Holman v. Gulf Refining Co. of Louisiana

• Decision Date: 20 March 1935
• Docket Number: No. 7449.,7449.
• Citation: 76 F.2d 94
• Parties: HOLMAN et al. v. GULF REFINING CO. OF LOUISIANA et al.
• Court: U.S. Court of Appeals — Fifth Circuit

76 F.2d 94 (1935)

HOLMAN et al. v. GULF REFINING CO. OF LOUISIANA et al.

No. 7449.

Circuit Court of Appeals, Fifth Circuit.

March 20, 1935.

Conrad E. Cooper, of Tulsa, Okl., Joseph H. Clark, of Detroit, Mich., J. O. Modisette, of Jennings, La., and Oliver D. Street, of Birmingham, Ala., for appellants.

S. L. Herold, Robert A. Hunter, J. M. Grimmet, Yandell Boatner, H. C. Walker, Jr., M. K. Smith, Pike Hall, H. B. Barret, Richard H. Switzer, Elmo P. Lee, and Frank J. Looney, all of Shreveport, La., R. L. Batts, of Austin, Tex., and R. D. Watkins, of Minden, La., for appellees.

Before BRYAN, FOSTER, and SIBLEY, Circuit Judges.

SIBLEY, Circuit Judge.

The appellants Y. Allen Holman, Sudie D. Holman, and J. D. Holman brought a bill on September 12, 1930, to cancel for fraud a transaction had on September 13, 1921, whereby several litigations concerning the title to very valuable oil properties in Claiborne parish, La., were compromised and disposition made of the interests of a dozen or more parties. The other appellants, Dominion Oil Company, F. P. Jackson, and C. O. Owens, were made defendants, but filed pleadings in support of the bill. The chancellor after hearing the evidence decreed against the relief prayed for. The pleadings need not be stated nor the rulings touching them be considered, since the case is controlled at last by the proofs. To understand the circumstances of the compromise and the frauds asserted against it, a brief history is necessary.

In 1889, the 91 acres of land involved belonged to one Thornton Bridgeman, who sold it on three years' credit for $6 per acre to a negro, Isom McGee, making him a deed, but taking a mortgage back. Whether McGee ever paid for the land does not appear. He married a wife who already had an illegitimate daughter, Lillie Gussie Taylor, and a legitimate daughter Mattie was born. Isom in 1894 became the victim of a lynching, and his family fled to Arkansas. In 1904, one G. L. Bridgeman made a deed to the land to Harris, who deeded to Mrs. Ada Bridgeman, tutrix, in 1907. The heirs of G. L. Bridgeman next conveyed to George West, a negro, in 1914 and he went into possession. In January, 1919, oil was discovered in the vicinity, and West, reserving a royalty, made an oil lease to one Walker, who was a member of the law firm of Goldstein & Walker. Walker, retaining an additional royalty of one-twenty-fourth, transferred the lease to Gulf Refining Company, which in November drilled wells upon the land and began on December 27th to produce vast amounts of oil from it. Meanwhile, since no deed from Isom McGee appeared of record, Foster, Looney & Wilkinson, a firm of lawyers, set in motion a search for his heirs. Lillie Gussie Taylor was located in Texas, and it was learned that Mattie McGee had died in 1903 leaving her mother as her heir, and the mother had died soon after leaving her illegitimate daughter, Lillie Gussie Taylor, as her heir, provided Lillie had been so acknowledged as under Louisiana law to be capable of inheriting. Taylor on October 31, 1919, by a formal writing, employed Foster, Looney & Wilkinson as her attorneys to recover the land, agreeing to convey to them an undivided one-half interest for services rendered and to be rendered, and giving them exclusive authority to compromise the suit. This agreement was filed for record November 25th. On November 24th she conveyed in fee simple to Foster, Looney & Wilkinson the one-half undivided interest as promised, and the deed was filed for record on December 30th. Meanwhile, on November 18, 1919, Taylor executed an oil and gas lease on 80 acres of the land to Y. Allen Holman, reserving a one-eighth royalty; Holman agreeing to pay also a bonus of $1,000 per acre for all of the land title to which should be established by judgment or compromise, and to pay the expense of litigation, except attorney's fees. The lease stipulated that no compromise should be effective without the consent of Taylor and of Foster, Looney & Wilkinson, and that "all litigation shall be conducted by the firm of Foster, Looney & Wilkinson." Foster, Looney & Wilkinson prepared this lease, and, though they did not sign it, one of them attested it. The lease has been treated as though they were parties to it, and they have since claimed only one-half of the bonus of $1,000 per acre to be paid, and one-half of the reserved royalty. They filed suit in the name of Lillie Gussie Taylor against George West in the United States District Court, and first lost, but later won it; an appeal being then taken by West to the Circuit Court of Appeals. He, represented by Goldstein & Walker, claimed title by prescription based on ten years' possession under deeds translative of title, but there was grave question whether some of the deeds were such. Taylor's trouble was her illegitimacy and the want of formal acknowledgment of her by her mother according to the requirements of article 203 of the Louisiana Civil Code. She obtained from the probate court an uncontested decree of heirship, but it was appealed to the state supreme Court by Gulf Refining Company, and at its instance and expense by the state of Louisiana as parties interested, the Gulf having foreseen that the land might be held to have escheated to the state and having arranged in that event a lease of it from the state. Y. Allen Holman had transferred his lease on the 80 acres to Caddo Central Oil & Refining Corporation, reserving an additional royalty in which J. D. Holman had got part which he subsequently transferred to his wife, Sudie D. Holman. Taylor had also made a lease to one Clayton of the remaining 11 acres which had come into control of the Caddo. She also disposed of interests in her royalties to others. On June 23, 1920, while the case of Taylor v. West was on its second trial in the United States District Court, Foster, Looney & Wilkinson entered into an agreement with Goldstein & Walker, the opposing attorneys, and with their client, West, whereby these latter conveyed to Foster, Looney & Wilkinson royalty interests amounting to one-sixteenth affecting the 80 acres in consideration of $200,000 to be paid them in four installments out of the money to accrue either to the royalty interests conveyed or to the one-sixteenth royalty claimed by Foster, Looney & Wilkinson, the last named to receive at once what Gulf Refining Company had been holding back to date in respect of said royalty interests because of the litigation. This was recited to be a compromise among these parties touching their conflicting claims. It operated to assure to Goldstein & Walker and their client, West, $200,000 from the one-sixteenth royalty interest, regardless of which title might finally prevail, and to Foster, Looney & Wilkinson the amount already accrued, together with all above the said $200,000 thereafter to accrue. The agreement was promptly recorded and was known to Gulf Refining Company, which, however, refused to pay out anything under it. It was known commonly in the community among those interested in oil matters. Presumably, Taylor consented to it, for she does not attack it. The Caddo also does not complain of it. The Holmans and the other appellants contend they did not know of it until years afterward. Other litigations arose, Caddo and the Holmans suing the Gulf and West and Walker for the oil taken out, and the Gulf suing Clayton who was interested under the Taylor title for a slander of the Gulf's title. The Taylor title was involved in all of these suits, and it hung upon the decision of the state Supreme Court touching her heirship. On November 3, 1920, that court, in Minor v. Young, 149 La. 583, 89 So. 757, made a decision which apparently would control adversely the case of Taylor then pending before it. Foster, Looney & Wilkinson, as amici curiæ joined in a motion for a rehearing, which was granted. Taylor's case was also argued, and on May 2, 1921, on an elaborate opinion by three justices and equally elaborate dissents by two, the decision in Minor v. Young was departed from, and Taylor's heirship sustained. Taylor v. Allen, 151 La. 82, 91 So. 635. A rehearing was applied for, and while it was pending the Supreme Court was reorganized by the retirement of two of the justices who had stood with the majority and the appointment of four new justices, rendering it uncertain how the case would eventually go. And there was a rumor that an old negro grave digger had been discovered by the Gulf who would testify that he had buried both Mattie McGee and her mother, and that Mattie died last, so that Taylor could not have inherited the land from the mother. In the second trial in the United States court and in those in the Supreme Court, the Holmans had, with the consent of Foster, Looney & Wilkinson, introduced counsel from Michigan, specially employed by them. With matters so standing, discussion of a general compromise arose, taking form in a letter written August 31, 1921, by Wilkinson and by Story, Caddo's attorney, to Gulf, whereby Gulf should pay $1,000,000 for all interests arising under Taylor's title, except the original royalties (which were to be separately settled), subject to approval by the Holmans and others named. The proposal was accepted by Gulf, but with qualifications which prevented the acceptance from really closing a contract. The Holmans and their special counsel were summoned to Shreveport, and after several days of discussion and with much reluctance growing largely out of dissatisfaction at the division of the $1,000,000 of which they were to get $240,000, they on September 13, 1921, together with all others at interest, signed a formal document reciting the litigations and settling them all and establishing the West lease to Gulf. The royalties were also dealt with and settled in this document, which recited that there was attached a schedule of their distribution. Such a schedule, though appellants deny that it was attached when they signed, was...