Laseter v. Sistrunk, 43175

• Decision Date: 16 November 1964
• Docket Number: No. 43175,43175
• Parties: Douglas E. LASETER v. Walter SISTRUNK et al.
• Court: Mississippi Supreme Court

Page 652

168 So.2d 652

251 Miss. 92

Douglas E. LASETER v. Walter SISTRUNK et al.

No. 43175.

Supreme Court of Mississippi.

Nov. 16, 1964.

Waller, Pritchard & Fox, Jackson, Daniel, Coker & Horton, Melvin Bishop, Jackson, for appellant.

Wells, Thomas & Wells, Martha Gerald, Heidelberg, Woodliff & Franks, Swep Taylor Jr., Jackson, for appellees.

LEE, Chief Justice.

Under the pleadings, the issue in this case was whether complainant, Douglas E. Laseter, was victimized by the fraud of the defendants Walter Sistrunk, Xavia M. Franscogna, Jim Williams, and Southwest Gas Producing Company, Inc., in trying to discover oil and gas, and was entitled to recover damages therefor. Defendant, Southwest Gas Producing Company, Inc., by its cross bill, sought recovery from complainant Laseter, for his proportionate part of the expense of the second and third wells, in which he became a joint operator.

During the 1960's, there has been considerable interest in the discovery and production of oil and gas in the State. Douglas E. Laseter evinced a desire to take a chance when he began to make inquiry in 1959 and approached Walter Sistrunk about activity in another state. He really was seized with the fever in 1960 and again conferred with Sistrunk, a broker of leases and an oil man in Jackson. At that time, the parties entered into an agreement whereby Laseter would furnish Sistrunk money to purchase leases in the Oldenberg area, and they would divide the profits equally, after reimbursing Laseter for the cost of the leases. But if there were no profits, Laseter was to bear the loss. Through Sistrunk's efforts, approximately 500 acres of varying interests, spread over the area, were purchased. After Laseter exhausted his resources in excess of $5,000 for purchases, the parties did not have sufficient acreage to interest a drilling company. In these circumstances, it became necessary to get the matter worked out in the best way possible; and to interest other persons with stronger financial responsibility to get Laseter's money back, if possible, together with an override. They set about working under the fifty-fifty agreement to accomplish that result.

Sistrunk was a man of ability and experience and had a wide acquaintance of people in the oil business. Ultimately, he went into conference with Xavia M. Franscogna, a geologist with wide experience in the oil business, giving to him all information which he had at that time in the Oldenberg area. Franscogna could expect no fee from them. He studied Sistrunk's maps and comments for sometime. This gentleman studied the proposition and finally he became convinced that there was merit in it. He then approached Jim Williams, a representative of Southwest Gas Producing Company, Inc., and laid the matter before him in detail. After considerable study of the matter, Williams was also impressed. This general information was made known to the proper parties of Southwest, and finally, in November 1960, a meeting was held in the office of Jim Williams in Jackson, with Pate, the company's geologist, Williams, Franscogna, Sistrunk as the representative of Laseter, and himself present. The matter was gone into thoroughly, and thereafter a tentative agreement was reached whereby Southwest would utilize the Laseter-Sistrunk leases with such others as it might acquire to afford sufficient acreage to justify drilling. Shortly thereafter, Sistrunk fully explained to Laseter that he had been able to make this deal with Southwest, but it would pay no money nor give an override--their only right would be to share proportionately in production, if any. The proposal was that Laseter would assign his interest to Southwest as part of the acreage necessary for drilling. If the well should be a producer, their proper share would be 12.125%. Thereafter, Laseter could become a joint operator, if he wished.

A well was drilled. When it came in for gas, Laseter, Sistrunk and Franscogna were all present. They were elated over the result. Laseter, noticing the joy of Franscogna, made an inquiry with the view of ascertaining Franscogna's reason for glee. Sistrunk told him that Franscogna had represented Southwest, which had paid him a commission, and that phase was none of Laseter's business. The trouble began at this point.

Laseter admitted that he authorized Sistrunk to buy the particular leases; that they were bought and his drafts were drawn to pay for them; that, because he ran out of money, the leasing was stopped; that at that time, one draft had not been paid; and that he authorized Sistrunk to make any necessary deal for the best result. There were five of these leases. He executed, under date of November 28, 1960, the assignment in favor of Southwest for a test well for oil and gas, to a depth of 10,550 feet. He had no objection to this contract whatever. Under its terms, more specifically, within sixty days Southwest was to assign his equitable part of the working interest, and that it did so assign to him 12.125%. He was not charged for any part of the cost of drilling, equipping, and completing the first well, but the proportionate cost of drilling, etc., for additional wells, would be borne by him. The first well was drilled and the company did not charge him anything. He admitted his signature on the operating agreement, dated August 23, 1961. He made none of the payments on the cost of additional wells. He made no complaint about the matter. He also admitted that, about five months after the conversation in which Sistrunk had told him that Franscogna's connection with the deal was none of his business, on November 25, 1961, he signed the authority for expenditures. He also admitted that he signed the authority for expenditures, dated February 12, 1962, which he received from Southwest. He admitted that he was under considerable pressure to pay his part of subsequent drillings at the time he found out the alleged information, and that he then began this action, which culminated in this litigation.

Laseter not only testified in detail himself, but he called all of the parties-defendant, as adverse witnesses for cross-examination.

Sistrunk testified in great detail. He admitted the history and details of the beginning, continuance and consummation of the matters which led to the discovery of the well. The terms, as worked out, were explained to Laseter, he approved them, and, in due course, Laseter assigned the leases to Southwest. Franscogna expected no compensation from Sistrunk or Laseter, but expected to be paid for his services by Southwest, as a finder. When the field was fully worked out, Southwest paid him $5,000 for that service. There was no legal obligation whatever for Franscogna to pay any part of it to Sistrunk; and he said that Franscogna did not pay him anything; but that Franscogna simply made him a gift of $2,500 because, he said that Sistrunk had acquired so much information about the proposal that he was enabled to save himself considerable investigation that otherwise would have been necessary. After the discovery well, Southwest gave Franscogna a bonus of $10,000 and an override. Without any consideration whatever, Franscogna gave $5,000 of that to Sistrunk and a part of his override. Franscogna also made a gift of a small part of his override to Jim Williams.

Franscogna, in his cross-examination, in great detail, testified that, in all of his relations with Sistrunk, he understood that, if he was successful, he would receive no compensation from Laseter; that, if successful, he expected to be paid a finder's fee by Southwest, the people who would undertake the discovery well. Southwest did pay him compensation in the sum of $5,000, as a finder's fee, and he gave $2,500 of that amount to Sistrunk, not because of any duty so to do, but simply because he wished to do it. When the well came in and it appeared to be a producer Southwest rewarded him with a bonus of $10,000 and an override; and in the same manner and from the same motive as in the $2,500 gift, as stated above, he gave Sistrunk $5,000 of that amount and a part of his override. His gift of a small part of his override to Williams was also a magnanimous gift on his part to him. Franscogna did not even know Laseter.

Jim Williams testified that he was surprised when Franscogna gave him the small override, because there was no duty on his part, legal or otherwise, to give him anything.

At the close of the evidence, offered by the complainant, all of the defendants made separate motions to exclude the evidence, and grant decrees for each of them. The court sustained the motions of Franscogna, Williams and Southwest, but overruled the motion of Sistrunk.

The defendant-cross-complainant, Southwest Gas Producing Company, Inc., proceeded with its cross bill against complaintiff-cross-defendant, Laseter, and, after hearing the evidence, the court awarded a decree for Southwest and against Laseter in the amount shown in the decree.

After hearing the renewed motion by Sistrunk to exclude the...