Hideca Petroleum Corp. v. Tampimex Oil Intern., Ltd., 01-86-00255-CV

• Decision Date: 22 October 1987
• Docket Number: No. 01-86-00255-CV,01-86-00255-CV
• Citation: 740 S.W.2d 838
• Parties: HIDECA PETROLEUM CORPORATION and Hideca Trading, Inc., Appellants, v. TAMPIMEX OIL INTERNATIONAL, LTD., Appellee. (1st Dist.)
• Court: Texas Court of Appeals

Page 838

740 S.W.2d 838

HIDECA PETROLEUM CORPORATION and Hideca Trading, Inc., Appellants, v. TAMPIMEX OIL INTERNATIONAL, LTD., Appellee.

No. 01-86-00255-CV.

Court of Appeals of Texas,

Houston (1st Dist.).

Oct. 22, 1987.

William L. Bowers, Jr., Dickerson, Hamel, Early & Pennock, Houston, for appellants.

Knox D. Nunnally, Don Jackson, Vinson & Elkins, Houston, for appellee.

Before DUGGAN, HOYT and LEVY, JJ.

OPINION

LEVY, Justice.

This breach of contract suit arises out of an aborted international crude oil transaction and involves questions of corporate "alter ego" and negligent performance and misrepresentations.

Robert Sessions, an employee of appellee, Tampimex Oil International, Ltd. ("Tampimex"), as seller, and Vincente Scippa, an employee of appellant, Hideca Petroleum Corporation ("Hideca Petroleum"), as buyer, negotiated for the sale of Dubai crude oil, largely by sending telexes to one another. Scippa signed all telexes, "Vincente Scippa Hideca Petroleum Corp. on behalf of and as instructed only by Hideca Trading, Inc." The trial court found that both Hideca Trading and Hideca Petroleum entered into an oral contract with Tampimex for the purchase of oil, which was confirmed in a telex sent by Tampimex to Hideca Trading, designating only Hideca Trading as the buyer, but addressed to Scippa's attention at the office of Hideca Petroleum.

Tampimex is a subsidiary of Ingram Corporation and a part of a larger international operation that traded in the domestic and international crude oil and petroleum markets. Hideca Petroleum is a Delaware corporation that is owned by Kimpter Company, N.V., a Netherlands Antilles corporation. Hideca Trading is a Cayman Islands corporation owned by Corsaire, Ltd. The Tudela brothers of Caracas, Venezuela, either directly or indirectly, own the majority of the stock of both Kimpter Company, N.V., and Corsaire, Ltd.

Hideca Petroleum had offices at One Riverway in Houston, Texas. Its president and only director was Luis Wolff ("Wolff"). Hideca Trading had offices in Caracas, Venezuela. Wolff and Vincente Scippa were allegedly employees of Hideca Petroleum only and not of Hideca Trading. Hideca Petroleum operated in the domestic crude oil and products markets, and Hideca Trading operated in the international markets.

In early February, 1980, Wolff advised Vincente Scippa that there was a possibility of selling approximately 800,000 barrels of Dubai crude oil (a Middle Eastern grade of petroleum) for Hideca Trading to Amerada Hess Company through a broker, I.T.I. Scippa then began to look for a source of the crude and in the process contacted Robert Sessions of Tampimex. He also contacted I.T.I. to verify the transaction and proceeded to negotiate the sale to I.T.I. on behalf of Hideca Trading and the purchase from Tampimex. These negotiations are reflected in Sessions' and Scippa's testimony and a series of telexes, the pertinent of which were introduced into evidence.

The transaction failed when Scippa, acting allegedly only for Hideca Trading, was unable to obtain the necessary letters of credit from I.T.I. and discovered that I.T.I. did not in fact have a customer for the Dubai crude oil. Sessions testified that at that time he had already committed Tampimex to purchase the Dubai crude from a supplier, Derby Resources, A.G., ZUG Switzerland ("Derby"). The court determined that a contract existed that was not barred by the statute of frauds because appellee had sent both appellants a telex confirming the oral contract, which appellants did not object to in writing (or orally), despite their knowledge of its contents. The court found, however, that this telex was not meant to be a complete and exclusive statement of the parties' contract. Following a non-jury trial, the court concluded that both Hideca Petroleum and Hideca Trading entered into an oral purchase contract with appellee, and that both appellants breached by their failure to nominate a ship to transport the oil or to obtain the necessary irrevocable letters of credit. The trial court rendered a $1,090,000 judgment jointly and severally against the appellants, and for appellee, with interest, attorney's fees, and costs.

Appellants contest only that portion of the court's judgment that imposes liability against Hideca Petroleum.

The trial court held that Vincente Scippa was an agent with authority to act for Hideca Petroleum, and that Hideca Petroleum was acting with actual authority as an agent for Hideca Trading, an undisclosed or partially disclosed principal. The court based its conclusion on its findings that Hideca Petroleum's actions led Tampimex to reasonably believe that Hideca Petroleum and Hideca Trading were, in effect, the same corporation, acting as one contracting entity, and that the intent of all involved in the formation of the contracts was that Hideca Petroleum be responsible thereunder. All parties involved considered and treated both Hideca companies as one contracting party.

The trial court concluded that Hideca Petroleum was the "alter ego" of Hideca Trading, basing its conclusion on findings that Hideca Petroleum's business affairs were indistinguishable from Hideca Trading's affairs and that Hideca Petroleum perpetrated a fraud on Tampimex by operating Hideca Trading as its business conduit.

Finally, the court held that although Hideca Petroleum had a duty to perform its agency contract with reasonable care, and to act as a reasonably prudent oil trader in its dealings with Tampimex, Hideca Petroleum failed to so perform and was negligent, and that such negligence directly caused substantial damage to Tampimex.

Appellants assert six points of error.

In their first point of error, appellants claim that the trial court erred in finding that Hideca Petroleum was a party to, or obligated under, the terms of the contract between Hideca Trading and Tampimex. They base their claim on the argument that the evidence was legally insufficient or, alternatively, that the evidence was factually insufficient, to support the court's finding, causing the finding to be so contrary to the great weight and preponderance of the evidence as to be manifestly unjust.

In reviewing legal insufficiency (or "no evidence") points of error, we must consider only the evidence tending to support the finding, viewing it in the light most favorable to the finding, giving effect to all reasonable inferences that may properly be drawn from that evidence, and disregarding all contrary or conflicting evidence. King v. Bauer, 688 S.W.2d 845 (Tex.1985); Garza v. Alviar, 395 S.W.2d 821 (Tex.1965); Texaco v. Pennzoil, 729 S.W.2d 768 (Tex.App.--Houston [1st Dist.] 1987, writ pending). A "no evidence" point of error must be sustained if we find a complete absence of evidence of probative force or only a scintilla of such evidence to support the finding, or if the evidence tending to support the finding must be disregarded because it is legally incompetent. If there is more than a scintilla of probative evidence to support the finding, the point of error must be overruled. Texaco v. Pennzoil, 729 S.W.2d at 787; Calvert, "No Evidence" and "Insufficient Evidence" Points of Error, 38 Texas L.Rev. 361 (1960).

In reviewing factual insufficiency points of error, we must consider all of the evidence that is relevant to the fact finding being challenged. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1951). We are required to sustain a "factual insufficiency" point of error if we determine that the finding of a vital fact is so contrary to the great weight and preponderance of the evidence as to be clearly wrong. Id., 150 Tex. at 664-65, 244 S.W.2d at 661; Texaco v. Pennzoil, 729 S.W.2d at 787; Calvert, 38 Texas L.Rev. 361.

One who acts as an agent for another in making a contract must disclose his agency and identify his principal in order to avoid being deemed a party to the contract and individually liable thereon. The duty of disclosure clearly lies with the agent alone; the third party with whom the agent deals has no duty to discover the existence of an agency or to discover the identity of the principal. Dodds v. Charles Jourdan Boutique, 648 S.W.2d 763 (Tex.App.--Corpus Christi 1983, no writ). An agent is not relieved from personal liability on a contract involving an undisclosed or partially disclosed principal merely because the party with whom he deals had a theoretical means of discovering that the agent was acting only in a representative capacity. Anderson v. Smith, 398 S.W.2d 635, 637 (Tex.Civ.App.--Dallas 1965, no writ). "Knowledge of the real principal is the test, and this means actual knowledge, not suspicion." Id.

Tampimex was aware that Scippa was an agent, but was not told that Scippa was actually a sub-agent and that the real principal was not even directly represented in the negotiations. Hideca Petroleum at no time offered any contradictory evidence to prove that Tampimex was ever actually or specifically informed of Hideca Petroleum's role as agent only for Hideca Trading. It was not unreasonable for the trial court to have considered the use of the words "Hideca Petroleum Corp. on behalf of and as instructed only by Hideca Trading, Inc." as being insufficient to convey actual knowledge to Tampimex that Hideca Petroleum was operating only in an agency capacity. The record reflects, as is discussed hereafter, that throughout the negotiations resulting in the contract, appellee was under the impression that it was dealing with a representative of the Houston firm of Hideca Petroleum, not the Cayman Islands firm of Hideca Trading, neither one of which took any affirmative steps to dissuade appellee of this false impression.

Applying the appropriate standard of review, we find that there is more than a scintilla of probative evidence to support the trial court's conclusion that Hideca Petroleum is individually liable on the contract because it was acting for an undisclosed or...