Daughtrey v. Allred
| Docket Number: | 2008-CA-00826-COA | |
| Court of Appeals: |
Opinion Link Opinion Date: 12-08-2009 Opinion Author: IRVING, J. Holding: AFFIRMED |
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| Additional Case Information: |
Topic: Contract - Standing - Affirmative defense - M.R.C.P. 12(b) - M.R.C.P. 8(c) - Statute of limitations - Section 15-1-7 Judge(s) Concurring: KING, C.J., LEE AND MYERS, P.JJ., GRIFFIS, BARNES, ISHEE, ROBERTS, CARLTON AND MAXWELL, JJ. Procedural History: Bench Trial Nature of the Case: CIVIL - CONTRACT |
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| Trial Court: |
Date of Trial Judgment: 04-15-2008 Appealed from: Jones County Chancery Court Judge: Franklin C. McKenzie, Jr. Disposition: CONTRACT DEEMED ENFORCEABLE Case Number: 2003-0131 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | K.R. DAUGHTREY AND PAUL UPTON |
JOHN D. SMALLWOOD,
LARRY O. NORRIS |
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| Appellee: | WILLIAM WALLACE ALLRED | JAMES L. QUINN | ||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Contract - Standing - Affirmative defense - M.R.C.P. 12(b) - M.R.C.P. 8(c) - Statute of limitations - Section 15-1-7 |
| Summary of the Facts: | William Allred approached Kenneth Daughtrey and Paul Upton with an opportunity to purchase mineral rights from Amoco Corporation. Thereafter, Upton and Daughtrey each purchased mineral rights and promised to convey, as a commission, fifteen percent of those rights to Charles Carden, after their expenses for the purchase of the mineral rights had been recouped. Carden subsequently passed away, and Allred was assigned Carden’s rights to the fifteen-percent interests. Allred filed suit gainst Daughtrey and Upton, seeking conveyance of the fifteen-percent interests as well as damages for lost profits. The chancery court found in favor of Allred, and ordered Daughtrey and Upton to convey their interests and pay Allred $26,807, each, as damages. Daughtrey and Upton appeal. |
| Summary of Opinion Analysis: | Issue 1: Standing Upton and Daughtrey argue that Allred had no standing to file a complaint because the transfer from Carden’s estate to Allred was invalid, and because the federal Securities Acts voided the mineral rights contracts. Although the issue of the validity of the assignment of the fifteen percent to Allred was raised at trial during a witness’s cross-examination, the issue was never raised in any of the pleadings filed by Upton or Daughtrey. Furthermore, the testimony was immediately objected to by Allred’s attorney on the ground that the issue had not been raised in any pleading. A defendant’s failure to timely and reasonably raise and pursue the enforcement of any affirmative defense or other affirmative matter or right which would serve to terminate or stay the litigation, coupled with active participation in the litigation process, will ordinarily serve as a waiver. This issue is procedurally barred under M.R.C.P. 12(b) and 8(c) for failure to raise the issue as an affirmative defense. Issue 2: Registered broker Daughtrey and Upton argue that the transfer of mineral rights from Allred to them is void because Allred was not a registered broker under the federal Securities Acts. However, Allred did not convey any mineral rights to Daughtrey and Upton. Rather, Daughtrey and Upton purchased the mineral rights from Amoco. While Section 77e of Title 15 of the United States Code, which is part of the Securities Act of 1933, prohibits the sale of an unregistered security through interstate commerce, no provision of the Securities Acts indicates that a transaction so consummated is thereafter void, as Daughtrey and Upton argue. In addition, neither Daughtrey nor Upton raised the issue of the Securities Acts until after the court had ruled against them as to liability. M.R.C.P. 8(c) explicitly states that illegality and fraud are affirmative defenses that must be timely raised in pleadings. Issue 3: Statute of limitations Upton and Daughtrey argue that the chancery court erred in finding that a ten-year statute of limitations applies to the conveyance of the fifteen-percent interests to Allred. They argue that the case involves only a claim for breach of contract, which they submit would be subject to a three-year statute of limitations. The ten-year statute of limitations found in section 15-1-7 applies to suits to recover mineral rights. Despite Daughtrey’s and Upton’s protests to the contrary, Allred’s suit was essentially a suit that set out to accomplish two objectives: conveyance of the fifteen-percent interests in the mineral rights and recovery of the profits that Daughtrey and Upton had been fraudulently receiving from the interests. The first of these is covered by section 15-1-7; as to the second, the court applied a three-year statute of limitations, a decision that neither Daughtrey nor Upton has challenged. An implied constructive trust exists in this case. Daughtrey and Upton withheld the fifteen-percent interests in their mineral rights, even though they had signed contracts promising to do otherwise. Furthermore, they did not report their payout dates, even though they were required to do so by their contracts. Since a constructive trust should have been imposed, a ten-year statute of limitations would also apply on that basis. |
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