Expansion Realty Company v. Geren

• Decision Date: 14 November 1914
• Citation: 170 S.W. 928,185 Mo.App. 440
• Parties: EXPANSION REALTY COMPANY, Appellant, v. JACK GEREN, E. R. GEREN, W. D. PAYNE, GEORGE N. SPIVA, T. D. WILLIAMS, E. F. GOBAR, J. S. ROBERTS, CONQUEROR TRUST COMPANY and GEORGE S. LORD, Respondents
• Court: Missouri Court of Appeals

170 S.W. 928

185 Mo.App. 440

EXPANSION REALTY COMPANY, Appellant, v. JACK GEREN, E. R. GEREN, W. D. PAYNE, GEORGE N. SPIVA, T. D. WILLIAMS, E. F. GOBAR, J. S. ROBERTS, CONQUEROR TRUST COMPANY and GEORGE S. LORD, Respondents

Court of Appeals of Missouri, Springfield

November 14, 1914

Appeal from Jasper County Circuit Court, Division Number Two.--Hon David E. Blair, Judge.

DECREE FOR APPELLANT (on condition.)

STATEMENT.--The appellant, a corporation with its place of business in Kansas City, Missouri, owner of a fifteen-acre tract of mineral land in Jasper county, has filed a bill in equity charging that owing to certain fraudulent representations made and relied upon by it, it was induced to execute a certain lease and the assignment of the same, and praying for an accounting to it by the defendants.

Summarized the allegations of the bill are as follows: That on the ninth day of September, 1910, the plaintiff executed a contract with Jack Geren & Company, otherwise referred to in the evidence as the Quick Seven Mining Company but referred to throughout this opinion as Geren & Company, under the terms of which the latter was to get the right to prospect and search for zinc and lead ores, covering a period of four months from its date. That it provided that when certain things were done by Geren & Company a lease for ten years dated from the date of the contract, would be given by the plaintiff. That it provided that no assignment of the contract, or the lease contemplated thereunder, should be made without the written consent of the plaintiff. That said Geren & Company went into possession of the land, but failed to perform the conditions of the contract, and thereby forfeited any and all rights thereunder; and that at all times after the expiration of the four months, which was in January, 1911, plaintiff denied that Geren & Company had any rights under said contract or in the land. That Geren & Company claimed to have expended some $ 6000 in the development of the land; and that in order to effect a compromise of the claims of all parties to the contract the plaintiff expressed a willingness to divide the proceeds to be derived from a disposal of a lease, provided some reliable, responsible party could be found to take the lease and mine the ground; and that out of the proceeds procured from such disposal of a lease the defendants would be reimbursed for the amount they claimed to have expended on the property. That with that end in view Messrs. Williams Gobar, Payne, Roberts, Jack Geren and E. R. Geren appointed the other member of Geren & Company, George N. Spiva, as their agent and attorney in fact to negotiate with a representative of the plaintiff for the purpose of making a mining lease of said land; that Spiva for Geren & Company and Shannon C. Douglass for the plaintiff, entered into negotiations which finally resulted in the execution of a lease "as a new transaction" and by way of a compromise or adjustment of all differences and controversies between Geren & Company and the plaintiff. That said defendant Spiva represented to Douglass that one George S. Lord of Chicago was a responsible and capable person to work the ground, and that thereupon there was an explicit and distinct agreement reached by which plaintiff agreed that it would execute a lease direct to said Lord, or to a corporation to be formed by him, or to said Spiva, with the understanding that if made to Spiva it would be at once assigned to said Lord or to a corporation that he would form. That Spiva further represented that $ 6500 was all that could be obtained from Lord for the lease. That at the request of said Spiva, acting for himself and his co-defendants, and on the representations made by him, plaintiff executed a lease dated November 20, 1912, to George N. Spiva, and inserted a provision therein that consent was given to an assignment to be made "to corporation," but that no other assignment could be made without plaintiff's written consent; that said lease was so made to Spiva for the express purpose of carrying out the compromise between plaintiff and defendants, and that said lease was made for the use and benefit of George S. Lord or corporation to be formed by him, and not for the purpose of executing a lease under the terms of the contract of September 9, 1910, with Spiva and his co-defendants. That it was the agreement that out of the $ 6500, which it was represented Lord would pay for the lease, plaintiff was to receive $ 750, and that Spiva and his associates were to receive $ 5750 to renumerate them for the amount they claimed to have expended under the development contract. That the representation made by Spiva that $ 6500 was all that Lord would pay was false and fraudulent and was made for the purpose of influencing plaintiff into executing a lease, and that relying upon such representation said lease was made, and that but for such representation the same would not have been executed. That Jack Geren, another defendant, made the same false representations to plaintiff's agent Douglass while the latter was in Jasper county on business relative to the contract. That only a short time before the filing of the bill plaintiff ascertained the fact to be that Spiva and his associates, other than Lord and the Conqueror Trust Company, had on October 16, 1912, already made an option to purchase contract with Lord in which they were to receive $ 12,000 for a lease to be made to Lord or to a corporation to be formed by him. That said option to purchase contract, with an escrow paper, was turned over to defendant Conqueror Trust Company. That all of the said $ 12,000 has been paid except $ 2500. That at the time defendants were representing that $ 6500 was all that Lord would pay, they knew that they had executed an exclusive option to purchase contract calling for the payment of $ 12,000. That their representations were false and fraudulent and made for the purpose of deceiving the plaintiff and after they knew that plaintiff had advised them that under no circumstances would it consent to make a lease or assignment of a lease for anything in excess of $ 6500 except upon a new agreement with respect to the sale and purchase price of said lease or assignment. That by reason of the procurement of the lease and assignment, as hereinbefore set forth, the co-defendants of Geren & Company received $ 5500 in excess of the amount they represented they were getting, and that all the defendants except Lord and the Conqueror Trust Company are insolvent, and that plaintiff is entitled to the $ 5500 so procured. Plaintiff asks that the Conqueror Trust Company and Lord be enjoined from paying out any part of the $ 5500 held by them by reason of the escrow agreement between Lord and Geren & Company, and that any of such sum in their hands be impounded and held subject to the orders of the court. The bill ends with a prayer for an accounting between plaintiff and defendants and for a judgment against the members of Geren & Company for the amount due plaintiff, and that Lord and the Conqueror Trust Company be enjoined from paying over to defendants any of the unpaid purchase price until ordered to do so by the court.

The answer of the defendants, except Lord and the Conqueror Trust Company, was a general denial. Lord's answer admitted that he purchased of Spiva a mining lease described in the petition but denied all other allegations in the bill, and denied that at the time of the institution of this suit he owed any of his co-defendants any sum of money whatever.

The evidence discloses that all the money had been paid by Lord to the Conqueror Trust Company for the other defendants and that all of it had been turned over to the defendants except the sum of $ 2521.

The evidence further shows that the Conqueror Trust Company figured in this transaction only for the purpose of holding the escrow agreement and acting as the party through whom the agreement would be carried out in detail by Geren & Company and Lord or his corporation.

Neither is there any evidence that Lord or the trust company were parties to the fraud charged to have been perpetrated on the plaintiff.

The vital question of fact to be determined in this case is as to what took place between Spiva and Douglass, the representatives of defendants and plaintiff, respectively, in the making of the lease and assignment thereof that went to Lord or his corporation for a consideration of $ 12,000, and this is to be determined largely from the versions of these witnesses as to what occurred during the negotiations and from the correspondence passing between them just prior to the making and delivery of the lease.

The facts stand admitted that for some time prior to the execution of the lease and the consent to the assignment thereof, there had been a controversy existing between plaintiff and Geren & Company as to the rights of the latter under the contract of September, 1910, under which contract Geren and Company were holding possession of the land. It is also admitted that Spiva and Douglass were empowered to adjust this controversy, and that certain correspondence passed between them, and that they had a meeting in the office of Douglass in Kansas City, Missouri, and there reached an understanding. It is admitted that Geren & Company did sell the lease to Lord or his corporation for $ 12,000, and that neither plaintiff nor its agent knew or had cause to know that Geren & Company was receiving or had received over $ 6500 until a short time before the institution of this suit.

As there is a direct conflict between the testimony of Douglass and that of Spiva as to what was agreed upon at the Kansas City conference, it is here fitting to review such correspondence as passed between them...