Hightower Oil & Refining Co. v. Castor

• Decision Date: 07 January 1944
• Docket Number: No. 9410.,9410.
• Parties: HIGHTOWER OIL & REFINING CO. v. CASTOR et al.
• Court: Texas Court of Appeals

177 S.W.2d 311

HIGHTOWER OIL & REFINING CO. v. CASTOR et al.

No. 9410.

Court of Civil Appeals of Texas. Austin.

January 7, 1944.

Rehearing Denied January 26, 1944.

Appeal from District Court, Runnels County; O. L. Parish, Judge.

Action on a note by Hightower Oil & Refining Company against John H. Castor and others. The trial was to the court and, from the judgment for defendants, plaintiff appeals.

Reversed and remanded.

Callaway & Callaway, of Brownwood, for appellant.

Paul Petty, of Ballinger, and E. M. Critz, of Coleman, for appellees.

McCLENDON, Chief Justice.

Suit by Hightower (Hightower Oil & Refining Company, appellant) against Castor, Zweig, and Siegel (appellees), upon an alleged promissory note signed by Castor and endorsed before delivery by Zweig and Siegel; trial to court; judgment for defendants; appeal by Hightower.

While appellees raise some questions concerning the pleadings (considered later), we regard them sufficient in every respect as against the objections urged to raise every issue affecting the merits of the question, whether, under the evidence adduced, the judgment, denying recovery, was warranted.

The salient facts shown were these:

December 3, 1941, Hightower, for the recited consideration of $10 "and other good and valuable consideration to it in hand paid by" Castor, executed an instrument assigning to Castor a mineral lease covering two contiguous tracts of 40 and 27.95 acres, respectively, together with the personal property on said lease; all with general warranty of title. The real consideration for the assignment was $18,500, of which $16,000 was paid in cash and $2,500 was represented by the note in suit. The assignment was placed of record December 4, 1941. Zweig and Siegel were interested with Castor in the assignment, and an instrument evidencing that interest was executed by them December 3, 1941. As stated, they endorsed the note before delivery. The note and accompanying letter referred to therein read:

                "$2,500.00 Dallas, Texas
                          Texas, December 3, A.D. 1941
                

"On or before June 1, 1942, for value received, I, the undersigned, promise to pay to the order of Hightower Oil & Refining Corporation Two Thousand Five Hundred Dollars at Dallas, Texas. This note is subject to the terms and provisions of a letter agreement between the payor and the payee, of even date herewith.

"And in the event default is made in the payment of this note at maturity, and it is placed in the hands of an attorney for collection, or suit is brought on the same, or same is collected through bankruptcy or probate proceedings, then the undersigned agree that an additional amount of ten per cent on the principal and interest then due hereon shall be added to the same as collection fees.

                  "Due on or before June 1, 1942
                                  "/s/ John H. Castor
                "Endorsed: H. W. Zweig
                          "M. Siegel."
                    Brownwood, Texas, December 3, 1941
                "Mr. John H. Castor,
                  "Ballinger, Texas.
                

"Dear Mr. Castor: In connection with the sale to you of the Hightower Oil & Refining Corporation's Brevard `A' lease, embracing the south 27.95 acres of the north 67.95 acres of Block 21 of the Norvell Travis Survey No. 533, Runnels County, Texas, and its Brevard `B' lease, comprising the north 40 acres, said block containing 197.78 acres, it appearing that title to the east one-half of said oil and gas leases stand in the name of J. A. Watt (all wells and personal property used in connection with the operation of said leases being located on the west one-half of said tracts), though the beneficial interest therein belongs to Hightower Oil & Refining Corporation.

"This is to advise that in addition to the warranty contained in the assignment to you of said oil and gas leasehold estate, with personal property situated thereon and used in connection therewith, Hightower Oil & Refining Corporation agrees to procure satisfactory assignment or quitclaim from the estate of J. A. Watt, who is now deceased; or, alternatively, to clear title through legal proceedings, so as to divest any apparent title out of J. A. Watt or his estate, and invest the same in Hightower Oil & Refining Corporation, its successors or assigns.

"In accordance with our agreement, $2,500.00 of the purchase price of the 67.95-acre lease and personal property used in connection therewith is to be withheld by you, and you are to execute your note for said amount payable to Hightower Oil & Refining Corporation, due on or before June 1, 1942. In the event the title to the east one-half of the 67.95-acre lease and the personal property thereon is legally vested in Hightower Oil & Refining Corporation, its successors and assigns, to the satisfaction of your attorneys, before June 1, 1942, said note shall become due and payable at that time. In the event the title to the east one-half of said 67.95-acre lease and personal property in connection therewith is not vested in Hightower Oil & Refining Corporation, its successors and assigns, by June 1, 1942, at your option you may declare the agreement to purchase the east one-half of said 67.95-acre lease cancelled, and the note cancelled, or you may accept title to said east one-half of said lease in its then status, proceed to clear the title, and offset the cost of such title perfecting against the amount of said note.

"If this meets with your approval, please indicate your acceptance on the line below.

                     "Very truly yours,
                         "Hightower Oil & Refining Corporation
                         "By /s/ Clyde Stuart
                         "Agent and Attorney in Fact.
                  "Accepted and Agreed to
                  "/s/ John H. Castor."
                

The attorneys who examined the title to the property had rendered a written opinion, addressed to Zweig and Siegel, dated November 26, 1941, which pointed out certain asserted defects in the title, and the things deemed essential to cure them. Among these was an apparent outstanding title to the east half of the lease in J. A. Watt. December 2, 1941, E. P. Woodruff, an attorney of Brownwood, made affidavit that he had represented Watt (then deceased) who was president of Hightower, and that Watt in managing the affairs of the corporation at times purchased property for the corporation, taking title in his own name and later deeding it to the corporation. The foregoing appears to have been the situation at the time the note and other documents of that date were executed. In an effort to clear up the title Hightower procured an affidavit made before a notary public of Windham County, Vermont, January 24, 1942, by Mrs. Nora J. Watt to the effect that she was the surviving wife of J. A. Watt, who died December 15, 1940; that he never had any child, natural or adopted; that he left a will (copy of which was attached) devising to her all his property; and that the will was not probated because there was no necessity therefor. Hightower also procured an assignment to it of the lease in question, executed and acknowledged by Mrs. Watt on January 24, 1942. No effort was made by Hightower to cure any of the other specified defects in the title except that relating to a reservation affecting the S. 27.95 acres of the lease, of "certain sliding scale overriding royalty interests" in a Mrs. Biddle and husband. This interest had been assigned by the Biddles to a bank, ostensibly (so read the opinion) as collateral security for a note. The opinion called for a quitclaim from the Biddles and the bank. In this connection Hightower showed that the bank obtained judgment upon the note with foreclosure and order of sale, dated March 26, 1942, sheriff's deed, dated June 2, 1942, to the bank as purchaser under order of sale under the judgment, and deed of the same date by the bank to Hightower. It was agreed that the order of sale was issued but it could not be found and there was no proof as to its contents.

It was conclusively shown that there were a number of items of personal property covered by the assignment that were located on the east half of the lease, although the letter recited that all personal property was on the west half. The value of this property on the east half was given by Castor as $500 and by Stuart, Hightower's manager, as $2,700. Appellees went into immediate possession of the entire lease and sold most of the personal property on the east half.

It is Hightower's theory (1) that there was substantial compliance with the conditions of the letter, or, in any event, (2) that appellees were estopped from asserting non-compliance therewith by reason of taking possession of the entire lease and appropriating the personal property thereon to their own use; whereupon liability upon the note became absolute. Appellees contend, on the other hand, that there was no compliance with the condition of the letter, in that none of the defects pointed out were cured by June 1, 1942 (time being of the essence of the condition), and that they had exercised their option to cancel the note and east half of the lease. In reply to the plea of estoppel they plead that the $16,000 was the entire consideration for the lease and personal property, which amount was far in excess of its real value, and that the note was given as consideration only for the obligation of Hightower to clear the title by June 1, 1942. As to this latter defense there was no sustaining evidence; and it was in direct conflict with the terms of the letter, and with the agreement among the appellees of December 3, 1941, as to their several interest in the lease, which recited that $18,500 was the consideration for the assignment of the lease and personal property. It will not be necessary, therefore, to further consider this defense.

Zweig and Siegel further contended that they were not liable because the...