas, to meet with Harber and Harber's wife. McKinney and the Harbers entered into a handwritten settlement agreement "to settle all present and future disputes (if any exist) . . . regarding Surface Damages, equipment, or any other material associated with the . . . Harber/Bille [oil and gas lease]." In exchange for $1500 and rod string, the Harbers settled all disputes with McKinney and agreed that McKinney then owned the equipment. After meeting with the Harbers, McKinney deposited the first check, but it was later returned to McKinney with a stop-payment notification.
After Ferguson failed to reply to a January 13, 2000 demand letter from McKinney's attorney, McKinney filed suit in district court, seeking "damages from Ferguson which were caused by his breach of contract." Specifically, McKinney sought to recover at least the face value of the two checks issued by Ferguson. Ferguson's answer included seven affirmative defenses. Following a bench trial, the district court entered a take-nothing judgment against McKinney, ordered that Ferguson recover court costs from McKinney, and made numerous findings of fact and conclusions of law. This appeal followed.
McKinney raises eleven issues on appeal. In his first issue, McKinney argues that the district court erred "when it failed to render judgment in McKinney's favor on the checks when McKinney established a prima facie case that he was entitled to recover on the checks and Ferguson failed to plead and prove an affirmative defense." McKinney's next nine issues assert that the district court erred in making various findings of fact and conclusions of law impacting Ferguson's asserted affirmative defenses. Specifically, McKinney challenges the district court's conclusions of law that "[McKinney] failed to perform all conditions precedent as required by the Bill of Sale" and "[McKinney's] suit is barred for failure of consideration." In his final issue, McKinney argues that the district court erred in failing to award McKinney attorney's fees, interest, and court costs, and in awarding court costs to Ferguson.
A trial court's findings of fact are reviewable for legal and factual sufficiency of the evidence by the same standards that are applied in reviewing evidence supporting a jury's answer. Catalina v. Blasdel, 881 S.W.2d 295, 297 (Tex. 1994). In deciding a legal-sufficiency challenge, "we must view the evidence in a light that tends to support the finding of the disputed fact and disregard all evidence and inferences to the contrary." Bradford v. Vento, 48 S.W.3d 749, 754 (Tex. 2001). A legal sufficiency or "no evidence" point will be sustained when (a) there is a complete absence of evidence of a vital fact; (b) the court is barred by rules of law or of evidence from giving weight to the only evidence offered to prove a vital fact; (c) the evidence offered to prove a vital fact is no more than a mere scintilla; or (d) the evidence conclusively establishes the opposite of the vital fact. Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1996). More than a scintilla of evidence exists when the evidence supporting the finding, as a whole, "rises to a level that would enable reasonable and fair-minded people to differ in their conclusions." Id. (quoting Burroughs Wellcome Co. v. Crye, 907 S.W.2d 497, 499 (Tex. 1995); Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex. 1994)). If the evidence is so weak as to do no more than create a mere surmise or suspicion of its existence, its legal effect is that it is no evidence. Haynes & Boone v. Bowser Bouldin, Ltd., 896 S.W.2d 179, 182 (Tex. 1995).
When reviewing a challenge to the factual sufficiency of the evidence, we must consider, weigh, and examine all of the evidence in the record. Plas-Tex, Inc. v. U.S. Steel Corp., 772 S.W.2d 442, 445 (Tex. 1989). If a party attacks the factual sufficiency of an adverse finding on an issue on which the other party had the burden of proof, the attacking party must demonstrate that there is insufficient evidence to support the adverse finding. Westech Eng'g, Inc. v. Clearwater Constructors, Inc., 835 S.W.2d 190, 196 (Tex. App.—Austin 1992, no writ). We will set aside the verdict only if the evidence that supports the jury finding is so weak as to be clearly wrong and manifestly unjust. See Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986). We may not reverse merely because we conclude that the evidence preponderates toward a different answer. See Herbert v. Herbert, 754 S.W.2d 141, 144 (Tex. 1988).
As for the trial court's conclusions of law, they will be upheld on appeal if the judgment can be sustained on any legal theory supported by the evidence. Westech Eng'g, Inc., 835 S.W.2d at 196. Incorrect conclusions will not require reversal if the controlling findings of fact will support a correct legal theory. Id. Moreover, conclusions of law may not be reversed unless they are erroneous as a matter of law. Id.
On appeal, McKinney asserts that the numerous affirmative defenses asserted by Ferguson—including failure of consideration, failure to comply with the statute of frauds, failure to mitigate, repudiation, recision, and fraudulent inducement—are not applicable because McKinney chose to sue on the checks, not on the underlying contract. See Tex. Bus. & Com. Code Ann. § 3.310(b)(3) (West 2002) ().3 However, McKinney's decision to sue to enforce the checks does not deprive Ferguson of his right to assert defenses. The Texas Business and Commerce Code states:
(a) Except as provided in Subsection (b),4 the right to enforce the obligation of a party to pay an instrument is subject to the following:
. . . .
(2) a defense of the obligor stated in another section of this chapter or a defense of the obligor that would be available if the person entitled to enforce the instrument were enforcing a right to payment under a simple contract[.]
Id. § 3.305(a)(2) (West 2002); see also Guaranty Fed. Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 656 & n.7 (Tex. 1990) (). We reject McKinney's contention that "the rules governing contracts of sale and purchase are not applicable."
On January 6, 2000, McKinney and Ferguson met at Ferguson's office, and Ferguson agreed to purchase the Harber/Bille lease from McKinney for...
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