HUMBLE EXPLORATION CO., INC., Appellants, v. FAIRWAY LAND COMPANY, Appellees.
No. 05-82-00673-CV
Court of Appeals of Texas, Dallas.
July 23, 1982
Rehearing Denied Aug. 24, 1982.
Moreover, to uphold punishment under
Punishment could have been imposed under
TEAGUE, J., joins.
DALLY, Judge, dissenting.
I am convinced that
W.C. DAVIS, J., joins in this dissent.
David Musslewhite, Akin, Gump, Strauss, Hauer & Feld, Kenneth Stohner, Jr., Jackson, Walker, Winstead, Cantwell & Miller, Michael V. Powell, Rain, Harrell, Emery, Young & Doke, R. Jack Ayres, Jr., G.H. Kelsoe, Jr., Kelsoe & Kelsoe, Dallas, Kenneth D. Johns, Jr., G. Michael Curran, Kenneth C. Raney, Jr., Houston, for appellees.
Before TED Z. ROBERTSON, CARVER and WHITHAM, JJ.
CARVER, Justice.
Humble Exploration Company, Inc., prosecutes this interlocutory appeal under the authority of
After the appeal of the receivership and the additional application of the Browning interests, the trial court in a second order, “modified” and re-imposed the receivership of Humble, as well as imposed a receivership upon other parties.2 We hold that the trial court was without jurisdiction to enter the second order, which modified and re-imposed the receivership of Humble after the perfection of Humble‘s appeal on the propriety of the initial appointment of the receiver, and we vacate the second order insofar as it includes Humble within its terms.
The record reflects that Fairway, and twenty other named plaintiffs, filed their original petition against Humble, and seven other defendants on May 26, 1982. The essential dispute in the sixty-six page petition, with exhibits, related to Humble‘s performance, as operator, under a series of operating agreements among the working interest owners of producing oil wells in the Giddings oil field. The prayer of the plaintiffs, as to the merits of the dispute, was: (1) that Humble be removed as operator; (2) that Humble render a full accounting of its operations; and (3) that the court award to each plaintiff his rightful share of the net proceeds of any oil sold. The plaintiffs also sought attorney‘s fees and such other relief as they might be entitled to receive. Additionally, the plaintiffs sought the appointment of a receiver of Humble, itself, not of the wells which were the subject of the operating agreements.
Humble was notified orally of the plaintiff‘s petition and, on the same day, May 26, 1982, filed its petition to remove the case to the bankruptcy court where Humble was a debtor under a Chapter 11 proceeding (rehabilitation with debtor in possession). On the same day, May 26, 1982, the bankruptcy court remanded the plaintiff‘s cause and the trial court commenced a hearing of the application for the appointment of a receiver. On May 28, 1982, at 3:44 p.m., while the first witness offered by the plaintiffs had not yet been examined by both sides, the trial court entered the questioned order which appointed a receiver of Humble and mandatorily enjoined Humble, its agents, servants, employees, officers, and all other persons, to submit itself, and themselves, to the receiver.
The court fixed the bond of the “applicants” for the receivership at $100,000 and for the injunction at $1,000; however, only twelve of the original twenty-one applicants signed the bonds. Two additional parties originally named as defendants, the Browning interests and Columbia Gas, were realigned as plaintiffs and applicants, but they also failed to sign either of the applicant‘s two bonds.
On June 1, 1982 (the first business day following the receiver‘s appointment due to the Memorial Day week-end), Humble perfected its interlocutory appeal to this court by cash deposit in lieu of appeal bond under
The brief evidence tendered to support the appointment of the receiver showed
The trial court was not requested to, nor did it, file its findings under
- “that Humble has unilaterally, without cause, without authorization from Plaintiffs and in an illegal manner “shut in” substantially all of the oil and gas wells in which the Plaintiffs have an interest which are operated by Humble, ceasing any further production therefrom.”
- “that such precipitant, unauthorized (sic), and illegal acts have severely injured Plaintiffs and others because “shutting in” such wells will in all probability cause permanent and irreparable physical damage to the formations from which the wells are producing and may prevent some of the wells from being restored to full production.”
- “that “all parties, . . . will be irreparably harmed . . . in that the longer the oil and gas wells remain shut in, the more likely it is that such damage and/or impaired production will result, and because the longer the wells remain shut in, the greater the loss of production rights under the terms of the leases presently held by the production.”
- “that “such oil and gas wells will in all probability be subject to drainage the longer they remain shut in.”
- “that “Humble‘s actions in shutting in the wells have deprived Plaintiffs of their clear contract rights to receive the production of oil and gas in kind and the proceeds from such production.”
- “that Humble has in many respects breached its duties as Operator and failed to operate the wells in a good and workmanlike manner.”
- “that the apointment (sic) of a Receiver is required in order to get the oil and gas wells in production and preserve such assets.”
- “that “all of the capital, bank accounts, assets, staff, employees, records, lease files, payable files, financial and accounting records, reporting files, Railroad Commission files, litigation files, lease files, and all other documents, files, equipment and materials of Humble are necessary and indispensable to a Receiver‘s ability to manage, control and operate the oil and gas wells.”
Our initial issue on appeal is whether the appointment of the receiver shall be tested under
“if all other remedies available either at law or in equity, including the appointment of a receiver for specific assets of the corporation, are determined by the court to be inadequate.”
“including all its operations, business, affairs, properties, files, records, bank accounts, employees, facilities, real and personal property interests, assets, liabilities, and any and all of its properties.” [emphasis added]
which is consistent only with the extent of receivership authorized by Article 7.05(A). Article 7.05(A) provides in pertinent part:
“a receiver may be appointed for the assets and business of a corporation by the district court for the county in which the registered office of the corporation is located, whenever circumstances exists deemed by the court to require the appointment of a receiver to conserve the assets and business of the corporation . . .” [emphasis added]
To the contrary, Articles 2293-2320c (and even Article 7.04 of the Tex.Bus.Corp.Act) are specifically limited to the appointment of a receiver of “property or fund jointly owned.” See
Consequently, the trial court‘s order appointing a receiver of Humble and its “assets and business” was necessarily an appointment relying upon Article 7.05 and requires that we employ Article 7.05 in testing the propriety of the appointment. Our conclusion is supported by King Commodity Co. of Tex., Inc. v. State, 508 S.W.2d 439, 444-447 (Tex.Civ.App.--Dallas 1974, no writ) in which we held that the Business Corporation Act was not limited to corporate receiverships of specific assets; or to corporate receivership for dissolution purposes; but, applied to every corporate receivership of the “assets and business” of the corporation to the exclusion of Articles 2293-2320c. We conclude and hold that receivership of Humble and its “assets and business” must be supported by evidence of each element and condition set out in Article 7.05.
In order to justify a receiver of a corporation, its assets and business under Article 7.05(A), the evidence must show:
- circumstances requiring a receiver to conserve such assets and business;
- but, only if all other requirements of law are met;
- but, also, only if all other remedies, at law or equity, including a receiver of specific assets, are inadequate;
- but, also again, only in these instances;
- In an action by a shareholder (inapplicable here) or;
- In an action by a creditor when it is established:
- That the corporation is insolvent and the claim of the creditor has been reduced to judgment and an execution thereon returned unsatisfied; or
- That the corporation is insolvent and the corporation has admitted in writing that the claim of the creditor is due and owing.
In any other actions where receivers have heretofore been appointed by the usages of the court of equity. [emphasis supplied]
See
Humble urges that the applicants failed to show that their action was one in which a receivership could be granted under Article 7.05(A) because there was no proof that the applicant‘s action was “by a shareholder,” or “by a creditor” or “other action” where a receiver had heretofore been appointed by the usages of equity. The applicants respond, admitting they were not shareholders, but claiming to be creditors, because Humble as operator, had sold some production before the shut-in of the wells and not all of such production had been accounted for and paid. Our examination of the record shows that such a claim was pleaded but we do not find proof of such claim; consequently, we sustain this argument of Humble.
Humble alternatively submits that the applicants, even if they were creditors, failed to show that their claims were either reduced to judgment or admitted in writing as required by Article 7.05(A)(2)(a) and (b). The applicants fail to respond to this argument and our examination of the record reflects neither a judgment against Humble in favor of the applicants nor Humble‘s admission in writing that the applicant‘s claims are due and owing. We sustain this argument of Humble.
Humble additionally urges that the applicants failed to show that Humble was insolvent as required by Article 7.05(A)(2)(a) and (b). The applicants fail to answer this argument and our examination of the record reflects no evidence showing that Humble is insolvent. We sustain this argument of Humble.
Humble further urges that the applicants failed to show that their action was one in which receivers had heretofore been appointed by the “usages of equity” as permitted by Article 7.05(A)(3). The applicants respond first that their evidence reflected immediate danger to the commonly owned property, the shut-in wells. Assuming the adequacy of the applicants showing of danger to the shut-in wells, a receiver by the “usages of equity” would only be justified of the shut-in wells alone, that is, “specific corporate assets.” We hold that mere proof of a need to conserve specific corporate assets (the applicant‘s proof here) does not justify a receiver of the entire corporation, its assets and its business, as a “usage of equity.” To conserve specific assets by a receivership of the whole corporation would, in fact, defeat equity. In so holding, we adhere to this court‘s conclusion in Texas Consld. Oils v. Hartwell, 240 S.W.2d 324 (Tex.Civ.App.--Dallas 1951, mand. overr.) that:
Conservation of the assets through receivership is ofttimes a myth--a total destruction of the corporate assets. No more radical remedy could be devised which would discredit, cripple and, in the majority of instances, put to an end any business or enterprise.
Id. at 327. We sustain this argument of Humble.
Humble lastly argues as well that, even if the applicants’ proof had been met by every other criteria provided by Article 7.05(A), the receivership should have been denied because the applicants failed to show that “all other remedies available at law or equity, including the appointment of a receiver for specific assets” were inadequate. The applicants respond that they needed the entire Humble corporation to open and to operate the shut-in wells, and that the trial court‘s order so found. We have examined the record and fail to find any evidence that supports a “need” to conserve the rights of the applicants beyond the wells themselves, together with their fixtures and attachments which heretofore served to obtain their production. We hold that since a receiver of the specific assets of Humble (wells and well equipment) would have adequately protected the applicants’ rights, a receiver of all the “assets and business” of Humble was contrary to Article 7.05(A). We sustain this argument of Humble.
Subsequent to the perfection of its interlocutory appeal on June 1, 1982, Humble was subjected to a second order of the trial court, entered June 16, 1982, which re-appointed a receiver over the entire corporation and carried forward the bond executed by the initial applicants. Humble sought relief in this court urging that the second order appointing a receiver of Humble, its assets and its business, was made and entered after the trial court lost jurisdiction by the perfection of Humble‘s appeal. We agree upon the authority of Parsons v. Galveston Cty. Empl. Credit Union, 576 S.W.2d 99, 100 (Tex.Civ.App.--Houston [1st Dist.] 1978, no writ). In Parsons, the trial court held that a statute giving the State‘s Credit Commissioner supervisory jurisdiction over credit unions was unconstitutional and mandatorily enjoined the commissioner to restore to the credit union its assets and its business taken by the commissioner in reliance on such unconstitutional statute. After the commissioner perfected his appeal, the trial judge entered a second order supplementing and amending his prior order (upon which appeal had been perfected) so as to place supervision (a receivership by nature) over operations of the credit union in the trial court. Under circumstances which were thus substantially identical with our case, Parsons ruled:
Unfortunately, it (the second order) came too late. The perfection of an appeal from an order granting a temporary injunction terminates the jurisdiction of the trial court insofar as the temporary injunction is concerned. 4 Tex.Jur.2d Rev. Part 1, 168, Appeal & Error--Civil Cases § 323, citing Caldwell v. Meyers, 446 S.W.2d 709 (Tex. Civ. App.1969, no writ). An amended temporary injunction entered after appeal has been perfected will be stricken. City of Corpus Christi v. Lone Star Fish and Oyster Co., 335 S.W.2d 621 (Tex. Civ. App.1960, no writ).
Parsons, supra at 100. We find no reason to distinguish Parsons from our case or to apply any different remedy. The applicants urge that in Charton Corp. v. Brockette, 534 S.W.2d 401, 404 (Tex.Civ.App.--Corpus Christi 1976 writ ref‘d n.r.e.), it was held that the trial court retained jurisdiction of a receivership despite appeal; however, as we read Charton, the holding was only that a trial court retained jurisdiction to direct the day-to-day conservation of assets in the hands of its receiver during an appeal. In our case, and in Parsons, the orders of the trial court, after perfection of the appeal, were directed at the very subject of the appeal, the receiver‘s appointment, and not to mere conservation of assets. We hold that the trial court lost jurisdiction of the issue of the appointment of a receiver, the subject of this appeal, on June 1, 1982, when this appeal was perfected. Consequently, its second order of June 16, 1982, will be stricken as void, insofar as such order includes Humble, its assets and its business. Additional costs in the trial court associated with the hearing for, and the trial court‘s order of, June 16, 1982, and not appearing on the cost bill presently certified to this court, shall not be assessed by the trial court, in part or in whole, to Humble.
Accordingly, the trial court‘s orders of May 28 and June 16, 1982, appointing a receiver of Humble are vacated. All costs in the trial court and this court are assessed to those applicants executing the applicants’ bond.
Reversed and vacated.
TED Z. ROBERTSON, Justice, dissenting.
I respectfully dissent. I would grant the appellee‘s motion for rehearing and affirm the appointment of a receiver.
The record reflects that on May 28, the trial court made all of the determinations required by
In the absence of a supersedeas bond, the district court retained authority to modify or change its order appointing a receiver pending the appeal. See Shell Petroleum Corp. v. Grays, 122 Tex. 491, 62 S.W.2d 113, 117-18 (Tex.Comm‘n App.1933, opinion adopted) (appellant entitled to supersede trial court‘s order appointing a receiver when the appeal is from such an appointment). The trial court‘s order of June 16 had the effect of rendering moot the issues presented by the appeal of the May 28 order appointing a receiver. Tharp v. Lammons, 520 S.W.2d 951, 951-52 (Tex.Civ.App.--Dallas 1975, no writ) (in the absence of a supersedeas bond, the trial court retains jurisdiction to vacate the order appointing a receiver). See also Charton Corp. v. Brockette, 534 S.W.2d 401, 404 (Tex.Civ.App.--Corpus Christi 1976, writ ref‘d n.r.e.). Humble has not perfected an appeal from the order of June 16. Consequently, this court is without authority to vacate that order.
Therefore, the relief requested by Humble should in all things be denied.
CARVER
Justice
Notes
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