Reeves Royalty Co., Ltd. v. ANB Pump Truck Service

• Decision Date: 30 September 1987
• Docket Number: No. 56972,56972
• Citation: 513 So.2d 595
• Parties: REEVES ROYALTY CO., LTD., and D. Preston Reeves v. ANB PUMP TRUCK SERVICE.
• Court: Mississippi Supreme Court

Page 595

513 So.2d 595

REEVES ROYALTY CO., LTD., and D. Preston Reeves v. ANB PUMP TRUCK SERVICE.

No. 56972.

Supreme Court of Mississippi.

Sept. 30, 1987.

Michael E. Earwood, Jackson, for appellants.

B. Ruth Johnson, Sullivan & Sullivan, Jackson, for appellee.

Before HAWKINS, P.J., and PRATHER and ROBERTSON, JJ.

HAWKINS, Presiding Justice, for the Court:

Reeves Royalty Company, Limited (Reeves Limited) and Preston Reeves (Reeves) appeal from a Hinds County Circuit Court ruling that denied their motion for vacation of default judgment under Mississippi Rules of Civil Procedure (MRCP) 60(b)(1). Default judgment was rendered against Reeves and in favor of ANB Pump Truck Service (ANB) in the 78th District Court of Wichita County, Texas. ANB then sought to have the foreign judgment enforced in Mississippi. At the hearing to vacate the judgment, Reeves put on uncontradicted evidence that the president of ANB had agreed to take no further action against Reeves, and, therefore, Reeves withdrew from its defense of the Texas case.

The circuit judge held that Reeves had not met his burden of clear and convincing evidence to show sufficient fraud to vacate the judgment. The lower court also held Reeves did not show a meritorious defense to the cause of action in the Texas proceeding. Finding the trial judge in error, we reverse.

FACTS

On July 26, 1984, ANB Pump Truck Service (ANB) secured a default judgment in the district court of Wichita County, Texas, against Federal Production and Drilling Corporation (Federal Production), Reeves Royalty Company, Ltd., and D. Preston Reeves for $5,154.12, together with prejudgment interest from September 1, 1982, to July 26, 1984, at 9% per annum interest, and also attorney fees of $3,000. Additionally, the judgment provided it was to bear interest at 10.92% from and after July 26, 1984.

Acting under the Uniform Enforcement of Foreign Judgments Act, Miss.Code Ann. Secs. 11-7-301, et seq. (1986 Supp.), ANB on July 3, 1985, filed with the Hinds County circuit clerk the statutory affidavit and a duly authenticated copy of this judgment, in compliance with Miss.Code Ann. Secs. 11-7-303, --305 (1986 Supp.).

On July 19 Reeves Royalty and Reeves individually (Reeves) filed a lengthy motion to vacate and set aside the judgment. The basis of this motion was that these defendants did not owe ANB anything, and never had, and that the indebtedness, if any, was due by Federal Production; and further, that on or about March 11, 1983, ANB had informed Reeves it recognized Reeves owed it nothing, and no further action would be taken to proceed against Reeves. The motion alleged that because of this representation Reeves did not defend the Texas suit. Reeves also charged fraud in procurement of the judgment. No claim was made that the Texas court lacked jurisdiction of Reeves.

The matter came on for hearing before the circuit court of the First Judicial District of Hinds County on September 6, 1985. Only David Preston Reeves, the individual defendant, testified. He was the agent and representative of Reeves Royalty, a limited partnership, in its Texas operations.

Reeves testified Federal Production contacted him about selling an interest to the limited partnership in some non-producing oil wells in Texas under lease to Federal Production, with the view that the limited partnership would re-work the wells, and if they produced, would own a thirty percent interest of the production. An agreement was then entered into between these two entities.

Reeves learned there were several creditors, among them ANB. Fearing a lien might be impressed halting re-working of the wells, Reeves contacted the creditors and told them if production was obtained, Federal Production would start a pay-back program to them. He testified that he told them the limited partnership would not be responsible on its own for payment of the debt.

On February 9, 1982, Reeves wrote the following letter to the creditors:

Dear Sirs:

This letter is concerning the W.P. Rogers lease with Reeves Royalty Company, through D. Preston Reeves acting as agent in conjunction with Federal Production and Drilling Corp. [sic] Enclosed is a copy of the contract we currently have binding.

In order for us to proceed as planned in and through this agreement we must have your consent, by letter, to withhold filing any liens or judgments of any form. At such time as indicated above (August 1, 1982) a pay back program will be initiated to begin substantial payments to your company.

s/D. Preston Reeves

Lee Quick, president of ANB, replied by letter to Reeves individually on February 12, the body of which reads:

As you request in your letter of February 9, 1982, concerning the above matter, the undersigned herewith agrees to withhold filing any liens or judgment of any form against Federal Production and Drilling Corporation until August 1, 1982. Such agreement is in consideration of your agreement to commence as of August 1, 1982 making substantial (i.e. at least in the amount of $800 per month) payments on the account involved monthly. Such account, it is agreed as part of this overall agreement, is $5,271.63, plus interest thereon at the rate of 15% per annum from February 1, 1982, until paid.

Unless we hear from you to the contrary within 10 days from the date of this letter, we will assume that you have accepted the terms of this letter, such being in response to your letter of February 9, 1982.

Reeves testified that following this letter he told Quick that he would not be personally responsible for payment of the debt, and at Quick's suggestion also told ANB's attorney.

There was some production on the wells, but Federal Production and Reeves had a disagreement, and Reeves "got out of the deal."

Thereafter, ANB filed the Texas suit, and Reeves employed Jay Cantrell, a Wichita Falls attorney, to represent him and the limited partnership. There was an answer filed on their behalf in this case.

Reeves further testified he went to Texas to give his deposition in the case, and following the deposition Quick approached him. Reeves testified as follows:

Q. And this is the president of ANB Pump Truck Company?

A. Correct. He is the president of ANB Pump Truck Service. He approached me and told me that all they were doing was trying to see what my capacity was with Federal Production and Drilling Corporation and that after this point in time that I had no problem there; that they would not continue to try to sue me or collect any of this debt from me. He knew that it was all before I was involved and I was not responsible for this debt in any way, form or fashion.

Q. So he made that acknowledgement and representation to you?

A. He told me that specifically.

Q. And based on the statement that Mr. Lee Quick made to you regarding his intentions as to the Texas lawsuit, what did you do at that point, Mr. Reeves?

A. At that point in time, while I was there in Wichita Falls, I told Mr. Jay Cantrell, my attorney, that I no longer was in need of his services and at that point I believe he resigned as my attorney through the court there.

Q. Was this done in reliance upon the statements and representations that Mr. Quick made to you?

A. It was.

Q. After you discharged your Texas attorney, were you represented here in Mississippi by another attorney to advise you in these matters?

A. I was not, unfortunately, until I employed you.

(R. 30-31)

Following hearing, the circuit judge in a well-reasoned opinion first found the Texas judgment was recorded pursuant to Miss.Code Ann. Secs. 11-7-301, et seq., and that the defendants had filed a motion to vacate under Rule 60(b)(1) of the MRCP, alleging fraud in procuring the judgment. He then addressed the question of timeliness in filing the motion to vacate, and found the six-month time limitation within which to move to vacate a foreign judgment allegedly procured by fraud as in this case did not begin until the defendants had notice of the filing of the judgment with the circuit clerk of Hinds County. He further observed that ordinarily a Rule 60(b) motion should be addressed to the court which entered it, but this could be a "practical impossibility" in a case of a judgment procured by extrinsic fraud.

The circuit judge further found that a Rule 60(b)(1) motion was an appropriate method of seeking relief from an enrolled foreign judgment under the Uniform Enforcement of Foreign Judgments Act, citing Phares v. Nutter, 125 Ariz. 291, 609 P.2d 561 (1980). Finally, he addressed the key question of whether the defendants had shown ground for relief under their motion and concluded they had not. The court recognized Reeves's testimony was uncontradicted:

[B]ut in light of the fact that Reeves had retained Texas counsel and had filed an answer that neither Reeves nor Texas counsel procured or attempted to procure anything in writing from ANB to the effect that ANB did not look to Reeves for payment, this court is not convinced that any representations made by Quick were sufficiently fraudulent to prevent Reeves from presenting a defense. Moreover although testimony at the hearing regarding the merits was [sic] curtailed, documentary evidence adduced indicates that Reeves does not have a meritorious defense. The court finds that Reeves's testimony falls short of verifying either fraud or a meritorious defense sufficiently to vacate this judgment on grounds of fraud.

Reeves and Reeves, Limited, have appealed, assigning the circuit judge erred in not finding there was insufficient evidence of fraud in procuring the default judgment, and that the defendants had failed to show a meritorious defense. No cross-appeal was filed by ANB as to any ruling made by the circuit judge.

LAW

Our courts must give full faith and credit to the final judgments of all other states and the Federal courts under Article 4, Section 1 of the United States Constitution, in which the court of that state had lawful authority to...