Alice Ruth Peters, Independent of the Estate of Jo Alice Stout v. Jerry Bob Young and Wife, Karen Elaine Young ( 2019 )

Opinion filed December 31, 2019
In The
Eleventh Court of Appeals
__________
No. 11-18-00008-CV
__________
ALICE RUTH PETERS, INDEPENDENT EXECUTRIX OF THE
ESTATE OF JO ALICE STOUT, DECEASED, Appellant
V.
JERRY BOB YOUNG AND WIFE, KAREN ELAINE YOUNG,
Appellees
On Appeal from the 50th District Court
Baylor County, Texas
Trial Court Cause No. 11229
MEMORANDUM OPINION
After a bench trial in a declaratory judgment action, the trial court held that
Jerry Bob Young and his wife, Karen Elaine Young, as optionees, had duly exercised
an option to purchase certain property described in the option contract and in a real
estate contract that was attached to and incorporated into the option contract. The
trial court ordered the Estate of Jo Alice Stout, the successor to one of the original
optionors, to sell the property to the Youngs. The trial court also held that there was
no consideration for the transfer of a royalty interest referred to in the option contract
and in the real estate contract. We affirm.
The property that is the subject of this lawsuit is a portion of what was known
as the Stout Ranch. The Stout Ranch is in Baylor and Throckmorton Counties.
Before their deaths, Lowe L. and Mary Alice Stout were the owners of the ranch.
After Lowe and Mary Alice died, their six children inherited equal undivided
interests in the ranch.
In 1986, after the six children had inherited the ranch, 728.2 acres of the ranch
were partitioned to Betty Lynn Stout, one of Lowe and Mary Alice’s six children.
The other five children retained undivided interests in the remainder of the ranch.
The partition arrangement covered the surface as well as the mineral estate except
for certain royalty interests. As far as those royalty interests relate to this case,
suffice it to say that Jo Alice retained a nonparticipating royalty interest in the
property partitioned to Betty Lynn.
Jo Alice Stout and Jack L. Stout were two of Lowe and Mary Alice’s six
children. In 2001, Jo Alice and Jack, through their respective attorneys-in-fact,
entered into an option contract with the Youngs. Under the terms of the option
contract, Jack and Jo Alice sold the Youngs an option to purchase “the property . . .
described for purposes of this contract as the Sosolik/Tucker Place and the Miller
Creek Place, and being more particularly described in Exhibit ‘A’ which is attached
to and by this reference made a part of this Option Contract.” The Sosolik/Tucker
Place was described as the first tract in Exhibit A; the Miller Creek Place was
described as the second tract. Thirteen different metes and bounds descriptions that
comprise those two tracts were also attached to the option contract. Exhibit A also
contained a third description: “All of Seller’s right, title, and interest in the oil, gas,
and other minerals in and under and that may be produced from” Betty Lynn’s 728.2
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acres; the attachment did not contain a metes and bounds description of the third
tract.
The option contract was conditioned on the partition of that part of the Stout
Ranch that remained after the partition of Betty Lynn’s 728.2 acres. The purpose
was to partition the remainder of the ranch into specific acreage so that each
undivided interest owner would own specific acreage rather than an undivided
interest. Further, the option contract contained a provision that the Youngs could
waive the partition condition. In 2009, the Youngs waived that condition and
executed and tendered to Jack and Jo Alice the real estate contract that the parties
had attached to the option contract. Jack, Jo Alice, and the Youngs had agreed in
the option contract that the Youngs could exercise the option “by execution and
tender . . . of the real estate sales contract” that was attached to the option contract.
When Jack and Jo Alice chose not to proceed under the option contract, the
Youngs sued them for specific performance. During that litigation, both Jack and
Jo Alice died, and the independent executrixes of the respective estates, Anne F.
Stout and Alice Ruth Peters, continued to participate in the litigation as
representatives of the estates. At the conclusion of that litigation, the trial court
entered a judgment in favor of the Youngs and ordered specific performance of the
option contract. That judgment was the subject of a prior appeal to this court.
Because the appellants in that appeal waived each of the issues that they presented
on appeal, we affirmed the judgment of the trial court. Peters v. Young, No. 11-14-
00120-CV, 2015 WL 6121351, at *3 (Tex. App.—Eastland Oct. 8, 2015, no pet.)
(mem. op.).
After we issued our prior opinion, Anne F. Stout and Alice Ruth Peters, as
representatives of Jack and Jo Alice’s estates, signed the real estate contract.
However, the parties continued to disagree on the purchase price that was provided
for in the contract. The Youngs and Jack Stout’s estate settled the dispute as to the
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interest held by Jack’s estate and closed the sale of that interest. The Youngs and Jo
Alice’s estate were never able to agree on the proper computation of the purchase
price under the real estate contract, and the Youngs filed this suit for declaratory
judgment as a result of that failure. For ease of reference, we will refer to Jo Alice’s
estate as “the Estate.”
In their suit for declaratory judgment, the Youngs asked the trial court to
declare that the Estate sell “the interest in the property owned by [the Estate], in the
amount set forth in the agreement which was negotiated in the Option Agreement.”
Additionally, the Youngs sought damages and attorney’s fees. The Estate answered,
sought a declaratory judgment based upon the Estate’s interpretation of the
instruments, and asked the trial court to award attorney’s fees.
As we have indicated, after a bench trial, except for the royalty interest in the
728.2 acres partitioned to Betty Lynn, the trial court adopted the construction
championed by the Youngs. As to the royalty interest of the Estate in the Betty Lynn
property, the trial court held, in its judgment, that there was “never a meeting of the
minds between the parties as to the consideration for the inclusion in the Option and
the Contract for the undivided 1/6 nonparticipating royalty interest . . . in the Betty
Lynn [Stout] property.” Therefore, the trial court did not order a sale of that
nonparticipating royalty interest.
The Estate brings four issues on appeal. First, the Estate contends that the
trial court misconstrued the unambiguous language of the real estate contract and the
option contract into which it was incorporated and that, in doing so, the trial court
rewrote the real estate contract “to say that the purchase price would be reduced
based on the [Estate’s] percentage of ownership in the property.” Next, in its second
issue on appeal, the Estate maintains that the trial court made a fact finding based on
lack of consideration when that theory was not pleaded by any party. In its third
issue on appeal, the Estate takes the position that the trial court’s findings “that there
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was no consideration for and no meeting of the minds on the purchase price for the
mineral interest [are] erroneous as a matter of law because they are contrary to the
undisputed facts and unambiguous contract language.” In the alternative, the Estate
asks: “[I]s there any legally or factually sufficient evidence supporting those
findings?” In the Estate’s fourth issue, it alleges that “the trial court’s findings that
the Youngs duly exercised their option contract to purchase the real estate and have
always been ready, willing and able to purchase the property [are] erroneous as a
matter of law because they are contrary to the undisputed facts and the unambiguous
contract language.” Again, in the alternative, the Estate poses the question: “[I]s
there any legally or factually sufficient evidence supporting those findings?”
We will first address the Estate’s argument, in its first issue on appeal, that
the trial court erred when it construed the contracts to conclude that the Youngs were
obligated to pay the Estate only for the interest that the Estate owned in the property.
In our review, we will apply the well-established rules of contract construction.
The trial court found that the real estate contract was unambiguous. That
finding has not been disputed. When a written contract is unambiguous, the
construction of the contract is a question of law for the court. We review the trial
court’s legal conclusions de novo. MCI Telecomms. Corp. v. Tex. Utils. Elec. Co.,
995 S.W.2d 647, 650–51 (Tex. 1999). When the meaning of a contract is disputed,
our primary objective “is to give effect to the written expression of the parties’
intent.” Pathfinder Oil & Gas, Inc. v. Great W. Drilling, Ltd., 574 S.W.3d 882, 888
(Tex. 2019). “Objective manifestations of intent control, not ‘what one side or the
other alleges they intended to say but did not.’” URI, Inc. v. Kleberg Cty., 543
S.W.3d 755, 763–64 (Tex. 2018) (footnote omitted) (quoting Gilbert Tex. Constr.,
L.P. v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 127 (Tex. 2010)). We,
therefore, “presume parties intend what the words of their contract say” and interpret
the language of the contract according to its “plain, ordinary, and generally accepted
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meaning” unless the contract directs otherwise. Id. at 764 (first quoting Gilbert Tex.
Constr., 327 S.W.3d at 126; then quoting Heritage Res., Inc. v. NationsBank, 939
S.W.2d 118, 121 (Tex. 1996)).
Because “[c]ontext is important,” we consider the entire writing in an effort
to harmonize and give effect to all of the provisions of the contract so that none are
rendered meaningless. Exxon Mobil Corp. v. Ins. Co. of State, 568 S.W.3d 650, 657
(Tex. 2019). No one phrase, sentence, or section of an agreement should be isolated
and considered apart from the other contractual provisions. Pathfinder Oil & Gas,
574 S.W.3d at 889. A contract can consist of more than one document; documents
“pertaining to the same transaction may be read together”; and “courts may construe
all the documents as if they were part of a single, unified instrument.” In re Laibe
Corp., 307 S.W.3d 314, 317 (Tex. 2010) (quoting Fort Worth Indep. Sch. Dist. v.
City of Fort Worth, 22 S.W.3d 831, 840 (Tex. 2000)).
Article One of the real estate contract contains the following provision: “By
this Contract, Seller sells and agrees to convey, and Purchaser purchases and agrees
to pay for, all of Seller’s interest in the Property . . . for the consideration and upon
and subject to the terms, provisions, and conditions set forth below . . . .” (emphasis
added). The next article “below,” Article Two of the real estate contract, is entitled
“PURCHASE PRICE.” In Article 2.01, entitled “Amount of Purchase Price,” the
parties agreed as follows:
The Purchase Price for the Property is a three-tiered price based upon
the number of acres determined by the survey as hereinafter provided
multiplied by the following applicable price per acre:
(a) If up to Sixty (60%) percent of the ownership interests
in the Property sell to Purchaser the purchase price
shall be $300.00 per acre;
(b) If up to Eighty (80%) percent of the ownership
interests in the Property sell to Purchaser the purchase
price shall be $325.00 per acre;
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(c) If One Hundred (100%) percent of the ownership
interests in the Property sell to Purchaser the purchase
price shall be $350.00 per acre.
Because Jo Alice and Jack were to convey less than a combined 60% interest in the
“Property,” there is no dispute that the applicable price per acre was $300.
The trial court construed the contract to mean that the purchase price under
the real estate contract (except for the nonparticipating royalty interest regarding
Betty Lynn’s property) was to be computed by “multiplying $1,622,580.00 (5,408.6
[acres] x $300.00) by the percentage of interest that [Jo Alice’s estate] owns in the
entire 5,408.6 acres”; that interest was to be determined by a licensed title insurance
agency. The number of acres was the total number of net acres shown by a survey
conducted as provided for in the agreement.
In the option contract, the parties provided that the real estate contract that
they had attached to the option contract governed the price and terms of the sale. As
we have said, in Article One of the real estate contract, the “Purchase and Sale”
provision, the parties provided, in part, that “Seller sells and agrees to convey, and
Purchaser purchases and agrees to pay for, all of Seller’s interest in the Property”
(emphasis added). In Article 2.01 of the real estate contract, the “Purchase Price”
provision, the parties provided, in part: “The Purchase Price for the Property is a
three-tiered price based upon the number of acres determined by the survey as
hereinafter provided multiplied by the following applicable price per acre”
(emphasis added).
In order to determine the purchase price for the “Seller’s interest in the
Property,” Article One and Article 2.01 must be read together—the price per acre
for the “Property” must first be calculated under Article 2.01. That price must then
be reduced by the percentage of ownership that the estate owns in the property as set
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forth in Article One; that is the price that the Youngs agreed to pay for the estate’s
interest.
We do not believe that the plain language of the real estate contract supports
the Estate’s interpretation otherwise. The Estate’s calculation of the purchase price
for the “Property” solely under Article 2.01 of the real estate contract ignores the
fact that in Article One the parties agreed that the Youngs were purchasing an
interest in the “Property” rather than the “Property” itself. Under the unambiguous
terms of the real estate contract, the trial court correctly construed the contractual
purchase price due from the Youngs to the Estate. We overrule the Estate’s first
issue on appeal.
Because the Estate’s fourth issue on appeal depends in large part on the
purchase price question, we will discuss it before we discuss the Estate’s second and
third issues on appeal. The Estate makes multiple claims in its fourth issue on
appeal. The claims are based upon their contention that “[t]he Youngs Rejected the
Option Contract by Failing to Exercise It in Strict Accordance with Its Terms.” The
Estate argues that the Youngs rejected the option contract when they failed to tender
the purchase price that the Estate asserts to be the correct purchase price but instead
offered numerous other amounts, when they failed to “tender performance ‘within a
reasonable time,’” and when they failed to object to the survey as provided in the
real estate contract.
“Exercise of an option, unless excused in rare cases of equity, must be
unqualified, unambiguous, and strictly in accordance with the terms of the
agreement.” Meadows v. Midland Super Block Joint Venture, 255 S.W.3d 739, 743
(Tex. App.—Eastland 2008, no pet.). As we have noted, the parties agreed in the
option contract that the Youngs were to exercise the option “by execution and tender
to [the Estate] of the real estate sales contract attached as Exhibit ‘B’.” In its brief,
the Estate notes that there is no dispute that “the Youngs executed the Real Estate
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Contract and tendered it to Ms. Peters within the option period.” We hold that the
option contract was duly exercised when the Youngs executed and tendered the real
estate contract.
However, although the option contract contained specific provisions for the
exercise of the option, the Estate contends that the Youngs were also obligated to
tender the purchase price within a reasonable time and that their failure to do so
constituted a rejection of the option. It is true that, when “a contract is silent
regarding the method of exercising [an] option, giving timely notice to the optionor
and tendering performance within a reasonable time thereafter is sufficient to
exercise the option.” Maxwell v. Lake, 674 S.W.2d 795, 798 (Tex. App.—Dallas
1984, no writ) (emphasis added). In this case, however, the option contract was not
silent as to how the option was to be exercised. The parties agreed upon specific
terms regarding the exercise of the option contract, and the evidence is undisputed
that the Youngs complied with those specific terms. The Youngs executed the
option in accordance with its very specific terms when they signed the real estate
contract and tendered it to the Estate. At that time, “a binding, enforceable contract”
was completed. Id.
Events that occurred subsequent to the exercise of the option, such as offers
and rejections made after the exercise of the option, although perhaps relevant to
other issues not presented here, do not appear to us to be relevant, under the facts of
this case, to the question of whether the option was properly exercised. The Youngs
exercised the option when the Youngs presented the Estate with the real estate
contract that bore their signatures—the method by which the parties had explicitly
agreed that the option would be exercised.
If the tender of the purchase price within a reasonable time after the exercise
of the option was required, as argued by the Estate, the record reveals that the
Youngs did that. The record reflects that the Youngs first tendered the signed real
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estate contract on August 24, 2009, and again on January 19, 2016 (eleven days after
this court issued mandate in the parties’ previous appeal). In accordance with the
terms of the real estate contract, the tender of the purchase price must necessarily
await the preparation of a survey as agreed by the parties. In accordance with the
real estate contract, it was the Estate’s obligation to provide that survey. The survey
of the property was completed in August 2016, and a legal description was prepared
in September 2016. The Youngs met with the Estate’s representative the next
month, October 2016. At that time, as the Estate concedes, the Youngs offered to
pay a purchase price computed by reducing the number of net acres shown by the
survey by the Estate’s percentage of ownership in the net acres and multiplying that
result by $300, the price per acre. As the trial court held, and as we have also held,
that is the purchase price upon which the parties agreed.
Also in its fourth issue on appeal, the Estate challenges the trial court’s
findings that the Youngs have always been ready, willing, and able to purchase the
acreage. The trial court’s findings of fact have the same weight as a jury’s verdict;
we review the legal and factual sufficiency of the evidence used to support them just
as we would review a jury’s findings. Catalina v. Blasdel, 881 S.W.2d 295, 297
(Tex. 1994). We apply the same standards that we apply when we review the legal
and factual sufficiency of the evidence supporting a jury’s answer to a jury question.
Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996); Catalina, 881 S.W.2d at 297. We
review a trial court’s conclusions of law de novo. BMC Software Belgium, N.V. v.
Marchand, 83 S.W.3d 789, 794 (Tex. 2002); In re Estate of Standefer, 530 S.W.3d
160, 164 (Tex. App.—Eastland 2015, no pet.) (citing BMC Software Belgium, 83
S.W.3d at 794).
Under the legal sufficiency standard, we consider the evidence in the light
most favorable to the trial court’s finding and disregard contrary evidence unless a
reasonable factfinder could not. Webb v. Schlagal, 530 S.W.3d 793, 802 (Tex.
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App.—Eastland 2017, pet. denied) (citing City of Keller v. Wilson, 168 S.W.3d 802,
827 (Tex. 2005)). The legal sufficiency challenge must be sustained if there is no
evidence or only a scintilla of evidence to support the finding. Id. In
a factual sufficiency review, we consider all the evidence and will uphold the trial
court’s finding unless the evidence is too weak to support it or the finding is so
against the overwhelming weight of the evidence as to be manifestly unjust. Serv.
Corp. Int’l v. Aragon, 268 S.W.3d 112, 118 (Tex. App.—Eastland 2008, pet.
denied).
As the Estate acknowledges, the Youngs offered to tender payment in October
2016. Bob Young testified at trial that he had always been ready and willing to
purchase the Estate’s undivided interest. The issue of whether a party to a contract
is “ready, willing, and able” to perform is a question of fact. DiGuiseppe v. Lawler,
269 S.W.3d 588, 596 (Tex. 2008). Here, in addition to the attempted tender of the
purchase price, the trial court was entitled to rely upon Bob Young’s testimony. See
Mustang Amusements, Inc. v. Sinclair, No. 10-07-00362-CV, 2009 WL 3487796, at
*5 (Tex. App.—Waco 2009, no pet.) (mem. op.) (trial court could believe testimony
that buyer was ready, willing, and able to perform). The evidence is neither legally
nor factually insufficient to support the findings of the trial court.
We have considered all of the Estate’s arguments in its fourth issue on appeal.
For all of the foregoing reasons, we overrule Appellant’s fourth issue.
The Estate’s second and third issues on appeal pertain to the nonparticipating
royalty interest related to the property partitioned to Betty Lynn. In its findings of
fact, the trial court found that “[t]here was never a meeting of the minds between the
parties as to the consideration for the inclusion in the Option and the Contract of
Sale for the undivided 1/6 nonparticipating royalty interest (referred to as a mineral
interest in the documents) in the Betty Lynn [Stout] property.” Also in its findings
of fact, the trial court found that “[t]here is no consideration to be paid for the mineral
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estate on the Betty [Stout] property.” In its judgment, the trial court declared that
“[t]here was never a meeting of the minds between the parties as to the consideration
for the inclusion in the Option and the Contract” of the royalty interest in Betty
Lynn’s tract. The trial court did not order a sale of that interest.
In its second issue on appeal, the Estate maintains that the trial court erred
when it entered findings on a theory—lack of consideration—that was not pleaded
by either party. Therefore, the Estate maintains, the judgment was not supported by
the pleadings.
The Estate bases its complaint on the proposition that lack of consideration is,
under Rule 93(9) of the Texas Rules of Civil Procedure, “a defense that must be
supported by a verified plea.” See TEX. R. CIV. P. 93(9). The Estate then argues
that, because neither the Youngs nor the Estate raised the issue, it was not before the
trial court and the trial court should not have determined that there was no
consideration as to the royalty interest in Betty Lynn’s tract.
The issue of a meeting of the minds as to consideration was before the trial
court because it was an element of the Youngs’ case and related directly to their
cause of action. See Belew v. Rector, 202 S.W.3d 849, 854 (Tex. App.—Eastland,
no pet.) (citing Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 496 (Tex.
1991)). Earlier in this opinion, we referred to the language that the trial court used
in its judgment as to the lack of a meeting of the minds as to the consideration for
the royalty interest. The trial court held: “[I]t is the opinion of the Court that there
was never a meeting of the minds . . . as to the consideration” for including the
royalty interest in the deal. We believe that language to be tantamount to a finding
that the Youngs did not meet their burden of proof as to the royalty interest.
However, even if we are incorrect, there is yet another reason to affirm the
judgment of the trial court as to its exclusion of the royalty interest from the sale. In
the “Recitals” portion of the option contract, the parties referred to the property that
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was the subject of the option contract as “the Stout Ranch, and further described for
purposes of this contract as the Sosolik/Tucker Place and the Miller Creek Place,
and being more particularly described in Exhibit ‘A’ which is attached to and by this
reference made a part of this Option Contract.” The first tract listed in that exhibit
was the “Sosolik/Tucker Place” followed by a reference to two metes and bounds
descriptions that were located in an attachment to Exhibit A. The second tract
mentioned was the “Miller Creek Place” followed by a reference to eleven metes
and bounds descriptions that were also located in the attachment to Exhibit A. The
third tract described was “[a]ll of Seller’s right, title, and interest in the oil gas and
other minerals in and under and that may be produced from [Betty Lynn’s tract].”
The attachment to Exhibit A did not contain a metes and bounds description of the
third tract.
Similarly, in the real estate contract, the Youngs agreed to purchase and the
Estate agreed to sell “the Sosolik/Tucker Place and the Miller Creek Place” with the
“correct legal description being determined from the survey provided for in this
Contract.” The parties referred to an attached Exhibit A. There were three tracts
listed in that exhibit. The first tract shown was the “Sosolik/Tucker Place” followed
by the comment “ATTACH LEGAL DESCRIPTIONS.” The second tract listed was
the “Miller Creek Place” also with the comment “ATTACH LEGAL
DESCRIPTIONS.” The third property described was “[a]ll of Seller’s right, title,
and interest in the oil gas and other minerals in and under and that may be produced
from [Betty Lynn’s tract].”
A de novo review of this unambiguous contract leads us to the conclusion that,
in the contract, the Youngs never agreed to buy and the Estate never agreed to sell
the royalty interest connected to Betty Lynn’s property even though the royalty
interest was listed in the exhibits to the agreements. Therefore, if there were any
error as to the holding of the trial court regarding consideration, which we have held
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not to be the case, it was harmless. TEX. R. APP. P. 44.1(a). For all the foregoing
reasons, we overrule the Estate’s second and third issues on appeal.
We affirm the judgment of the trial court.
JIM R. WRIGHT
SENIOR CHIEF JUSTICE
December 31, 2019
Panel consists of: Bailey, C.J.,
Stretcher, J., and Wright, S.C.J.1
Willson, J., not participating.
1
Jim R. Wright, Senior Chief Justice (Retired), Court of Appeals, 11th District of Texas at Eastland,
sitting by assignment.
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