Flournoy v. Gallagher, 2515.

• Citation: 189 S.W.2d 108
• Decision Date: 29 June 1945
• Docket Number: No. 2515.,2515.
• Parties: FLOURNOY v. GALLAGHER et al.
• Court: Court of Appeals of Texas

189 S.W.2d 108

FLOURNOY v. GALLAGHER et al.

No. 2515.

Court of Civil Appeals of Texas. Eastland.

June 29, 1945.

Rehearing Denied July 20, 1945.

Appeal from District Court, Stephens County; Floyd Jones, Judge.

Suit by J. M. Flournoy against Joe Gallagher, for whom, after his death, was substituted Bethel Fondren Gallagher, executrix of the estate of Joe Gallagher, deceased, and others, for an accounting of sums received by deceased defendant on the sale of oil and gas leases and for judgment for one-half of sums received from such sales, less the amount paid therefor, and for other relief. From a judgment dismissing the suit, plaintiff appeals.

Affirmed.

F. D. Wright, of Cisco, and L. H. Welch, of Breckenridge, for appellant.

Harrell & Bowers, of Breckenridge, for appellees.

LONG, Justice.

This suit was originally instituted by the plaintiff, J. M. Flournoy, against Joe Gallagher. After the death of the defendant Gallagher, the plaintiff by his second amended original petition sued Bethel Fondren Gallagher, executrix of the estate of Joe Gallagher, deceased, George P. Hill, Ed S. Hill and Houston Hill.

Plaintiff alleged, in substance, that he was then, and had been for a number of years, engaged in the business of buying and selling oil and gas leases; that he was not a licensed real estate dealer and was not licensed under the Texas Securities Act, Vernon's Ann.Civ.St. Art. 600a; that on or about the month of September, 1943, he made an oral agreement with the deceased Joe Gallagher, under which plaintiff was to aid the said Gallagher in acquiring certain oil and gas leases, and that he and the deceased Gallagher would work together in the acquisition and sale of said leases; that he and Gallagher acquired oil and gas leases on some fourteen tracts of land situated in Stephens County, Texas; that the plaintiff expended in traveling expenses, use of his car, etc., several hundred dollars in obtaining or in assisting the deceased Gallagher in obtaining said oil and gas leases. Plaintiff further alleged it was agreed by and between Gallagher and himself that when the leases had been properly assembled they would be sold for the best price obtainable and the proceeds of the sale over and above the actual costs of said leases were to be divided equally between the deceased Gallagher and plaintiff after the payment of certain attorneys fees; that, thereafter, the deceased Gallagher sold said leases without the knowledge or consent of plaintiff and received approximately $4,000 in cash and retained an oil payment of $50 per acre to be paid out of 1/8 of the 7/8 of all oil and gas produced, and that later Gallagher sold an undivided one-half interest in the oil payment for $5 per acre; that the deceased Gallagher did not account to the plaintiff for any of the consideration so obtained. Plaintiff alleges that the defendants, other than Bethel Fondren Gallagher, were claiming some right, title and interest to the oil payment which had been sold. Plaintiff prays for an accounting of all sums received for the sale of said leases, for judgment against Bethel Fondren Gallagher, executrix, for one-half of all sums received from said sale, less the amount actually paid for them, for judgment for one-half of the oil payment reserved, and that said one-half reserved interest be charged with an equitable lien to secure the payment by the defendant to plaintiff of all sums of money as might be due him.

The defendants urged certain exceptions to the plaintiff's petition, which were by the court sustained, and the plaintiff declining to amend, the cause was dismissed. Plaintiff excepted and gave notice of appeal to this court.

We deem it unnecessary to discuss all of the exceptions urged by the defendants. We believe the exception asserting that the plaintiff was not licensed under the Securities Act is good and is an all sufficient reason why the trial court's action was proper in dismissing this cause. The Securities Act, Article 600a, Vernon's Ann. Civ.St. of Texas, classifies an oil and gas lease as a security. Section 2(a) of said Article provides, in part, as follows: "The term `security' or `securities' shall include any * * * instrument representing any interest in or under an oil, gas or mining lease, fee or title * * *."

The courts of our state have passed upon this question in numerous cases. Our Supreme Court in Kadane et al. v. Clark, 135 Tex. 496, 143 S.W.2d 197, held that an oil and gas lease is a security within the meaning of the Securities Act, Article 600a, Vernon's Ann.Civ.St.

Section 33b, Article 600a, provides as follows: "No person or company shall bring or maintain any action in the courts of this State for the collection of a commission or compensation for services rendered in the sale or purchase of securities, as that term is herein defined, without...