City of Corpus Christi v. Gregg

• Decision Date: 24 November 1954
• Docket Number: No. 12716,12716
• Citation: 275 S.W.2d 547
• Parties: CITY OF CORPUS CHRISTI, Appellant, v. A. W. GREGG et al., Appellees.
• Court: Texas Court of Appeals

Page 547

275 S.W.2d 547

CITY OF CORPUS CHRISTI, Appellant, v. A. W. GREGG et al., Appellees.

No. 12716.

Court of Civil Appeals of Texas, San Antonio.

Nov. 24, 1954.

Rehearing Denied Jan. 19, 1955.

Further Rehearing Denied Feb. 16, 1955.

I. M. Singer, Keys, Russell, Keys & Watson, Corpus Christi, for appellant.

Dan Moody, Dan Moody, Jr., Austin, B. D. Tarlton, Corpus Christi, C. E. Bryson, Houston, John Miller, Sinton, Wm. E. Nichols, Aransas Pass, J. C. Tenrus, William B. Moss, Sinton, Lewright, Dyer, Sorrell & Redford, Corpus Christi, for appellees.

NORVELL, Justice.

This suit was brought by A. W. Gregg to validate four oil and gas leases held by him and purportedly executed for and on behalf of the City of Corpus Christi. By way of cross-complaint, the City sought a decree cancelling the leases and named A. W. Gregg, Sam Susser and Leslie Wasserman as cross-defendants. Upon motion, Wasserman was dismissed from the suit over the City's objections. ¹ At the conclusion of the evidence, the court instructed the jury to return a verdict in favor of Gregg and Susser, whereupon judgment was rendered validating the four oil and gas leases in question and decreeing that the City take nothing against Gregg and Susser.

The City by its first point urges that the evidence was sufficient to take the case to the jury upon the pleaded theory that Gregg had obtained the oil and gas leases by fraud. It is specifically contended that the evidence if credited was sufficient to show that Gregg had paid some $30,000.00 to Wasserman, who was Mayor of the City of Corpus Christi, and that such sum was paid for Wasserman's corrupt services in influencing the action of the city council in executing the leases.

It appears that Gregg had known Susser for some time prior to December, 1949, and that the two had been jointly interested in certain oil and gas operations in West Texas. Largely at the instigation of Susser, Gregg decided to investigate oil and gas production opportunities in the Corpus Christi area and entered into an agreement with Susser that should any leasehold interests be acquired they would be held jointly, Gregg owning a two-thirds interest and Susser a one-third interest therein. Gregg came to Corpus Christi some time during the month of December, 1949, and became acquainted with Leslie Wasserman, the Mayor of Corpus Christi, who was a friend of Susser's for many years. Wasserman was then engaged in the upgrading of Mexican cotton, that is, mixing domestic cotton with that which he had imported and selling the combined product. He applied to Gregg for a loan of $20,000.00 and represented that he expected to make a $30,000.00 profit in his cotton activities. Gregg did not loan this money to Wasserman direct, but on January 4, 1950, he signed a note which was also executed by Wasserman and his wife, for the principal sum of $20,000.00, payable to the order of the City National Bank of Houston. Wasserman received the proceeds of this note, but it appears that the bank advanced the money upon the strength of Gregg's credit. Wasserman made some interest payments upon this note but ultimately defaulted, and in June of 1951 the bank called upon Gregg to take up the note, which he did. It also appears that on February 20, 1950, Gregg paid one, E. G. Lyon, the sum of $10,000.00 in order to discharge an indebtedness owed by Wasserman to Lyon. Wasserman never reimbursed Gregg for the $20,000.00 he paid to the National City Bank of Houston, nor for the $10,000.00 which he advanced in order to pay the Lyon indebtedness. Both of these obligations owed by Wasserman to Gregg were charged off by Gregg as bad debts in his income tax returns.

During the month of January, 1950, there was drilling activity on a lease adjacent to certain property owned by the City of Corpus Christi, near Mathis, Texas, where the City maintained a storage reservoir as a part of its water works system. The well then being drilled near the City's property was known as the Ella Wade No. One. Susser attempted to get information in regard to this well and by entering upon the premises with city employees who were entitled to go upon the Wade property, he managed to see the record of the Schlumberger test. The showing of the Ella Wade was favorable, and a lease upon the adjoining property owned by the City of Corpus Christi thereupon became highly desirable. On January 14, 1950, the Manager of the City of Corpus Christi advised that bids for an oil and gas lease upon property owned by the City of Corpus Christi near the Ella Wade lease would be considered. The time limit for the receiving of bids was set at 5 o'clock P.M. on January 19th. The Ella Wade was completed as a producer on the fifteenth and fourteen bids for an oil and gas lease upon the city property were received by the nineteenth. No paid advertisements were inserted in newspapers with reference to the call for bids, but wide publicity was given to the proposed letting of a lease by the Corpus Christi daily papers. The various bids received were discussed by the city commissioners and Gregg's bid, embodying a bonus of $30,000.00, was found to be the highest and best bid. The Council, composed of the four City Commissioners and the Mayor, voted unanimously to execute a lease covering the property to Gregg. ²

It appears that the estimated cost of drilling the proposed well upon the city property, plus the $30,000.00 bonus, amounted to about $80,000.00. Susser informed Gregg that he was unable to pay one-third of this amount and, after negotiations between the two, Gregg finally agreed to assign to Susser an oil payment of $100,000.00 out of a certain percentage of the oil from the well, as, if and when produced.

The above briefly states the evidence relied upon to carry the case to the jury. In our opinion it is insufficient as a matter of law. The rules relating to the necessary quantum of proof in fraud cases are variously stated. It is conceded that an extensive latitude should be exercised in admitting circumstantial evidence where the existence of a conspiracy is in issue. Jernigan v. Wainer, 12 Tex. 189; Vittitoe v. Junkin, Tex.Civ.App., 54 S.W.2d 166, 15 C.J.S., Conspiracy, § 29, ³ p. 1043, but despite the latitude applicable to the admission of evidence, the rule as to the sufficiency of the evidence to meet the requisite standard of proof has been rather strictly stated. Some cases hold that in order to show conspiracy or fraud it is necessary that the evidence be full, clear and satisfactory. Selari v. Selari, Tex.Civ.App. 124 S.W. 997; S. Cantu & Son v. Ramirez, Tex.Civ.App., 101 S.W.2d 820; Fernandez v. Cano, Tex.Civ.App., 108 S.W.2d 310; Elick v. Schiller, Tex.Civ.App., 235 S.W.2d 494, reversed on other grounds, Schiller v. Elick, 150 Tex. 363, 240 S.W.2d 997. It is likewise said that fraud will not be presumed, Paxton v. Boyce, 1 Tex. 317; Whitsel v. Hoover, Tex.Civ.App., 120 S.W.2d 930, but that, on the contrary, there is a presumption in favor of honesty and fair dealing. Turner v. Lambeth, 2 Tex. 365; Giddings v. Steele, 28 Tex. 732, 733; Fletcher v. Ely, Tex.Civ.App., 53 S.W.2d 817; Hawkins v. Campbell, Tex.Civ.App., 226 S.W.2d 891. For the purposes of practical application, perhaps the most satisfactory statement of the rule is that evidence which raises no more than a conjecture, suspicion or surmise of fraud is insufficient to take the case to the jury. Joske v. Irvine, 91 Tex. 574, 44 S.W. 1059; Green v. Texas & Pacific Ry. Co., 125 Tex. 168, 81 S.W.2d 669; Cole v. Missouri-Kansas-Texas R. Co., Tex.Civ.App., 179 S.W.2d 343, 344; Hayter v. Hudgens, Tex.Civ.App., 268 S.W. 480; Smith's Heirs v. Hirsch, Tex.Civ.App., 197 S.W. 754; Metropolitan Cas. Ins. Co. of New York v. Texas Sand & Gravel Co., Tex.Civ.App., 68 S.W.2d 551. A corollary to this rule, as stated by the Waco Court of Civil Appeals in Perren v. Baker Hotel of Dallas, 228 S.W.2d 311, 317, is that, 'Where circumstances are equally consistent with the existence and nonexistence of an ultimate fact (fraud in this case) sought to be established, such circumstances are wanting in probative force as any evidence tending to establish the existence of the ultimate fact.'

In applying the rules above stated to the record before us, it is well to consider those necessary elements of a fraudulent conspiracy which are not shown by direct evidence and hence must be supplied by inference. There are also certain matters established by the undisputed evidence which can not be ignored. Although there is evidence that Wasserman and Susser were friends, there is no direct evidence that Susser ever talked to Wasserman about Gregg's obtaining a lease upon the city property. Similarly there is no direct testimony that Wasserman urged or suggested to any member of the city council that the oil and gas lease be awarded to Gregg. It is undisputed in the evidence that the bid made by Gregg for the oil and gas lease in question was the highest and best bid made for the lease. Likewise, it is undisputed that the Ella Wade was a known producer prior to the time the bidding for the City lease was closed. It does not appear that Susser's attempts to gain information relating to the Ella Wade well resulted in his obtaining any particular informational advantage. Appellant's position in its brief, as we understand it, is not that Susser and Gregg were pssessed of information superior to that possessed by others in the Corpus Christi area, or that Gregg's bid was not the highest and best received, but rather that the city council, being corruptly influenced, had acted with unseeming haste in awarding the lease upon the property, and that had the time been extended beyond January 19th, other and larger oil producing companies may have been induced to bid for the lease.

We may assume that the making of the $20,000.00 loan to Wasserman by Gregg, upon a relatively short acquaintance, constituted a suspicious circumstance and that Gregg on...