Guardian Trust Co. v. Bauereisen

• Decision Date: 30 November 1938
• Docket Number: No. 7201.,7201.
• Citation: 121 S.W.2d 579
• Parties: GUARDIAN TRUST CO. v. BAUEREISEN.
• Court: Texas Supreme Court

Page 579

121 S.W.2d 579

GUARDIAN TRUST CO. v. BAUEREISEN.

No. 7201.

Supreme Court of Texas.

November 30, 1938.

Error to Court of Civil Appeals of First Supreme Judicial District.

Action by R. J. Bauereisen against the Guardian Trust Company, independent executor under the will of W. T. Eldridge, deceased, and another, for breach of contract. Judgment for plaintiff against the executor was affirmed by the Court of Civil Appeals, 99 S.W.2d 357, and the executor brings error.

Judgments of the trial court and of the Court of Civil Appeals reversed, and judgment rendered that plaintiff take nothing.

Baker, Botts, Andrews & Wharton, G. G. Gannon, John T. McCullough, and C. R. Wharton, all of Houston, for plaintiff in error.

A. D. Dyess, David T. Searls, Vinson, Elkins, Weems & Francis, Joel W. Cook, and William A. Vinson, all of Houston, for defendant in error.

Peareson & Peareson, of Richmond, for Irrigation Co.

HICKMAN, Commissioner.

As this case comes to this court there are but two parties, R. J. Bauereisen, and Guardian Trust Company, independent executor in the will of W. T. Eldridge, deceased. Bauereisen was awarded judgment in the trial court against the executor for $40,000 damages for the breach of a contract executed by him and Eldridge. That judgment was affirmed by the Court of Civil Appeals, its opinion being reported in 99 S.W.2d 357.

Two questions are brought forward in the application for writ of error, but we have concluded that it will be necessary to consider but one of them and our statement will be limited to such facts as are thought to throw light upon that question.

W. T. Eldridge was a man of large business affairs. The details of his business interests are not fully disclosed by the record, but it appears that he was a large stockholder in a corporation known as Sugarland Industries. That corporation had subsidiaries, among them being Texas Fig, Inc., which operated nine fig plants. Most of Eldridge's business was carried on through corporations, but he owned in his own right a majority of the stock in a corporation known as Nueces Lands Irrigation Company. He also owned some liens against the properties of that company. The Irrigation Company owned about 8,500 acres of land in Dimmit County and was subdividing, improving and selling the land in small tracts. Bauereisen, who was Eldridge's son-in-law, lived in Chicago, Illinois, and was engaged in the business of drilling water wells. He had two drilling rigs used by him in his business. During the year 1928 Eldridge took up with Bauereisen the question of employing him to come to Texas and drill some wells on the lands of the Irrigation Company. After some correspondence, followed by a personal visit by Bauereisen to Texas, two contracts were executed contemporaneously and as a part of the same transaction, one with the Irrigation Company and the other with Eldridge. Since the decision of this case turns upon the construction of these contracts, they are here copied in full.

First Contract.

"This agreement entered into this 26th day of July 1928, by and between Nueces Lands Irrigation Company, a corporation organized under the laws of the State of Texas, with its principal office in Sugar Land, Fort Bend County, Texas, hereinafter called Company, and R. J. Bauereisen hereinafter called Second Party, Witnesseth:

"I. The Company agrees to employ Second Party as its General Manager for a period of five (5) years, beginning September 1st, 1928, and to pay Second Party a salary of Seven Hundred Dollars ($700.) per month, and to provide Second Party with a house suitable for the occupancy of Second Party and his family on the company's properties in Dimmit County, Texas.

"II. Second Party hereby accepts said employment and agrees to devote his best efforts and entire time to the management of the affairs of the Company, it being contemplated, however, that company will permit Second Party to contract for the drilling of wells or other work in Texas, provided such contracts can be and are made and performed without in any way causing Second Party to neglect his duties as General Manager of the Company. Second party agrees that he will not contract or undertake any such work without first receiving the express written consent of the Company through its President.

"III. Second Party, being the owner of one drilling rig and cable tools, hereby agrees to move same to the property of the Company in Dimmit County, Texas, and to use same in the drilling of wells and in connection with other well work on said property, in accordance with the Company's best interests, the Company to pay all costs of such drilling and such work, and in addition thereto Company to pay Second Party at the rate of 60¢ per foot for each foot drilled by said rig and tools, and at the rate of $10.00 per day for rig work other than drilling, it being estimated that such payments will compensate Second Party for the repairs, replacements and depreciation on said rig and tools. Company also agrees to pay the freight and other costs of transporting said rig and tools from present location to said property in Dimmit County, Texas.

"IV. The Company agrees to reimburse Second Party for the expense (exclusive of damage) of moving Second Party's household belongings and office furniture and equipment from Chicago to Company's property in Dimmit County, Texas.

"In testimony Whereof parties hereunto sign their names on the day and year first above written.

                         "Nueces Lands Irrigation Company
                         "By: (Signed) W. T. Eldridge
                                          President
                "Attest
                "(Signed) H. E. Thompson
                    "Secretary (Seal)."
                             "Second Contract
                             "(Signed) R. J. Bauereisen,
                                      "Second Party.
                

"This agreement entered into this 26th day of July 1928, by and between W. T. Eldridge, hereinafter called First Party and R. J. Bauereisen, hereinafter called Second Party, Witnesseth:

"I. As a special inducement to cause Second Party to enter into a contract with Nueces Lands Irrigation Company to act as General Manager of said Company, for a period of five years, first party hereby agrees to give second party one-half (1/2) of all the dividends which may be declared within the next five (5) years upon the stock in said Company which now belongs to first party, or which may be acquired by first party within the five (5) year period.

"II. First party hereby guarantees the payment of the salary agreed to be paid to second party by Nueces Lands Irrigation Company in said contract.

"III. In the event that within said five (5) year period first party should foreclose the liens which he now holds against the properties of Nueces Lands Irrigation Company, first party agrees that he will enter into a contract with second party, in which the spirit of said contract between Nueces Lands Irrigation Company and second party will be carried out for the remaining portion of said five (5) year period, and in which first party will agree to divide equally with second party the net profits realized from the operation and/or sale of said properties prior to the expiration of the five (5) year period above mentioned, and it being understood that in such event first party shall receive his entire investment plus six per cent (6%) interest before any profit can be considered to have been earned.

"IV. In the event that first party should sell or assign his stock and liens in and against said Company prior to the expiration of the five (5) year period, or in the event said Company should sell or assign within said period all its properties to any party other than first party, second party shall have the election of receiving from first party the salary for the remaining portion of said five (5) year period at the rate of Seven Hundred Dollars ($700.00) per month, or of receiving one-half (1/2) of the profit realized by first party on the transaction, first party receiving his entire investment plus 6% interest before any profit shall be considered to have been earned. Second party's right to receive the salary for the remaining portion of said period upon his electing to do so upon the happening of either of the above contingencies, shall be conditional upon his devoting his time and services somewhere in the United States for the benefit of first party, as first party may direct.

"V. Second party hereby agrees that first party shall receive one-half (1/2) of all the net profits realized during said five (5) year period by second party from any and all of his operations in connection with the drilling of wells, and the sale of well equipment.

"Executed in duplicate this 26th day of July 1928.

                                  "(Signed) W. T. Eldridge,
                                          "First Party,
                                  "(Signed) R. J. Bauereisen,
                                          "Second Party."
                

Pursuant to the provisions of the contract between Bauereisen and the Irrigation Company the drilling rig and tools were removed to the premises and Bauereisen entered upon the discharge of his duties as general manager of the enterprise. He had charge of farming operations, erection of improvements, drilling and equipping wells, clearing land, purchasing supplies for the commissary, marketing the crops produced, buying implements and tools, keeping books and accounts, keeping time of employees and paying employees. His exact duties with reference to the selling of land are not made clear, but it appears that he had a sales agent in San Antonio.

In the Spring of 1929, a few months after Bauereisen became general manager of the enterprise, Eldridge transferred and assigned his stock in the Irrigation Company and his liens against its property to Sugarland Industries and Bauereisen was informed of that fact. The selling of the stock and liens was one of the contingencies provided for in Section IV of the contract between Bauereisen and Eldridge above copied. In accordance with the...