Cassidy v. Hornor

• Decision Date: 13 June 1922
• Docket Number: Case Number: 10476
• Citation: 1922 OK 207,86 Okla. 220,208 P. 775
• Parties: CASSIDY, Adm'x, v. HORNOR et al.
• Court: Oklahoma Supreme Court

1922 OK 207

208 P. 775

86 Okla. 220

CASSIDY, Adm'x, v. HORNOR et al.

Case Number: 10476

Supreme Court of Oklahoma

Decided: June 13, 1922

Syllabus

¶0 1. Trusts--Constructive Trusts--Elements.

Constructive trusts are raised by equity for the purpose of working out right and justice, where there was no intention of the party to create such a relation, and often directly contrary to the intention of the one holding the legal title. All instances of constructive trust may be referred to what equity denominates fraud, either actual or constructive, including acts or omissions in violation of fiduciary obligations.

2. Joint Adventures--Acquiring Title to Property in Fraud of Associates--Constructive Trust.

Where one party to a joint adventure obtains the title to property, not only by fraud or by violation of confidence or of fiduciary relations, but in any other unconscientious manner, so that he cannot equitably retain the property which really belongs to another, equity carries out its theory of a double ownership, equitable and legal, by imposing a constructive trust upon the property in favor of the one who is in good conscience entitled to it, and who is considered in equity as the beneficial owner thereof, or of an interest therein.

3. Same.

Where property is acquired as a joint venture, it is not material in whose name the title is taken, as the one holding the title will be regarded as trustee for his associates; and property paid for out of the receipts of the joint adventure becomes the joint property of all the parties.

4. Same--Fiduciary Relation of Parties.

The relation between the parties to a joint adventure is fiduciary in its character, and requires the utmost good faith in all the dealings of the parties with each other.

5. Corporations--Capital Stock--Legality--Stock in Payment for Oil Leases.

An oil and gas corporation is not prohibited by section 39, art. 9, of the Constitution from issuing its stock in payment for oil and gas leases, provided the value of the leases equals the par value of the stock issued in payment therefor.

6. Corporations--Contracts Between Corporation and Officers--Validity.

A contract between a corporation and its officers is not void per se, but is merely voidable at the option of the corporation or its representatives, and such option must be exercised within a reasonable time under all the circumstances of the case.

Error from District Court, Logan County; John P. Hickam, Judge.

Action by C. C. Hornor against M. Cassidy and others. Judgment for plaintiff, and defendant M. Cassidy brings error. Affirmed.

Dale & Bierer and S.W. Hayes, for plaintiff in error.

D. A. Richardson and John Adams, for defendants in error.

NICHOLSON, J.

¶1 This action was brought by C. G. Hornor, as plaintiff, against M. Cassidy, Alice-Kathryn Oil Company, a corporation, and J. R. Cottingham, as secretary of Alice-Kathryn Oil Company, as defendants, to require the Alice-Kathryn Oil Company to issue and deliver to the plaintiff five shares of capital stock of the Alice-Kathryn Oil Company of the par value of $ 500. From a judgment in favor of the plaintiff, the defendant M. Cassidy prosecuted this proceeding in error. After this proceeding was lodged in this court, M. Cassidy died, and said cause has been revived in the name of, and is now being prosecuted by, Alice M. Cassidy, administratrix of the estate of M. Cassidy, deceased. The facts are fully stated in the findings of fact by the trial court, which are as follows:

"Upon the request of M. Cassidy, defendant, the court makes the following findings of fact and conclusions of law.

"Findings of Fact.

¶2 "(1) The court finds that the plaintiff was, at the time when this action was commenced, and has been for many years, a practicing lawyer residing in the city of Guthrie; that plaintiff at the time when this action was commenced and prior thereto, had had experience in the organization of corporations and had also made a study and investigation of oil fields and the conditions under which oil deposits formed and accumulated, and that plaintiff had had experience with oil companies, in their organization and management and in prospecting for oil.

¶3 "(2) The court finds that the defendant M. Cassidy had resided in the city of Guthrie for many years and was in the habit of coming to the office of plaintiff and discussing topics in connection with oil and oil fields, and that at such time plaintiff was in the habit of discussing with said defendant the result of his reading upon the subject of oil and gas production, and that defendant believed that plaintiff possessed knowledge and experience in such matters of practical value.

¶4 "(3) That the Alice-Kathryn Oil Company was and is a corporation organized and existing under the laws of the state of Oklahoma, and that J. R. Cottingham was and is secretary of said corporation.

¶5 "(4) The court finds that sometime in the month of March, 1914, the defendant M. Cassidy went to the plaintiff's office and stated to plaintiff that he, Cassidy, had been advised by one C. M. Gould, formerly State Geologist for the state of Oklahoma, that one D. W. O'Hearn had been making surveys and investigations in the vicinity of Yale, Okla., and had there discovered a well defined anticline indicating the existence of an undeveloped oil field, and that said Gould had suggested to the said Cassidy that there was an opportunity to acquire some oil leases in that section and it looked like a favorable proposition to get in on to make some money. That said Cassidy stated to plaintiff that he had an arrangement with the said Gould to go to Yale and look over the grounds there in company with the said O'Hearn; that the said Cassidy desired and requested the plaintiff to go along and look over said proposition in company with him and the said Gould, with a view of acquiring an interest therein, which said Cassidy said might be advantageous to plaintiff and to the said Gould and the said Cassidy. That plaintiff inquired the date when it was proposed to go to Yale, and that defendant stated the date, some days later, when the said Gould would come up from Oklahoma City, and it was proposed that plaintiff and said defendant should go from Guthrie on said day and meet the said Gould at the station of Fallis, on the line of the Missouri, Kan. & Texas Railroad and then proceed in company to Yale. That plaintiff stated that he was very much interested in the proposition and thought he would be able to go on the day in question. That defendant said he didn't want any uncertainty about the matter, but wanted it to be a distinct understanding that the parties were to go to Yale on the day stated, and said to plaintiff in words or substance, 'that this might be a big thing for us,' or 'it might mean a whole lot to us,' with other expressions of similar character and import; that plaintiff said he understood the matter very well and understood its importance and what it might signify and expected and intended to go. That defendant said he wanted to leave the matter in this shape so that there would be no contingency about keeping the appointment. That in this talk defendant stated in words or substance that Gould, meaning C. N. Gould, would be 'in this with us,' or 'in on the deal.' The court finds that the purpose of the defendant in coming to and desiring plaintiff to go to Yale on said trip was to interest plaintiff in this proposition in order to have the benefit of plaintiff's judgment and experience in looking over the ground and in any action that might be taken thereafter, and that it was the idea of defendant that plaintiff's knowledge and experience would be of value, both by reason of his knowledge of law and his experience in the formation of corporations, and also his knowledge of oil and gas and geology, all of which it was believed would be useful and valuable in passing upon the property and in carrying out any plan that might be formed to handle it; and the court further finds that there was nothing in the conversation or intentions of the parties, nor in fact, implying any employment of plaintiff as an attorney in a formal or technical sense, but that the purpose of defendant coming to plaintiff as aforesaid was to interest him in a joint venture in which the parties were to participate, and that any return which the plaintiff was to receive for what he did in the premises, was simply to be an interest or share in the venture. That there was nothing stated, implied, or intended in said conversation or arrangement that plaintiff was to be paid an attorney fee, or that plaintiff was to act in that sense and capacity. That it was simply a business venture in which plaintiff was to appear, if at all, as an actor and party in his own interest, he to contribute such advice and services as would be naturally expected in view of the knowledge and experience of plaintiff and his relation to the other parties.

¶6 "(5) The court further finds that a few days later the defendant Cassidy called plaintiff over the phone in the evening and stated that Mr. Gould had changed the day then fixed, viz., on or about the 3rd day of April, 1914; that plaintiff stated to defendant that he guessed that day would be all right, and that defendant again said that he didn't want any guessing about the matter, but wanted it to be definitely understood that the parties were to go to Yale on the day fixed and look the proposition over.

¶7 "(6) The court further finds that on or about the 3rd day of April, 1914, plaintiff and the defendant Cassidy went from Guthrie to Fallis and there met Mr. Gould, who had come up on the M., K. & T. train from Oklahoma City, that plaintiff was not acquainted with the said Gould, but that defendant Cassidy introduced plaintiff to said Gould, saying: 'This is Mr. Hornor, who will be in with us on this matter,' in substance or effect making an explanation of this character.

¶8 "(7) The court further finds that the...