Meacham v. Halley

• Decision Date: 25 May 1939
• Docket Number: No. 8979.,8979.
• Citation: 103 F.2d 967
• Parties: MEACHAM v. HALLEY et al.
• Court: U.S. Court of Appeals — Fifth Circuit

103 F.2d 967 (1939)

MEACHAM v. HALLEY et al.

No. 8979.

Circuit Court of Appeals, Fifth Circuit.

May 1, 1939.

Rehearing Denied May 25, 1939.

Stanley Boykin and George F. Seideman, both of Fort Worth, Tex., for appellant.

William L. Kerr, of Pecos, Tex., and John Sayles, of Abilene, Tex., for appellees.

Before FOSTER, HUTCHESON, and McCORD, Circuit Judges.

HUTCHESON, Circuit Judge.

The suit, from the judgment in which this appeal comes, had to do with an oil and gas lease on ten acres of the Halley Ranch, in Winkler County, Texas. It was in equity against Halley and others, to cancel, for fraudulent representations, a release of it plaintiff had given Halley, and in the alternative, if that relief could not be had, for damages against him.

The claim was that by fraudulently representing to plaintiff that her lease had expired with the expiration of the ten year primary term, Halley had induced her to release her claim to it; that the other defendants, Weaver and others, were claiming to be, but were not, innocent purchasers of a lease on the same land, and that plaintiff should have her decree against all of the defendants, but if she could not have the relief of cancellation then she should be given damages against Halley.

Halley's defense was that the statement made by him that the lease would expire unless, before the expiration of the primary term, drilling had commenced upon it, was not a statement of fact, but an expression of a legal conclusion or opinion honestly and in good faith entertained by him, and made by him in good faith and in the honest belief that it was true, with no intent to mislead plaintiff, and under circumstances which did not and could not constitute fraud.

Weaver and the others defended as innocent purchasers, for value, relying upon plaintiff's release of her claim, and without knowledge or notice of any defect in it. They also asserted as an estoppel against plaintiff, her conduct in executing the release, and in later dealing with them, without disclosing that she had, or claimed, any interest whatever in the land.

The District Judge, upon evidence amply sustaining, indeed, not raising any substantial question as to them, made the following findings. On July 14, 1925, S. M. Halley and wife, as lessors, executed an oil and gas lease upon 9288 acres of land in Winkler County, Texas, to one J. W. Grant. In the usual form, it provided for a primary term of ten years, and that it should remain in force by the payment of rentals for a term of ten years from its date and as long thereafter as oil or gas, potash or other minerals is produced from the land by the lessee. It further provided that it might be assigned in whole or in part, and there were assignments of some portions of it, including the 10 acres in question, which plaintiff acquired in 1926, and on which throughout the primary term she made payment of the required rental of 50¢ an acre. On September 12, 1934 the Skelly Oil Company brought in a producing well on a portion of the main lease, about 4½ miles from plaintiff's tract, and since its bringing in Halley has received royalties from it. In the spring of 1935 Halley, who was not a lawyer though he was county judge, wrote the assignees of the remaining portions of the main lease on which there had been no development, a letter substantially the same as this which, on May 1, 1935, on stationery showing him to be county judge, he wrote to plaintiff:

"The primary term of the Oil and Gas Lease covering the following described land, the N.W. ¼ of the S.W. ¼ of N. W. ¼ containing 10 acres, in Section 12, Block B-12 Winkler County, Texas, which you hold under assignment, will expire July 14, 1935, unless on or before said date you have drilled and secured commercial production on your portion of this covered by your assignment.

"This is to put you on notice that with the expiration of the primary term of said lease your rights will be treated as fully terminated."

Plaintiff did not reply to this letter, and on September 12, 1935, Halley again wrote plaintiff:

"I am enclosing herewith release of Oil and Gas Lease for your signature and notary acknowledgment and am also enclosing $1.00 for same.

"Will appreciate your immediate attention in this matter, since the primary term on your lease was for a term of ten years and expired July 14, 1935, unless you had developed the property prior to that date also this will aid immensely and avoid possible other procedures in getting my titles on my land cleared up.

Thanking you, I am,"

On September 20, 1935, plaintiff executed and returned the release he had enclosed. The provisions of it pertinent here are; that in consideration of $1, Minnie Meacham does hereby release, relinquish and surrender to Halley and wife, all right, title and interest in and to the Grant lease as to the 10 acres she had acquired as assignee. Plaintiff and Halley were not acquainted, had never had any dealings with each other, and the only communications ever exchanged between them were the letters above. At the time the letters were written Halley knew of the production from the Skelly well, but neither Halley nor plaintiff knew the legal effect on the 10 acre lease held by plaintiff, of that production. The representations and statements contained in the letters were innocent representations or statements of an opinion as to the law which Halley believed to be true and correct. Halley did not occupy any fiduciary position or relationship to plaintiff, the communications were not written with any intent to defraud, and no fraud, actual or constructive, was committed by him in writing them. Plaintiff was charged with knowledge of the law, and she therefore was not and could not in law have been deceived by Halley's statement that it was necessary, in order to hold her lease beyond the ten year term, that she commence drilling upon it before its expiration.

On March 11, 1935, prior to the writing of the letters of May 1 and September 12, 1935, Halley and wife had executed and delivered to one Estill an oil and gas lease, covering a large part of the Grant lease, and including plaintiff's 10 acres, but subject to the Grant lease, and plaintiff's release, when obtained, inured therefore, to the benefit of Estill. Some time after the execution and delivery of complainant's release and under date of March 11, 1936, Estill assigned 30 acres, including the 10 acres released by plaintiff, and the Beckert 10 acres, for a cash consideration of $500, to Weaver, Hoffman and Page, the other defendants, who thus acquired it for a valuable consideration and without notice or knowledge of any claim on the part of plaintiff, contrary to the purport of her release. In addition, prior to the closing of their trade with Estill the attorneys for Weaver et al. communicated with plaintiff, advising her that they were purchasing the lease, and asking her for information and an affidavit as to her status as married or a feme sole when she made the release. Plaintiff replied to their inquiry that she was an unmarried woman. She did not, however, advise the defendants that she made any claim to the 10 acres, or was in any way contesting her release thereof, though prior to the receipt of the letter from Weaver's attorneys, and prior to her letter of April 28, she had, on December 6, 1935, conveyed to one Morrissey, without telling him, however, that she had made the release, a ¼ interest in it. That assignment was not placed of record until July 21, 1936, after defendants Weaver et al. had in good faith drilled and completed, on June 30, 1936, an oil well on the land, nor was this suit filed until November 28, 1936.

Finding that Halley's statement was not fraudulently made, the District Judge made no finding upon whether plaintiff had relied upon and been misled by it. She, however, testified that she did not know anything about the state of production on the lease as a whole, and that she made no inquiry about it, and did not know what the law was as to the expiration of her lease, and made no inquiry about it but she believed Halley's statement that her lease expired at the end of the ten year term, and believing it, executed the release as he had requested.

Because he did not find for plaintiff, the District Judge made no finding as to the damage proven. As to that, there was testimony that in November and December, 1936, after the suit was brought, and six months after the well had been brought in on the land, the value per acre of her lease, based upon recoverable oil estimated as under the ground, was about $1800 an acre. Plaintiff offered no testimony as to the value of the oil lease in September, 1935, when the release was obtained. The proof established, however, that at that time, and in May, 1936, when it was released to Weaver, it had a value of not exceeding $15 an acre, so that plaintiff's damage from the release could not have been in excess of $150.

Upon the facts he found, the District Judge concluded as matter of law; that complainant's lease was kept valid by the payment of rentals up to and including July 14, 1935, and that commercial production having been obtained in the Skelly well, complainant's lease did not terminate at the expiration of the primary term, but that the representation that it did, made in Halley's letters, was not and could not be fraudulent, but was only a good faith statement of a misconception sincerely held by him as to the legal effect of the admitted fact that the primary lease had expired; and that plaintiff had therefore failed to make out a case for the relief either of cancellation or of damages. He concluded, in addition, that Weaver and the other defendants were innocent purchasers of the land, in reliance upon plaintiff's release, and that by executing the release and her other conduct in the premises, even if Halley had defrauded her, she would be now estopped to make claim against them.

So concluding, he...