Interstate Petroleum Co. v. Farris

• Decision Date: 30 September 1914
• Parties: INTERSTATE PETROLEUM CO. v. FARRIS ET AL.
• Court: Kentucky Court of Appeals

169 S.W. 535

159 Ky. 820

INTERSTATE PETROLEUM CO. v. FARRIS ET AL.

Court of Appeals of Kentucky.

September 30, 1914

Appeal from Circuit Court, Knox County.

Action by J. D. Farris and another against the Interstate Petroleum Company. From a judgment for plaintiffs, defendant appeals. Reversed and remanded, with directions.

Black Black & Owens, of Barbourville, for appellant.

J. M Robsion, of Barbourville, for appellees.

MILLER J.

For several years previous to November 26, 1903, the Interstate Petroleum Company had been engaged in the business of developing territory, and the production of crude oil in Knox county, and for that purpose it had acquired a number of leases of lands in that county. In the fall of 1903 Frank Ritchey, of Richmond, Va., obtained an option from said company to buy its property. Ritchey had theretofore interested Swisher, Kirkland, Meade, and other residents of West Virginia in the oil business, and proposed to sell them his option upon the property of the Interstate Petroleum Company. Accordingly Swisher and Kirkland visited the oil property in Knox county for the purpose of inspecting it, and upon their return to West Virginia they and their associates on November 26, 1903, agreed to buy the property of the Interstate Petroleum Company and also the property of the Atlantic & Pacific Oil Company (a similar company doing business in the same neighborhood) for $25,000. Of this sum $5,000 represented the purchase price of the property of the Interstate Petroleum Company. The West Virginia purchasers sent Hartley, their attorney, to Knox county, Ky. for the purpose of examining the title to the property, and upon his favorable report the sale was completed by a formal conveyance dated December 6, 1903, by which the Interstate Petroleum Company, at the direction of Kirkland and his associates, conveyed the property sold by it to Francis P. Bent as a temporary title holder, for the recited consideration of $800. The West Virginia purchasers then organized the Blue Grass Oil & Gas Company under the laws of West Virginia, for the purpose of taking over their property, and that corporation having been formed on December 9, 1903, Bent by his deed dated December 18, 1903, conveyed all of said property to the Blue Grass Oil & Gas Company for the recited consideration of $1. These conveyances were lodged for record in Knox county on December 18, 1903. Up to the time of the sale Bent had been the field manager of the Interstate Petroleum Company, and had assisted in making the sale to Swisher, Kirkland, and their associates, and for that service the Interstate Petroleum Company paid him $2,000. After the sale had been agreed upon, Bent contracted to represent Swisher and Kirkland and their associates, and their corporation, the Blue Grass Oil & Gas Company, in Kentucky, and with that end in view, he was made the title holder of the property until the corporation could be formed. Bent paid nothing whatever to the Interstate Petroleum Company or to the Atlantic & Pacific Oil Company; on the contrary, the entire purchase money was paid by Swisher, Kirkland, and their associates, who afterwards formed the Blue Grass Oil & Gas Company. After the sale had been completed, the Blue Grass Oil & Gas Company took possession of the property in December, 1903, and has held and operated it ever since. On June 15, 1903, the Interstate Petroleum Company, being indebted to the appellees, Farris & Blair, in the sum of $500, had executed its note to that firm for $500, payable on December 15, 1903. The note was not paid at maturity; and in the meantime as above recited, the Interstate Petroleum Company had sold its property to the Blue Grass Oil & Gas Company.

On January 12, 1905--about 13 months after the Interstate Petroleum Company had sold its property--Farris & Blair brought this action against the Interstate Petroleum Company, the Blue Grass Oil & Gas Company, and F. P. Bent, to recover the amount due on the note, and, charging that the conveyances from the Interstate Petroleum Company to Bent, and from Bent to the Blue Grass Oil & Gas Company, were fraudulently made for the purpose of preventing the plaintiffs from collecting their debt, they procured an attachment which was levied upon the property the Interstate Petroleum Company had conveyed to the Blue Grass Oil & Gas Company. Upon final hearing, the attachment was sustained, and Farris & Blair were thereby given a lien for their debt upon the property above mentioned, and from that judgment the Blue Grass Oil & Gas Company, the Interstate Petroleum Company and Francis P. Bent prosecute this appeal.

1. Preliminary to the consideration of the case upon its merits, it becomes necessary to pass upon appellees' motion to dismiss the appeal upon the ground that it was not taken within two years after the judgment was entered. The appeal was taken before the clerk of this court on June 30, 1913. The judgment was spread upon the judgment book of the Knox circuit court on January 5, 1907, while Hon. H. C. Faulkner was the presiding judge of that court. By inadvertence, Judge Faulkner failed to sign the judgment book, a fact which was not discovered until some time in 1912, and after Hon. F. D. Sampson had become judge of said court. Judge Sampson, doubting his authority to sign the judgment book, refrained from doing so until after the decision of this court in Farris v. Matthews, 149 Ky. 455, 149 S.W. 896, on September 25, 1912. Upon his attention having been called to that decision, Judge Sampson signed the judgment book on November 21, 1912. The question for decision, therefore, upon the motion to dismiss the appeal, is this: Was the judgment appealed from rendered on January 5, 1907, when it was spread upon the judgment book, or on November 21, 1912, when it was signed by the presiding judge? If the first date is to control, the appeal is not in time; but if the judgment be treated as having been entered on November 21, 1912, the appeal was taken within time, and the motion should be overruled.

In speaking of the judgment now before us, the court, in Farris v. Matthews, supra, said:

"It is well settled that it is essential to the validity of a judgment that it shall be entered upon the order book of the court, and signed by a judge, and that an unsigned judgment is no judgment at all. Commonwealth v. Chambers, 1 J. J. Marsh. 108; Raymond, etc., v. Smith, 1 Metc. 65 ; Johnson v. Commonwealth, 80 Ky. 377; Ewell v. Jackson, 129 Ky. 214 [110 S.W. 860, 33 Ky. Law Rep. 673]."

The question must therefore be treated as closed by the opinion above referred to; and, as there was no judgment until it was signed by Judge Sampson on November 21, 1912, the appeal was taken in due time, and the motion to dismiss the appeal is overruled.

2. Upon the merits of the case the chancellor was of opinion that the Interstate Petroleum Company sold its property for the purpose of defrauding its creditors; that Bent was the agent of that company and aware of its purpose; that in carrying out this scheme the organizers of the Blue Grass Oil & Gas Company agreed with the Interstate Petroleum Company to have the property conveyed to Bent so that he could hold the title and...