Hinds v. Biggs

• Decision Date: 03 June 1940
• Docket Number: No. 5166.,5166.
• Citation: 142 S.W.2d 902
• Parties: HINDS v. BIGGS.
• Court: Texas Court of Appeals

142 S.W.2d 902

HINDS v. BIGGS.

No. 5166.

Court of Civil Appeals of Texas. Amarillo.

June 3, 1940.

Rehearing Denied July 1, 1940.

Appeal from District Court, Hutchinson County; Jack Allen, Judge.

Action by E. R. Biggs against Clem Hinds and others, to secure the dissolution of a corporation and for a writ of execution and an injunction wherein defendant filed a cross action. From a judgment for the plaintiff, named defendant appeals.

Reversed and remanded.

Joseph H. Aynesworth and K. H. Dally, both of Borger, for appellant.

H. H. Cooper, of Amarillo, for appellee.

JACKSON, Chief Justice.

The record shows that the Pharis Oil Company, a Texas corporation, owned an oil and gas lease on certain land, hereafter described, situated in Hutchinson County, Texas. E. R. Biggs and C. M. Humphrys were the owners of all the capital stock of said corporation save and except a nominal share owned by L. B. Cox. The Pharis Oil Company, acting by its president, E. R. Biggs, its vice president, C. M. Humphrys, and its secretary, L. B. Cox, called first party, and E. R. Biggs and C. M. Humphrys as individuals, designated as second parties, entered into a contract on December 26, 1929, with Clem Hinds, called third party, the terms and provisions of which material to a disposition of this appeal are as follows:

"Whereas, first party is the owner of a certain oil and gas lease upon the following described lands, to-wit:

"The Northwest One-Fourth (NW¼) of the Southwest One-Fourth (SW¼) of Section Fourteen (14), Block Y, in Hutchinson County, Texas, together with the personal property now located upon said lands, and

"Whereas, first party and second parties desire to sell and third party desires to purchase the same upon the terms and conditions as hereinafter set forth.

"Now, therefore, for and in consideration of the sum of Thirty Five Thousand and Ten ($35,010.00) Dollars paid and to be paid as follows, to-wit: the sum of Ten ($10.00) Dollars cash, the receipt whereof is hereby confessed and acknowledged by parties of the first and second part, and the further sum of One Thousand ($1000.00) Dollars on or before February 1, 1930, and a like amount on the first of each month thereafter, together with interest at the rate of Eight Per Cent (8%) per annum upon each of said payments, the interest upon the first twelve monthly instalments being payable as each of said instalments mature, and the interest upon the amount of principal remaining unpaid thereafter being payable at the expiration of said twelve months period.

"For the purpose of buying additional equipment and furnish labor necessary to equip said lease with needed improvements, first and second parties agree that they will furnish the sum of Two Thousand ($2,000.00) Dollars, and which sum to be advanced by first and second parties shall be not to exceed the sum of One Thousand ($1,000.00) Dollars during the month of January, 1930, and not to exceed the sum of One Thousand ($1,000.00) Dollars during the month of February, 1930. In the event the full sum of Two Thousand ($2,000.00) Dollars is not required for the placing of said lease on a profitable basis, then the said first and second parties will credit the notes of the third party for the difference between the said sum of Two Thousand ($2,000.00) Dollars and the amount necessary or used by third party in placing said lease on a profitable basis.

* * *

"When third party shall have paid or caused to have been paid to first and second parties the sum of Seventeen Thousand Five Hundred ($17,500.00) Dollars, together with all accumulated interest thereon, first and second parties agree that they will deliver to third party a good and merchantable title to said above described property, and for that purpose will execute to said third party, or his nominee, such conveyances and assignments as shall be necessary to invest said party with good and merchantable title to said property. * * *

"The conveyance herein provided for shall be made subject to the One-eighth royalty interest due the land owner, and subject to the balance due to first and second parties in the sum of Seventeen Thousand Five Hundred ($17,500.00) Dollars, and which sum shall be secured by a vendor's lien, chattel mortgage lien and other lien necessary to assure and secure the prompt payment of the balance due under the terms of this contract; * * *

"It is further understood that any and all equipment of any and every kind placed upon said lease by third party shall become a part of the property and the superior title thereto shall remain in first and second parties until the sum of Thirty Five Thousand ($35,000.00) Dollars agreed to be paid herein shall have been paid in full; third party shall not permit any lien, or liens, of any nature to be placed against said premises or any part thereof, and in no event shall the said first and second parties be or become responsible for any sum, or sums, for labor, supplies, taxes or any other item except the sum of Two Thousand ($2,000.00) Dollars as above provided for.

"In the event third party shall default in the performance of any of the terms and conditions as herein provided, then and in that event all right conveyed or contracted to be conveyed to said third party in and to said premises shall cease and terminate, and first and second parties shall have the right to re-enter and repossess said premises without process of law and retake and rehold the same as in their former estate, and third party shall quit and deliver up said premises to said first and second parties."

On December 30, 1938, the plaintiff, E. R. Biggs, instituted this suit in the District Court of Hutchinson County against the defendants, Pharis Oil Company, H. F. Cypher and Clem Hinds to have the corporation dissolved, its properties adjudged to him as the only stock holder; asked that a writ of execution issue and the property be restored to the possession of plaintiff, and in an amended petition asked that the temporary injunction theretofore issued be perpetuated restraining the defendants from interfering with the enjoyment, occupancy and possession of the premises by plaintiff.

He alleged that the Pharis Oil Company had failed to pay its franchise tax and forfeited its charter to do business on July 2, 1932; that he had acquired all the capital stock of said company; that Clem Hinds failed and refused to pay the $17,500 and the $35,000 in accordance with the provisions of the contract; that he and his predecessors agreed to advance not exceeding $2,000 with which to buy and install additional equipment needed on said lease; that Clem Hinds promised to operate the wells efficiently and use his best efforts to increase the production on the lease; that Hinds took possession of the property under the contract, had never paid exceeding $12,000 thereon and had repudiated the agreement; that by virtue of the breach, default and repudiation of defendant Hinds and the acquisition of the entire stock plaintiff is entitled to a decree adjudging to him possession of the premises for which he has made demand; that the contract stipulated upon default plaintiff and his predecessors should have the right to re-enter and repossess the premises; that the defendant would surrender the property, and all improvements placed thereon by him during his possession should become part of the real property. He attached to and made the contract a part of his petition.

H. F. Cypher disclaimed and the Pharis Oil Company defaulted.

The defendant, Clem Hinds, urged a general demurrer and certain special exceptions which will be hereafter considered; pleaded a general denial, the two and four years statutes of limitation and alleged that on and prior to the execution of the contract, December 26, 1929, the first and second parties fraudulently represented to him that all four of the wells were in good condition except they needed cleaning out, the cost of which would not exceed $2,000, and by such expenditure each of the wells could be made to produce; that the wells were completely cased and they owned all the personal property on the lease; that he was prevented from making any investigation of the lease or the condition of the wells; that plaintiff and his predecessors in title knew of these conditions but by false representations upon which the defendant relied he was induced to execute the contract. In truth and in fact wells Nos. 2 and 3 were without value because three strings of tools had been lost in well No. 2 and could not be gotten out; that the casing in well No. 3 had collapsed and it was impossible to get tools to the bottom thereof; that in an effort to recondition said wells he had expended $4,762.15; that after he executed the contract certain parties who claimed to be the true owners thereof were permitted to remove personal property of the value of $5,592 from the lease by the plaintiff and his predecessors who promised defendant that they would pay him therefor by crediting the reasonable value of such property on the consideration he had agreed to pay, but failed and refused to allow such credit; that wells Nos. 1 and 4 were not completely cased but prior to the signing of the contract casing of the value of $9,282 had been withdrawn from said wells and removed from the lease; that the refusal of the plaintiff and his predecessors to compensate the defendant for the personal property and the casing removed constituted failure of consideration and such amount if allowed would have paid and satisfied the obligations of the defendant. The defendant further alleged that he made valuable improvements upon the lease aggregating the sum of $21,025.54, which increased the value of the lease in that amount and that he was entitled to compensation therefor. His prayer that the plaintiff take nothing by his suit is the only relief he was entitled to under the allegations in his answer. Milliken v. Smoot, 64 Tex. 171; Hughes v....