*2 POWERS, Before BRADY and *3 CARROLL, JJ.
ON MOTION FOR REHEARING POWERS, Justice. opinion
We withdraw our of November 19, 1986, and following opin- substitute the ion.
James A. Leonard and Texas Land & Co., Trading (appellants) appeal Inc. from a district-court that rescinds a con- tract between Leonard and Doren Eskew, Muir, Douglas Danny Womack. appellees’ We conclude cause of action was Accordingly, barred limitations. we will reverse the below and render nothing. take THE CONTROVERSY In the fall appellees, the three together partner with another in their law suit, party firm who is not a to this wished gas properties. to invest in oil and Dr. Kehle, Ralph part-time geology professor a capital and owner of half the shares of Land, presented stock in Texas proposal centering on a investment agreement farmout between Leonard and agree- Amoco Production Co. The farmout provided drill ment that Leonard must and, upon test well on a certain tract com- pletion specified depth, of that to a well assign Amoco would to Leonard certain acreage surrounding leased the test well. time, At the Leonard the other half owned capital stock in Texas Land. negotiations, appellees After contracted pay one-eighth of the cost with Leonard to drilling exchange, the test well. appellees, on agreed Leonard well, one-eighth in- completion of the test rights the farmout terest in his agreement, together percentage inter- gas leases— ests in two additional oil and purported- and Gaar Corsicana Leases— Leonard. Leonard and ly owned Trading Lease # Land Co. Exhibit agreement writing to a & lees reduced #2, of Lease Exhibit provides part A-5 as follows: 10.9875% assign- A-5. It is understood into this [14th [address This and between JAMES [*] AGREEMENT, given], [*] AGREEMENT day of hereinafter [*] made and entered [*] December, 1976], A. called LEONARD, [*] “Oper- [*] of said FARMOUT ment of of the LEASES. hibit interest is [*] E) and to operating [*] subject the terms and conditions [*] to all of the rights AGREEMENT [*] [*] provisions working [*] (Ex- ESKEW, BRADY, WOMACK ator” and MUIR, given], re-
& hereinafter [address “Participant”.
ferred to as
WHEREAS, Operator represents that *4 following is the holder of the described
it and LEASES:
FARMOUT AGREEMENT AGREEMENT;
FARMOUT between Company and
Amoco Production A. LEONARD ...
JAMES
LEASES; certain Oil and Gas Leases less,
totaling 540.81 acres more or lo- Texas, Co.,
cated in Burleson and more
fully described in Exhibit A-5.
WHEREAS,
agrees
Operator
that Par-
ticipant
lands
hibit
FARMOUT
ditions
sideration of the mutual convenents [sic]
Exhibit
and
follows:
NOW, THEREFORE, for and in con-
agreed by
[*]
agreements
A-5,
described
hereinafter set forth.
E,
may acquire
[*]
and under the terms and
under the
wit:
AGREEMENT
and between the
in
[*]
hereinafter set
Exhibit
an interest
provisions
[*]
A-l and
attached as
[*]
parties as
forth, it
of said
in
[*]
con-
said
Ex-
initially produced substantial
began receiving royalty checks
a few months of its
and the amount
never
oil,
minished
Leonard
Appellees
their share
but over
well
drilling
performed his
completed
was a
accordingly.
paid
cost of the test well
time the
of the
producing
of the
in
requisite
agreement to
production.
completion,
March
production
Moreover,
royalty
well
or
one-eighth
quantities
and,
April
checks
represent-
appellees
The well
Leonard
declined
convey
within
which
1977.
di-
in the
percentage interest
upon
Assignment
Interests
Leases,
and Gaar
as he was obli-
Corsicana
Completion
Producing
Test
aWell as
gated to do in the event the test well was
in
Upon completion of the test well
Well:
producing well.
all of the terms
accordance with
agreement,
pro-
as a
provisions of this
by the
return on their
Prompted
slow
well,
ducing
Operator agrees to execute
dis-
investment,
expressed their
appropriate
Participant
an
deliver
letter dated
to Leonard
satisfaction
Participant
conveying
letter,
instrument
also
1978. In the
October
(12.5%)of
percent
conveyed
Twelve
One-Half
that Leonard had not
complained
rights
working
operating
interest
in the Corsi-
promised
to them the
interest
Leases,
Operator
expressed
site” as
doubt as
earned
the “drill
and Gaar
cana
competence
such con-
defined
and earned
accordance
to Leonard’s
to make
ownership interest
veyance
AGREE-
for want of an
the aforementioned FARMOUT
them,
(Exhibit E),
demanded a return
and Twelve and One-
MENT
drilling
test
(12.5%)
money they
paid
percent
operating
Half
immediately responded
Leonard
working
in the Texas well.
rights and
and, among
letter
things,
other
specified
assured
events or circumstances—for ex-
ownership
of his
of the Gaar and
ample, a
imprisonment
defendant’s
or the
Corsicana Leases
legal right
and his
plaintiff’s minority or unsound mind. Ordi-
appellees.
them to
narily, once the
period
com-
run, nothing
mences to
stop
will
except
Approximately
later,
year
Septem-
event,
such an
spelled out in a statute.
1979, appellees
ber
and Leonard met to
Tyson Britton,
(1851).
Findings Fact paid by respective parties. 1. Prior to the Agree- execution of the 14, 1976,
ment dated December
Defend-
Conclusions
Lawof
written contract and under a written con-
tract that had not been
tiffs
leases and that defendants’ claimed inter-
ests were
4. Defendants
failures to disclose were intended to in-
plaintiffs
that the
[sic]
undivided
veyances
to the ...
ant could
duce
entered into neither Defendant held title
thereby convey
A. Leonard was the holder of
2. At
divided interest of
cana and Gaar
ants
Defendants
did not have.
represented
[that
plaintiffs
the time the
Agreement
thereby
of oil and
*7
contingent only
interests
leases
others held title to the two
failed to disclose to
into the transaction into
represented
Leases]
to Plaintiffs that James
...,
plaintiffs
to receive certain con-
[sic]
Agreement
gas
... conferred
and neither defend-
said leases.
recorded],
said leases.
leases which it
and ... could
under one un-
plaintiffs
a certain un-
[the
plaintiffs
... was
which
Corsi-
plain-
The
[*]
rate of
on sums
4. Plaintiffs and defendants are entitled
to recover
Practices —Consumer Protection Act.
plaintiffs any money acquired by defend-
ceived
less
890.53,
ants
and Gaar Leases].
3. Plaintiffs are entitled to recover
garding their statements or failures to
disclose in
tices—Consumer
2. Defendants
17.46(b)(12)
1.
judgment
[*]
Defendants violated
assignment
$17,757.85, money previously
asserting
by plaintiffs,
10%
violation of the
the money paid to
paid by
[*]
regard
prejudgment
per
itself
annum
limitations or laches re-
[*]
rights of
Protection
to the
Deceptive
provides
in order to restore to
respective parties.
[*]
compounded daily
Deceptive
ownership,
interest at the
§§
[the
17.46(a)
Act.
Trade Prac-
as follows:
defendants,
[*]
and barred
Corsicana
Trade
#
$30,-
title
re-
plaintiffs
which
would not have entered
Court,
hearing
The
after
the evidence
had the information been disclosed.
arguments
counsel,
and
rendered
14, 1985,
judgment
August
5. Plaintiffs were
by
never told
on
that the
defend-
ants,
plaintiffs
did not know and could
are entitled to
of and
not reason-
recover
$30,-
ably have known about
from the defendants the sum of
two fore-
[the
going agreements
[plus
previous-
interest],
between
890.53
less sums
defendants
paid
ly
plaintiffs
in the amount of
others].
$17,757.85
interest];
[plus
and that the
1978,
In
again
October
Sep-
agreement
at an end
sued on should be
1979,
plaintiffs
tember
defendants told
force and effect.
and of no further
defendants had the
to make
any assignments
therefore, ORDERED, ADJUDGED,
Agreement
under the
It is
14,
dated
[including
December
AND
the Court
DECREED
Act,
17.46(a)
[plaintiffs]
17.46(b)(12),
from
and recover
tion
[de-
§§
fendants], jointly
severally,
Laws,
the sum Tex.Gen.
ch.
at 323-324
§
$29,172.17....
(amended 1979). The cause of action was
appellees’
predicated
allegations
ap-
agree-
It is further ORDERED that the
(the
pellants’ misrepresentations
parties
ment between the
herein
at an
same as
be
rescission)
alleged
end and of no further force and effect
those
a basis for
any
by [plaintiffs
and that
interests held
par-
amounted to
that the
in the Corsicana and Gaar
under
upon appellees
ties’ contract conferred
Leases]
agreement
the terms of said
...
in all
rights that it did not in truth confer. Sec-
things
plaintiffs
out of the said
divested
17.46(a)
17.46(b)(12)
make such
and title to same vested in the
de-
said
misrepresentations
and autho-
actionable
fendants.
any
rize a “consumer” to recover
“actual
judgment?
parties
lees a
tion,
fact and conclusions of
The
interest in the Corsicana and
possessed legal capacity
lowing
recovery money damages,
lief in appellees’
form of
What
The
appellants’ misrepresentations
occupied before the contract was made.
averred
such restoration was effectuated in the fol
contract. There is some
sideration received
ed
....
remedy
judgment ultimately
herein
[*]
[******]
then did the trial
percentage
manner.
All
be restored
Relief
relief—rescission of the
other
they
[*]
of rescission
readiness to return the con ment,
Ordered in the
denied.
and attendant
trial
relief
Appellees
He
to the
petition,
appellants’
them in the transac
not
induced to enter
court decide
[*]
basis
requires
law
awards
expressly
were awarded a
positions
in the amount
Gaar
wherein
reflect
[*]
Judgment.
ownership
only
Leases.1
that the
parties’
grant-
appel-
n
they
re
judgment
them and vested in
lees under the contract is
form of relief—rescission of the
contract. We infer the
for the net sum of
eight, and conclusion of
are also restored to their
pounded annually.
lants with the smaller sum and awards
be restored to
interest at the annual rate of
account the matter of
appellants, and the
sum of
damages” resulting
ment
clares that each shall bear
previously
this
ultimately
determines, however,
simple expedient
$17,757.85 (in royalties).
sum,
ultimately
itself,
judgment evidently
larger
received from
which must
appellees,
awards
finding of fact number
title
$29,172.17. Appellants
$30,890.53
from them. The
appellants.
Then it credits
reflects
sum.
prejudgment
appellees judgment
foregoing
acquired by appel-
law number
previous position
declaring in
be restored
divested
only
judgment
prejudgment
which must
takes into
Thus,
10%
Concern-
parties’
adjust-
single
three.
judg-
from
com-
de-
Necessarily
$30,890.53,
Determinations
on their statutory cause of
are,
Implied.
brought
action
as
authority
of the De
bound to
ceptive
validity
Trade
This
Practices —Consumer Protec-
sume the
following allegations
plaintiffs paid
1. We refer to the
con-
to defend-
the consideration
*8
$30,890.53,and,
appellees’
Original
upon
tained in
tition:
Third Amended
Pe-
ant in the amount of
con-
the condition that defendant restore said
plaintiffs together
to
with interest
sideration
meaning
Within the
Business and
Texas
thereon, plaintiffs offer to
to defend-
restore
27.01,
§
Commerce Code
plaintiff
ing
defendant made to
them in
ants all consideration received from
past
false
exist-
of
or
$17,532.68_
the amount of
fully
material facts as more
set out above
Nothing
pleading
similarly to
II,
in the
offered
paragraph
purpose
inducing
in
for the
of
acquired by
reconvey
real-property
...,
the
interest
plaintiffs to enter into a contract
which
however,
appellees;
we assume this was within
plaintiffs
upon
entering
relied
in
into the con-
prayer
general
as
intention of their
relief
the
tract....
Because of
false and
defendant’s
judgment
misrepresentations,
to the trial court’s
plaintiffs
it was essential
fraudulent
were
damaged
rescinding
parties’
plaintiffs
and defendant is liable to
the
contract.
assumption
requires
in turn
that
we con Boles v. Aldridge, 107 Tex.
175 S.W.
judgment
strue the
any
itself and
attend
(1915);
Hester,
Milby
Finding of Moreover, fact number because the trial court ex- expressly quite specifically ap- establishes pressly explicitly determined that estoppel in that declared conclusion of interpose pellants were to upon appellants’ rests in- bar, law number two they and because induced limitations ducing appellees not to file their suit before appellees to file suit within limita- not the bar of limitations arose. This is indis- contrary period, we not infer the contrast, putable. finding there is no necessary theory appellants facts to a that indirectly suggests ap- fact that even that appellees facts neces- concealed from pellants appellees ever concealed from sary to constitute their cause action. their cause action. What then do find- mutually are exclusive as to the two ings through of fact one five determine? they require. theory, facts The one enunci- Findings of jointly fact one and two deter- findings of expressly ated in the fact appellants misrepresented, mine that at the law, presupposes appellees conclusions contracting, legal capacity time their necessary facts refrained knew the but convey good title fractional to a interest owing filing appellants’ from suit induce- leases; the two number three determines ment; concerning theory, the other which appellants misrepresented legal that of fact and conclusions law instrument; the contract number silent, appellees presupposes did not effect of appellants four determines that in- were apprise them know the facts by appellants’ duced to enter the contract they had a cause of action. concealment of the fact that their interests hold then that We in the leases were contingent two forms the basis of the trial-court and, unrecorded; number five determines and its conclusion of law number two is appellees never were informed and grounded solely upon the court’s determi- reasonably ap- could not have known that (set explicitly finding out nation pellants’ contingent interests were six) appellants had induced number establish, These unrecorded. do appellees to file their suit in time to not grounds for rescission based raised avoid the bar misrepresen- causes of action for fraud or against it. granted tation —relief that could have been heretofore, el- As discussed the essential appellees, misrepresentation, even without show, appellees bound to ements were appellants convey good when failed to title estop- for order establish required by within the time the contract. limitations, interpose were as fol- pel to But, they any do not establish sense appellants, by lows: that their words whatever the accrual a cause of action conduct, fil- delay induced rescission, appellees, unknown beyond cause of action the time Indeed, appellants from concealed them. limi- applicable permitted statute is difficult to understand how this could tations, diligence unmixed with want of possibly undisputed the case under the appellees’ part. Owing to the trial (1) appellees: they had evidence knew judgment of rescission and con- court’s a contract to receive two, must as- clusion of law number specified fractional conveyance favorably the trial court decided sume leases; (2) in the two knew judgment on these ele- appellees and the conveyance had not received such a ments. long period performed after conclude, however, there is no obligations. fully their contract This was finding that support evidence to all had to know in order to know diligent inter- rescission had that a cause of action for vening making of the last re- enough between accrued in their favor—it was *10 134
assurance, in September 1979, and the date file lees not to their suit within the of the bar limitations first arose. Before by applicable allowed statute of limita- discussing matter, however, that we should particulars, argue tions. they In various legal set out the effect of the trial court’s there is no evidence or insufficient evidence of conclusion law number two—a support to eq- essential elements legal ignore. effect we are not free estoppel, including requirement uitable By its appellants finding determination that implied by were the trial court that estopped to interpose bar, the limitations appellees’ failure to assert their cause determined, trial court necessarily by action, they they possessed after knew it implication, (1) the following ap- matters: arose, but before limitations bar was pellees’ cause of action for rescission was not diligence. caused lack of in law barred limitations when it was We should first observe appellees that September 24,1981, for this be unless filed have not the validity attacked trial- so, there would be no reason for the trial judgment, or any court of its express appel- court’s that determination law, fact and conclusions of they as were lants were interpose the limita- privileged 74(e) to do Tex.R.App.P. bar; (2) when the last reassurance 1986). (West Thus, express these determi- given 1979, September was appellees any necessarily implied nations and they possessed knew of action cause judgment, are binding rescission, did, they they unless could appellants. as on This includes the neces- not have been induced refrain from “to sarily implied finding that they knew commencing suit,” their trial as the court bring that they October 1979 had a finding determined number rescission, six. their cause action for based representation upon the made in sufficiency turn then to We month; and, implied finding their support eq- evidence to cause of action was barred limitation estoppel upon uitable which the September filed when it was specifically rests: were es- topped by their words or conduct from must We next determine when interposing the they limitations when bar bar of limitations first arose. It is neces had induced suit not to file within sarily implied, that it arose some period. the limitations 24, 1981, ap- September time when before And, pellees their suit. TO LIMITA- filed must ESTOPPEL INTERPOSE
TIONS AS A PLEA OF September IN BAR first arisen sometime after
APPELLEES’ ACTIONS for it would make no sense for trial court erect the deter on a Many appellants’ points error be- appellees' not mination that were induced light come irrelevant in construction our already to file that was a suit barred of the trial-court rule We conclude trial limitations. not infer omitted determina- applied four-year the residual specif- tions other than those in the court statute grounds upon formerly ic which the rests. found limitations Tex.Rev. true, regard for example, (1958), This art. 5529 found Civ.Stat.Ann. appellants’ regarding contentions the theo- presently in Tex.Civ.Prac. Rem.Code & ry concealed from their (1986). believe, more Ann. 16.051 § cause of action. over, the trial court was correct doing so. National Resort See Communi however, error, points appel- In three Holleman, ties, 195 Inc. S.W.2d validity lants attack the of the trial court’s n.r.e.); Goo (Tex.Civ.App.1980,writ ref’d equitably determination that es- dell, A Sought Need Rescission Be Within topped interpose bar ow- Time?, Reasonable Tex.L.Rev. in October 1978 September 1979, (1930). induced *11 Pickett, supra; four-year period of v. see also Panhandle The run, Hood, supra. the statu v. commence to Construction Co. The would terms, regarding tory appellees’ any the “accrual” of record is silent with semblance justification appellees’ delay bring- cause of action for rescission. When then (when it “accrue”? For to have September did so the bar suit between 1979 September Sep action) they arisen between 1979 and they knew had a cause of 24, 1981, must 14,1980 (when tember the cause of action the September bar of limita- day in years any accrued four before have arose). tion first We must therefore hold evidence, period. the that could the Under support there is no evidence to the trial 14, only 1976—the date when be December necessarily implied determination court's theory the contract was made—on a and an diligent in the asser- were implied determination that had rights September 1979. tion of their after day (irrespec notice on that constructive judgment the consequently reverse notice) they tive whether actual judgment and render below what the deed records would have revealed nothing by take their suit. concerning appellants’ true the state of ti tle in the Corsicana and Gaar Leases. That BRADY, Justice, dissenting. say, the trial court must have conclud respectfully I dissent. ed as a matter law that judg- the majority opinion The states that by presumption bound irrebutable ultimately ment of trial court “awards matters, knowledge, by about such created of the only one form of relief—rescission terms of art. Tex.Rev.Civ.Stat.Ann. However, pleadings parties’ contract.” (1958). court was 6646 We believe the trial plaintiffs clearly set out that Mooney in this correct as well. See v. estate a suit for securities and real was Harlin, (Tex.1981); 622 83 S.W.2d White fraud, Deceptive Trade violation of the Bond, (Tex.1962); 362 295 S.W.2d Sher Act, contract, and com- Practices breach of 85, 152 Sipper, man v. 137 Tex. S.W.2d 319 gas arising out of an oil and mon law fraud (1941); Pratt, Hexter v. S.W.2d findings of fact in 1976. The transaction (Tex.Comm.App.1928, adopted). jdgmt clearly set out conclusion, of law also evidence, and conclusions finding, There is no 17.46(b)(12) 17.46(a)and a violation of appellants, by and even no contention that §§ damages award- conduct, ap- DTPA. Furthermore prevented their words or ever having clearly indicate that pellees by access to the deed records or ed the trial court plaintiffs any money given they these records restore to would not have are “to actual in violation of acquired by notice of circumstances that would defendants prudent Pro- reasonably person Deceptive cause a to inves Practices —Consumer Trade Therefore, tigate. the bar of limitations of Law No. Act.” See Conclusion tection arose, express 3, majority opinion. under the trial court’s out in the as set 14, determinations, on December relief un- the same awarded The fact that making years grant- four after the also be relief der a DTPA suit could reject argument appellees’ contract. We preclude the should not ed rescission investigate the duty had no resort to Tex.R.Civ.P.Ann. impliedly The trial court de deed records. reads: appeal did has been termined and no by the are filed Where by appellees from determination
taken the basis they shall form trial court aspect below. or other grounds of recov- upon all therein. ery defense embraced claiming operation of suspended “One upon supported may not be limitation, statutes finding upon by presumption appeal must not apparent effect, defense, no recovery or any ground of ignored requisites of due care by the has been found element of which being blindly relied a situation as court; more ele- one or trial but where it what what seemed rather than added). have been (emphasis Neal ments reality was.” found thereof court, unrequested trial omitted ership ele- Bank Corsicana lease ments, supported evidence, where agreement when he into entered supplied by presumption be sup- will appellees. attempted Leonard to main- port Refusal of the tain that he held some character control requested court make a finding shall exploration over the lease virtue of an on appeal, (emphasis reviewable agreement Leonard had with Lear Petrole- mine). Appellants um in have become *12 suspicious by 1978 or 1979 when assured cited by majority, the case the E.F. by appellant that he had to the make Co., Fox, Hutton Inc. & S.W.2d 849 any assignments under the unrecorded (Tex.Civ.App.1974, n.r.e.), writ ref'd it was agreement, actually way that, but had no while held omitted elements of recov- knowing ascertaining veracity the ery or defense will supplied by presump- represented facts support originally by tion in them judgment, the to rule does not authorize Leonard. appellate an court to presume findings theory of recovery Finally, the trial court’s Conclusion No. not by pleadings. was raised In this 2, in which held that defendants are case, however, we such have no lack of estopped asserting regard- from limitations pleading. Appellees pleaded causes of ac- ing the to the failures disclose and later fraud, tion for securities and estate real the indicates that trial DTPA, the violation of breach contract court based conclusion on both failure is, and common law fraud. The case at bar originally, subsequent to disclose as well as therefore, distinguisable from I Hutton. appellant statements made soothe think must the assume that trial court and appellees. Appellees argued assure favorably here determined the credibility trial Leonard’s at was findings omitted fact conclu- brought question, into serious support sions of law the relief judge ample trial had reason to disbelieve judgment. ordered appellant entirely. I disagree estop- with the majority that A closely point case is Sherman pel forms basis of the trial court’s Mechanics, Inc., Foundry v. 517 S.W.2d judgment. I disagree also that conclusion dism’d), grounded solely upon of law number two is implied which the court held that where (set explicitly court’s determination out findings necessarily are referrable to an six) finding appel- fact number express finding supported by are lants had induced not to file their evidence, properly considered to, suit in avoid time the bar Appeals support Court of it. The trial court raised judgment. specifically found the defendants Finally, judge finder the trial as the fact plaintiffs failed to that others disclose judge credibility is the exclusive held and that title to two leases weight given the witnesses to be
plaintiffs would not entered this have I testimony. should not sub- want transaction this information been dis- express Further, my judgment stitute here when the Finding of closed. Fact No. plaintiffs and conclusions the trial court found that fact by defendants, know, did clearly support never told not entered not reasonably could known the trial court. Exploration Lear about the existence I would affirm Agreement agree- and the verbal farmout ment with Lambert Hollub. argue correctly
lees asserting
should be limita- disclose, of these because failures trial, up filing
even the time of suit. At no
appellant Leonard admitted he held own-