Benton v. Blair

• Citation: 228 F.2d 55
• Decision Date: 16 January 1956
• Docket Number: No. 15629.,15629.
• Parties: Thaddeus G. BENTON, Appellant, v. Francis M. BLAIR, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

228 F.2d 55 (1955)

Thaddeus G. BENTON, Appellant, v. Francis M. BLAIR, Appellee.

No. 15629.

United States Court of Appeals Fifth Circuit.

December 16, 1955.

As Amended on Motion to Enlarge Opinion January 16, 1956.

Thaddeus G. Benton, McNally & Krieger, New York City, by Lawrence W. Krieger, New York City, of counsel, for appellant.

David T. Searls, Dan C. Arnold, Vinson, Elkins, Weems & Searls, Houston, Tex., for appellee, Francis M. Blair.

Before TUTTLE, CAMERON and JONES, Circuit Judges.

TUTTLE, Circuit Judge.

Upon the close of the plaintiff's case below, the trial court, sitting without a jury, granted judgment for the defendant on the ground that the plaintiff had failed to establish the existence of the oral contract upon which this suit is based. The sole question here is the correctness of this judgment, in the light of the evidence adduced.

The plaintiff's evidence included his own testimony, a long series of correspondence between the parties, notes made by him of various conversations, and excerpts from the depositions of three other persons. At the trial, he testified that he was an oil man and a lawyer, with offices in New York. He said that he met the defendant Blair on January 19, 1950, when he was in Houston, and at that two-hour meeting, in Benton's room at the Lamar Hotel, the parties made the oral contract on which he sues. He said that Blair wanted to exploit the possibilities for oil production in the Rankin area, a generally unattractive area of 12,000 to 14,000 acres about twenty miles northeast of Houston. He testified that Blair said that the major oil companies and the intelligent operators did not think well of its possibilities, and that Blair therefore thought it might be possible to make a better deal by getting the financing done in the East. The drilling of one well would not be enough, however. Blair wanted a rich man or a man with a large income tax who could spend a lot of money and gain tax deductions thereby, and "could be in one play after another." Benton testified that he and Blair then agreed that they would share equally the profits on any leases or royalties developed exclusively through drillings made by Benton's contacts on options or leases that Blair could obtain.

Benton testified that at the time the parties had in mind his client, Russell Maguire, "a wild, wild wildcatter with a lot of money to spend," who Benton said had described himself as "the most fabulous operator he Maguire knew." There was also discussed at this first meeting of the parties the terms of a specific deal, known as the first Gulf farmout, and Benton's notes on the meeting refer either exclusively to this deal or equally to this deal and the overall agreement.

Benton then submitted Blair's first deal to Maguire, who rejected it. In April or May, 1950, Blair went to New York, and Benton arranged a meeting between Blair and Maguire. They were unable to reach an agreement on any of Blair's promotions, however. Following this introduction, Blair and Maguire began to negotiate with each other directly, without Benton's intervention, although Blair continued to send various proposals to Benton for submission to Maguire, as well as to other potential investors of Benton's acquaintance. However, Benton encouraged Blair and Maguire to deal directly with one another, since Blair knew all of the details of the proposals he was making. In some of the proposals forwarded to Benton for submission to his contacts, Benton's participation was specifically provided for, in terms different from those of the overall agreement. For example, in the so-called Grimes County deal, referred to below, the percentage was one-third. In others, nothing was said with regard to Benton's share.

As time went on, Blair and Maguire continued to negotiate more and more without Benton, and eventually without even informing Benton of the progress of their negotiations. (According to Maguire's deposition, he told Blair that Benton "could be of no help in negotiating trades with me.")

On February 23, 1953, Benton wrote to Blair that he had asked Maguire about a transaction that Blair and Maguire had been negotiating, while they were together in Palm Beach, Florida. The deal had fallen through, and Benton wrote that "he Maguire makes the point that you have nothing to offer." He stated further that Maguire had asked him for a letter "to the effect that if he makes a transaction on one or more of the properties you have submitted I would not look to him for compensation. I told him I would give him such a letter, upon my understanding that he would, naturally, deal through you, and that per the agreement between you and me in New York you would transfer me one-third of your net `take'." In closing, Benton remonstrated with Blair for failing to keep him informed of the progress of the negotiations.

In answer to this letter, Blair telegraphed to Benton as follows:

"Dear Thad: I Offered You One Third Of My Net On Grimes Co. Deal If You Sold Same To Russell Maguire. You Failed To Sell Deal. Later In Warlits Office I Called Maguire And Put Him And Jack Little Together Little Failed To Sell Maguire Little Told Me They Had Traded Locally On Said Block Harrell Made Well Deal With Abercrombie Et Al On Gulf Portion I Had And Now Drilling Bob Hotz Used Up Two Months Time On Grimes Deal And I Wasted Additional Thirty Days On You And Maguire Thereby Loosing 7700 Acre Consolidated Deal Water Over Dam If You Want To Pit Maguire On Notice Stay Out Of Yarboro And That Is Your Business. If You Expect Thirty Three And One Third Percent On Future Trades Between Me And Maguire Will Be Obliged To Stear Clear Of Him. My Expected Trip To New York Did Not Work Out Regards.

Francis Blair." Misspelling as in original.

Benton testified that this telegram indicated to him that Blair was walking out on the overall agreement but that he "just couldn't believe it." He answered that "Your wire reflects a little feeling that I don't think is good for anybody; but perhaps I'm not reading it as well as I should — yet one can't be sure of what's between the lines not written." The letter again expressed the desire that Blair keep him informed regarding the progress of negotiations, and said that he "had a meeting with the Rockefellers the other day" regarding some transactions. Blair wired back in a somewhat more friendly tone. This telegram reads in part:

"Was Not Aware You Trading With Rockefeller Interest On Grimes."

The next correspondence between the parties was a letter from Benton to Blair, on May 25. It was partly in regard to a Mexican manganese transaction, but closed:

"Someone told me of some deals you made with Russell Maguire. May be it was not deals, but at least one deal. I thought he said several. What are they, and have any of them clicked yet? Let me know as fully as possible so that I may watch these plays; and please tell me when I\'m going to get my million."

Blair answered three days later by forwarding to Benton a half interest in one of Blair's transactions covering leases in Jackson County. The letter expressed the hint that the feeling between Maguire and Blair was not good.

Benton answered by asking about the properties, which later turned out to be "substantially dead." Blair did not reply to the letter but telephoned Benton at the Mayflower Hotel, on July 20, when Benton was in Houston. Blair said that another well would be drilled in Jackson County. He said that Maguire had cheated him out of everything, leaving him out of all the deals in the Harris County block of leases. He said that in Union County he had a lease that Maguire wanted badly, and that Maguire had called him that day and threatened to sue if he didn't give Maguire the lease.

About July 24, Blair wrote to Benton about the new well on the Jackson County properties, adding, "My old Rankin area is getting active — maybe I will make some money yet." Benton answered on September 28 that he had heard that "you have hit that oil field, and that you should now be on the way to riches. I hope and pray that is so, and that you will send me the good news when confirmed." There was no reply.

On October 7, Benton received a call from Maguire, who asked him to come to Maguire's office. There Maguire showed him a map of the land west of the San Jacinto river in the Rankin field, depicting the two leases which are the major source of dispute here. Maguire then asked Benton for a written statement that on July 2, 1953, Blair had said that he was getting a lease together for Maguire. Maguire said that he had saved the Dooley-Scanlan lease by drilling a well there, because otherwise the lease would have reverted to the landowners. Maguire also said that Blair had signed a memorandum at Maguire's house on July 2, to the effect that the leases were Maguire's. Benton refused to give Maguire the statement he wanted.

On October 21, Benton's attention was drawn to an article in the Houston Press telling of success in the Crosby area, near the two leases in question. On October 30, Benton telephoned Blair from New York, and asked what had happened. Blair confirmed the story of success, adding that Maguire had sued him the day before, but that when they began to talk settlement, and Maguire produced a paper which Blair had allegedly initialed, Blair recognized it as a forgery. Blair then told Maguire that there would be "no compromise," that if Maguire sued he would "put him behind bars," and that to buy in he would have to pay "as much as the Houston people." Blair said that Maguire had doublecrossed him on six deals, but that this was "a new oil field." Benton asked, "What's in it for me?", and Blair answered that he would give Benton a part of the overriding royalty.

Later Benton called Blair again, about his interest, and early in November he went to Houston. Blair at that time denied owing Benton anything, and Benton thereafter brought this suit for fifty per cent of...