Burton v. Maupin

• Decision Date: 01 March 1926
• Docket Number: No. 15204.,15204.
• Citation: 281 S.W. 83
• Parties: BURTON et al. v. MAUPIN et al.
• Court: Missouri Court of Appeals

281 S.W. 83

BURTON et al. v. MAUPIN et al.

No. 15204.

Kansas City Court of Appeals. Missouri.

March 1, 1926.

Appeal from Circuit Court, Daviess County; Arch B. Davis, Judge.

Action by T. 0. Burton and others against R. E. Maupin and others. Judgment for plaintiffs, and certain defendants appeal. Reversed and remanded.

John C. Leopard & Son, of Gallatin, and Randolph & Randolph, of St. Joseph, for appellants.

Dudley & Brandom, of Gallatin, Roger S. Miller, of Kansas City, and Scott J. Miller, of " Chillicothe, for respondents.

BLAND, J.

This is a suit for damages based upon an alleged conspiracy to defraud. Plaintiffs, eight in number, made mutual assignments of their causes of action, and brought this suit in six counts against the defendants, seven in number, each count covering a separate transaction between one or more of the plaintiffs and the defendants, or some of them. There was a verdict and judgment in favor of plaintiffs on all six counts. Only four of the defendants, to wit, Maupin, Bray, Bleish, and Hudson have appealed, the other three, to wit, Timms, Thompson, and Hedrick, made no defense at the trial.

The facts show that on May 22, 1919, there was a lease executed by the owner of 80 acres of ground situated in Union county, Ark., and between the city of Eldorado, Ark., and the Louisiana state line, by one Robertson and his wife to one Beecher. The lease was what is known as an oil, gas, and mineral lease, and reserved to the owners of the property a one-eighth of the production of oil and gas, if any. On February 10, 1920, the Robertsons conveyed to one Deil an undivided one-half interest in all of the royalties reserved by them in said lease. Subsequently, and before the happenings giving rise to this suit, the defendant L. W. Timms, Deil's brother-in-law, acquired a part of Deil's interest, but the record title remained in the latter.

Timms, testifying for plaintiffs, stated that he was an oil man living in Kansas City, Mo., and was acquainted with the defendant Bray, who lived at Pattonsburg, Mo. Bray met the witness in Kansas City on several occasions, and at different times asked him "if there wasn't some way he could make some money in the oil business." Finally, Timms proposed to Bray that he get four people in the latter's community to put up $2,000 each to purchase a one-sixth interest each in that part of the so-called Robertson royalty belonging to Timms and Deil, Timms to retain two-sixths. The "proposition" was then to be resyndicated for $50,000. The one-half interest in the royalty was to be conveyed to a trustee, and 500 shares of "stock" or "units" at the par value of $100 a share were to be issued. Enough of this stock was to be sold to repay such four persons for the amount of money advanced by them. Timms said he would put up $8,000. The $16,000 was evidently to be paid to Deil and Timms for their interests. The unsold shares were to be issued to the four parties and Timms in proportion to their interests.

Timms and Bray went to Pattonsburg and thence to McFall, where a friend of the former, the defendant Bleish, a merchant, lived. Bray explained to Bleish what Timms had told Bray. Bray told Bleish that the latter was to pay $2,000 for a one-sixth interest in one-half of the so-called Robertson royalty, and that the one-half interest in the royalty would be resyndicated for $50,000; that it would be necessary for Bleish to assist in disposing of the units and use his influence among his friends for that purpose, and when enough of the units had been sold to return to him his $2,000, he should have his part of those unsold.

Timms further testified that Bray and he the same conversation with the defendant Maupin, who was a banker and friend of Bray, living at Pattonsburg. Maupin was told that if he would put in $2,000 the royalty would be resyndicated, and that he would be expected to assist those who sold stock in it. Timms further testified that Bray and he had the same conversation with defendant Miss Ora Hudson that he had had with Bleish and Maupin. Miss Hudson was vice-president of a bank in the town of Weather-by. Pattonsburg, McFall, and Weatherby are towns situated in the same general community, 25 or 30 miles apart. There was testimony that Bray, Bleish, Maupin, and Miss Hudson had been personally acquainted with one another for some time before this occurrence.

Timms testified that he explained to Miss Hudson that if she would put up $2,000 that she would be appointed trustee, and that he would procure some salesmen and send them into that community; that he told the four "if they would assist those salesmen in disposing of the stuff, that their money would be returned to them as soon as it was sold." Bray was with the witness at the time of all these conversations. Bray and Maupin asked the witness how soon he could secure the salesmen and send them "up there," and the witness replied that he thought he could do immediately. Bray, Maupin, and Bleish the witness that they "would lend these salesmen all the assistance they could in disposing of these units." These three agreed to recommend the proposition to their friends. The witness testified that it was agreed between him and all four parties that "there shouldn't be any more (stock) sold than enough to reimburse them for their original investment, and the balance was to be issued in units pro rata to us according to our investment." The witness stated that he did not know whether any of these four persons had made any investigation of the proposition or not, but he thought that perhaps he told them what he knew about the lease.

Timms returned to Kansas City and employed defendants Thompson and Hedrick, together with one Hewitt and one Wilford, to sell the units in and around these three Timms testified that Thompson and Hedrick bought 65 units or shares in the $50,000 syndicate, and gave their notes in the sum of $6,500 bath, which were left with Miss Hudson as trustee; that some shares were also sold to Hewitt and Wilford. These selling agents were to receive 25 per cent. of the amount collected in the sales of the units. As fast as the units were sold they were given credit on their notes, and in this way all of these notes were taken up, unless it was the one of Hedrick. The units were sold to various parties living in the vicinity of the towns mentioned. The purchasers were friends and customers of Bray, Bleish, Maupin, or Miss Hudson. The amount realized on these sales was $13,118.55. This was paid in money and notes, most of which were turned over to Miss Hudson, the trustee. Enough of the units were sold to return the money advanced by the four parties other than Timms, except to the extent of about $300 each. Timms received about $7,700. There is no evidence that Timms actually advanced $8000. Timms further testified that it was agreed that the arrangement made between the five parties was to be kept a secret.

An assignment of the one-half interest in the Robertson royalty was duly made in writing by Dell to Miss Hudson as trustee. A declaration of trust was drawn and turned over to her for her signature, and she issued certificates of stock to the parties who purchased interests. She testified that she did not sign the trust agreement because she did not understand that she was to sign it, never having been told to do so.

It seems that the Robertson royalty was what is called a "wild-cat proposition." There was no well upon the 80 acres, nor had there been any steps taken to drill one. Timms further testified that there were no producing wells in Union county, Ark.; that he did not know whether a shaft had ever been sunk in the county; that any property lying further than a mile away from developed territory would be called "wild-catting"; that the 80 acres was situated 6 or 7 miles southwest of Eldorado; that there was a well called the Considine well being drilled between the 80 and the city of Eldorado, about 4 miles away from the 80; that the Homer pool lay in the state of Louisiana about 18 miles southwest of the 80 acres in question; that oil had been discovered around Eldorado, and the Homer pool was a producing district; that these facts, together with the sinking of the Considine well, were the main things that gave the so-called Robertson lease a speculative value.

During the time these units were being sold the Considine well "came in" as a "big gasser," but produced no oil. This was reported by Timms to one Green, one of the purchasers of the units at Pattonsburg, which caused considerable excitement in the vicinity where these units were being sold. Timms further testified that at none of the times when he had these conversations with Bleish, Maupin, and Miss Hudson was there present either of the other two; Bray, of course, was present. Timms testified that there was no agreement to misrepresent, and that he did not tell the soliciting agents what to say to prospective purchasers of the shares.

One hundred thirty-two units were sold to persons other than those in the alleged conspiracy from whom, as before stated, approximately $13,200 was collected. Miss Hudson issued stock to these to the extent of their units. She issued stock to Timms for 122 units, and 61 units to Bleish, Maupin, and Bray, respectively, and 63 units to herself. Had all of the owners of the units gone in on the same basis, Bleish, Bray, Maupin, and Miss Hudson would each have paid $6,150 for their shares, whereas they paid only $2,000, respectively, and received all of this back except $300 each.

Timms further testified that, after the units had been sold to various people around Pattonsburg, McFall, and Weatherby, Bray told him that "it looked like there was going to be a suit; that it didn't look very good for them to be sued on account of the fact that they all lived at Pattonsburg; that in order to shift the blame on my shoulders he asked me to exchange checks with him"; "he gave me his note...