Berne v. Keith

• Decision Date: 13 September 1962
• Docket Number: No. 13922,13922
• Citation: 361 S.W.2d 592
• Parties: Ira BERNE et al., Appellants, v. Julian T. KEITH, Appellee.
• Court: Texas Court of Appeals

Page 592

361 S.W.2d 592

Ira BERNE et al., Appellants, v. Julian T. KEITH, Appellee.

No. 13922.

Court of Civil Appeals of Texas, Houston.

Sept. 13, 1962.

Two Motions for Rehearing Denied Nov. 8, 1926.

Fountain, Cox & Gaines, Joyce Cox, Winston Ellis, Houston, for appellants.

John L. Hill, W. James Kronzer, Houston, Hill, Brown, Kronzer, Abraham, Watkins & Steely, Houston, of counsel, for appellee.

WERLEIN, Justice.

This suit was brought by appellee, Julian T. Keith, against Ira Berne and some thirty-two corporations, to recover as compensation for personal services 10.9% of the profits realized and to be realized from a project known as Westbury project, involving the development, use and sale of three tracts of land designated as the 526 acre, 714 acre, and 430 acre tracts, generally referred to as Westbury, and alternatively for damages for denial of his alleged rights. Judgment was rendered by the court in the sum of $579,721.92, the court disregarding answers to eight issues, setting aside the finding of joint enterprise, and entering judgment for breach of oral contract for personal services. On motion for new trial the court ordered that a new trial would be granted unless a remittitur was filed in the sum of $287,620.96. Such remittitur was filed and the judgment was reduced to $292,100.96 with interest from date thereof. Appellants have assigned numerous points of error.

The oral agreement upon which Keith bases his claim is encompassed in the jury findings made in answer to Special Issues 1, 3, 4 and 5, which the trial court allowed to stand, to wit:

To Special Issue No. 1: That at the time of the meeting of Ira Berne and Julian Keith in August, 1954, Ira Berne and Julian Keith agreed with each other on the following matters: (a) That Julian Keith would invest some of his personal funds in the Westbury project; (b) That for his coming to work on the Westbury project Keith would receive an interest in the profits, if any, produced or generated therefrom; (c) That any salaries of Berne were not to be deducted in determining net profits, if any, to be produced or generated from the Westbury project; (d) That Keith's participation in the profits, if any, would extend to all of the properties comprising and which would comprise the Westbury project; (e) That as between Berne and Keith, Keith's participation in the profits, if any, produced or generated from the Westbury project would not be affected or changed by the mechanics, creation and use of corporations and companies utilized for the purpose of developing and selling the Westbury project; (f) That Keith would work on the Westbury project until such time as it was completed and sold or sold before completion; and (g) That Keith's services could not be terminated except for dishonesty or fraud.

To Special Issue No. 3: That at the Brooks System Sandwich Shop meeting (March or April, 1956) it was agreed between Ira Berne and Julian Keith that: (a) Keith would continue to devote his services to the Westbury project until that project was completed and sold or sold before completion; (b) Keith would receive 10% exclusive of any investment interest of Keith, of the net profits generated from the Westbury project as computed at completion or sale of such project; (c) Such 10%, if any, would be figured on the total net profits, before deducting income taxes, and before deducting any salaries paid to Berne; (d) From such 10%, if any, there would be first deducted such moneys paid to Keith.

To Special Issue No. 4: That at the Brooks System Sandwich Shop meeting (of March or April, 1956) it was agreed between Berne and Keith that the 10% net profits interest, if any, inquired about in Special Issue No. 3 and the investment interest would be merged and combined to a 10.9% interest for Keith in the net profits of the Westbury project before taxes.

To Special Issue No. 5: That at the Brooks System Sandwich Shop meeting (of March or April, 1956) Ira Berne and Julian Keith agreed: (a) That Keith's participation in the profits, if any, would extend to all of the properties comprising and which would comprise the Westbury project; (b) That as between Berne and Keith, Keith's participation in the profits, if any, produced or generated from the Westbury project would not be affected or changed by the mechanics, creation and use of corporations and companies utilized for the purpose of developing and selling the Westbury project; and (c) That Keith's services could not be terminated except for dishonesty or fraud.

The jury, in answer to Special Issue No. 2, found that it was possible to perform the agreement inquired about in Special Issue No. 1 within one year from the making thereof; and in answer to Special Issue No. 6 the jury found that it was possible to have performed such agreements as they may have found Ira Berne and Julian Keith made at the Brooks Sandwich Shop, within one year from the making thereof.

The first question presented for our determination is whether the trial court erred in refusing to enter judgment for appellants upon the ground that Keith's claims under the pleadings, evidence and jury findings are to an interest in land, or to a right in land or the proceeds thereof, which cannot be established or enforced upon an oral agreement. Keith takes the position that he alleged that his claim to profits was stated only and solely as the basis for measuring his compensation for personal services, and that he has neither pleaded nor established a claim to an interest in land.

In his first amended original petition Keith alleged that Berne promised him that he would be given a larger percentage of the Westbury project over-all profits if he would make a personal investment of $5,000.00; that subsequent to such investment being made by Keith, and which investment was part and parcel of the overall employment arrangements, it was agreed between the said parties that in full compensation for Keith's services in connection with their joint business venture, in addition to his 1% investment percentage, Keith would be and become entitled to 10% of the profits, before income taxes, generated from the Westbury project, less any salary and bonuses paid Keith by Berne from time to time. He also alleged that such 10% interest would be applicable before any investment percentages were paid, making his total percentage 10.9%, and also that the 10.9% would be paid him on any salaries or personal expenses withdrawn by Berne.

It is clear that the relationship between Berne and Keith was that of employer and employee. Keith went to work on October 1, 1954. He testified that Berne allowed him a drawing account of $600.00 per month to begin with, and that he was to work on a percentage basis which was the only basis Berne was willing to employ him on. The trial court in entering judgment expressly found that the judgment entered is based upon a breach of an oral contract for personal services with compensation therefor being measured by a 10.9% interest before federal income taxes in the profits of the project, and that such 10.9% interest is based upon plaintiff's 1% investment interest as merged and combined with a 10% interest in such manner as to result in a total of 10.9% interest, all as found by the jury in response to Special Issues Nos. 3, 4, 5 and 6; and that the judgment entered was in personam only for damages, with no relief being granted to plaintiff by way of impressing any form of constructive or resulting trust in respect to any of the lands described in plaintiff's first amended original petition or upon funds representing money from the sale of such lands, and that all relief sought by plaintiff in the nature of any declaration of rights in respect to such project or lands not specifically granted was specifically denied. If the trial court's conclusions and judgment are supported by the pleadings, evidence and findings of the jury, the contract would not give Keith an interest in land or such interest in the proceeds or profits therefrom as might be construed as an interest in land within the Statute of Frauds, Art. 3995, Subd. 4, Vernon's Annotated Texas Statutes.

Appellee does not assert any interest in the lands comprising the Westbury project. He claims only compensation for personal services and damages for breach of contract, and contends that he is entitled to recover 10.9% of the net profits generated and growing out of the development project. The oral contract as found by the jury was substantially pled by appellee and his testimony supports the jury findings. An analysis of such findings by the jury based upon all of the evidence adduced does not indicate that the parties intended by the oral contract to vest in Keith any interest in the lands comprising the Westbury project. The cases relied upon by appellants, in support of their contention that under the oral contract in question Keith's claims are to an interest in land or to a right in the land and the proceeds therefrom, are factually inapplicable to the present case. Most of such cases involve oil, gas and mineral leases and royalties in which the interest claimed was measured by the production of the land whether payable in kind or money. It is, of course, well settled that the right to royalty from oil production constitutes an interest in land. In Sheffield v. Hogg, 124 Tex. 290, 77 S.W.2d 1021, 80 S.W.2d 741, our Supreme Court held:

'Sound principle, supported by the highest authority, goes further and compels us to accede to the proposition that dealing with oil and gas or dealing with solids in place, like sulphur, lignite, salt, coal, or lime, the lessor owning the entire fee-simple title to the land, and his assigns, who have been careful to secure to themselves, their heirs or assigns (by exception or reservation or by contract for 'having' or yielding or paying, or for delivery, or by what-not similar contractual clause), the right to a portion of the...