NEI Corp. v. Glenn McMillan Developing Co.

550 S.W.2d 113, 1977 Tex. App. LEXIS 2844
CourtCourt of Appeals of Texas
DecidedApril 6, 1977
DocketNo. 1573
StatusPublished
Cited by4 cases

This text of 550 S.W.2d 113 (NEI Corp. v. Glenn McMillan Developing Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
NEI Corp. v. Glenn McMillan Developing Co., 550 S.W.2d 113, 1977 Tex. App. LEXIS 2844 (Tex. Ct. App. 1977).

Opinion

CIRE, Justice.

This appeal is from a judgment for plaintiff on its suit for damages for breach of contract.

On March 30, 1973 a contract for the sale of land was entered into between appellee Glenn McMillan Developing Co. (McMillan) as vendor and appellant NEI Corp., Texas (NEI, Texas) as purchaser. Performance of the contract was guaranteed for McMillan by its parent company, appellee Westches-ter Corp. and performance for NEI, Texas was guaranteed by its parent company, appellant NEI Corp., a Delaware corporation. The subject of the sale was the remaining undeveloped portion of a large tract of land in northwest Harris County, known as the Northampton Subdivision, development of which had been begun by McMillan. This was valuable residential property, in a wooded area on rolling land, through the center of which Willow Creek meandered across the subdivision from west to east. The contract called for McMillan to end its development of the subdivision and transfer all of its title and interest in the subdivision, including the land and development offices, to NEI, Texas.

The total amount of land included in the contract was not an issue in the case. It was admitted in NEI, Texas’s second amended sworn answer that the contract was for the sale of approximately 946 acres of land, to be conveyed in phases, as called for in the opening clause of the contract:

Seller agrees to sell and convey to Purchaser in phases, and Purchaser agrees to purchase and accept conveyance in phases, of the Subject Property as herein defined under the terms and conditions as herein set forth as follows

The sale of Phase I was completed and is not involved in this suit. . Phase II covered an area north of Willow Creek and had been platted for development. Phase III was an area of indeterminate size, lying within “base tracts,” and consisted of a flood plain along Willow Creek. This phase was left without an exact acreage, because the extent of the flood plain had not been determined at the time of signing the contract. Because the flood plain would be unsuitable for homesites, it was contemplated that the land in this area would be sold at $1,500.00 per acre, a price much lower than the cost of the land in the other phases. The land in Phase III was to be developed for recreational uses, including a golf course. The contract described this area:

The property which is the subject matter of PHASE III of this Contract is the land lying along the North and South banks of Willow Creek within the base [115]*115tracts as defined in Exhibit “A” which is (1) not included within the perimeter boundaries of any subdivision approved for recording in Harris County, Texas; and (2) lies below the contour established or approved by the Harris County Flood Control District as evidencing the high water level within the base tracts.

Finally, Phase IV and subsequent phases were to be carved out of new sections of Northampton Subdivision to be platted by McMillan out of the base tracts. The contract also provided for unrestricted reserves to be set aside within the base tracts. These were shown on a large map of Northampton Subdivision attached to the contract as Exhibit B. The reserves would be available for apartments, townhouses, or commercial or business purposes, and would be included only at NEI, Texas’s option. The map outlined the location of the base tracts as well as the reserves, which were wholly within the base tracts.

The base tracts were described in Exhibit A, attached to the contract and made a part thereof, as:

Base Tract No. 1 — That portion of the John Brock Survey, Abstract 122, lying North of NORTHAMPTON SECTION THREE as reflected in Volume 169, Page 112 of the Map Records of Harris County, Texas, and NORTHAMPTON SECTION FIVE as reflected in Volume 188, Page 29 of the Map Records of Harris County, Texas; and lying East and North of that certain 120 acre tract out of the Westerly portion of the John Brock Survey conveyed to W. A. Kirkland, et al, by Deed recorded in Volume 5865, Page 131 of the Deed Records of Harris County, Texas.
Base Tract No. 2 — 19.7077 acres of land in the Levi Gosling Survey, Abstract 280, Harris County, Texas, and being more particularly described by metes and bounds as Tract No. 2 in that certain Deed dated October 14,1964, from Lonnie D. Harrison, Trustee, to W. Harold Sellers, Trustee, recorded in Volume 5865, Page 109 of the Deed Records of Harris County, Texas, LESS AND EXCEPT:
a. A portion of the dedicated right of way for Dovershire Road as shown on the plat of NORTHAMPTON SECTION FOUR recorded in Volume 171, Page 75; and,
b. A portion of a 7 acre tract conveyed to Norchester Municipal Utility District off the South end of Base Tract 2.
******
Base Tract No. 3 — 13.6527 acre tract of land out of the Levi Gosling Survey, Abstract 280, Harris County, Texas, and being more particularly described by metes and bounds as Tract 3 in that certain Deed dated October 14,1964, from Lonnie D. Harrison, Trustee, to W. Harold Sellers, Trustee, recorded in Volume 5865, Page 109 of the Deed Records of Harris County, Texas, LESS AND EXCEPT:
a. A portion of the dedicated right of way for Dovershire Road as shown on the plat of NORTHAMPTON SECTION FOUR recorded in Volume 171, Page 75; and,
b. A portion of a 7 acre tract conveyed to Norchester Municipal Utility District off the South end of Base Tract 3.

This litigation centers around the flood plain which determined the extent of Phase III. It is undisputed that, at the time the contract was entered into, the parties believed the flood level would be established at an elevation of 118 feet. At that elevation the flood plain would contain some 182 acres. In September 1973, the Commissioners Court of Harris County established flood control regulations which set the flood plain elevation in the area at approximately 129 feet. This area encompassed over 400 acres of land, including much or all of the land to be included in Phase II.

NEI, Texas was unwilling to buy such a large tract of land which could not be used for residential homesites. The parties entered into negotiations in which NEI, Texas sought to redefine the area of Phase III and to abrogate its obligation to purchase Phase II. The parties agreed to alter Phase III to [116]*116297 acres. McMillan had a warranty deed for that acreage prepared and NEI, Texas delivered its earnest money in the amount of $127,304.49 to a title company for closing. However, they could not agree on the acreage to be included in Phase II. McMillan then sued NEI, Texas and NEI Corp. to recover damages in the amount of $898,-660.00 for breach of contract.

NEI, Texas counterclaimed against McMillan and joined Westchester Corp. as a third-party defendant, claiming McMillan’s tender of more acreage in Phase III than originally contemplated constituted an abandonment of the contract, and prayed for liquidated damages of $898,660.00.

Trial was to a jury, at which testimony was given in support of the facts set out above. Also introduced into evidence were McMillan’s warranty deed for 297.9394 acres of land, purported to be the entire area of Phase III, and NEI, Texas’s corporate resolution authorizing the execution of a note for $446,909.10 for the purchase of Phase III.

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Related

Reitmeyer v. Clawson
634 S.W.2d 379 (Court of Appeals of Texas, 1982)
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Wilson v. Worley
562 S.W.2d 22 (Court of Appeals of Texas, 1978)

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Bluebook (online)
550 S.W.2d 113, 1977 Tex. App. LEXIS 2844, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nei-corp-v-glenn-mcmillan-developing-co-texapp-1977.