Cooper Petroleum Co. v. LaGloria Oil & Gas Co., B--795

• Decision Date: 22 January 1969
• Docket Number: No. B--795,B--795
• Citation: 436 S.W.2d 889
• Parties: COOPER PETROLEUM COMPANY et al., Petitioners, v. LaGLORIA OIL AND GAS COMPANY, Respondent.
• Court: Texas Supreme Court

Page 889

436 S.W.2d 889

COOPER PETROLEUM COMPANY et al., Petitioners, v. LaGLORIA OIL AND GAS COMPANY, Respondent.

No. B--795.

Supreme Court of Texas.

Jan. 22, 1969.

Fulbright, Crooker, Freeman, Bates & Jaworski, Dan G. Matthews, John A. Croom and Chester M. Fulton, Houston, for petitioners.

Vinson, Elkins, Weems & Searls, John C. Snodgrass and John B. Holstead, Houston, for respondent.

WALKER, Justice.

This suit by LaGloria Oil and Gas Company against Cooper Petroleum Company and Albert E. Fagan is based upon alleged guaranties of accounts owing by International Marketing, Inc. (I.M.I.) to LaGloria. The trial court rendered judgment on the verdict in favor of LaGloria against Cooper Petroleum for $159,881.90 and against Fagan for $136,429.93. The Court of Civil Appeals affirmed. 423 S.W.2d 645.

The only question brought here that might affect the judgment against Cooper Petroleum is a contention that the trial court erred in admitting the documentary evidence offered by LaGloria to prove the indebtedness owing by I.M.I. Cooper Petroleum guaranteed in writing, and LaGloria had been orally promised that Fagan would guarantee in writing, payment of the purchase price of petroleum products sold by LaGloria to I.M.I. pursuant to certain contracts. LaGloria offered into evidence and the trial court admitted: (1) Plaintiff's Exhibit 5, which was a box of LaGloria invoices purporting to cover sales to I.M.I.; and (2) Plaintiff's Exhibit 4, which was a demand letter from LaGloria to Cooper Petroleum with an attached list of the invoices prepared by someone acting for LaGloria. The latter not only lists the dates, numbers and amounts of the invoices but also purports to show the amounts that should be charged to Cooper Petroleum and to Fagan under their respective guaranties.

Defendants objected to Exhibit 4 on the ground that it was a self-serving letter written by LaGloria to Cooper Petroleum. This objection apparently was directed at one paragraph of the letter, which was excluded by the trial court. The remainder of the letter and the attached list of invoices were admitted. Petitioners objected to Exhibit 5 as hearsay and on the ground that a proper predicate had not been laid for the introduction of the invoices as business records. The Court of Civil Appeals reasoned that since the list of invoices was admitted without objection, any error of the trial court in admitting Exhibit 5 was harmless.

We recognize that a tabulated schedule or summary of voluminous records may, in the discretion of the trial court, be admitted to expedite the trial and aid the trier of fact. See Wigmore on Evidence, 3rd ed. 1940, § 1230. This rule assumes that the records themselves are admissible. The tabulated statement tends to prove nothing except the contents of the records it purports to summarize. If the invoices constituting Exhibit 5 were improperly admitted, the list of invoices prepared for making demand on Cooper Petroleum is hearsay and has no probative value. Aetna Insurance Co. v. Klein, 160 Tex. 61, 325 S.W.2d 376; Texas Co. v. Lee, 138 Tex. 167, 157 S.W.2d 628; Henry v. Phillips, 105 Tex. 459, 151 S.W. 533.

The question then is whether a proper predicate was laid for admission of the invoices as business records in accordance with Article 3737e, Vernon's Ann.Tex.Civ.Stat. This statute creates an exception to the hearsay rule and makes a 'memorandum or record of an act, event or condition * * * competent evidence of the occurrence of the act or event or the existence of the condition' provided the identity and mode of preparation of the memorandum or record are established as provided therein. Respondents offered the testimony of Bruce A. Jones, general manager of sales for LaGloria, to show that the invoices met the requirements of Article 3737e. The witness could not say that the invoices are accurate, but he did state that they were kept in the regular course of LaGloria's business. His testimony further shows that they were prepared by employees in the office manager's group and are 'based upon delivery tickets' delivered or sent 'from our rack to the office manager's group.'

Before a business record may be admitted under Article 3737e, the proponent must show, among other things, that:

'(b) It was the regular course of that business for an employee or representative of such business with personal knowledge of such act, event or condition to make such memorandum or record or to transmit information thereof to be included in such memorandum or record.'

As we observed in Skillern & Sons, Inc. v. Rosen, Tex.Sup., 359 S.W.2d 298, 'some employee or representative who either made the record or transmitted the information to another to record must have had Personal knowledge of the act, event or condition in order for such record to be admissible under the business records exception to the hearsay rule.' It is clear that the invoices here were not prepared by someone with personal knowledge of all relevant information appearing thereon, and there is no evidence that it was the regular course of LaGloria's business for one or more of its employees who had personal knowledge of the information to transmit the same for inclusion in the invoices. Under the present record, therefore, neither the invoices nor the list constitutes competent proof of the sales to I.M.I. There is no other evidence to support the jury's findings as to the amount of indebtedness covered by the alleged guaranties, and the judgment of the trial court must be reversed.

LaGloria's claim against Fagan is based on an oral promise made by Fagan's son-in-law Clark, that Fagan would give LaGloria a letter of guaranty. Fagan has a number of points of error which, if sustained, might require a rendition of judgment in his favor. They raise questions of apparent authority, extoppel to deny authority, applicability of the Statute of Frauds, and estoppel to plead the Statute of Frauds. A rather detailed statement of the facts giving rise to the suit is necessary.

LaGloria is a producer, refiner and processor of petroleum products. Cooper Petroleum is in the business of marketing these products, buying them from producing companies and reselling to its customers. Fagan is President of Cooper Petroleum. He and his wife and children own all of its stock. His son-in-law, James A. Clark, is Vice-President of Cooper Petroleum and Vice-President of I.M.I.

I.M.I. is another corporation engaged in the business of buying and selling petroleum products. It was organized in 1959, and its stock was originally owned equally by Clark and D. Truitt Davis. By 1962 I.M.I. was doing a substantial amount of business with Cooper Petroleum, perhaps $100,000.00 per month. It was in need of additional working capital, and in May, 1962, Fagan purchased one-fourth of the capital stock. The remainder of the stock was owned one-third each by Clark, Davis and Frank Wood. Cooper Petroleum loaned Clark, Davis and Wood $7,500.00 each, and their stock in I.M.I. was pledged to Cooper Petroleum as security for the loans. By December, 1963, Fagan had gaven his stock in I.M.I. to a son and another son-in-law.

At the request of Fagan and Clark, LaGloria began selling gasoline to I.M.I. on credit. In September, 1962, I.M.I. contracted to furnish Cooper Petroleum a large amount of gasoline each month to enable the latter to fulfill its contract with Slick Airways. About two months later I.M.I. was awarded a contract to supply aviation gasoline to the United States Government. On each occasion it negotiated with LaGloria for the required gasoline. Since substantial sales were involved, Mr. Jones of LaGloria talked with Clard about I.M.I.'s credit and was assured orally that Cooper Petroleum would guarantee payment of I.M.I.'s account. On the basis of these representations, LaGloria agreed on each occasion to supply the gasoline required by I.M.I. and began making deliveries. The promised guaranties were not furnished promptly, but on or about February 1, 1963, LaGloria received a letter from Cooper Petroleum guaranteeing 'payment at maturity of whatever amounts shall at any time be owing to you on deliveries' under the two contracts between LaGloria and I.M.I. The letter was signed for Cooper Petroleum by Clark as Vice-President and was witnessed by the Secretary.

Substantially the same sequence of events occurred in connection with another Government contract which I.M.I. was awarded in about May of 1963. After numerous telephone calls from Mr. Jones of LaGloria, Cooper Petroleum mailed a second letter of guaranty on September 26, 1963. This second letter was signed in the same manner and contained the same form of guaranty as the first. It covered gasoline furnished to I.M.I. to enable it to fulfill its contract with Cooper Petroleum and the second Government contract.

This brings us to the transactions that are the basis of LaGloria's claim against Fagan individually. By purchase order dated July 22, 1963, I.M.I. confirmed the purchase from LaGloria of 75,000 to 100,000 gallons of light alkylate per month. On August 1, 1963, LaGloria further agreed to sell I.M.I. approximately 200,000 gallons of 100 RON motor gasoline per month. I.M.I. was awarded a third contract to supply aviation gasoline to the Government, and on December 16, 1963, LaGloria agreed to sell and I.M.I. agreed to buy a maximum of 5,480,000 gallons of gasoline to service this contract.

I.M.I. fell behind on the payment of its accounts with LaGloria. In mid-December of 1963 the responsible officials of LaGloria decided that I.M.I.'s unpaid account of approximately $250,000.00 was so large that LaGloria needed collateral in addition to the Cooper Petroleum guaranty. Mr. Kane of LaGloria talked with Clark and requested the latter to secure from Fagan a personal letter of guaranty covering the light alkylate contract, the 100 RON motor gasoline contract and the third Government contract. Clark assured Kane that...