Mesa Petroleum Co. v. Coniglio, No. 78-3600

CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)
Writing for the CourtBefore BROWN, HENDERSON and SAM D. JOHNSON; HENDERSON
Citation629 F.2d 1022
PartiesMESA PETROLEUM COMPANY, Plaintiff-Appellee, v. C. John CONIGLIO and C. A. Locke, Jr., Defendants-Appellants, Diamond T Cattle Co., Inc. and John Coniglio, Jr., Defendants.
Docket NumberNo. 78-3600
Decision Date03 November 1980

Page 1022

629 F.2d 1022
MESA PETROLEUM COMPANY, Plaintiff-Appellee,
v.
C. John CONIGLIO and C. A. Locke, Jr., Defendants-Appellants,
Diamond T Cattle Co., Inc. and John Coniglio, Jr., Defendants.
No. 78-3600.
United States Court of Appeals,
Fifth Circuit.
Nov. 3, 1980.

Page 1024

Steven H. Gray, Ocala, Fla., for defendants-appellants.

Richard G. Rumrell, Jacksonville, Fla., Barry F. Cannaday, D. Don Dent, Amarillo, Tex., Keith E. Hope, Miami, Fla., for plaintiff-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before BROWN, HENDERSON and SAM D. JOHNSON, Circuit Judges.

HENDERSON, Circuit Judge:

Mesa Petroleum Company (hereinafter referred to as "Mesa") brought this diversity action in the United States District Court for the Middle District of Florida against Diamond T Cattle Company (hereinafter referred to as "Diamond T"), C. John Coniglio and C. A. Locke, Jr. seeking enforcement of certain promissory notes executed by the individual defendants and a joint venture agreement between Mesa and Diamond T. The district court entered judgment in favor of Mesa, and Coniglio and Locke appeal. We affirm.

Coniglio, Locke and William Hallauer 1 are the sole and equal shareholders of Diamond T, a Florida Corporation. Mesa, a corporation organized under the laws of Delaware, has its principal place of business in Amarillo, Texas. On June 6, 1972, Mesa and Diamond T entered into a joint venture agreement which provided that Diamond T would acquire and graze cattle in Florida and then send them to Texas for fattening and sale by Mesa. The expenses of the venture were to be shared equally, with Mesa advancing most of the necessary operating capital. By July of 1973, the expenses of the joint venture had increased to the extent that further direct advances by Mesa became impracticable. Hence, the joint venture agreement was amended on July 31, 1973 to authorize Mesa to obtain bank financing to generate additional funds for the operation of the joint venture.

In accordance with this amendment, a loan agreement and a promissory note payable to the First National Bank of Amarillo and other banks (hereinafter referred to as

Page 1025

"the Bank") were signed by Mesa and Diamond T as debtors, and Coniglio, Locke and Hallauer as individual guarantors. The loan agreement provided for a $3.5 million line of credit, to be secured by cattle and receivables at 75% of the current market value of the cattle. Mesa was required to furnish regular certificates of compliance assuring the Bank of the value of the collateral.

During the year 1974, there was a serious decline in the cattle market and the venture began to lose money. The market value of the cattle owned by the joint venture fell, causing the Bank's security interest to become approximately $1 million out of compliance. The Bank, which had the right to accelerate the loan, demanded that this situation be remedied.

In July of 1974, a meeting was held in Dallas, Texas between Coniglio, as representative of Diamond T, Ronald Bassett, Comptroller of Mesa Agro (a division of Mesa Petroleum Company), and a Mesa attorney. Although conflicting testimony was presented at trial, the district court accepted Bassett's version of the Dallas meeting. Coniglio was advised that Diamond T's share of the total projected losses of the venture was $425,000.00, and that Mesa was unwilling to advance additional monies without first obtaining the personal guarantees of the shareholders of Diamond T that its share of the losses would be reimbursed. Coniglio promised on behalf of the principals of Diamond T that each of the shareholders would execute equal individual promissory notes to Mesa, totaling $425,000.00, if Mesa would agree to advance the money necessary to bring the loan back into compliance. It was further agreed that appropriate adjustments would be made on the individual shareholders' liabilities to Mesa if Diamond T's share of the losses was ultimately determined to be less or greater than $425,000.00 On August 6, 1974, Mesa advanced $1,170,000.00 to the joint venture. With these funds, the joint venture was able to satisfy the entire loan obligation.

In accordance with the agreement reached at the Dallas meeting, Locke and Coniglio each executed and mailed to Mesa a personal promissory note payable to "Mesa Argo" (an unintentional misspelling of "Mesa Agro") in the amount of $141,666.67, representing one-third of the projected $425,000.00 losses. Accompanying the notes was a cover letter written by Coniglio to the following effect:

Enclosed herewith please find notes from myself and Mr. Locke as evidence that we are indebted in some amount to be determined.

By giving these notes, we are not waiving any rights or cause of action I may have against Mesa Argo, or any other persons in the joint venture, nor will I take advantage of any action any other party may have against me by virtue of the notes being divisible.

Four days before executing his promissory note, Locke, along with his wife, conveyed certain real property to Coniglio and his wife for no consideration. This property represented Locke's total net worth. On the day after Coniglio signed his promissory note, he and his wife encumbered the property conveyed to them by the Lockes to the Federal Land Bank of Columbia, South Carolina, as security for a loan to Coniglio in the amount of $500,000.00. On December 17, 1974, Coniglio and his wife transferred certain other real property for no consideration to their son, who in turn executed a quit-claim deed back to Coniglio.

The joint venture was terminated on December 1, 1974, and Diamond T's share of the losses was finally determined to be $477,822.00, $52,872.00 more than the projected figure. Coniglio and Locke were notified of the additional losses on March 11, 1975, and were requested to pay the face amount of the notes, plus the sum of $17,642.00 each. They refused to pay, and this suit followed. On October 13, 1978, judgment was entered against Locke and Coniglio in the equal amounts of $159,290.67. A subsequent order, dated December 26, 1978, awarded Mesa attorney's fees and imposed a lien and equitable trust on real property held by Coniglio.

Page 1026

The district court determined Coniglio and Locke to be obligated to Mesa under three distinct theories. Specifically, the court held that Coniglio and Locke entered into a binding oral contract with Mesa to pay their share of the losses suffered by Diamond T, that their promissory notes were supported by valid consideration, and that they were estopped to deny the enforceability of their promise to reimburse Mesa. We first consider these theories of recovery, and then address the appellants' remaining challenges to the judgment.

The district court found that the parties entered into a binding oral contract at the Dallas meeting; their intent to be bound was evidenced by their conduct, the promissory notes and the exchange of letters. We agree with this assessment. We note at the outset that the Florida choice of law rules apply in this diversity action. See Calloway v. Manion, 572 F.2d 1033 (5th Cir.1978). Florida law instructs that the validity of the purported oral contract and the nature of the obligations thereunder are governed by the substantive law of Texas. The parties stipulated in the overall joint venture agreement that Texas law would control, see Hirsch v. Hirsch, 309 So.2d 47 (3rd DCA Fla.1975), and the agreement was entered into in that state, see Boat Town U.S.A., Inc. v. Mercury Marine Division of Brunswick Corp., 364 So.2d 15 (3rd DCA Fla. 1978); Carriers Insurance Co. v. LeRoy, 309 So.2d 35 (3rd DCA Fla. 1975). Under Texas law, if the parties so intend, an oral contract is binding from the time it is made even though the parties also agree that a formal writing embodying its provisions will subsequently be prepared. Mechanical Wholesale, Inc. v. Universal-Rundle Corp., 432 F.2d 228 (5th Cir.1970) (applying Texas law); Vick v. McPherson, 360 S.W.2d 866 (Tex.Civ.App.-Amarillo 1962, writ ref'd n. r. e.). Here, approximately one and a half months after the Dallas meeting, Coniglio and Locke each executed a promissory note for one-third of Diamond T's estimated share of the joint venture losses. The accompanying letter explained that the notes were "evidence that (Coniglio and Locke were) indebted in some amount to be determined." This written evidence, in conjunction with Bassett's testimony as to what transpired at the Dallas meeting, is adequate support for the district court's finding that a binding oral agreement existed between the parties. Moreover, Mesa's action in actually advancing $1,170,000.00 to the enterprise prior to the execution of the promissory notes also manifests the parties' intentions to be bound as of the time of the Dallas meeting.

The appellants maintain that the existence of a valid oral contract is precluded by the parties' failure to negotiate and agree upon certain essential terms. Under Texas law, the omission of any essential element...

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50 practice notes
  • Dole v. Solid Waste Services, Inc., Civ. A. No. 88-1066.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • July 14, 1989
    ...motion is necessary to relieve a party from waiver; the court cannot grant relief on its own initiative." Mesa Petroleum Co. v. Coniglio, 629 F.2d 1022, 1029 (5th Cir.1980), cert. denied sub nom., Lock v. Mesa Petroleum Co., 479 U.S. 1031, 107 S.Ct. 876, 93 L.Ed.2d 830 (1987); see 9 Wright ......
  • Farias v. Bexar County Bd. of Trustees for Mental Health Mental Retardation Services, Nos. 89-5620
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • March 11, 1991
    ...that a court should grant a jury trial in the absence of strong and compelling reasons to the contrary", Mesa Petroleum Co. v. Coniglio, 629 F.2d 1022, 1029 (5th Cir.1980), we adhere to a long line of precedent in finding no abuse of discretion. "It is not an abuse of discretion by a Distri......
  • LaMarca v. Turner, No. 82-8196-Civ.
    • United States
    • United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
    • June 4, 1987
    ...supra, 707 F.2d at 1267; Rhodes v. Amarillo Hospital District, 654 F.2d 1148, 1154 (5th Cir.1981); Mesa Petroleum Co. v. Coniglio, 629 F.2d 1022, 1029 (5th Cir. 26. Under Rule 38(b), pleading "amendments not introducing new issues will not give rise to a jury trial." Guargando v. Estelle, 5......
  • FDIC v. Perry Bros., Inc., Civ. A. No. 9: 91 CV 181.
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • June 3, 1994
    ...legal obligations of the parties. See e.g., Bendalin v. Delgado, 406 S.W.2d 897, 899 (Tex.1966); see also Mesa Petroleum Co. v. Coniglio, 629 F.2d 1022, 1026-1027 (5th Cir.1980). The facts disclosed through trial prove the contract in issue was sufficiently certain. Also, these facts prove ......
  • Request a trial to view additional results
50 cases
  • Dole v. Solid Waste Services, Inc., Civ. A. No. 88-1066.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Eastern District of Pennsylvania)
    • July 14, 1989
    ...is necessary to relieve a party from waiver; the court cannot grant relief on its own initiative." Mesa Petroleum Co. v. Coniglio, 629 F.2d 1022, 1029 (5th Cir.1980), cert. denied sub nom., Lock v. Mesa Petroleum Co., 479 U.S. 1031, 107 S.Ct. 876, 93 L.Ed.2d 830 (1987); see 9 Wright &a......
  • Farias v. Bexar County Bd. of Trustees for Mental Health Mental Retardation Services, Nos. 89-5620
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • March 11, 1991
    ...a court should grant a jury trial in the absence of strong and compelling reasons to the contrary", Mesa Petroleum Co. v. Coniglio, 629 F.2d 1022, 1029 (5th Cir.1980), we adhere to a long line of precedent in finding no abuse of discretion. "It is not an abuse of discretion by a D......
  • LaMarca v. Turner, No. 82-8196-Civ.
    • United States
    • United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
    • June 4, 1987
    ...supra, 707 F.2d at 1267; Rhodes v. Amarillo Hospital District, 654 F.2d 1148, 1154 (5th Cir.1981); Mesa Petroleum Co. v. Coniglio, 629 F.2d 1022, 1029 (5th Cir. 26. Under Rule 38(b), pleading "amendments not introducing new issues will not give rise to a jury trial." Guargando v. ......
  • FDIC v. Perry Bros., Inc., Civ. A. No. 9: 91 CV 181.
    • United States
    • United States District Courts. 5th Circuit. United States District Court of Eastern District Texas
    • June 3, 1994
    ...legal obligations of the parties. See e.g., Bendalin v. Delgado, 406 S.W.2d 897, 899 (Tex.1966); see also Mesa Petroleum Co. v. Coniglio, 629 F.2d 1022, 1026-1027 (5th Cir.1980). The facts disclosed through trial prove the contract in issue was sufficiently certain. Also, these facts prove ......
  • Request a trial to view additional results

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