Ebberts v. Carpenter Production Co.

• Decision Date: 12 March 1953
• Docket Number: No. 4725,4725
• Citation: 256 S.W.2d 601
• Parties: EBBERTS et al. v. CARPENTER PRODUCTION CO.
• Court: Texas Court of Appeals

Page 601

256 S.W.2d 601

EBBERTS et al. v. CARPENTER PRODUCTION CO.

No. 4725.

Court of Civil Appeals of Texas, Beaumont.

March 12, 1953.

Rehearing Denied March 20, 1953.

John L. Bell and Bruce Votaw, Beaumont, C. M. Hightower, Liberty, for appellants.

King, Sharfstein & Reinstra, Beaumont, for appellee.

WALKER, Justice.

The plaintiffs in this suit, and one of the two groups of appellants, are M. J. Ebberts and wife, Mittie Ebberts. The defendant, and the sole appellee, is the Carpenter Production Company. The other group of appellants are intervenors.

The plaintiffs sued to rescind transfers of property made by a bill of sale, two assignments of oil and gas leases, and a deed. The first three of these instruments were executed by Ebberts alone and were dated December 28, 1943; but the deed was executed by both Ebberts and Mrs. Ebberts and it was dated December 29, 1943. These papers were incidents of a sale of the transferred property, plaintiffs being the sellers and defendant being the purchaser; and these papers are the only memorial of the terms of the contract of sale.

The intervenors sought to have one of the oil and gas leases transferred to defendant declared at an end and to recover damages from defendant for the destruction of an oil well. The lease is that referred to hereinafter as the Hebert lease of 1940, or July 5, 1940, and the well, that situated on Lot 9.

The land conveyed to defendant by Mr. and Mrs. Ebberts' deed belonged to the separate estate of Mrs. Ebberts. It was a part of a subdivision of a larger tract, and for convenience we shall describe it as lots 8, 19, 22, and 23, and a one-third undivided interest in lots 6, 7, 11 to 16, inclusive, and lots 81 to 90, inclusive. Mrs. Ebberts reserved a one-eighth royalty in the oil, gas and other minerals in the property which she conveyed. This was a full one-eighth in the four lots wholly owned by her and a one-twenty-fourth in the eighteen lots of which she owned a one-third.

Each of these lots and each of the lots in this particular subdivision was an acre, or approximately an acre in size, and the lots are sometimes referred to in the proof as an acre.

The property conveyed to defendant by the papers which only Ebberts executed, namely, the bill of sale and the two assignments of oil and gas leases, belonged to the community estate of Mr. and Mrs. Ebberts; but legal title to this property was formally vested in Ebberts.

All of the land and interests in land conveyed to the defendant was in the Sour Lake Oil field in Hardin County, in an area which had produced oil for many years.

One of the leases assigned to defendant covered only lots 6 and 7, which were owned in undivided thirds by Mrs. Ebberts, one Jackson, and intervenors. The terms of this lease were not proved and it seems not to be involved in the conflicting claims of the parties or to be material to the issues made on this appeal except as its ownership may finally be affected by the judgment rendered. Ebberts' assignment described it as being dated October 19, 1943, and as made to Ebberts as lessee by Ebberts and Mrs. Ebberts and the other owners. The other lease assigned to defendant by Ebberts is of the utmost materiality to the claims of the parties, and it is referred to hereinafter as the Hebert lease of 1940, or July 5, 1940. It is dated July 5, 1940, and was made to Ebberts as lessee by intervenors as lessors. It was for a primary term of 5 years and as long thereafter as oil or gas should be produced. Subject to one-eighth royalties, it conveyed the oil and gas in lots 9, 18, 20, 21, 78, 79 and 80 of the subdivision in which Mrs. Ebberts' lots were situated. The lots mentioned in the Hebert lease belonged to intervenors. Ebberts was lessee as stated, but he and Mrs. Ebberts, or Mrs. Ebberts alone, had or were treated as having an interest in the income from these lots under and by virtue of the contract now to be mentioned.

On January 10, 1914, many years before the present controversy arose, Mr. and Mrs. Ebberts made a written agreement with Mr. and Mrs. J. J. Hebert which provided that 'any revenues or monies derived from the mineral rights' in certain property 'shall be divided equally and paid half' to Mr. and Mrs. Hebert and half to Mr. & Mrs. Ebberts 'or their heirs and assigns.' Some of the property described in this agreement belonged to Mrs. Ebberts and some of it belonged to Mrs. Hebert, and Mrs. Ebberts' part included lot 19 and other lots which, or an interest in which, Mrs. Ebberts conveyed to defendant by her deed of December 29, 1943; and Mrs. Hebert's part included the lots which were covered by the Hebert lease of 1940. Mr. and Mrs. Hebert were the parents of those of the intervenors who are interested parties (not formal parties) other than the widow of J. J. Hebert, Jr., who was the son of Mr. and Mrs. Hebert. Mrs. Ebberts and Mrs. Hebert were sisters. After this contract was made Mrs. Ebberts continued to be the owner of lot 19 and the other property described as hers in the contract down to the time she conveyed the property to defendant. J. J. Hebert died in 1925 and Mrs. Hebert died in 1939, and intervenors (for convenience we shall identify the widow of J. J. Hebert, Jr. with her husband) inherited their mother's title. Throughout the years since this contract was made it was complied with by the parties to the agreement and by intervenors until it was terminated by another agreement, dated July 2, 1947, in which Mrs. Ebberts (joined by her husband) and the intervenors granted each other interests in the royalties or minerals produced from their respective properties. We note that while the contract of 1914 was in force the landowners seem to have construed it as being only an agreement in personam (or covenant running with the land) which conveyed no interest in the various lots mentioned in it.

The consideration paid plaintiffs by defendant for the transfers of December 28 and 29, 1943, is not fully stated in the documents of transfer. A part of this consideration was paid in cash and amounted to $13,300. We have concluded that $800 of this sum was paid to Mrs. Ebberts and that $12,500 was paid to Ebberts. This $12,500 was actually deposited in a bank to the joint credit of Ebberts and an officer of the defendant corporation named Frank Carpenter, and most of it was paid out by them to creditors of Ebberts but a small part, perhaps $1,500 was left after these payments were made, and this sum was then released to Ebberts.

The cash payments to Mr. and Mrs. Ebberts are not mentioned in any of the four documents of transfer. Mrs. Ebberts' deed refers in general terms to some cash consideration without specifying it and Ebberts' two assignments of oil and gas leases contain only formal recitations of consideration. However, the bill of sale refers in general terms to some cash consideration and also to some consideration which was to be paid in the future. This bill of sale purported to transfer certain oil field equipment and it recited that 'I, M. J. Ebberts, for and in consideration of-($1.00) and other good and valuable consideration to us in hand paid by (defendant), the receipt of all of the cash consideration for which is hereby acknowledged, and the further consideration of the oil payment hereafter set forth have (transferred to defendant the personal property mentioned). As a part of the consideration for this bill of sale, grantee agrees to pay to grantor an oil payment in the total-of-($10,000.00)-payable only out of the proceeds of any oil run from production had from the hereinafter described wells now situated on said property, but not producing, as follows, to-wit: 1. The sum of-($5,000.00)-payable only out of the proceeds of-(1/4 of 7/8) of any and all oil produced and sold from well situated on Lot-(9) of said-subdivision, which said well is not presently producing and in which some tubing and rods are stuck; and (2) the sum of-($5,000.00)-payable only out of the proceeds of-(1/4 of 7/8) of any and all oil produced and sold from that certain well situated on Lot-(18) of said-subdivision, which said well is not presently producing and has no derrick over same. It is understood and agreed that no part of the oil payment hereby provided for shall be payable to grantor except it be paid from the proceeds of oil produced and sold from the two wells expressly mentioned above and in the sum and manner provided for above.'

The negotiations for the purchase and sale of plaintiff's property were conducted by Carpenter for the defendant and by Ebberts for the plaintiffs. Mrs. Ebberts never talked with Carpenter about the sale of the property; she dealt with Carpenter through her husband. As the time of these negotiations Carpenter was the Secretary-Treasurer of the defendant corporation and he has continued in the office since that time. He has been treated by the plaintiffs as the alter ego of the defendant corporation, and his own way of speaking while giving testimony shows that he has done the same thing. We infer, from his testimony, that at all times relevant to the issues between the parties he was in the actual charge and control of the defendant's operations concerning and on the property in suit.

Carpenter, who was a lawyer, wrote the four documents of transfer, at his own suggestion. Ebberts was not a lawyer but had had many years of experience in the production of oil from the property conveyed to defendant and from other property nearby and elsewhere in the Sour Lake oil field; and Carpenter was also experienced in the production of oil in the same area and in the oil business. The two men had been acquainted for many years and were on friendly terms, but there was no special relation of confidence and trust between them. Carpenter delivered the documents in blank to Ebberts, and Ebberts took them away with him to his home in another town and there he and Mrs. Ebberts read them over, privately and at...