Minchew v. Morris

• Decision Date: 15 April 1922
• Docket Number: (No. 8657.)
• Citation: 241 S.W. 215
• Parties: MINCHEW et al. v. MORRIS et al.
• Court: Texas Court of Appeals

241 S.W. 215

MINCHEW et al. v. MORRIS et al.

(No. 8657.)

Court of Civil Appeals of Texas. Dallas.

April 15, 1922.

Appeal from District Court, Dallas County; E. B. Muse, Judge.

Action by Archie F. Morris and others against A. P. Minchew and others. From judgment for plaintiffs, defendants appeal. Judgment of rescission of contract reversed and rendered denying the same. Judgment in other respects affirmed.

Carrigan, Montgomery, Brittian & Morgan and Bert King, all of Wichita Falls, for appellants.

W. B. Hamilton, of Dallas, and Clark & Sweeton, of Greenville, for appellees.

HAMILTON, J.

This is a suit for rescission of a contract conveying 2½ acres of land as oil property in Wichita county, Tex., for the cancellation of a promissory note given as part payment for the conveyance, and also for the recovery of $3,000, with interest, which was paid as a part of the consideration for the conveyance. Appellees, who were plaintiffs below, also sought an injunction against Minchew to restrain him from prosecuting a suit upon the promissory note in the district court of Wichita county, which suit appellees alleged to have been filed after the instant suit was instituted.

As the basis of recovery it was alleged that on or about the 16th day of January, 1919, two of appellants, Minchew and Wheeler, had an oil lease upon a certain tract of land in Wichita county; that these parties, claiming to own the lease with the right to transfer it, represented to appellee Morris that it was located in "proven territory," that, is, "territory that was proven to contain petroleum oil in paying quantities; that it was a sure thing and that if plaintiffs purchased said land they could form a company, and that, because of the fact that same was in such proven territory, they could capitalize said company at a sum largely in excess of the amount they were to pay him for the land and could easily sell the stock and make a splendid profit, not only upon the sale of the stock, but in the development of said property by drilling for oil thereon and developing same."

It was alleged that Minchew had had great experience in the oil business and owned large oil interests in that section; that Morris, because of his friendship for Minchew, who had been his boyhood friend, reposed the utmost confidence in him and relied upon his representations; that Minchew represented himself and appellee Wheeler to be the owners of the lease, Minchew having a power of attorney in fact to make a conveyance of the latter's interest as well as to convey his own interest; that by these representations appellees were induced to purchase the oil lease upon the land, paying the sum of $3,000 in cash therefor and executing a promissory note for the sum of $7,000, payable to appellant Minchew, dated January 16, 1919, and due February 15, 1919.

It was alleged that, while Minchew represented that he and Wheeler were the owners of the lease, in fact, appellant W. T. Cunningham was a part owner and jointly interested with the other appellants and bound and liable for the acts and representations of Minchew in the transaction between Minchew and appellees, as was also Wheeler; that Cunningham was claiming to be the owner of the note and demanding its payment; that, in consideration of the note and the aforesaid cash payment, Minchew, for himself and as attorney in fact for Wheeler, had executed a written transfer and conveyance of the lease upon the land to appellees, who, following Minchew's suggestions and advice, undertook to organize a company to develop the property; that after they entered into this undertaking they learned the property was not in "proven territory," that it was in barren territory, and instead of being worth $10,000 it was not worth $3,000; that at the time of the payment of the money and the execution of the note, as well as at the time the representations were made by Minchew, it was already apparent and known to him and the other appellants, or by the exercise of ordinary diligence could have been known to them, that the territory described was barren and not producing territory; that it was incapable of being developed, and that appellees would lose practically all they paid for the property. It was further alleged that the representations were falsely and fraudulently made by Minchew; that they were relied upon by appellees, who were induced by them to pay the $3,000 and execute the described note. Tender of the cancellation and surrender of the lease was made.

It was alleged that for the purpose of injuring, vexing, and harassing appellees, Minchew, since the filing of this suit, instituted suit against appellees in the district court of Wichita county upon the $7,000 note above described. The prosecution of this suit for the above-stated reasons, as well as others, was sought to be enjoined.

By trial amendment appellees alleged that there was no consideration for the note described in their amended original petition, and that if there was any consideration it had failed, because Minchew had no title to the lease and was not authorized to assign and convey it, either in his own right or as attorney in fact for any one else. It was alleged that there was no consideration for the execution of the note, or, if any, it had failed for the additional reason that the property was represented to be "in proven oil territory and have oil in paying quantities therein and thereunder, whereas, in truth and in fact, said property was not in proven territory and there was not any oil, gas, or other mineral thereon or thereunder in paying quantities."

It was also alleged in the trial amendment that the note was not delivered as a binding obligation, but was put into the hands of Minchew with the understanding that it was not to become a binding obligation unless the property should be in proven territory with oil thereon and thereunder in paying quantities, and not until and unless a joint-stock company or trust company should be successfully organized and the stock sold so that a sufficient sum should be realized from such sale to pay the note. In that connection it was alleged that Minchew agreed to organize, manage, and assist in managing and controlling such joint-stock or trust company, and that the note was not to become a binding obligation until such contingencies and conditions had transpired.

Appellants answered by general demurrer and by special exceptions. The first special exception invoked the proposition that the petition pleaded a cause of action based upon representations of opinion and not of fact, for which reason it was insufficient. The second special exception was directed at the portion of the trial amendment alleging that the note was executed and left in the possession of appellants with the understanding that it was not to become a binding obligation unless the property sold should be "proven territory," the pleading in this respect alleging a verbal understanding without any allegation sufficient to sustain it with reference to varying the written contract made, and there being no pleading that the written contract was made through mutual mistake or fraud, and that such allegation constituted an attempt to vary the terms of a written instrument by parol agreement. The third special exception assails the petition on the ground that the allegation to the effect that the title had failed was uncertain and indefinite.

Appellants also answered by general denial and specially pleaded estoppel on the ground that appellees were guilty of laches because of their failure promptly to repudiate the contract and seek rescission upon making discovery of the alleged fraud and misrepresentation. By cross-action appellants sought recovery upon the note.

Judgment was rendered for appellees, plaintiffs below, as follows: All the exceptions were overruled. It was decreed that appellees should recover judgment for the sum of $3,000, that the $7,000 note above described should be canceled and delivered to appellees, and that all the appellants should be perpetually enjoined from prosecuting this suit in Wichita county.

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