Goggin v. Moss

• Decision Date: 31 March 1962
• Docket Number: Civ. A. No. 2358.
• Citation: 221 F. Supp. 905
• Parties: James C. GOGGIN et al. v. William MOSS et al.
• Court: U.S. District Court — Northern District of Texas

221 F. Supp. 905

James C. GOGGIN et al. v. William MOSS et al.

Civ. A. No. 2358.

United States District Court N. D. Texas, Lubbock Division.

March 31, 1962.

Lyne, Blanchette, Smith & Shelton, Dallas, Tex., for plaintiffs James C. Goggin and Munson G. Shaw Co.

Stubbeman, McRae, Sealy & Laughlin, Midland, Tex., for defendant William C. Moss.

Crenshaw, Dupree & Milam, Lubbock, Tex., for defendants Roy H. Johnston and wife, Marguerite A. Johnston.

DOOLEY, District Judge.

Findings of Fact

I

The plaintiff, James C. Goggin of New York, who was the president of Munson G. Shaw Company, and the defendant, Roy H. Johnston of Denver, first became acquainted about 1942 or 1943, and shortly afterwards had two or three oil and gas working interest and royalty transactions. In the succeeding years they met casually a few times and would talk tentatively about the prospect of having business dealings again some time, but nothing definite came of it until in the late summer of 1955. About September of that year, Goggin communicated with Johnston by telephone and said that he and his company would be interested in finding some satisfactory oil and gas deals and, by appointment, Johnston went to New York to talk the subject over with Goggin in person, and the outcome of their discussion was that Johnston undertook to see what opportunities he could find in oil and gas ventures which he could recommend to Goggin.

II

The defendant Johnston, acting on his discussion with the plaintiff Goggin, a short time later, in turn, talked on the said subject to his acquaintance, the defendant William Moss of Midland, Texas, at a Denver Country Club, and Moss, who was experienced in the business of oil and gas operations and development, said he would get busy and see whether he might be able to work up and put before Johnston some deals for submission to Goggin.

III

In the initial talk aforesaid, between Johnston and Moss, a part of the discussion and agreement was that the two would split 50-50 whatever profits Moss was able to realize out of the deals which might develop through Johnston as medium for Goggin. On this subject Johnston testified, saying: "Well, Mr. Moss said whatever he did, any revenues or profits that were obtained in the dealings would be split right down the middle on a 50-50 basis." (S.F. 11) On the same subject Moss said: "I testified that I had an agreement with Mr. Johnston to pay him 50% of what I was able to clear out on the deals that I turned Roy H. Johnston." (S.F. 476) This agreement was never communicated to the plaintiffs by either defendant.

IV

The next stage was that Moss set up a series of deals, five in number, having much overlap of time, and the plaintiffs Goggin and Munson G. Shaw Company, respectively, bought an interest in each of said deals, paying therefor varying sums of money, but not new money every time, as in two instances some or all of the amount paid in on a given deal, which failed, was transferred to another deal, but all told each of the plaintiffs put in on the series of deals more than $100,000.00.

First Deal

The first was known as the "Ector County Deal", which came in September 1955. No well was drilled on this land and the lease was abandoned because a well on some adjoining property was being damaged by the intrusion of salt water. The money, totaling $35,000.00, paid in by the plaintiffs was transferred to the "Jones County Deal".

Second Deal

The second deal was known as the "Jones County Deal". This came along early in November 1955, followed by drilling begun about the middle of that month and the outcome was a dry hole about the middle of December 1955. The total amount disbursed in the name of said deal was $50,000.00, comprising $35,000.00 from plaintiffs and $15,000.00 from one Wendell Morgan. The $35,000.00 investment made by plaintiffs was spent in pro rata payments upon drilling costs of about $21,000.00, a "bonus" item in the sum of $15,000.00, while the remainder went as pro rata part of equal distributions of about $7,000.00 to Johnston and Moss, respectively.

Third Deal

The third deal was known as the "Garza County Deal". It was drilled around the same time as the Jones County well, in November 1955, and repeated as a dry hole. The plaintiffs invested $27,500.00 in this venture, and all of it was spent in drilling costs and profits to the defendants Johnston and Moss.

Fourth Deal

The fourth was known as the "Lea County, New Mexico, Deal". The plaintiffs sent their checks to Johnston totaling $36,500.00 for an interest in this deal, but it was abandoned without being drilled about November 20, 1955, and the said sum received from plaintiffs was transferred to the fifth deal.

Fifth Deal

The fifth was known as the "Scurry County Deal". This venture included two separate, but contiguous, tracts of land and an initial well was required on each tract to validate the respective leases. The first well drilled thereon was the No. 1 Birdwell, on the East 100 acres, (one tract of the Stanolind farm-out), which was spudded in about November 28, 1955, and completed as a producer in January 1956. The second well was the McGlaun No. 1, on the West 140 acres, (the other Stanolind farm-out tract), which was spudded in on January 20, 1956, and also completed as a producer on March 3, 1956. The plaintiffs' initial investment here was $36,500.00, (transferred from the "Lea County, New Mexico, Deal"), plus an additional $10,500.00 sent by Goggin, thus making a total initial investment of $47,000.00 on this one deal. Several other wells followed on both of these leases pursuant to the requirements of the Stanolind's farm-out agreement and the McGlaun lease, which called for continuous drilling operations, and the plaintiffs paid further drilling and completion costs until their total outlay on this venture aggregated nearly $200,000.00.

V

The course of action in the foregoing transactions was, in the first four deals, that Moss, without paying any cash purchase money of his own, so far as reflected in the record, acquired in his name the particular lease or leases identified with said deals, respectively, and in the fifth transaction acquired a lease assignment on a one-half interest in part of the property (140 acre tract), and got said farm-out without any claimed money cost to him for either interest, however, in both said instances he did incur personally a drilling obligation, and pursuant thereto drilled the two paying wells mentioned in the last Finding of Fact. The plaintiffs, respectively, invested different sums of money for specified fractional interests in each of the deals, however, the same money served for both of the first and second deals, since the first was abandoned without any outlay. Mention has already been made of Wendell Morgan, (not a party to this suit), who also invested some money for specified fractional interests in the first, second and fifth deals, however, there was no concert of action or joint interest between him and the plaintiffs, but, on the contrary, they acted separately and independently and, in fact, apparently were strangers to each other. Moss took the role of operator in these transactions and had full control of arrangements and supervision over the drilling of the wells on the respective tracts. He contended that he organized and assembled the respective deals in his own right and that then participation therein was tendered through Johnston to the plaintiffs, who, at their option, could take part or stay out of the deal. That version is true, but nevertheless the preliminary activities of Moss were not actually disassociated from the plaintiffs, since each of these deals from the outset was arranged with the plaintiffs in mind and pursuant to the purpose that same would be submitted to the plaintiffs.

VI

The plaintiff Goggin and the defendant Johnston from the outset of their transactions material to this litigation showed the mutual recognition that Goggin and the plaintiff company were in the attitude of investors interested in making profitable investments in oil and gas drilling ventures and the defendant Johnston was in the attitude of being an experienced man in oil and gas deals and one willing to act in behalf of the plaintiffs by efforts to find desirable deals of said kind for the plaintiffs. The responsibility committed exclusively to the defendant Johnston was the work of making contact with the activities underway in territory where he had ways to get in touch with and examine plans that were forming, or could be put together for drilling operations which he regarded with favor and could arrange an opportunity for plaintiffs to make a participating investment. Johnston's own estimate of his representative capacity for the plaintiffs is reflected repeatedly in his testimony. (S. F. 76-7, 86-7, 134, 148) Further light on the subject is found in the correspondence exhibits. (Plaintiffs' Exhibit 1, letter Johnston to Goggin, dated September 7, 1955) (Johnston's red marked Exhibit 2, letter Johnston to Goggin, dated August 22, 1955) (Defendant Johnston's Exhibit No. 11, marked on back, letter from Johnston to Goggin, dated October 17, 1955) (Plaintiffs' Exhibit 8, letter from Johnston to Goggin, dated October 27, 1955) (Plaintiffs' Exhibit 10, letter from Johnston to Goggin, dated November 26, 1955) (Plaintiffs' Exhibit No. 12, letter Johnston to Goggin, dated January 28, 1956)

Johnston, while acting for the plaintiffs during September and later months of 1955, zealously sought to ingratiate himself with plaintiffs, cultivate their confidence in him, enhance their estimate of his importance and capabilities, and gain their full reliance towards him in his handling deals for them. This studious method can be seen not only in the last mentioned correspondence, but also in other letters. (Plaintiffs' Exhibit 2, letter of Johnston to Goggin, dated September 17, 1955) (Exhibit DJ 22, copy of letter from...