Hooser v. Thraves, 10654.

• Citation: 25 S.W.2d 678
• Decision Date: 01 February 1930
• Docket Number: No. 10654.,10654.
• Parties: HOOSER v. THRAVES.
• Court: Court of Appeals of Texas

25 S.W.2d 678

HOOSER v. THRAVES.

No. 10654.

Court of Civil Appeals of Texas. Dallas.

February 1, 1930.

Rehearing Denied March 15, 1930.

Appeal from District Court, Dallas County; Claude M. McCallum, Judge.

Suit by W. V. Thraves against John W. Hooser. Judgment for plaintiff, and defendant appeals.

Reversed and remanded.

Webster Atwell and Cockrell, McBride, O'Donnell & Hamilton, all of Dallas, for appellant.

Bailey, Nickels & Bailey, of Dallas, for appellee.

LOONEY, J.

John W. Hooser, owner of interests in certain producing oil leases located in Navarro county, Tex., contracted with W. A. Thraves, with reference to same, as hereinafter stated. Their original contract was entered into at Corsicana, Tex., January 6, 1925, was amended in Dallas January 7, 1925, and was again amended and supplemented in New York City on January 26, 1925. The pertinent provisions of these writings are to this effect: Thraves agreed to procure a charter from the state of Delaware, incorporating the Hooser Oil Company, with an authorized capital of $3,000,000, divided into 600,000 shares, of the par value of $5 each. John W. Hooser, W. T. Thraves, Robert Thraves, A. L. Beason, and A. L. Slaughter were to constitute the first board of directors; John W. Hooser was to be president and treasurer, W. V. Thraves first vice president, A. L. Slaughter second vice president, A. L. Beason secretary and general counsellor, and Robert Thraves New York counsellor, with offices at Wilmington, Del., Dallas, Tex., and New York City. Hooser agreed to convey to this corporation, when organized, the interest he owned in the oil leases before mentioned, and accept, as full consideration for the conveyance, all the capital stock of the corporation, less ten shares, reserved as qualifying shares for the other four directors. Hooser further obligated himself in the following language: "And I further agree that after said corporation is chartered and said properties assigned to it, as aforesaid, you (meaning W. V. Thraves) may proceed to sell a sufficient amount of the common stock of said corporation at not less than 65 per cent of the par value thereof net to me, to pay to me the sum of $1,000,000.00 * * * and I further agree that when I shall be fully paid from the sale of stock, as aforesaid, I will transfer and deliver to you one-half of all the stock of said corporation remaining unsold." Thraves arranged with J. K. Sague, of New York City, to market 100,000 shares of this stock. Sague's written proposal to Thraves required the adoption of certain amendments to the charter of Hooser Oil Company as a condition precedent to his undertaking the task of selling stock, and in addition made the following stipulations: "The Hooser Oil Company to place in escrow in a trust company of their selection 100,000 shares of stock to be marketed by said Sague and his associates at a minimum price of $3.25 per share * * * Hooser Oil Company is to receive 65 per cent and the balance of 35 per cent is to go to the marketing syndicate. * * * The marketing syndicate undertakes and stipulates that they shall have 30 days in which to prepare their campaign for marketing the stock, and at the conclusion of 60 days from the date (January 26, 1925) of signing this contract they agree to turn in $100,000.00 (One Hundred Thousand Dollars) to the company's treasury for stock sold, and thereafter a minimum amount of $50,000.00 (Fifty Thousand Dollars) per month until the 100,000 shares is (are) disposed of. In the event of their failure to live up to this (these) provisions, the agreement shall be immediately cancelled at your (Thraves') option."

Hooser's assent to Sague's proposal to Thraves necessitated the supplemental contract, which was executed in New York City January 26, 1925, from which we quote: "Now therefore it is agreed by both parties (Thraves and Hooser) that the charter of the Hooser Oil Company as amended, the officers, by-laws and minutes of said company, as now elected, constituted and adopted, are in full compliance with said contract, and the amendments thereto agreed upon by the parties thereto, and it is further agreed that the contract entered into this day (January 26, 1925) by second party (Thraves) with J. K. Sague and associates, for the sale of stock of the aforesaid company is in compliance with the terms and provisions of said contract and amendments thereto. It is further agreed by second party (Thraves) that for and in consideration of first party (Hooser) having given his consent to the changes in the charter, etc., of said company, as set out in the aforesaid amendment of the charter of said company, said (second) party agrees that at any time first party desires to withdraw any or all of the stock of said company, which second party is empowered under said original contract and amendments to sell for the purpose of paying first party the amount set out in said original contract, he may do so, and he may credit said stock on said amount at 65 per cent of its par value until said consideration named in said original contract be fully paid. This agreement is necessary for a proper interpretation of second party's contract with said Sague and associates. * * * It is agreed by the parties hereto that said Hooser shall have all rights and privileges of naming price at which stock shall be sold, withdrawing stock from the market, etc., set out in said contract of second party with said Sague and associates, and the provisions of said contract with said Sague shall apply to second party and all his agents, brokers and salesmen as fully as if written herein, and a copy of said contract with said Sague is hereto attached and marked Exhibit `A' (the written proposal of Sague to Thraves). It is further agreed by the parties hereto and made a part hereof, that in the event second party has not completed the sale of stock by January 1, 1926, said original contract between the parties hereto, together with all amendments thereto, shall terminate at the option of said Hooser."

Thraves procured the charter for Hooser Oil Company, also the amendments suggested in the written proposal of Sague, and in these respects fully complied with the written contract. After the supplemental or amendatory contract of January 26, 1925, was executed, Hooser returned to Dallas, Tex., and in compliance with his obligation conveyed to Hooser Oil Company the oil leases heretofore mentioned. Within a short time thereafter the occurrences that culminated in this lawsuit took place.

Thraves sued Hooser for damages, and alleged after the predicate facts in substance that, prior to January 1, 1926 (the time limit of the contract), he could have found parties ready, able, and willing to purchase 307,692 shares of the stock of Hooser Oil Company at $5 per share (the amount necessary to raise the cash payment to Hooser of $1,000,000), but that defendant willfully and deliberately repudiated the contract and refused to deliver stock for sale, to plaintiff's damage in the sum of $538,460; that defendant attempted to dispose of and did in fact transfer out of Hooser Oil Company all the valuable producing oil leases (conveyed to it by Hooser), thus rendering it impossible for plaintiff to dispose of the stock at any price; that, but for the breach of the contract by defendant, he (plaintiff) could and would have earned and would have been entitled to receive one-half the stock of Hooser Oil Company remaining, after the sale of 307,692 shares (less 50,000 shares to be left unsold for the benefit of the company), alleged to be 71,154 shares, of the par and reasonable market value of $5 per share; that defendant refused to deliver said stock to plaintiff for sale, but converted same to his own use and benefit, to plaintiff's damage in the sum of $355,770.

In describing his cause of action, plaintiff set up the supplemental contract of January 26, 1925 (to which the Sague proposal was attached), and referred to same in the following language, viz.: "Thereafter this plaintiff proceeded to prepare for the sale of the shares of stock belonging to the defendant Hooser in the Hooser Oil Company, and in order to facilitate the said work and by mutual consent, and for a valuable consideration, plaintiff and defendant entered into a further supplemental agreement on the 26th day of January, 1925, in the City of New York, a true copy of which is attached hereto and marked Exhibit `C,' and prayed to be read as a part of this petition."

After a general denial, defendant Hooser urged as a special defense the following: "Further answering, defendant denies that he willfully and deliberately repudiated the contract set out in plaintiff's petition but says that he was at all times ready, able and willing to perform his part of said contract, but that said plaintiff, W. V. Thraves, as shown by Exhibit C, and Exhibit A to Exhibit C, attached to plaintiff's first amended original petition, did transfer and assign to one J. K. Sague and associates, the right to market the shares of stock of the Hooser Oil Company and did appoint the said J. K. Sague and associates his agent for the purpose of carrying out his said contract with said defendant. That the plaintiff in the name of J. K. Sague, or said J. K. Sague as agent of the plaintiff, and acting in his behalf, did demand of defendant that false and fraudulent issues of stock be made to various persons, said persons to endorse said certificate of stock and deposit same in a New York Trust Company, and that 5,000 of said shares of stock be issued immediately and delivered to the broker in order that the same might be falsely and fraudulently transferred on the stock exchange without consideration and in order that it might be made to appear to the public that said stock was active and desirable, in order to enable the said plaintiff and the said J. K. Sague to more easily sell same, and furthermore, demanded of defendant that all of said stock...