Buxton v. McKendrick

• Citation: 64 So.2d 844,223 La. 62
• Decision Date: 23 March 1953
• Docket Number: No. 40803,40803
• Parties: BUXTON et al. v. McKENDRICK et al.
• Court: Supreme Court of Louisiana

Page 844

64 So.2d 844

223 La. 62

BUXTON et al. v. McKENDRICK et al.

No. 40803.

Supreme Court of Louisiana.

March 23, 1953.

Rehearing Denied April 27, 1953.

E. B. Charbonnet, Jr., John T. Charbonnet, New Orleans, for plaintiffs-appellants.

Minos H. Armentor, New Iberia, Felix W. Gaudin, New Orleans, for defendantappellee, Charles S. McKendrick.

Samuel J. Tennant, Jr., New Orleans, defendant-appellee, pro se.

MOISE, Justice.

The voluminous records in this litigation disclose that there are two separate suits involved--No. 40,803 and No. 40,804, which have never been consolidated. These suits represent two different causes of action, with separate litigants, imposing on the trial judge great labor and added responsibility, and necessitating the rendering of separate and distinct judgments. 223 La. 79, 64 So.2d 850. We take it that the defendants let all bars down because of the charge of fraudulent conspiracy, and thus, the reason for taking evidence in both cases at the same time.

We will now consider the appeal of plaintiffs from the judgment of dismissal in this suit--No. 40,803. The gravamen of petitioners' complaint is that McKendrick and Tennant formed a conspiracy to defraud them and, therefore, plaintiffs' petition the court:

(a) To have annulled certain instruments described in the record;

(b) To be decreed the sole and only owners of the mineral interest described in their petition;

(c) To be decreed the owners of $5,200 of a $17,300 oil payment;

(d) To render judgment in their favor, in solido, against McKendrick and Tennant, Jr. for the sum of $12,000; and

(e) That they receive an accounting from Tennant, Jr.

The judgment of the district court was in favor of the defendants. It is based on a finding of facts. The burden is now on plaintiffs to show that such finding is manifestly erroneous. Eals v. Swan, 221 La. 329, 59 So.2d 409; Moser v. Moser, 220 La. 295, 56 So.2d 553; Cormier v. Douet, 219 La. 915, 54 So.2d 177; and Diez v. Diez, 219 La. 576, 53 So.2d 677.

The law relating to fraud applicable here will be revealed by the following:

In Sanders v. Sanders, 222 La. 233, 62 So.2d 284, 286, it is stated:

'In the jurisprudence of this court it has been said that the charge of fraud is a most serious one; that one who alleges fraud has the burden of establishing it by legal and convincing evidence since fraud is never presumed, and that to establish the fraud exceptionally strong proof must be adduced. (Authorities) It has also been said that evidence showing that the fraud was probable or that the circumstances partook of a suspicious character is not sufficient, and that the fraud must be established by proof stronger than the mere preponderance of the evidence. * * *'

In Aucoin v. Marcell, La.App., 38 So.2d 81, 88, it is stated:

'Fraud is never presumed: it must always be alleged and proved.'

In Winzey v. Louisiana Industrial Life Ins. Co., Inc., La.App., 195 So. 67, 69, we find:

'* * * The very basis for setting aside a contract induced by fraud is because of an error on the part of one of the parties relative to a material fact bearing on the contract which error arose because of some misrepresentation or failure to disclose certain facts by the other party. [LSA-]C.C. art. 1847.

'In determining whether or not fraud has been proved, the situation of the parties and the circumstances surrounding the transaction may be taken into consideration. * * *' In Slocomb v. Real Estate Bank of Ark., 2 Rob. 92, it is declared:

'Two things are necessary to constitute fraud: the intention to defraud, and actual loss or damage, or such strong probability of it as will induce a court to interfere.'

In Strauss v. Insurance Co. of North America, 157 La. 661, 102 So. 861, 865, it was stated:

'The charge of fraud is a most serious one, and the maxim of law is that fraud is never to be imputed to any one except upon legal and convicting evidence.'

See also, 37 C.J.S., Fraud, §§ 16, 22, 114; Cox v. De Soto Crude Oil Purchasing Corp., D.C., 55 F.Supp. 467; Pike v. Kentwood Bank, 146 La. 704, 83 So. 904; Articles 1848 and 1847, LSA-C.C.

Our study of the record shows that the learned district judge examined thoroughly all of the issues and evidence herein through the medium of sharp eyes and a shrewd brain. In this instance there was in him the quality of Ithuriel's spear at whose touch there stood revealed the naked truth. We shall now adopt as our own the reasons for judgment given by the trial court:

'A. C. Buxton, and his wife, Mrs. Evelyn J. Buxton, residents of Gulfport, Mississippi, seek by this action to have declared null and void a number of documents they have executed. As these documents are of record in the office of the Clerk of Court and Ex-officio Recorder of Conveyances in this parish they seek to have the inscription thereof cancelled.

'They also seek a solidary judgment against the defendants in the amount of $12,000.00 and an accounting of all monies received by one of the defendants, Samuel J. Tennant, Jr., by virtue of these documents.

'The plaintiffs had invested in the activities of the Acadian Production Corporation and the documents they seek to have annulled are those by which they divested themselves of the interests acquired therein by virtue of these investments.

'In the course of several years, beginning about the year 1939 and ending in 1948, plaintiffs purchased stcok of this corporation as well as a 1/128 of 68 3/4% of 7/8 interest in the mineral lease described in suit No. 14927 entitled Acadian Production Corporation of Louisiana vs. Charles S. McKendrick, et al., consolidated with this suit for the purpose of trial. Apparently, they also advanced money to the company from time to time. * * * For this amount in June, 1942 the company issued to them an oil payment.

'In December, 1948 they therefore owned company stock, the mineral interest mentioned and the oil payment.

'They claim that the defendant, Charles S. McKendrick, the President and member of the Board of Directors of Acadian Production Corporation, was their close friend and adviser with reference to the activities of the company. Mrs. Evelyn J. Buxton was a member of the Board of Directors also.

'In December, 1948 the corporation found itself financially insolvent, as described in the Court's opinion in suit No. 14927. The result was that the Buxtons were not realizing any revenues from their investment and had become uneasy about it. At that time the defendant McKendrick visited their home and it was agreed that they would sell their holdings in McKendrick if McKendrick could find a purchaser. This McKendrick did, in the person of Samuel J. Tennant, Jr. Accordingly, the Buxtons sold to Tennant their interest for a consideration equal to the sum of money they had invested in the corporation, payable at the rate of $50.00 per month.

'After making four payments Tennant discovered that he had failed to obtain from the Buxtons the transfer of the oil payment. He resides in New Orleans, hence he mailed the Buxtons the necessary document to complete the transaction. They refused to sign it.

'Thereafter the Buxtons executed a sale of their oil payment for a cash consideration of $3500.00 and attached the documents to a draft drawn upon Tennant. Tennant refused to accept it.

'In these negotiations the Buxtons had as their attorney John R. Land, Jr. As a result of negotiations between that attorney and McKendrick in June, 1949, the Buxtons agreed to sell this interest to Charles B. Gholson for a consideration of $3500.00, provided Gholson would hold them harmless from any legal action that Tennant may institute because of the deeds he had previously acquired.

'Gholson was acting for McKendrick, that is, it was understood between them that the interest thus acquired belonged to McKendrick.

'Gholson & Gholson, McKendrick and Tennant had become the principal if not the entire interest holders of the lease formerly owned by Acadian and managed by the Moresi Lease Management, Inc. They had engaged in many transactions relative to their interests, and as a result considerable disagreement had arisen.'

'On June 21, 1949 they entered into a written agreement disposing of their various controversies, among which was the division of the Buxton oil payment. It was also agreed that Gholson would assign to Tennant, without warranty, the Buxton working interest that he had thus acquired. Whether or not formal transfer has been made is not shown by the evidence. The defendants, however, recognize the binding effect of the agreement and expressed their intentions to abide by its provisions.

'The Buxtons claim they have a right to have these transactions set aside because they were defrauded of this property. The means used by the defendants in achieving their goal, they allege, was a conspiracy among the defendants, the principal act of which was to have McKendrick, in whom they reposed a great amount of confidence, deceitfully misrepresent the actual value of the interest they had. This was done, they claim, by his telling them that the production in the field in which they held a mineral interest and oil payment was less than 100 barrels per day, when as a fact production was about 350 barrels.

'They contend that he also represented to them that an oil payment previously owed Regent Drilling Company, Inc. for an amount of money almost as large as theirs, had not been paid and had priority in payment over theirs. They also claim that McKendrick told them that the persons who had charge of the lease were improperly handling it and that there was no prospect that conditions, or the value of their interest, would improve. All of these representations, they claim, are contrary to facts.

'As additional evidence of their assertions they charge the defendants with having influenced their own attorney with a payment of money, namely the sum of $200.00.

'Of course, the defendants strenuously deny any...