Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-85-02541/USCOURTS-ca10-85-02541-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

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IN THE UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

HESTON OIL COMPANY, 

Plaintiff-Appellee, 

v. No. 85-2541 

FILED 

United St.ates Court of Appeals 'renth Circuit 

APR O 61989 

ROBERT L. HOECKER 

Clerk 

WILLIAM LLOYD WALSH, 

Defendant-Appellant. 

(D.C. No. 82-C-1100-E 

N.D. Okla.) 

ORDER AND JUDGMENT* 

Before HOLLOWAY, Chief Judge, ANDERSON, Circuit Judge, and BROWN, 

District Judge** 

This case concerns joint operations on oil and gas prospects 

by the defendant-appellant Walsh with the plaintiff-appellee 

Heston Oil Company (Heston). From 1980 through 1983 Walsh and 

Heston executed contracts to cover the costs of exploring and 

developing 29 oil and gas prospects in Oklahoma, Kansas and Texas. 

* This order and judgment has no precedential value and shall not 

be cited, or used by any court within the Tenth Circuit except for 

purposes of establishing the doctrines of the law of the case, res 

judicata, or collateral estoppel. 10th Cir. R. 36.3. 

** The Honorable Wesley E. Brown, United States District Judge for 

the District of Kansas, sitting by designation. 

Appellate Case: 85-2541 Document: 010110035041 Date Filed: 04/06/1989 Page: 1 
Heston filed this action to recover payments due from Walsh 

for (l} the purchase price on 22 East Texas Prospects and for (2) 

the acquisition, drilling, operating, and related costs for these 

and other prospects. After a nonjury trial the district court 

found that Walsh had fully paid, when properly credited for his 

payments, the purchase price of the East Texas Prospects, but held 

that he owed Heston $221,228 for the latter claim. Walsh appeals 

only the issue of Heston's entitlement to the $221,228, plus 

interest. We affirm the award in this amount. 

I 

In 1980 and 1981 Walsh and Heston were involved in developing 

seven oil and gas wells, three in Kansas and four in Oklahoma. 

Heston operated these seven wells. One of the Oklahoma wells was 

the Weibert 9-1 (Weibert}. 

On December 2, 1981 and April 27, 1982 Heston and Walsh 

entered into two agreements (Agreements} concerning the 22 East 

Texas oil and gas prospects. In these Agreements Heston assigned 

to Walsh an undivided 18.75% interest in the East Texas Prospects 

for a total purchase price of $1,643,378. Under the Agreements 

Walsh agreed to pay Heston $1,000,000 upon receipt of the 

assignment of the leasehold interest, such payment not to be made 

before February 5, 1982. Additional payments agreed to were 

$321,689 due on or before March 5, 1982, and $321,689 on or before 

April 5, 1982. 

Walsh made the first payment 

February 10, 1982 and it appears to 

remaining payments were not timely. 

for $1,000,000 on or about 

have been timely. The 

How credits for them were 

applied form the basis for this dispute. On about March 17, 1982, 

2 

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Walsh paid Heston $100,000 by wire transfer. This sum was applied 

to the East Texas Prospects, though it was not timely nor for the 

full amount due at that time from Walsh. Walsh did not make any 

payment on the amount due on April 5. On April 7 Singletary, 

president of Heston, sent Walsh a telegram indicating that due to 

critical banking commitments which Heston had due on April 15, 

Heston was in "dire need of your assistance in paying the 

remainder of the overdue balance on the East Texas deal. Also we 

are overdue monies for your interest in the Weibert well in Custer 

County, Oklahoma now in the completion phase." II R. 49. In 

addition to the amount due on the East Texas Prospects, Walsh owed 

Heston for the drilling, operating, and additional leasehold 

acquisition costs on other wells, including the Weibert. 

On about the same date Singletary sent the telegram, he 

talked by telephone with Hill who was Walsh's general counsel and 

authorized to act for him. As a result of Singletary's repeated 

request for payment, Hill agreed to attempt to send Heston 

$400,000 on or about April 15. On this date Walsh, through Hill, 

wire transferred this amount to Heston's bank in Tulsa. Also on 

April 15, Hill sent a mailgram to Heston ''to advise of wire 

transfer made 4/15/82, of $400,000 to your account Utica 

National per our agreement." The sum transferred was applied by 

Heston to Walsh's indebtedness as follows: $33,812.43 to the East 

Texas Prospects; $317,166.28 to the Wiebert account; and 

$49,921.29 for operating and drilling expenses for other wells in 

which Walsh was a participant. On April 29 Walsh sent a check in 

the amount of $143,378.62 marked for application to his 

indebtedness on the purchase of the East Texas Prospects and 

3 

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marked as "final payment." This payment was applied to this 

account as requested by Walsh. 

Thereafter there was a meeting between Hill and Singletary 

accompanied by Mitchell (another Heston official) to discuss how 

Walsh could pay his indebtedness on various prospect accounts. A 

series of payments followed, which can be summarized as: 

eayment date amount instruction from Walshia22lication 

(on or about) 

May 5, 1982 $50,000 instructed for & applied to Weibert 

June 14, 1982 $25,000 no instructions, applied to East 

Texas 

June 23, 1982 $25,000 instructed for & applied to Wiebert 

On September 14 Heston's attorneys sent a demand letter to 

Walsh requesting immediate payment of all sums due from Walsh to 

Heston. The letter warned that legal action would result if the 

sums were not paid or other satisfactory arrangements made by 

September 28. On about September 24 Walsh and Hill met with 

Heston representatives to discuss Walsh's indebtedness, at that 

time in the amount of $663,412.46, which Walsh acknowledged as the 

invoices he was showing in his books. IV R. 388. 

Then the legal actions commenced. The first, the instant 

case, was filed in November 1982 for recovery only for the 

outstanding debt of $309,656 on the purchase of the interests in 

the East Texas Prospects. The second suit was filed in December 

1982 in the district court of Custer County, Oklahoma, and related 

solely to Walsh's debts on the Weibert well. Heston sought to 

recover $338,941 there. 

4 

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On February 11, 1983, Walsh and Heston executed a settlement 

agreement (Settlement) on the Custer County lawsuit. Walsh agreed 

to pay Heston $300,000 in return for a release of all other sums 

owed by Walsh on the Weibert up to and through February 9, 1983 

and a dismissal with prejudice. The Settlement did not release 

costs or expenses incurred subsequent to February 9, 1983, nor 

those which had not been billed to Heston or which Heston had not 

yet billed to Walsh. Appellant's Brief, Exh. A. 

On February 14, 1983 Heston filed a bankruptcy petition under 

Chapter 11. On about February 25 Hill informed Ritter of Heston 

in a telephone conversation that Walsh believed that he had fully 

paid the purchase price for the East Texas Prospects at issue in 

this lawsuit. II R. 142; V R. 507-508. According to Walsh, the 

entire $400,000.00 payment of April 15, 1982 should have been 

applied to the East Texas Prospects. Consequently on July 16, 

1984, Heston filed an application to amend its complaint to 

include a second claim in response to Walsh's defense that the 

East Texas Prospects purchase price had been fully paid. 

Count two of the amended complaint asserted a claim against 

Walsh for the amount that would be outstanding on all the 

prospects if the court determined that Walsh's $400,000 payment 

should have been credited solely to the purchase of the East Texas 

Prospects. Heston sought $221,288 plus interest for the 

acquisition, drilling, operating and other costs on other 

properties and the East Texas Prospects. 

At a pretrial conference the trial court overruled Walsh's 

objections to Heston's application to amend. The court granted 

the parties leave to conduct additional discovery related to (1) 

5 

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additional acquisition, drilling, operating and other costs 

associated with the East Texas Prospects and other prospects in 

the amount of $34,509.90; and (2) the sum of $288,914.45 allegedly 

owed by Walsh for his purchase of the interest in the East Texas 

Prospects. 

After a nonjury trial the trial judge concluded that Heston 

should have applied Walsh's $400,000.00 payment of April 15, 1982 

entirely to the purchase price of the East Texas Prospects. The 

court determined that Heston was entitled to recover 1 $221,288, 

plus interest, from Walsh for the additional costs on the East 

Texas and other prospects as alleged in the amended complaint. 

The court's reasoning appears to have been as follows: The 

$400,000 payment of Walsh should have all been applied to the East 

Texas Prospects accounts. Making that correction alone, however, 

would leave inequitable balances in the various accounts. The 

$317,166 item, for example, applied as a credit to Walsh's account 

on the Weibert was thought by Heston to have thus reduced by that 

amount the sum settled by Heston with Walsh in the Settlement. 

Thus a further adjustment was required by allowing recovery on 

some of the Weibert account. 2 

The court denied Walsh any recovery against Heston on his 

affirmative defenses and counterclaims. Walsh appeals, but only 

1 

A typographical error states the amount as $221,228.05 in one 

part of the order, but the court's calculations for interest are 

based on the $221,288.05 sought in the amended complaint and shown 

in Exhibit 49. Hence we use the latter figure, but affirm in the 

amount entered in the judgment, $221,228.05. 

2 

As we explain, Part IV infra, actually Heston seems to have 

been entitled to a larger judgment. Heston has not crossappealed, however, and we do not go into this matter. 

6 

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from the $221,288 judgment for Heston. The appeal focuses on the 

award of $221,228 to Heston. Walsh argues for reversal 

essentially on the grounds that the trial court erred when it (1) 

granted Heston leave to amend the complaint and limited additional 

discovery, denying due process by allowing recovery for debts 

previously compromised and settled and denying Walsh notice and an 

opportunity to defend; (2) admitted extrinsic evidence related to 

the unambiguous Settlement in the state district court and 

construed that agreement to settle and release only approximately 

$338,000 in costs related to the Weibert well; and (3) stated 

findings and conclusions which do not comply with Rule 52(a), Fed. 

R. Civ. P. 

II 

Walsh argues that leave to amend was improperly granted where 

suit had been filed for twenty-two months, extensive discovery had 

been completed, and the trial date was thirty-four days away. In 

allowing Heston to add the alternative count two, the court 

permitted new theories of recovery to enter the case. To prepare 

a defense to these new theories would have required the discovery 

process to begin anew; the limited discovery precluded Walsh from 

adequately preparing his defense. Walsh also claims that the 

allegations in count two failed to provide notice of which 

prospects Heston sought recovery on and were broad enough to 

include matters resolved in the Settlement in the state action. 

By allowing recovery on the claims addressed in the Settlement, 

the court permitted litigation of ''the same question twice." 

Walsh says that the lack of notice, limitation on discovery, and 

re-litigation of the same Weibert claim denied him due process. 

7 

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We are guided by the Supreme Court's directive in Fernan v. 

Davis, 371 U.S. 178 (1962), that Rule 15(a), Fed. R. Civ. P. 

mandates that leave to amend be freely given: 

In the absence of any apparent or declared reason -

- such as undue delay, bad faith or dilatory motive 

on the part of the movant, repeated failure to cure 

deficiencies by amendments previously allowed, 

undue prejudice to the opposing party by virtue of 

allowance of the amendment, futility of amendment, 

etc. the leave sought should, as the rules 

require, be "freely given." 

Id. at 182; 3 J. Moore, Moore's Federal Practice, , 15.02 at 15-13 

(2d ed 1987); see United States v. Hougham, 364 U.S. 310, 316-317 

(1960); Childers v. Independent School District No. 1 of Bryan 

County, 676 F.2d 1338, 1343 (10th Cir. 1982). The determination 

whether to grant leave to amend is within the discretion of the 

trial court; we reverse only for an abuse of discretion. 

Leaseamerica Corporation v. Eckel, 710 F.2d 1470, 1473 (10th Cir. 

1983) (leave to amend denied if it would be prejudicial to the 

opposing party.) 

Walsh argues that it is error to allow the amendment by 

Heston to seek recovery for all claims against him because Heston 

did not maintain one open account for Walsh, but credited and 

debited some 29 accounts for each of the prospects which the 

parties were jointly developing. Walsh argues that "The relative 

merits of the costs and expenses associated with each prospect is 

unique and separate in and of itself and does not arise from the 

same operative facts as the initial purchase price of the East 

Texas Prospects." Appellant's Reply Brief, 5-6. 

The record fails to reveal that either Heston or Walsh 

maintained such a discrete accounting method so as to preclude 

8 

Appellate Case: 85-2541 Document: 010110035041 Date Filed: 04/06/1989 Page: 8 
transactions on one prospect account from affecting the account of 

another prospect. While Walsh accuses Heston of manipulating his 

payments and credits to create the indebtedness claimed in the 

second count of the amended complaint, we note that Walsh also 

caused similar transfers among the accounts. For instance, Walsh 

generated a credit for $52,273.12 when he returned the Currie 

prospect to Heston. Walsh asked that this amount be credited to 

his indebtedness on the East Texas Prospects. II R. 125. He 

requested this after the state and federal actions were filed, but 

before the Settlement was reached in the state action. Id.; III 

R. 208-210. 

Both parties apparently operated in ignorance of each other's 

accounting method as it related to specific entries and 

indebtedness for each of the 29 accounts. They repeatedly 

generally addressed an aggregate sum as to the amount which Walsh 

owed to Heston. II R. 26, III R. 179-182; Exh. 7, 17. Some 

payments by Walsh were applied to specific accounts when he 

requested this. 

applied payments 

trying to follow 

payments to the 

In the absence of directives from Walsh, Heston 

and credits to different accounts, generally 

the accounting practice of first applying 

most delinquent accounts. Neither the invoices 

which Heston billed to Walsh nor the recorded communications from 

Walsh to Heston show a pattern of precise accounting as to each of 

the 29 prospect accounts. What is more in evidence in the 

communications and demand letters is a focus on the total 

indebtedness of Walsh to Heston. 

The court focused upon the underlying aggregate indebtedness 

as Heston's claims and Walsh's defenses each involved transactions 

9 

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spanning more than the East Texas Prospects and their respective 

contracts. While the 29 prospects which the parties were 

developing involved discrete contracts and operative facts, the 

course of dealing between Walsh and Heston shows that the 

subsequent conduct and contracts, including the Settlement, mixed 

the transactions. In these circumstances we do not find any abuse 

of discretion in granting leave to amend, there being no showing 

of prejudice. Amoco Production Co. v. Guild Trust, 636 F.2d 261, 

266 (10th Cir. 1980), cert. denied, 452 U.S. 967 (1981). 

The court properly restricted the discovery to claims and 

defenses arising from the other properties and from the Weibert, 

if not included in the terms of the Settlement. The procedures 

followed by the trial court did not subject Walsh to a trial 

lacking in fundamental fairness. Beck v. Quiktrip Corporation, 

708 F.2d 532, 536 (10th Cir. 1983). 

III 

Walsh argues that since neither party said that the 

Settlement was ambiguous, the court erred in admittng extrinsic 

evidence regarding the negotiations and circumstances related to 

execution of the agreement and by construing it to settle and 

release only some $338,000 in Weibert claims. According to Walsh, 

the admission of the evidence violated the parol evidence rule, 

injected confusion and was unfairly prejudicial. Rule 403, Fed. 

R. Evid. 

By a motion in limine and at trial Walsh repeatedly objected 

to admission of the testimony of Atkinson, an attorney and 

executive vice president of Heston, regarding the Settlement. 

Atkinson did not negotiate for Heston but acted as the liaison 

10 

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between Heston's president and the attorney for the law firm 

representing Heston in the state action. Atkinson's testimony 

concerned his role in drafting the petition for that suit, the 

lien and the post-Settlement release of lien and a conversation 

Atkinson had with Walsh's attorney the day after the Settlement 

was executed by Heston. 3 II R. 132-146. Walsh argues that 

Atkinson lacked the personal knowledge required by Rule 602, Fed. 

R. Evid. 

The court overruled Walsh's objection that Atkinson's 

testimony was "an attempt to establish liability by admitting 

negotiation of settlement in a former case." Id. at 141: 

I'm going to overrule the objection since we do not 

have a jury. And the Court will be addressing 

these matters both in findings of fact and 

conclusions of law. It may tie in with some 

positions urged by the parties in regard to what 

was covered. Now, we have a document compromise 

settlement agreement. Exhibit No. 10, that's 

comprehensive. It should cover everything. But it 

may be of some value to understand what the parties 

were addressing at the time this was executed. It 

may have some relevance. At this point I'm going 

to overrule your objection. And if the testimony 

should not be considered by the Court in its 

findings it will not be. 

Id. at 137-138. In its order the court found no oral agreement 

was reached by the parties which would alter the obligations set 

forth in the two contracts for the East Texas Prospects. The 

Agreements were found to be complete and unambiguous. 

Walsh's argument that the Atkinson testimony on the 

Settlement was not relevant and was prejudicial ignores the 

court's primary function: to ascertain the intent of the parties 

3 

Walsh was represented in the state action by the same 

attorney as in this action. 

11 

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with regard to the Settlement. First, the court must engage in 

some scrutiny before determining that a contract is unambiguous 

and, in any event, it should consider the surrounding 

circumstances in construing the agreement. "[T]he contract in any 

event had to be appraised in view of the surrounding circumstances 

known to the parties at the time of its execution and these 

reasonably could be looked to without violating the parol evidence 

rule even though the contract were not deemed ambiguous." Evensen 

v. Pubco Petroleum Corporation, 274 F.2d 866, 871 (10th Cir. 

1960); Liberty National Bank & Trust Co. v. Bank of America 

National Trust & Savings Assoc., 218 F.2d 831, 840 (10th Cir. 

1955) (to ascertain intention court should put itself in the place 

of the parties and consider the writing itself, its purpose, and 

circumstances leading to and attending execution of contract}; see 

generally 4 Williston on Contracts, § 601 at 306 (1961) (contracts 

should be construed in light of circumstances surrounding the 

parties at time of execution of the contracts). Second, where 

earlier contractual liabilities may be affected by a subsequent 

agreement, such as the Settlement here, the court should consider 

the circumstances resulting in the latter contract. The court 

must consider the parties' subsequent conduct or course of action 

and whether it evidences an interpretation to be followed. Id. at 

§ 600A at 299. 

Walsh's argument to exclude the evidence is incorrect as to 

the procedure the court should follow and too preclusive here 

since the claims and defenses relate to contracts other than those 

on the purchase of the East Texas Prospects. The court as the 

fact finder articulated an express need to understand what the 

12 

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parties were addressing in the Settlement. There was no jury to 

confuse, a concern of Rule 403, and the court stated it would 

exclude from its findings the testimony which should not be 

considered by the Court. "Certainly we do not reason in a 

vacuum." Century Refining Company v. Hall, 316 F.2d 15, 21 (10th 

Cir. 1963). Where there are unambiguous original contracts 

followed by a contract which affects the viability of the claims 

and defenses, "We think it appropriate to look at the latter for 

the full meaning of the former." Id. at 21. 

The parties' concurrence that the Settlement is unambiguous 

does not preclude evidence where each side argues different 

consequences follow from the executed document. Here, Heston 

argues that only some $38,000 was waived when it accepted the 

$300,000, while Walsh argues that Heston wrote off some $379,328 

in debt related to the Weibert development. The court's admission 

of evidence and its inquiry during trial were necessary to 

ascertain the intent of the parties in reaching the Settlement: 

Words, written or oral, cannot apply themselves to 

the subject matter. The expressions and general 

tenor of speech used in negotiations are admissible 

to show the conditions existing when the writing 

was made, the application of the words, and the 

meaning or meanings of the parties. Even though 

words seem on their face to have only a single 

possible meaning, other meanings often appear when 

the circumstances are disclosed. In cases of 

misunderstanding, there must be inquiry into the 

meaning attached to the words by each party and 

into what each knew or had reason to know. 

Restatement (Second) of Contracts, § 214 comment b (1981) 

(emphasis added). 

What the parties knew at the time of the Settlement supports 

the court's ruling. In the damage award, the trial judge allowed 

13 

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Heston recovery of amounts by which Heston had incorrectly reduced 

the Weibert account before the Settlement. Walsh contends the 

Settlement unambiguously prohibited Heston from recovering 

anything on the Weibert account in this suit. Consequently, Walsh 

argues the trial judge erred when he admitted extrinsic evidence 

of what the parties intended the Settlement to cover and when he 

allowed Heston recovery on the Weibert account. 

The Settlement purported to 

acquit and forever discharge WM. LLOYD WALSH .. from any and all claims or causes of action of any 

kind whatsoever, at common law, statutory or 

otherwise, which [Heston] has or might have, known 

or unknown, now existing or that might arise, 

directly or indirectly attributable to the cost 

incurred in .•. operating the [Weibert] well up 

to and through February 9, 1983, it being intended 

to release all claims of any kind which [Heston] 

might have against those hereby released whether 

asserted in the above captioned suit or not. 

Although Walsh's argument that the express terms of the 

Settlement prohibit Heston from recovering any pre-February 9, 

1983 costs on the Weibert well appears sound, the trial judge 

found that: 

at the time of the settlement on the Weibert 9-1 

well, there was an outstanding indebtedness on that 

well of approximately $338,000 due Heston. There 

was no settlement or release of any sums in excess 

of approximately $38,000 on the Weibert 9-1 well. 

The court finds that both parties were aware of the 

limitations of the settlement. 

In light of the $300,000 paid by Walsh in accord with the 

Settlement, this conclusion seems proper. Implicit in the trial 

court's order was a finding that a mutual mistake of fact underlay 

the Weibert Settlement. Only by such a finding could the trial 

judge in effect reform the written agreement to not dispose of 

14 

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$317,166 of invoices on the Weibert well. "When the execution of 

a written contract is procured . through mutual mistake 

..• and the contract fails to express the real agreement and 

intent of the parties, a court of equity will grant reformation of 

the instrument to speak the truth." Boettler v. Rothmire, 442 

P.2d 511, 514-515 (Okla. 1968); 15 Okla. Stat. Ann. § 63 and 

§ 156. 

Heston and Walsh both assumed that $338,000 was the correct 

Weibert account balance. With respect to the $317,166, Heston was 

unaware that this reduction of the Weibert account was improper; 

Walsh was unaware that this reduction had been made at all. 

Therefore they were both unconsciously ignorant of the correct, 

higher Weibert account balance. When the trial judge found the 

$317,166 of the $400,000 payment by Walsh should originally have 

been applied to reduce the balance of the East Texas accounts, he 

ordered Heston to reduce the East Texas accounts. And since both 

parties mistakenly believed the balance of the Weibert account at 

the Settlement date was only $338,000, the judge found that the 

$317,000 of invoices Heston had erroneously deducted from the 

Weibert account were not really understood by Heston and Walsh to 

be covered by that agreement. Consequently, he in effect reformed 

the Settlement to exclude those amounts. 

The record fully supports the trial court's findings and 

conclusions. We hold that the judge did not err when he admitted 

evidence of the parties' understanding of the scope of the 

agreement nor when he allowed Heston to recover an amount 

including unsettled amounts of the Weibert account. 

15 

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IV 

As a final basis for reversal Walsh argues that the trial 

court's findings and conclusions failed to comply with Rule 52(a), 

Fed. R. Civ. P., as they do not state a sufficient factual basis 

for the award to Heston. Walsh also says there is insufficient 

evidence in the record to support the award of $221,288 plus 

interest. 

Our review of the trial court's findings of fact is under the 

clearly erroneous standard. 4 The standard applies even though the 

trial court's findings do not rest on credibility determinations 

but are based instead on physical or documentary evidence or 

inferences from other facts. Anderson v. Bessemer City, 470 U.S. 

564, 574 (1985). To meet the requirements of Rule 52(a), the 

court must state findings that are sufficient to indicate the 

factual basis for the ultimate conclusion. Colorado Flying 

Academy, Inc. v. United States, 724 F.2d 871, 877-878 (10th Cir. 

1984), cert. denied, 476 U.S. 1182 (1986). 

The trial judge's Order states the following basis for his 

award in his conclusions of law: 

4 

5. The Court finds Walsh owes Heston the sum 

of $221,228.05 for additional lease acquisitions, 

drilling operating and other costs on the other 

properties and the East Texas Prospects. 

We discuss below the conclusions of law which state the 

essence of the trial court's reasoning. While denominated 

conclusions of law, the judge said in the Order that the 

conclusions, insofar as they may be deemed findings of fact, are 

incorporated in the findings. We regard a finding or conclusion 

for what it is, regardless of the labeling of the trial court. 9 

C.A. Wright & A.R. Miller, Federal Practice and Procedure: Civil 

§ 2579, at 708 & n.24 (1971); Featherstone v. Barash, 345 F.2d 

246, 250-51 (10th Cir. 1965); Houck v. Hinds, 215 F.2d 673, 676 

(10th Cir. 1954). 

16 

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6. The Court finds Walsh is entitled to a 

credit for full payment under the Agreements for 

his interest in the East Texas Prospects and is 

entitled to debit all outstanding unpaid invoices. 

Walsh is credited with all payments he made which 

should be attributed to the other properties and 

the East Texas Prospects for additional lease 

acquisition, drilling and operating. 

Although the trial judge did not provide specific numbers in 

conclusion 6, apparently he thought Heston's Exhibit 49 supported 

the result he described. It contains the exact amount he awarded 

Heston. We think the above conclusions, which implicitly 

incorporate Exhibit 49, are sufficiently detailed to afford a 

clear understanding of the ground upon which the court based its 

damage award. 

Walsh further argues that if the trial judge relied on 

Exhibit 49 then his award is clearly erroneous because Exhibit 49 

does not reach the result described in conclusion 6. We agree 

with Walsh that Exhibit 49 does not agree with the result 

described in conclusion 6, but the errors in the final award were 

in favor of Walsh, not Heston. 

From conclusion 6 the intent of the trial judge's damage 

award is clear. He intended to award Heston the amounts Walsh 

owed on each of the accounts. He contemplated awarding Heston the 

$317,166 which he found, due to the mutual mistake underlying the 

Settlement, Walsh still owed on the Weibert account. Finally, he 

did not contemplate any award to Heston on the East Texas 

Prospects accounts because he treated Walsh as having fully paid 

them, with the crediting of the $400,000 payment being properly 

made. The trial judge thought Heston's Exhibit 49 would, in 

17 

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substance, achieve this result, so he awarded Heston $221,228.05, 

appearing on that Exhibit. 

Upon careful examination, however, Exhibit 49 does not 

achieve the result intended by the trial judge. The exhibit was 

prepared by Heston on the assumption they would recover nothing on 

the Weibert account. In an attempt to mitigate the effect of this 

limitation on their recovery, Heston moved several credits from 

other accounts to the Weibert account. The effect of those 

accounting entries was to increase the balances in the accounts 

that Exhibit 49 assumed Heston could recover on from Walsh, while 

decreasing the balance in the Weibert account which Exhibit 49 

assumed Heston would not recover. Walsh claims that this was 

''juggling" and erroneously increased Heston's damages. We 

disagree. On the contrary, by using Exhibit 49 as the measure of 

Heston's damages, the trial judge awarded Heston less damages than 

his findings in the Order indicate he intended. 

If the trial judge had followed the theory of his Order, he 

would have awarded Heston damages in the following amounts: 

$317,166 on the Weibert account, representing amounts not 

comprehended in the Settlement; $2,828 on the Weibert account, 

representing expenses incurred after the Settlement; and the 

correct balances of the remaining accounts. Obviously, this would 

have given Heston substantially more than $221,228 in damages. 

Consequently, the errors in the trial judge's damage 

calculation occasioned by Heston's Exhibit 49 inured to Walsh's 

benefit, not Heston's. But since Heston has not cross-appealed, 

we do not address those apparent errors. 

18 

Appellate Case: 85-2541 Document: 010110035041 Date Filed: 04/06/1989 Page: 18 
Accordingly, we hold that the trial court met the 

requirements of Rule 52(a) and that there was sufficient evidence 

to support the findings and the judgment. 

A F F I R M E D. 

19 

ENTERED FOR THE COURT 

William J. Holloway, Jr. 

Chief Judge 

Appellate Case: 85-2541 Document: 010110035041 Date Filed: 04/06/1989 Page: 19