HF Wilcox Oil & Gas Co. v. Skidmore

• Decision Date: 06 September 1934
• Docket Number: No. 9922.,9922.
• Citation: 72 F.2d 748
• Parties: H. F. WILCOX OIL & GAS CO. v. SKIDMORE.
• Court: U.S. Court of Appeals — Eighth Circuit

72 F.2d 748 (1934)

H. F. WILCOX OIL & GAS CO. v. SKIDMORE.

No. 9922.

Circuit Court of Appeals, Eighth Circuit.

September 6, 1934.

Horace B. Clay and W. I. Williams, both of Tulsa, Okl. (R. L. Davidson, of Tulsa, Okl., on the brief), for appellant.

David A. Murphy, of Kansas City, Mo. (Harding, Murphy & Tucker, of Kansas City, Mo., on the brief), for appellee.

Before STONE and SANBORN, Circuit Judges, and WYMAN, District Judge.

SANBORN, Circuit Judge.

The appellant is a Delaware corporation; the appellee, a citizen of Missouri. The parties will be referred to as in the court below, where the appellee was plaintiff. Prior to February 1, 1929, the plaintiff was virtually the sole owner of the stock of the Skidmore Oil Company, a Missouri corporation engaged in selling gasoline and oil in Kansas City and the vicinity. As of that date the defendant agreed to buy all of the capital stock of the company from the plaintiff for a price of $42,647.79, of which $9,497.79 was to be cash and the balance 1,300 shares of the stock of the defendant on the basis of $25.50 a share, its then market value (a total of $33,150.00), the stock to be delivered six months after February 1, 1929. The agreement was reduced to writing and dated February 1, 1929. The cash was paid upon the execution of the agreement, and the 1,300 shares of stock were delivered to plaintiff on August 6, 1929. On or about November 29, 1930, the parties entered into a "confirmation agreement," evidenced by a letter from the defendant to the plaintiff and accepted by him. It reads as follows:

"For a valuable consideration, the receipt of which is hereby acknowledged, the undersigned, H. F. Wilcox Oil & Gas Company agrees that whereas, it has heretofore purchased your oil business at Kansas City, Missouri, and has paid and delivered to you 1300 shares of its capital stock, on the basis of $25.50 per share, that in the event the market price on the New York Stock Exchange of the capital stock of said company does not reach $25.50 per share between November 29, 1930, and December 1, 1931, this company will, on said last mentioned date, either pay you in cash or in additional shares of said stock of an equivalent value the difference between the market value of such stock on December 1, 1931, and the value thereof based on $25.50 per share; or will take up from you the said 1300 shares of stock on the basis of $25.50 per share, with the further agreement that in the event the market price on the New York Stock Exchange of said stock reaches the sum of $25.50 per share on or before December 1, 1931, then said company shall be relieved of any further responsibility whatsoever with respect to said 1300 shares of stock."

The stock did not reach a price of $25.50 per share on the New York Stock Exchange between November 29, 1930, and December 1, 1931. On November 29, 1930, it was $10 a share. On December 1, 1931, the market price was $5 a share. The defendant refused to carry out the agreement, and the plaintiff brought this action, setting forth in his petition the agreement, its breach, and his damages. The defendant moved for an order requiring the plaintiff to make his petition more definite and certain "by stating what was the valuable consideration mentioned in his petition moving from the plaintiff to the defendant for the guaranty sued on in this action, and whether the defendant received such consideration."

The plaintiff, with leave of court, then filed an amended petition which was in all essential respects the same as the original. The defendant then moved to strike the amended petition, but this motion was denied.

The defendant, in answer, admitted making the agreement of November 29, 1930, but alleged that it was without consideration. It then set forth the agreement by which it purchased the stock of the Skidmore Oil Company and Skidmore acquired the 1,300 shares of the defendant's stock. It asserted that, after that transaction, it had employed Skidmore as its managing agent in Kansas City, and that he remained in its employ in that capacity until January 23, 1931, at which time he resigned; that, after the stock crash in October, 1929, the defendant's stock depreciated in price; that in the fall of 1930 the plaintiff represented that he was financially embarrassed, and requested the defendant to guarantee a price of $25.50 a share on the 1,300 shares he had accepted; that at the time he made the request he stated that he would remain with the defendant and would not engage, directly or indirectly, in the business of selling petroleum products in Wyandotte county, Kan., or Jackson county, Mo.; that on or about November 17, 1930, the plaintiff renewed his request for a guaranty, and it was then agreed that the defendant would write a letter, to be accepted by the plaintiff, guaranteeing the price of the stock for the period of one year, on condition that the plaintiff would not engage in the marketing of petroleum products in the territory above referred to; that such a letter was written on November 17, 1930; that the plaintiff requested that the paragraph in that letter incorporating his agreement not to engage in the business of marketing petroleum products be omitted, and he then promised that he would remain in the defendant's employ, and that, if he should leave such employment, he would not engage in the oil business in the territory referred to; that solely in reliance upon this promise the defendant entered into the confirmation agreement of November 29, 1930; that about January 23, 1931, the plaintiff resigned his position with the defendant, and, in violation of his promise, entered into the business of selling petroleum products in the Kansas City territory, and became an active and unfair competitor of the defendant; that, when the plaintiff made the promise upon which the defendant relied in executing the guaranty, he had no intention of carrying it out, but intended not to perform it; that this promise of the plaintiff was the sole consideration for the defendant's guaranty, and that such consideration has wholly failed; that the guaranty was procured by fraud of the plaintiff in falsely representing that he would remain in the defendant's employ and would not engage in the oil business if he left its employment.

Briefly stated, the situation at the time the case went to trial was this: The plaintiff had asserted the contract of November 29, 1930, its breach by the defendant, and his damages. The defendant had admitted the making of the contract, and had asserted that there was no consideration for it, and that it was procured by fraud. At the opening of the trial, there was some controversy about the burden of proof. The court held that the burden was upon the plaintiff to go forward with the evidence to prove the contract and its breach, and that the burden of showing want of consideration and fraud was on the defendant.

While it was not necessary for the plaintiff to prove the contract, since it was admitted, and probably not necessary for him to prove the breach, since the defenses asserted in the answer negative the performance of the contract by the defendant, we do not find that the defendant admitted the amount of the plaintiff's damages. In order, therefore, for the plaintiff to recover, he was required to prove that he was damaged and to what extent. Hence no error can be predicated on the court's ruling as to who had the opening and closing.

The plaintiff was the first witness. On his examination in chief, he testified to the making of the contract sued on, its breach by the defendant, and the facts tending to establish his damages. On cross-examination, the defendant was permitted, over the plaintiff's objection, to ask the plaintiff what the consideration for the contract was. He said it was a part of the original purchase price of the stock; that it was orally understood at the time he sold his stock in the Skidmore Oil Company to the defendant that the defendant was to guarantee the 1,300 shares of its stock at $25.50 a share; that this understanding was not incorporated in the sales agreement, but was, under date of November 29, 1930, reduced to writing in the "confirmation agreement."

On redirect examination, the defendant objected to the plaintiff's testifying that the agreement for the sale of plaintiff's stock to the defendant included a guaranty of the 1,300 shares of its stock, on the ground that it was an attempt to vary the terms of a written instrument by parol evidence. The court sustained this objection. The plaintiff then offered to prove, in substance, that, when he sold the stock of his company to the defendant, it was agreed that the defendant would guarantee its stock for $25.50 a share; that that guaranty was not incorporated in the written contract; that thereafter the plaintiff from time to time demanded that this agreement be reduced to writing, which was finally done on November 29, 1930. An objection to this offer was sustained. Thereupon the plaintiff procured from the court leave to file and filed his "second amended petition," in which he set forth what he claimed was the actual consideration for the contract of November 29, 1930. In his amendment he alleged that he executed the contract of sale upon the agreement of the defendant that it would guarantee that, when its stock was delivered to him, it would have a value of at least $25.50 a share, and that the defendant would, on demand, give him a written confirmation of such guaranty, that it was in reliance upon such verbal promise that the plaintiff accepted the offer for his stock in the Skidmore Oil Company and that he would not have done so otherwise. He further alleged that, when the 1,300 shares were delivered to him August 6, 1929, they were worth less than $25.50 a share; that in August or September he demanded that the defendant take his stock at the agreed figure, give him the difference between the market price and...