Gray v. Premier Inv. Co., Civ. No. 874.

• Decision Date: 25 September 1943
• Docket Number: Civ. No. 874.
• Citation: 51 F. Supp. 944
• Parties: GRAY v. PREMIER INV. CO.
• Court: U.S. District Court — Western District of Louisiana

51 F. Supp. 944

GRAY v. PREMIER INV. CO.

Civ. No. 874.

District Court, W. D. Louisiana, Shreveport Division.

September 25, 1943.

Elias Goldstein, of Shreveport, La., for plaintiff.

Chas. L. Mayer, of Shreveport, La., and E. J. Lundy, of Tulsa, Okl., for defendant.

DAWKINS, District Judge.

Plaintiff's original petition, alleged upon a contract consisting of a proposal contained in a letter, which was accepted in writing, providing for the delivery of certain quantities of oil per month during the term, which it appeared conceded, will not expire until 1945. The bill charges that defendant was about to sell or transfer the leases upon lands from which the oil was to be produced and delivered, without making proper provision to carry out the terms of this contract. The prayer was for a restraining order, and upon hearing for a preliminary injunction, followed finally by a permanent writ.

The restraining order was granted and the application for temporary injunction was heard on September 7, 1943. At that time defendant first moved to dismiss the complaint upon the ground that it did not state facts showing plaintiff entitled to relief in a court of equity, and further, that the facts alleged were based upon information and belief. It also filed an answer, as the court directed that all matters be submitted at one time, both on the motion to dismiss and the merits of the application for preliminary injunction, upon affidavits, some of which were permitted to be filed within one week; and the restraining order was extended for a period of ten days. All rights under the motion to dismiss for want of equity were reserved, to be disposed of without prejudice. Defendant also filed a motion to increase the bond for the restraining order, which at another hearing a week later, was sustained and the bond increased from $1,000 to $5,000. The briefs were not filed until about the time the first extension would have expired and another extension of ten days was entered.

The answer admits the contract, but avers that "it is, and was, the intention of Premier Investment Company not to make a sale or sub-lease of the property without a provision that the purchaser or sub-lessee of the defendant would complete for the account of defendant any valid, executory contract of the defendant for the sale of oil from the properties." It denied the prospective injuries alleged by plaintiff.

Taking up the motion to dismiss, the allegations of the original petition, upon which the plaintiff relies as showing it is entitled to equitable relief, or that it has no adequate remedy at law, are in substance as follows: that his plant is engaged and equipped for refining oil of the type and gravity produced from the particular leases in the Bellevue Field, where his plant was purposely built for the use of such oil; that the demand is such that it is not possible to obtain his requirements for this particular kind of oil from any other producing available field; and unless defendant is restrained from violating its contract plaintiff's business will be destroyed; that for the breach of the contract from month to month during the remainder of its unexpired term, plaintiff would be compelled to institute a multiplicity of suits, and that the damages would be next to impossible to estimate and determine. The final prayer was for a permanent injunction restraining defendant "from selling to the Bayou State Oil Company or to any other * * * the leases owned by it * * * without stipulating in the act of conveyance or assignment that the vendee or assignee shall fully comply with all obligations" of the defendant to plaintiff. In the amendment filed on September 7th, plaintiff alleged that he had been informed that the defendant would hold a meeting of its stockholders and directors on September 1, 1943, to authorize the sale of its leases to the Bayou State Oil Company without "provision for the observation by the seller (purchaser) of the obligations of the defendant to plaintiff" and that petitioner had endeavored without success to induce both the proposed seller and purchaser to give assurance that the said sale would be made "subject to the rights of complainant to receive the oil produced" according to his contract; and further that serious differences between the stockholders of defendant would probably prevent a liquidation of the Premier before July 15, 1945, date of expiration of the contract and of which plaintiff might or might not acquire information in time to intervene therein and assert his claim against the corporation.

Upon the proofs, it appears that the existence of the contract between the parties, substantially in the terms as alleged by plaintiff, is admitted, as is the proposed sale or subleasing by defendant of its interest in the properties covered by the bill of complaint, for the sum of $80,000 cash and $120,000 out of a portion of the 7/8 working interest in the leases. It also appears that the proposed purchaser, Bayou State Oil Company, had accepted the terms and would have executed the agreement but for the restraining order issued herein on August 30, 1943. The proposal also covered all the equipment on the leases used in connection therewith, except certain quantities of pipe, etc., which apparently were not needed. This, of course, made it impossible for defendant to continue operations.

Plaintiff submitted both his affidavit to the complaint and an additional one made and filed September 7th. In the latter it was stated that his plant is capable of refining 18,000 barrels per month, and that during recent months he had refined from 12,000 to 14,000 barrels per month; but that in order to operate without a loss, it is necessary that he refine at least 12,000 barrels per month; that during 1942, his said plant "earned more than $70,000 before depreciation and more than $50,000 after depreciation"; that it is impossible to estimate the amount of damage it would suffer by the "cutting off any considerable portion of his supply of crude oil"; or the profits he would make because of the "unpredictable and varying conditions under which he and all other persons engaged in business today must operate"; that he purchased a large part of his crude oil from the defendant whose production is close by his refinery, and the cost of transportation small; that he had been purchasing from defendant 5,372,000 barrels of oil per month during 1943; that he had been repeatedly advised by the vice president of the defendant that it had "no commitments to others for the sale of oil" produced from these wells "with the exception of Bayou State Corporation", which had expired on February 1, 1943; and that plaintiff became entitled thereafter under terms of his contract, to purchase all the oil produced from said leases, but that he, plaintiff, had agreed with one Wickett, vice president of defendant, that the latter might furnish to Bayou State 3,000 barrels per month "for a few months until it could make arrangements to get other oil". Affiant attached copies of correspondence between himself and officers of the defendant covering these points. Further, that some of the officers of defendant were contending that they had the right to renew the agreement with Bayou State so that it would receive 7,000 barrels of their production per month; that on August 23d, affiant addressed to the officers of defendant a letter demanding that, effective September 1st, he should receive all the oil produced from said leases, copy of which was attached to the affidavit; and that on the same date a letter was addressed to the Bayou State, advising it that plaintiff had learned said company intended to purchase these properties from defendant and requesting that the Bayou State "advise him that it would carry out the obligations" of the defendant "if it bought the properties" (copy of this letter is attached to the affidavit), but that no reply was ever received from either the defendant or the Bayou State, except that the president of defendant telephoned affiant on August 26, 1943 "and asked if he (plaintiff) would be in position to make Premier an offer on its Bellevue properties at or before September 1st", as it had an offer from Bayou State, which was subsequently authorized by the stockholders and directors of defendant, but affiant informed the said president that he was not interested in making such an offer. Further, that since September 1st, plaintiff had received no oil from defendant, but had been told frequently of violent differences between the stockholders of defendant and that the latter was going to be liquidated; further, that plaintiff has conducted a successful business and now there is a demand for his product, to meet which would require all the oil that defendant can produce from the said leases; that if he does not receive said oil, his plant will be forced to shut down with consequent great loss and damage, which it would be impossible to determine; that the reason he is so dependent upon said production is that he can not obtain replacement in any section that it would be profitable to operate, stating details of fields and conditions where similar oil is produced; and finally that his said plant is designed to refine the type of oil which is produced by defendant in the Bellevue Field, and that under present conditions, due to the war, he can not obtain materials to convert his plant so as to use other types of crude oil. Affiant attached several exhibits, consisting of letters from officers of defendant, etc.

Plaintiff also offered the affidavits of others as follows: (1) an accountant who had audited his books during the past years, giving figures showing the results of actual operations of his plant in recent months, and supporting in large measure his own affidavit with respect thereto, including the statement that it would not be profitable to operate, if plaintiff were deprived of as much as 4,000 to 5,000...