Burford v. Hughes
Decision Date | 15 July 1919 |
Docket Number | 9106. |
Citation | 182 P. 689,75 Okla. 150,1919 OK 215 |
Parties | BURFORD v. HUGHES. |
Court | Oklahoma Supreme Court |
Syllabus by the Court.
Mrs Hughes gave an option on her land to the effect that, when paid the sum of $3,200, she would execute an oil and gas lease. The Flora Dora Oil Company was incorporated and issued stock to procure money to pay for the option and develop the lease. Burford subscribed for seven shares of stock and paid for same by giving note to Mrs. Hughes for $700, which was by agreement of all parties applied as part payment on the lease. Suit was brought on the note, and Burford pleaded fraud in the procurement thereof by the oil company as a defense. Mrs. Hughes had no connection with the oil company other than the execution of, and the delivery of, lease. Held, the law of novation is applicable thereto that Burford is a substituted debtor, and that the note is an independent obligation existing between the parties in which fraud, if any, in the procurement thereof, is not a defense.
In every novation it is essential that the new contract in which there is a substituted debtor shall be valid; that all parties thereto must agree to the substitution of the new contract and debtor, and that the old contract be a valid one and extinguished by the giving of a new contract. When such is the case, the substituted obligation is a new contractual relation and one in which the old obligation is in no way concerned.
An allegation of an agency in a pleading must be taken as true unless denied under oath; but, if no objection is made to the introduction of evidence to prove or disprove agency, then this statutory requirement is waived, and in such a case it is the duty of the court to submit the issue of agency as though the pleading denying agency was verified.
Error from District Court, Muskogee County; Chas. G. Watts, Judge.
Action by Dora B. Hughes against G. E. Burford. Judgment for plaintiff, and defendant brings error. Affirmed.
Blakeney & Maxey, of Tulsa, for plaintiff in error.
M. G Bailey and W. J. Crump, both of Muskogee, for defendant in error.
An option was taken on the lands of Mrs. Hughes, defendant in error, wherein, upon payment of a sum approximating $3,200, she was to execute an oil and gas lease upon certain lands belonging to her. The Flora Dora Oil Company was organized and proceeded to sell stock to pay for the sum called for in the option and to develop the property. Burford, the plaintiff in error, subscribed to seven shares of stock in this company, but did not pay for it in cash, but paid for it by executing a note to Mrs. Hughes for the sum of $700. This note was applied to the payment on the lease, the remainder thereof being paid in cash. The lease on the lands was then delivered to the Flora Dora Oil Company. It at once proceeded to develop the property, sinking two holes which proved to be dry. While this development was being made, Burford made no claim of any kind that a fraud had been perpetrated upon him in the procurement of the note to Mrs. Hughes; but, after the development in which there was a failure to find either gas or oil, he for the first time awakened to the fact that he had been defrauded in the procurement of the note and refused to pay the same, whereupon suit was brought by Mrs. Hughes against him.
The fraud alleged is that Carroll S. Bucher, a brother of Mrs. Hughes, acting as her agent and also for the Flora Dora Oil Company, in securing his execution and delivery of the note in question in payment of the stock in the company, had made certain false representations to him, that is, that he (Bucher) represented to him that there were no oil developments on the 20 acres to the south of the lease in question and that, relying upon this representation, he executed the note in question in payment of the stock of the company, whereas, in truth, the 20 acres above had been developed and no oil discovered, and that he executed the note, relying upon the false representations of Bucher as the truth. Bucher denied that he was the agent of his sister or the oil company, and denied that he had perpetrated any fraud of any kind whatsoever on the plaintiff in error. Burford noted on the note that it was "not transferable." There is conflict in the evidence as to why this was done, Burford stating he did so in order that the note might not go into the hands of innocent parties, thus giving him an opportunity to investigate the representations made by Bucher as to the development of the acreage to the south of the lease. Other witnesses, however, testified the reason given by Burford was that he did not want his note "hawked about." The court instructed the jury that if, at the time Mrs. Hughes received the note executed by Burford, she knew that false representations had been made to him in order to secure the execution thereof, or if Bucher was her agent and had made false representations to Burford as to developments of the 20 acres above referred to, and that Burford relied upon these false representations and believed them to be true, and thus executed the note in question, then Mrs. Hughes could not recover upon the note. The court refused to instruct the jury that, if any false representations were made by Bucher as agent of the oil company which induced plaintiff in error to execute the note, this would be a defense to the action.
The jury decided the issue in favor of Mrs. Hughes, and Burford appeals to this court.
The error complained of by plaintiff in error is that the court erred in its refusal to give an instruction requested holding that false representations, if any, made by the oil company upon which Burford relied, believing the same to be true, was a legal defense to the payment of the note. The plaintiff in error contends that if a contract was entered into between the oil company and him by which he was to give a note to the oil company, but which, at its request, he made payable to Mrs. Hughes, then Mrs. Hughes is not an innocent purchaser for value, and any fraud or failure of consideration that would appear in the contract between the oil company and him would be a defense against the note in Mrs. Hughes' hands, quoting Jones v. Citizens' State Bank, 39 Okl. 393, 135 P. 373. The law as applied to the facts in that case is sound, but the facts in that case...
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