Linn v. Houston

• Decision Date: 07 May 1927
• Docket Number: 27,104
• Citation: 255 P. 1105,123 Kan. 409
• Parties: DONALD W. LINN, Appellant, v. P. S. HOUSTON, J. E. WHEELER, J. A. STINSON, FRED J. QUINN, GEORGE C. CODDINGTON, WARREN HOWLAND, A. C. T. GEIGER, THE QUINN OIL COMPANY, CHARLES A. RODENBECK, as Administrator, etc., and THE QUINN OIL COMPANY, a Trust Estate, Appellees
• Court: Kansas Supreme Court

255 P. 1105

123 Kan. 409

DONALD W. LINN, Appellant, v. P. S. HOUSTON, J. E. WHEELER, J. A. STINSON, FRED J. QUINN, GEORGE C. CODDINGTON, WARREN HOWLAND, A. C. T. GEIGER, THE QUINN OIL COMPANY, CHARLES A. RODENBECK, as Administrator, etc., and THE QUINN OIL COMPANY, a Trust Estate, Appellees

No. 27,104

Supreme Court of Kansas

May 7, 1927

Decided January, 1927.

Appeal from Decatur district court; WILLARD SIMMONS, judge.

Judgment reversed and cause remanded.

SYLLABUS

SYLLABUS BY THE COURT.

1. TRUSTS--Common-law Trust--Individual Liability for Breach of Contract. Where a common-law trust was organized and a board of trustees selected to conduct its business affairs and the trustees so chosen entered upon their duties and selected a business name for the trust and selected one of their number to manage its affairs, and the trust thereafter breached a contract with plaintiff who had no notice of the limitations of liability the organizers of the trust had specified in the trust agreement (if these had any virtue, which is not decided), the plaintiff may bring and maintain an action for damages against the trustees or any of them wherever he can obtain personal service of summons on them or any of them.

2. SAME--Common-law Trusts--Limited Liability. A common-law trust has none of the attributes of limited liability or freedom from personal liability which attach to limited partnerships or ordinary business corporations.

3. PLEADING--Amendment--Discretion of Court. Error assigned on overruling plaintiff's motion for leave to amend his petition considered, and held: (1) the matter was discretionary with the trial court, and (2) the facts recited in the proposed amendment were already sufficiently disclosed in plaintiff's petition.

4. APPEARANCE--General or Special Appearance--Traversing Question of Fact. A so-called special appearance is none the less a general appearance, notwithstanding its designation when its recitals have the effect of traversing a material question of fact involved in the merits of the action.

J. P. Noble, W. K. Thompson, both of Oberlin, and William Ritchie, Jr., of Omaha, Neb., for the appellant.

A. C. T. Geiger, of Oberlin, Herbert Howland, of Atwood, and E. H. Benson, of Colby, for the appellees.

OPINION

DAWSON, J.:

The plaintiff brought this action against the defendants to recover damages for the breach of a contract to drill for oil on certain lands in Wyoming covered by a lease which plaintiff had acquired on the faith of defendants' undertaking.

Plaintiff alleged that in 1920 the defendants, Stinson, Houston, Howland, Geiger, Quinn, J. E. Wheeler and three other persons, one of whom, Henry Rodenbeck, is now deceased, organized themselves into a common-law trust for the exploitation and development of oil and gas lands and business incident thereto, and for sundry other purposes not here pertinent; and that these six defendants and Rodenbeck named themselves as trustees of this trust, and selected the title "The Quinn Oil Company," as its business name and designation, and chose one of their number, J. E. Wheeler, as their agent for the general management and conduct of the business affairs of the trust, and that he assumed the duties and powers thus conferred upon him.

Plaintiff further alleged that in July, 1920, Wheeler, on behalf of this common-law trust, the Quinn Oil Company, and the defendant trustees thereof, proposed to plaintiff that he should purchase and procure an oil and gas lease on a certain acreage of lands and assign every alternate 40-acre tract thereof, 640 acres in all, to the Quinn Oil Company, and that the latter would commence and diligently prosecute the work of drilling on such leased lands in conformity with the conditions prescribed by the lessors in the leasing contract. Accordingly, plaintiff proceeded to purchase and procure a lease as desired by Wheeler, for which he paid the reasonable price of $ 2,500, and that he assigned to the Quinn Oil Company the acreage required by Wheeler; and plaintiff and Wheeler, on behalf of the Quinn Oil Company, executed in writing a drilling contract covering in detail the obligations thereby undertaken by defendants' institution. Part of the concluding paragraph of that contract reads:

". . . Second party hereby agrees to be held liable for the fulfillment of the covenants herein made and hereby agrees to indemnify first party in the amount of $ 2,500 in the event that second party fails to protect first party's interests under the terms of this lease, and hereinbefore described, and as set forth in said lease.

"D. W. LINN [first party].

"THE QUINN OIL COMPANY [second party].

"By DR. J. E. WHEELER, Secretary."

Attached to plaintiff's petition as exhibits were a copy of defendants' trust agreement, a copy of the gas and oil lease covering 1,280 acres procured by plaintiff at the instigation of Wheeler, and copy of the assignment thereof to the Quinn Oil Company with special reference therein to the drilling contract above mentioned. The gas and oil lease provided that drilling operations should commence within 120 days from the signing of the lease and should be diligently prosecuted thereafter, and that a failure on the part of the lessee to comply therewith would subject the lease to forfeiture at the lessors' option on fifteen days' notice.

Plaintiff also alleged that defendants failed to perform the acts agreed to in the drilling contract and as prescribed in the lease, and that the lessors had exercised their privilege of forfeiting the lease in conformity with its terms, whereby plaintiff was damaged in the sum of $ 2,500, and that by the terms of the drilling contract defendants had stipulated and agreed that...