Workman v. Harrison, 6224.
| Decision Date | 12 September 1960 |
| Docket Number | No. 6224.,6224. |
| Citation | 282 F.2d 693 |
| Parties | R. F. WORKMAN, Appellant, v. W. M. HARRISON, Trustee of Selected Investments Corporation and Selected Investments Trust Fund, and Capitol Gate, Inc., Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
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Mart Brown and Rex H. Holden, Oklahoma City, Okl., for appellant.
Luther Bohanon, Oklahoma City, Okl. (Bert Barefoot, Jr., Oklahoma City, Okl., on the brief), for appellees.
Before BRATTON, PICKETT and LEWIS, Circuit Judges.
By complaint filed in the District Court for the Western District of Oklahoma present appellees1 sought a decree quieting their title to some 74 acres of land located in Oklahoma City as against any claim of the appellant Workman and further seeking to gain authority to reject any contractual relationship found to exist between Workman and Selected upon such conditions as the court determined to be just and reasonable. By his answer and cross-claim Workman expanded the issues to provoke determination of his rights in the stock of Capitol Gate and, in the alternative, to damages against Selected for breach of express or implied contract. The judgment of the trial court resolved each controversy of fact in favor of Selected and denied any relief to Workman upon each of the numerous alternate defenses proposed by Selected. Such a sweeping and adverse judgment has necessitated a wholesale appeal by appellant questioning the sufficiency of the evidence to support most of the trial court's findings and alleging error in the court's conclusions in toto. However, our disposition of the case does not require a burdensome consideration of minutia for an examination of the record convinces us that the factual narration to follow is either indisputably true from the record or admitted by the parties.
At a time prior to 1958, Workman conceived the idea that a large shopping center could be profitably developed upon the subject 74-acre tract of land in Oklahoma City. His plan contemplated the acquisition of the acreage; causing the land to be zoned as a commercial business area; constructing buildings thereon; obtaining long-term rental contracts; and using the rental contracts as collateral for obtaining long-term loans from large financial institutions to be applied as reimbursement for the original outlays of money made for the acquisition of the land and the construction of the buildings. Workman approached several persons and companies with his proposal, including Selected. After a period of negotiation with the then officers of Selected and particularly with the president, one Carroll, an oral agreement was reached whereby Selected was to advance the money necessary for the promotion and Workman was to perform the services necessary to make the contemplated shopping center a reality. More specifically, Workman was to negotiate the purchase of the lands, arrange for the rezoning, and then proceed to supervise the construction of the buildings and rent the completed properties. Monies were to be advanced by Selected and repaid, together with ten per cent interest, from the contemplated income or security of the project and, after complete repayment with interest to Selected, Workman and Selected were to share the fruits of the development equally.
Performance began in accord with the terms of the oral agreement. Workman did arrange for the purchase of the tracts of land constituting the 74 acres. The parties organized Capitol Gate, Inc., to receive the land titles as they were acquired and Workman conveyed one or two parcels to Capitol which had been taken in his own name. Capitol was authorized to issue 500,000 shares of $1 par stock but issued only 1,000 shares. Of these 100 shares went to Workman, 100 shares to George H. Shirk, 100 shares to Lucyl H. Shirk, and 700 shares to Selected. Workman and the Shirks promptly assigned their issued shares to Selected. Selected had then made a total outlay of $570,861.65 which reflected in the wholly-held stock of Capitol.
On March 3, 1958, Selected was adjudicated bankrupt and, as we have noted, a plan of reorganization was approved and became operative as contemplated by Chapter 10 of the Bankruptcy Act, as amended, 11 U.S.C.A. § 501 et seq. Investigation indicated that the officers of Selected had caused its financial failure through gross misconduct including the organization of several satellite companies operating for the personal benefit of Carroll and other Selected Officers. See Selected Investments Corp. v. Duncan, supra.
At the time Selected was adjudicated bankrupt Workman had not been successful in having the Capitol Gate property rezoned from residential to commercial and had run into "material obstacles" in his efforts to do so. He continued to attempt to fulfill this obligation after Selected was placed in reorganization and worked closely with the Trustee and his counsel to that end. The rezoning was accomplished, according to the finding of the court, "largely through the work of the Trustee and his attorneys" although Workman was found to have contributed "substantial effort."
On January 12, 1959,2 Workman wrote the Trustee stating in general terms that he had contacted and interested many desirable tenants for the shopping center and suggested that an architect be employed to prepare drawings of the development so that definite commitments for leased space could be obtained. Two weeks later the Trustee replied thus:
Since the exchange of these letters neither Workman nor Selected has taken any steps to develop the subject property and their opposing claims arising from the course of events stated reflect in the instant action initiated by Selected in April, 1959. And from such course of events the trial court found and concluded that no valid or enforceable contract had ever existed between the parties because, for one of numerous grounds, Workman had "entered into secret and confidential negotiations" with officers of Selected resulting in the misuse of trust funds and that "because of his knowledge of the trust, R. F. Workman, as well as the trustees, was legally prohibited from making an agreement of the nature here involved."
We can find no support in the record justifying the inference that Workman's relationship with the officers of Selected was conspiratorial in nature or that Workman had any knowledge that the officers were being or ever had been derelict in the duties of their trust. The record indicates that the land purchases were made without public disclosure of the interest of Selected in the project. Such procedure is not unusual and indeed is often dictated as good business practice to avoid the hasty raising of prices when the participation of large financial concerns becomes generally known. The procedure will not support an inference of wrongful or fraudulent purpose upon the part of Workman. And, although considerable evidence was offered and received of the misapplication of trust funds by the officers of Selected in many transactions not involving Workman there is no evidence that Workman had knowledge of these transgressions or that the officers contemplated a violation of their trust in regard to Capitol Gate. Workman had no knowledge of the internal affairs of Selected nor information regarding the duties of the trust beyond the general knowledge of the corporate names.3
We hold, too, that the court was in error in determining that the agreement of the parties was invalid because of the compulsion of the Oklahoma Statute of Frauds. Here, again, the judgment below was a broadside and without designation as to what provision or provisions of Title 15 Okl.Stat. § 1364 were deemed controlling. It is obvious that subsections 2 and 3 are inapplicable. And subsection 5 has been interpreted by the Oklahoma courts as not to constitute a bar to the enforcement of an oral agreement where, as here, the parties join as joint adventurers in a plan to purchase and develop real property, one contributing the use of money, the other performing services. Catlett v. Jordan, 206 Okl. 473, 244 P.2d 564; Florence v. Thompson, 92 Okl. 156, 218 P. 800; Thompson v. McKee, 43 Okl. 243, 142 P. 755, L.R.A.1915A, 521. However, Selected urges the agreement as one for the exchange of personalty, i. e. stock in the corporation of a value in excess of $50, or an agreement that is not to be performed within a year from its making, which contracts must be in writing under subsections 4 and 1 respectively, and then attempts to distinguish the cases cited above as being concerned merely with the transfer of land provision of the statute and not with other portions of the statute which might have voided the contracts. The attempted distinction is tenuous. To explain as oversight the Oklahoma court's broad determinations that an oral agreement to share in profits and losses arising from the purchase and sale of real estate to be not within the statute and that existence of such a partnership or joint venture may be established by parol evidence is not consonant with reason. The Oklahoma court has held that to bring an oral contract within the one-year statute of frauds, there must be a negation of the right to perform the contract within a year, Municipal Gas Co. v. Gilkeson, 160 Okl. 284, 16...
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