Nicholas v. Crocker
| Decision Date | 28 June 1984 |
| Docket Number | No. 12-83-0091-CV,12-83-0091-CV |
| Parties | Blue Sky L. Rep. P 72,082 Don NICHOLAS and Charles Cannon d/b/a Nicholas-Cannon Oil Company a/k/a Cannon Oil Company and Nicholas Petroleum Company, Appellants, v. David CROCKER, R.D. Crocker, F.M. Fillingim and Richard Fillingim, Appellees. |
| Court | Texas Court of Appeals |
Ronald O. Habitzreiter, Douglas A. Bender, Bender, Walter & Wahlberg, Austin, for appellants.
Gary F. DeShazo, Davis, DeShazo & Gill, Austin, for appellees.
On August 21, 1979, plaintiffs/appellees, David R. Crocker, R.D. Crocker, F.M. Fillingim and Richard Fillingim, filed suit against defendants/appellants, Don Nicholas and Charles Cannon, seeking monetary and exemplary damages for alleged fraudulent misrepresentations made by defendants during a course of dealings between the parties wherein defendants sold to plaintiffs fractional working interests in two oil and gas leases in Brown and Eastland Counties; plaintiffs also sought treble damages under the Deceptive Trade Practices and Consumer Protection Act (Section 17.41, et seq., Tex.Bus. & Com.Code).
Plaintiffs alleged in their original petition that they each purchased a small fractional working interest in one or more of four oil and gas wells drilled by defendants, viz., Crenshaw No. 1, Crenshaw No. 2, Crenshaw No. 3, and Anderson No. 1 under the oil, gas and mineral leases; plaintiffs also alleged in the original petition that none of the wells were commercial producers.
On June 27, 1980, plaintiffs filed their first amended original petition asserting for the first time a cause of action based on defendants' violation of the Texas Securities Act, Article 581-1, et seq., Tex.Rev.Civ.Stat.Ann. (Vernon 1964). 1 More specifically, plaintiffs alleged in the amended petition that the interest sold them by the defendants in the wells were securities under the provisions of Article 581-4 of the act and "... were not registered and--were not sold by a licensed person...." Plaintiffs also alleged that the acts and conduct of the defendants relating to the sale and offer of the working interest in such wells to plaintiffs violated the provisions of Article 581-33 A(1) and (2), thereby rendering defendants liable to plaintiffs for the amounts paid for the working interest and a reasonable attorney's fee.
The case went to trial before the court without a jury on August 4, 1980; on May 13, 1981, judgment was rendered and signed in favor of all plaintiffs in the aggregate sum of $42,409.66 for damages and prejudgment interest, attorney's fees in the amount of $2,500.00, and all costs of suit.
Defendants present eighteen points of error challenging the legal and factual sufficiency of the evidence to support the judgment, and complaining of the award of attorney's fees and the denial of their plea of limitation against that part of the plaintiffs' cause of action seeking rescission as to the Crenshaw Wells Nos. 1 and 2, as well as other trial error. We reverse and remand in part, and affirm in part.
In order to put the issues in proper focus, it must be understood that the sale to the plaintiffs of the various interests in the four wells were made as follows:
Crenshaw No. 1 May 23, 1977 David Crocker only
Crenshaw No. 2 June 22, 1977 David Crocker, R.D
Crocker & Richard Fillingim
Crenshaw No. 3 August 10, 1977 Richard Fillingim and
F.M Fillingim
Anderson No. 1 October 13, 1977 David Crocker, R.M
Fillingim & Richard
Fillingim
A careful reading of the record demonstrates that the Crenshaw wells were drilled in an area in which various producing oil and gas wells had been completed prior to the drilling of defendants' Crenshaw No. 1. The Anderson well was also drilled in an area where producing gas wells were located. These facts were established by exhibits furnished plaintiffs by the defendants and introduced into evidence by the plaintiffs. A careful analysis of David Crocker's testimony reveals that before his investment in Crenshaw No. 1 that defendant Nicholas "... indicated that the test that had been run ... reflected that it was a good well." Sometime after plaintiff David Crocker made his investment in the first well, and before he invested in any subsequent well drilled by the defendants, he testified that he received additional written information on the Brooksmith, Marble Falls Reef Field in Brown Before any investments were made by any of the plaintiffs in the Anderson No. 1 well, David Crocker received a letter from defendants regarding the prospects of said well. A map of the area was also enclosed. In summary, the correspondence discussed three separate wells, two gas wells and one oil well producing gas and oil in the area of the proposed drilling site for the Anderson well No. 1, and stated that one gas well had a potential of producing 3,700,000 cubic feet of gas per day, and the other had a potential of 17,000,000 cubic feet per day. The letter represented the Anderson well as a "... lake sand project that has a good chance for production." Essentially, all the negotiations for the sales of these interests were between the defendants and David Crocker. Plaintiffs F.M. Fillingim and Richard M. Fillingim testified that they relied on the judgment of David Crocker. However, David Crocker testified that he had no involvement with anyone regarding the Crenshaw No. 3 well and had no participation in the well of any kind. R.D. Crocker did not testify or appear at trial. R.D. Crocker is David Crocker's father, and Richard M. Fillingim is David Crocker's father-in-law. F.M. Fillingim is a brother of Richard M. Fillingim.
County, in which field all three Crenshaw wells were drilled and completed by the defendants (plaintiffs' exhibit No. 8). The information consisted of a report from Sid Sers who sold the Crenshaw leases to the defendants. The report purported to provide a "synopsis" of the "potential of" the Crenshaw leases and stated that production rates of several gas wells in the field varied greatly; and significantly, contained the statement, "therefore, it must be understood that in order to find large volumes of gas one must drill." The report also concluded that the acreage covered by the defendants' Crenshaw leases were "definitely--development acreage." Also included in the information furnished to plaintiff David Crocker was a copy of a July 1976 drill stem test on a well in the Brooksmith field and a map and copies of a log of one of the wells offsetting the Crenshaw lease. The record shows that while all four wells involved in this dispute were drilled and completed, none were commercial producers; and that none of the plaintiffs received any income on either oil or gas therefrom except plaintiff David Crocker who received $560 from the Anderson No. 1 well
David Crocker also testified that subsequent to the drilling of each Crenshaw well and after the plaintiffs' investments in Crenshaw wells Nos. 1 and 2, defendants kept telling him that such wells were good wells capable of producing.
The trial court's judgment is based on defendants' violations of the Texas Securities Act, Article 581-33 A(1) and (2), Tex.Rev.Civ.Stat.Ann. (Vernon 1964) and (Vernon Supp.1984), and clearly denies recovery to plaintiffs under any other theory.
The trial court at defendants' request made and filed findings of fact and conclusions of law. Thus, in our review of the record, and defendants' points of error, we follow the well-established rules in considering defendants' factual insufficiency points that findings of specific facts are tested on appeal in the same manner as jury findings upon special issues; and, that a trial court's findings have the same force and dignity as jury findings. Hence, a trial court's finding of fact will not be disturbed on appeal unless the evidence is factually insufficient to sustain a specific finding or the findings are so contrary to the overwhelming weight of the evidence as to be manifestly wrong. 4 R. McDonald, Texas Civil Practice in District and County Courts § 16.05 p. 11 (Rev.1971); Paul v. Johnson, 314 S.W.2d 338 (Tex.Civ.App.--Houston 1958, writ dism'd); In re King's Estate, 150 Tex. 662, 244 S.W.2d 660 (1951).
We first address defendants' points of error 8 and 13 by which they contend that the transactions were exempted from registration under the Securities Act pursuant to the provisions of Article 581-5 Q, and that the causes of action under Article 581-33 A(1) and (2) as to the Crenshaw wells Nos. 1 and 2 were barred by limitations under Article 581-33 C Earlier in the opinion we set forth the allegations contained in plaintiffs' original and first amended petitions filed on August 21, 1979, and June 27, 1980, respectively. Since the original petition is not subject to the plea of limitations, and the first amended original petition is not based on "a new distinct or different transaction and occurrence," neither is the amended petition subject to the plea of limitations asserted by defendants. Article 5539b, Tex.Rev.Civ.Stat.Ann. (Vernon 1958); Leonard v. Texaco, Inc., 422 S.W.2d 160, 166 (Tex.1967). Defendants' point of error 13 is overruled.
Under Rule 299, Tex.R.Civ.P., where one or more factual elements of a theory of recovery or defense have been expressly found by the trial court, "... omitted unrequested elements where supported by evidence, will be supplied by presumption [by the appellate court] in support of the judgment." (Emphasis supplied.) F.R. Hernandez Const. v. National Bank of Commerce, 578 S.W.2d 675 (Tex.1979). In the case at bar, the trial court made various express findings that at various times the defendants made statements to plaintiffs that the Crenshaw wells Nos. 2 and 3 were "good wells"; that Crenshaw well No. 1...
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