Meredith v. Ramsdell

• Decision Date: 15 July 1963
• Docket Number: No. 19844,19844
• Citation: 152 Colo. 548,384 P.2d 941
• Parties: John A. MEREDITH, Plaintiff in Error, v. Richard H. RAMSDELL, Defendant in Error.
• Court: Colorado Supreme Court

Page 941

384 P.2d 941

152 Colo. 548

John A. MEREDITH, Plaintiff in Error, v. Richard H. RAMSDELL, Defendant in Error.

No. 19844.

Supreme Court of Colorado, In Department.

July 15, 1963.

Rehearing Denied Sept. 16, 1963.

Sears & Goldsmith, Denver, for plaintiff in error.

Robert Sunshine, H. D. Reed, Denver, for defendant in error.

FRANTZ, Chief Justice.

Originally Meredith sued All State Oil Corporation and Ramsdell. His complaint was in five counts, the first four of which were directed against All State for rescission of two instruments which purported to convey interests in two oil and gas leases in Logan County, and the fifth of which sought damages from Ramsdell by reason of his alleged fraud.

Count one related to one of the instruments and Count two to the other, and therein it was alleged that those instruments were void for vagueness, inconsistency and unintelligibility, and further that each was voidable for breaches thereof committed by All State. The third count alleged failure on the part of All State to comply with certain requirements of the Colorado Securities Act. The fourth count charged All State with fraud, warranting a court-decreed avoidance of the instruments.

In his fifth count Meredith accused Ramsdell of fraud in the sale to him of the two instruments, by which Meredith was entitled to recover damages from Ramsdell individually. Also alleged as grounds for the recovery under this count was Ramsdell's failure to register as a broker or salesman as required by C.R.S. '53, 125-2-9.

The consideration which moved from Meredith to All State in the transaction was $3500.00, and it is this sum which Meredith would recover from the defendants, as restitution in the suit for rescission against All State, and as damages against Ramsdell. Regardless of how, or by whom, it is adjudged owing, Meredith seeks only to be made whole in the sum of $3500.00.

Trial to the court resulted in a determination that All State had breached the contract and that Meredith therefore was entitled to a decree of rescission on Counts one and two. The trial court declined to decide the third count, which was predicated upon a violation of C.R.S. '53, 125-2-9, a section of the Colorado Securities Act.

Regarding the fraud alleged to have been committed by All State in the fourth count and Ramsdell in the fifth count, the trial court stated: 'As the court views the matter, representations were made, false or not, most of which were to be performed in the future.' It continued by saying that Meredith 'paid out $3500 to All State for these contracts for something that was to be performed in the future.' 'These contracts' had reference to Exhibits 1 and 2.

The trial court held that Exhibit 2, which provided that it would become effective in the event the well contracted for in Exhibit 1 failed to become a commercial producer, created 'a conditional future proposition' which cannot be the subject of an actionable misrepresentation.

In the consideration of Exhibits 1 and 2, the trial court found that the first was executed at a time when All State had no title to the oil and gas lease forming its subject matter, and that it did not acquire such title until some two months later. It found that All State did not have, at the time of the execution of Exhibit 2 or at any time thereafter, title to, or any interest in, the oil and gas lease involved in that instrument.

Meredith prosecutes this writ of error, directed solely to the disposition of the fifth count, in which the trial court held against him on the matter of Ramsdell's individual liability. Our resolution of this controversy depends on answers to two questions: (1) was there evidence of actionable misrepresentations; and (2) if there was, may a person defrauded thereby, having obtained a decree of rescission against the principal, have a judgment for damages against the agent?

Exhibits 1 and 2 were executed on July 9, 1958. Ramsdell represented All State in the negotiations preceding their execution and he signed them on behalf of All State as its president.

By Exhibit 1, All State conveyed a 6/64ths interest in the Green Prospect well, subject to a 1/16th of 7/8ths overriding royalty. It is recited therein that ownership of the oil lease was acquired from British American Oil Co. Ramsdell testified that ownership of the lease was actually acquired three months after the execution of Exhibit 1, and that he knew the statement of ownership was false on July 9, 1958.

Documentary evidence indicates that, when obtained, All State got a less interest in the well than that described in Exhibit 1. British American Oil Co. have reserved a 1/8th of 8/8ths royalty.

Exhibit 2, relating to another well, was entered into at the instance of Meredith. It, too, recited the acquisition of an oil lease from British American Oil Co., and the ownership of the lease by All State. Ramsdell admitted that All State never had a right or interest in the lease. Meredith had subscribed to Exhibit 1 only after there had been agreement as to Exhibit 2. By its terms, Exhibit 2 would become operative only if the well in Exhibit 1 proved not to be a commercial producer. There is no question that the well referred to in Exhibit 1 was not such a producer.

Certain prefatory observations should be made before we proceed to the disposition of the axial questions of this case. A statement of them puts these questions and their resolution in proper perspective.

Exhibits 1 and 2, executed at the same time and interdependently made, form one contract. It is elementary that an agreement may be evidenced by several writings, which, when connected, show the parties, subject matter, terms, and consideration. 17 C.J.S. Contracts § 58, p. 408. Such concept has been applied to oil and gas contracts. 58 C.J.S. Mines and Minerals § 225, p. 604. And in the related field--mining--this court has construed several writings as constituting one contract. O'Reilly v. Burns, 14 Colo. 7, 22 P. 1090. See Gibbs v. Wallace, 58 Colo. 364, 147 P. 686.

It follows then that fraud as to either instrument infects the whole transaction, since we are dealing with one contract. Where a contract involves several parts evidenced by several instruments, yet they make up but one transaction, fraud in one part vitiates the entire agreement at the election of the defrauded party. Gyles v. Stadel, 252 Mich. 349, 233 N.W. 339; Dykes v. Blake, 4 Bing.N.Cas. 463, 33 E.C.L. 806; 132 Reprint 866; 91 C.J.S. Vendor & Purchaser § 54, p. 910.

It is undisputed that All State never acquired or had an interest in the well described in Exhibit 2. It appears that Ramsdell on behalf of All State entertained an expectation of obtaining an interest. Ownership in the context of this case was a relevant fact within the meaning of the law of fraud. O. K. Uranium Development Co. v. Miller, 140 Colo. 490, 345 P.2d 382.

A person who misleads another by word or act to believe that a fact exists, when he knows it does not, is guilty of fraud, notwithstanding he entertains a belief and expectation that it will come into existence. Hubbard v. Weare, 79 Iowa 678, 44 N.W. 915; Grosh v. Ivanhoe Land & Improvement Co., 95 Va. 161, 27 S.E. 841; Kent Jewelry Corp. v. Kiefer, Sup., 119 N.Y.S.2d 242. Anticipating the subsequent acquisition of title to the property, as in this case, comes within the rule.

Having obtained a decree of rescission against All State, could Meredith in the same action have judgment for damages against Ramsdell, All State's agent? On the theory that Meredith cannot both affirm and disaffirm the contract, Ramsdell would have this Court answer the question negatively. In opposition, Meredith contends that this case does not involve an election of remedies, and that the suit was properly initiated and pursued.

Meredith cannot have two satisfactions for the same injury. It is axiomatic that for an injury a party may have one satisfaction, whether the proceeding be in equity or at law. Spaulding Mfg. Co. v. Board of Com'rs of La Plata County, 63 Colo. 438, 168 P. 34; German National Bank v. J. D. Best & Co., 32 Colo. 192, 75 P. 398; Nash v. Minnesota Title Ins. & Trust Co., 163 Mass. 574, 40 N.E. 1039, 28 L.R.A. 753, 47 Am.S.R. 489.

In connection with the rule that...