Gaines v. Hamman

• Decision Date: 13 June 1962
• Docket Number: No. A-8462,A-8462
• Citation: 163 Tex. 618,358 S.W.2d 557
• Parties: Leon GAINES, Petitioner, v. Blake HAMMAN, Respondent.
• Court: Texas Supreme Court

Page 557

358 S.W.2d 557

163 Tex. 618

Leon GAINES, Petitioner, v. Blake HAMMAN, Respondent.

No. A-8462.

Supreme Court of Texas.

June 13, 1962.

Rehearing Denied July 18, 1962.

Settle & Settle, Fort Worth, for petitioner.

Hudson, Keltner, Jordan, Smith & Cunningham, ningham, Fort Worth, for respondent.

NORVELL, Justice.

The Court of Civil Appeals affirmed a summary judgment rendered in favor of the defendant Blake Hamman and against the plaintiff Leon Gaines, 346 S.W.2d 186. Being of the opinion, since confirmed by a plenary examination of the record, that the decision of the Court of Civil Appeals is contrary to the decisions of this Court in Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256 and Omohundro v. Matthews, 161 Tex. 367, 341, S.W.2d 401, we granted writ of error and not reverse the judgments of the trial court and the Court of Civil Appeals and remand the cause to the District Court.

In this Court the respondent Hamman raises questions relating to the summary judgment practice under Rule 166-A, Texas Rules of Civil Procedure. Hamman asserts and strongly maintains that Gaines in his deposition which is a part of the summary judgment record, swore to facts which, if true, would defeat his asserted cause of action based upon the theory of a constructive trust. ¹ It is also urged that Gaines' testimony was too vague and uncertain to support a judgment based upon said trust theory.

As this cause must be retried under our holding that issues of fact are indicated by the record, we purposely refrain from making an exhaustive statement. Other and further evidence will undoubtedly be received upon another trial.

Such facts as are disclosed by the record and are necessary to an understanding of our holdings are as follows:

Leon Gaines is a geologist of wide experience in the Texas counties of Palo Pinto, Wise, Jack and Young. He had acquired an extensive collection of oil well logs and other date relating to oil exploration and discovery activities in the counties named. Hamman is an oil and gas lease broker. It appears that from 1954 to 1958 Hamman and Gaines were engaged in numerous transactions together. As a general rule Gaines would work up the geological information upon a particular tract of land upon which they planned to acquire a lease; Hamman would underwrite the expenses incidental to the deal, and generally take a lease upon the property in his own name. He would then interest others in the lease and transfer the same to such third parties, retaining an overriding royalty. After Hamman's expenses had been recouped, the overrid would be divided equally between Hamman and Gaines. While the taking of title in Hamman's name was the usual thing, it was not the invariable practice. In his affidavit counter to Hamman's motion for summary judgment, Gaines said:

'The agreement which we had was that as to any lease or prospect on which I developed or prepared the geology, and which Hamman, or both of us working together, attempted to sell, we would own an equal interest in the lease or prospect and would share equally in any interest reserved when a lease was turned. It was also understood and agreed between us that in making a trade, Hamman would be entitled to recoup the costs which he had incurred in acquiring it. The original agreement was made in 1954. It was oral, and it was repeatedly reaffirmed from time to time by Hamman and by myself; however, I am unable to state at this time when and with respect to which prospect such statements were made.'

According to Gaines' affidavit, some four years after the original agreement or understanding was made, he and Hamman became interested in an oil and gas lease on some land in Yound County owned by C. H. Rogers. The lease was held in the name of Gaines and one of his employees. It was necessary that a well be drilled to prevent the lease's termination. Hamman offered to try to turn the lease for a half interest therein. Gaines' employee ceased to figure in the deal and a short extension of the lease was procured by Gaines. Hamman then succeeded in working out a deal whereby Al Addyman, Jess Harwell and Clarke Cummins agreed to pay the costs for drilling a well to the casing point in return for a 3/4 interest of the 7/8 working interest of the lease. This left Hamman and Gaines sharing a 1/4 of the 7/8 working interest equally, subject to a $1900.00 oil payment held by the lessor. Gaines executed the necessary written instrument to vest Hamman with his part of the working interest. This transaction was similar to numerous others had between the parties in which Gaines furnished the geology and Hamman secured operators to drill the lease, retaining an override which was divided between the parties. In the case of the Rogers the lease was in Gaines' name, whereas usually Hamman was the record holder of the lease.

Shortly after the Rogers deal, the transactions and occurrences took place with reference to the Logan lease which gave rise to this lawsuit. Again we refer to Gaines' affidavit. He stated that a portion of the Logan properties became open acreage because of the expiration of a lease insofar as it covered the particular tract involved. Gaines had done geological work on the tract and discussed with Hamman the advisability of securing a lease upon the open acreage concerned. In the early part of November 1958 both he and Hamman talked to L. M. Logan, the owner of the property. On November 17, L. M. Logan and wife executed an oil and gas lease to Hamman covering some 376.4 acres of land. This lease was placed in a Fort Worth bank with directions that the lease be delivered upon the payment of an attached draft. On November 27, 1958 a successful drill-stem test was made on the Rogers well which brought about a conversation between Gaines and Hamman in which, according to Gaines' best recollection, Hamman said:

'We have to get a deal for these people (Addyman, Harwell and Cummins). They are ready to go on another well, because they have gotten a good well on your geology, on the Rogers. It will be the same deal as the Rogers.'

According to Gaines he met with Hamman, Addyman, Harwell and the completion engineer on the Rogers well in Jacksboro, Texas, on November 29, 1958 and 'discussed in detail the geological possibilities of the Logan prospect and gave them my interpretation of its subsurface geology.' He thereafter completed a geological report and plat which he delivered to Hamman around the first of December.

On December 22, 1958 Addyman and his associates paid the draft above mentioned and as a consequence, the bank delivered the lease to Hamman. The Addyman group financed entirely the drilling of the initial well to the casing point on the Logan tract, but paid only their proportionate part of the cost of the drilling of the second well thereon. Addyman and associates now hold 3/4 of the 7/8 working interest. The remaining 1/4 of the 7/8 working interest now stands in the name of Blake Hamman and it is this interest upon which Gaines seeks to impress an equitable trust to the extent of a 1/8 interest in and to the 7/8 working interest in the Logan lease.

If Gaines' statements be credited, we think it reasonable to conclude therefrom that Gaines and Hamman, for a number of years, had been engaged in acquiring oil and gas leases which they were to own jointly. These leases would then be 'turned' or transferred to third parties and an override or other mineral interest retained and held jointly by the parties in equal portions, subject to Hamman's right to recoup his out-of-pocket expenses. Under the arrangement between the parties, Gaines would contribute the 'geology' and Hamman would pay the expenses incident to the procuring of the leases and the turning of the deal. Undoubtedly if Gaines' version of the parties' dealings be accepted, there existed a confidential relationship between the parties insofar as the Logan lease was concerned. The Rogers transaction had just been completed. Hamman wanted another deal for the Addyman group and said in effect that it would be 'the same deal as the Rogers.' Addyman, according to his affidavit, received Gaines geological reports and largely upon the strength thereof decided to enter the Logan venture. Should Hamman keep the entire 1/4 of the 7/8 working interest after production upon the Logan had been obtained, he would be the recipient of an unjust enrichment resulting from the breach of a confidential relationship. This conclusion is fully supported by Fitz-Gerald v. Hull, 150 Tex. 39, 237 S.W.2d 256; Omohundro v. Matthews, 161 Tex. 367, 341 S.W.2d 401 and Peckham v. Johnson, Tex.Civ.App., 98 S.W.2d 408, affirmed, 132 Tex. 148, 120 S.W.2d 786.

It is not a complete answer to Gaines' asserted cause of action to say that in some of the Gaines-Hamman ventures the procedures followed varied in detail from the general scheme of operation above outlined. Nor was it essential that at the commencement of each particular venture, the parties reiterate verbally the terms of the general agreement under which they had operated in order to make such understanding effective insofar as a new venture was concerned. Of course it is Hamman's contention that all of his deals with Gaines were separate and independent transactions and there was no general understanding or agreement between them. He says that at most, Gaines was employed to do a certain piece of work, namely provide geological information and was to receive petroleum interests therefor instead of money. It is asserted that Gaines' remedy, if any, lies in assumpsit and not in equity to establish a constructive trust. These contentions and theories, however, simply raise fact issues. On summary judgment we must accept Gaines' version which, as above pointed out, clearly supports the theory of a general understanding as to methods of operation. Particularly is this true with reference to the Rogers and the Logan leases.

It is further no...