Kadane v. Clark

• Decision Date: 29 September 1939
• Docket Number: No. 13958.,13958.
• Citation: 134 S.W.2d 448
• Parties: KADANE et al. v. CLARK.
• Court: Texas Court of Appeals

134 S.W.2d 448

KADANE et al. v. CLARK.

No. 13958.

Court of Civil Appeals of Texas. Fort Worth.

September 29, 1939.

Rehearing Denied December 15, 1939.

COPYRIGHT MATERIAL OMITTED

Appeal from District Court, Wichita County; Ernest Robertson, Judge.

Action by C. W. Clark against George E. Kadane and others to recover a specified sum as commissions, or in the alternative for the reasonable value of the services rendered in procuring a purchaser for an oil and gas leasehold interest. Judgment for plaintiff, and defendants appeal.

Reversed and cause remanded.

Kilgore & Rogers, of Wichita Falls, for appellants.

Bonner, King, Dawson & Jones, of Wichita Falls, for appellee.

SPEER, Justice.

Plaintiff, C. W. Clark, instituted this suit against defendants, George E. Kadane, Jack Kadane, Mike E. Kadane, Edwin G. Kadane, Charles Kadane, Fred A. Kadane and Big Six Oil Company, a corporation, for $20,000, as commissions, and in the alternative for the reasonable value of his services rendered, in procuring a purchaser from defendants of an oil and gas leasehold interest in 200 acres of land in Wichita County, Texas.

Plaintiff alleged that he was a geologist by profession and had acquired a valuable knowledge of the formations which rendered defendants' property valuable. That he had never engaged in the brokerage business, but because of his knowledge of values, he conceived the idea of attempting to sell defendants' property to large oil companies, the personnel of which was well known to him. He asked George E. Kadane, whom he knew was in charge of selling the leases belonging to himself and his associates, if he would be interested in selling the properties to one or more of the several independent companies with whom plaintiff had contacts; that the said George E. Kadane said he would have to confer with other interested parties and would do so at once; that he later told plaintiff that he and his associates were willing to sell, if prices and terms were acceptable. Allegations are made that defendants, acting through George E. Kadane, listed their said property with plaintiff for sale, and promised to pay five per cent of the amount of any sale made as commissions; in the alternative, that if no definite promise was made to pay five per cent of the purchase price for commissions, then they promised to pay a reasonable compensation to plaintiff for the services rendered by him, if such a sale was made, and that a reasonable compensation was five per cent of the purchase price for any sale made.

Plaintiff further alleged that after said property was so listed with him for sale, he interested the Sunray Oil Company in the proposition and caused representatives of that company and defendants to enter into negotiations, which resulted in the sale by defendants to Sunray Oil Company of said properties, for $400,000, one-half in cash and the other half to be paid from future oil runs produced from the properties. Further allegations were made that plaintiff procured a purchaser, to whom a sale was made, and that by his efforts he was the procuring cause of the sale made by defendants to Sunray Oil Company.

Defendants excepted specially to plaintiff's petition upon the ground that it disclosed a transaction between the parties, whereby plaintiff was seeking to enforce a contract which was in violation of The Securities Act of this State, and therefore invalid.

Subject to their general demurrer and special exceptions defendants answered by general denial, and by special pleas in defense, such as a denial of partnership, as alleged by plaintiff, that if any such contract as alleged by plaintiff was ever entered into (all of which they denied) that it was in violation of The Securities Act of Texas and void. Defendants further denied that they had ever listed their property with plaintiff for sale by him, and further specially denied that plaintiff was the procuring cause of the sale made by them to the Sunray Oil Company, but that said sale was procured through another person, to whom they had paid an agreed commission on the sale.

The general demurrer, all special exceptions and the plea in bar were overruled. The case was tried to a jury on special issues. The verdict was favorable to plaintiff. Motion for new trial was overruled and a joint and several judgment was entered in favor of plaintiff against all defendants, for $10,500. From the judgment entered defendants have perfected this appeal.

The parties will carry the same designation here as was given them in the trial court.

Defendants seek a reversal by this court on thirty-one propositions contained in their briefs. These points or propositions are admirably grouped and briefed in four classes. Some of the points presented are well taken and require a reversal of the judgment entered. We shall avoid, as far as possible, expressions as to the evidence which would give to either party an undue advantage upon another trial. Both sides have briefed the case thoroughly and these efforts on the part of counsel have been helpful to us in arriving at the conclusions reached.

In defendants' first group they present propositions one to six, under which they contend, (1) that the court erred in overruling the exception to the petition, because it did not allege that plaintiff had complied with The Securities Act; (2) because after plaintiff had stipulated upon the trial that he had not complied with The Securities Act, the court should have given a peremptory instruction for defendants; (3) because plaintiff having stipulated that he had not complied with The Securities Act and obtained a license, defendants were entitled to an instructed verdict and the court should have sustained their motion for judgment non obstante veredicto; (4) because plaintiff having failed to allege a compliance with The Securities Act, and having stipulated that he had not done so, the alleged contract attempted to be enforced was a violation of the Penal Code of this State, and the court erred in its enforcement; and (5) because it was error for the court to refuse to permit defendants to read to the jury the pleadings of plaintiff when he had not alleged a compliance with the Act and had so stipulated upon the trial.

There is no error shown by the action of the trial court in overruling defendants' special exception and plea in bar to plaintiff's petition, because it did not allege a compliance with The Securities Act. The petition stated a cause of action. The pleader was not required under the circumstances of this case to negative all possible defenses that might be presented or urged by his adversary. The matters so raised were defensive and could not be reached by exceptions. Culver v. Cockburn, Tex. Civ.App., 127 S.W.2d 328, writ of error dismissed, correct judgment; Mullin v. Nash-El Paso Motor Co., Tex.Civ.App., 250 S.W. 472, writ refused; R.C.L., vol. 4, page 303.

Subject to their special exceptions, defendants did plead the failure of plaintiff to comply with The Securities Act, alleging that by reason of his failure to so comply and procure a license, the purported contract relied upon by him with defendants was invalid and could not be enforced. There is a stipulation in the testimony adduced, to the effect that plaintiff had not qualified as a dealer in securities and procured a license under the provisions of The Securities Act. It is under this defensive plea and the agreed facts that defendants urge the propositions that plaintiff could in no event recover and that they should have had a summary instruction by the court and absent such instruction the court should have disregarded the verdict and sustained their motion for judgment non obstante veredicto.

These propositions fairly present the issue of whether or not the alleged express or implied contract between defendants and plaintiff, whereby the latter claimed that the former had employed him to find a purchaser of their oil and gas rights, was a violation of The Securities Act, Vernon's Ann. Penal Code, Article 1083a.

We have concluded that the facts in this regard (about which there is no controversy) do not bring the transaction within that statute. Vernon's Texas Civil Statutes, Article 600a and its 38 sections contain what is known as The Securities Act. Section 30 is the penal provision in it and is now Art. 1083a of our State Penal Code, Vernon's Ann.P.C. art. 1083a.

The Act evinces that the Legislature intended to protect the public against the purchase of worthless securities from unscrupulous dealers who peddle them about in search of buyers. Section 2 (a) of the Act, insofar as applicable to this case, defines the words "security" and "securities" in this language: "The term `security' or `securities' shall include * * any instrument representing any interest in or under an oil, gas or mining lease, fee or title."

Section 2 (c) reads: "The term `dealer' shall include every person * * * who engages in this State, either for all or part of his * * * time, directly or through an agent, in selling, offering for sale or delivery or soliciting subscriptions to, or orders for, or undertaking to dispose of, or to invite offers for, or dealing in any other manner in any security or securities within this State."

Section 2 (h): "`Broker' shall mean dealer as herein defined."

Section 3: "Exempt transactions. Except as hereinafter in this Act specifically provided, the provisions of this Act shall not apply to the sale of any security when made in any of the following transactions and under any of the following conditions, and the company or person engaged therein shall not be deemed a dealer within the meaning of this Act. * * *

"(c) Sales of securities made by, or in behalf of a vendor in the ordinary course of bona fide personal investment of his personal holdings, or change of such investment, if such vendor is not otherwise engaged either permanently or temporarily in selling securities * * *".

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