Pansy Oil Co. v. Federal Oil Co., 4922.

• Court: Texas Court of Appeals
• Writing for the Court: Hall
• Citation: Pansy Oil Co. v. Federal Oil Co., 91 S.W.2d 453 (Tex. App. 1936)
• Decision Date: 30 January 1936
• Docket Number: No. 4922.,4922.
• Parties: PANSY OIL CO. et al. v. FEDERAL OIL CO. et al.

91 S.W.2d 453

PANSY OIL CO. et al. v. FEDERAL OIL CO. et al.

No. 4922.

Court of Civil Appeals of Texas. Texarkana.

January 30, 1936.

Rehearing Denied February 6, 1936.

Appeal from District Court, Rusk County; W. N. Stokes, Judge.

Suit by the Pansy Oil Company and others against the Federal Oil Company and others. From a judgment dismissing the suit, the plaintiffs appeal.

Affirmed.

Tom L. Beauchamp, Frank Bezoni, and Pollard & Lawrence, all of Tyler, for appellants.

McGown & McGown, B. E. Godfrey, and J. M. Scott, Jr., all of Fort Worth, and Hirsch, Susman & Westheimer, of Houston, for appellees.

HALL, Justice.

On August 4, 1931, J. W. Kelly and S. J. Taylor, as sellers, and W. B. Powell, as buyer, entered into the following contract:

"State of Texas, County of Tarrant

"This Agreement between J. W. Kelly and S. J. Taylor, both of Tyler, Texas, Seller, and W. B. Powell of Fort Worth, Tarrant County, Texas, Buyer, Witnesseth:

"For and in consideration of the payments hereinafter agreed to be made by Buyer to Seller, Seller sells and conveys to Buyer One Hundred Thousand Barrels of oil in, on and under the following described land, the same being 15 acres, more or less, in the County of Rusk, State of Texas, and being a part of the H. B. Dance Headright Survey, said lease being described as follows:

"Beginning at the N. W. corner of Block No. 2 and at the N. E. corner of Block No. 1 of the land described in the Oil & Gas Lease executed by Mrs. Jessie Menshaw to W. O. Alford on November 13, 1930, and which lease is recorded in Volume 174, page 239, in Rusk County Deed Records;

"Thence E. with the N. line of Block No. 2, 379.9 vrs. to N. W. corner of W. A. Tunstill's 10 acre lease;

"Thence South with Tunstill West line 95.3 vrs. to N. E. corner of E. L. Chapman's 20 acre lease;

"Thence West 379.9 vrs. to N. W. corner of E. L. Chapman 20 acre lease on West line of Block No. 2;

"Thence North with said line 195.3 vrs. to beginning.

"Said oil to be delivered by Seller to Buyer out of 7/16 of the total first production under said above described lease, as produced, in the manner hereinafter stated.

"The consideration for this conveyance is $2,500.00 in cash, to be paid on approval of the title to said oil in Seller by Buyer; $1,000.00 to be paid in cash within 5 days of the delivery of notice in writing to Buyer that the well to be drilled by Seller on said land has reached the depth of 1000 feet; $2,500.00 to be paid in cash within 5 days of the delivery of notice in writing to Buyer that said well has reached the Woodbine sand; and $4,000.00 to be paid in cash within 10 days after the delivery of notice in writing to Buyer that said well has been brought in as a commercial oil producer.

"Buyer shall have 3 days from the date of receipt of all abstracts, including supplement to date, in which to accept or reject the title, and if title is rejected, this conveyance shall be of no further force and effect, but if title is accepted to Buyer, then this conveyance is of full force and effect, conditioned, however, that the consideration above stated be paid in full, and failure to pay such consideration to Buyer shall operate as a limitation upon this title, and this conveyance shall thereupon be of no further force and effect. All payments are to be made to the account of Seller at the Tyler State Bank & Trust Company, Tyler, Texas.

"Seller agrees to deliver said oil in the pipe line to which connection may be made on the authority of Buyer free and clear of all water and B. S., the quantity of oil delivered to be computed from regularly compiled tank tables, Seller to have the privilege of witnessing the gauge tickets, and, in addition to the deductions of the tank tables, corrections shall be made for temperature and impurities according to the Texas Company's local rules in force at the time said oil is delivered in said pipe line.

"Seller guarantees and warrants the title of said oil free and clear of all encumbrances and if at any time during the delivery of the oil hereby sold, and before payment therefor has been completed, a condition may arise in reference to title of said oil, or seller's right to deliver same, which the Buyer may reasonably consider to involve Buyer in a hazard in paying therefor, payment may be withheld until such conditions are removed, but deliveries thereof shall not be suspended during the time such payments are withheld, unless suspension thereof shall be requested by Buyer or his assigns. A suspension of payment above provided for shall not operate as a limitation on this conveyance.

"If Seller shall fail or refuse to deliver said oil in accordance herewith, this instrument shall then, upon the happening of such event, operate as a complete conveyance and assignment of the above described oil and gas lease insofar as it covers the land above described and contingent upon the happening of such condition we hereby grant, sell, convey and assign said lease, together with all personal property thereon unto him, the said W. B. Powell, his heirs, assigns, executors, and administrators forever.

"Seller agrees to begin delivery of said oil upon the completion of said well and before the 4th day of November, A. D. 1931, and to continue the same with full diligence.

"To have and to hold said oil unto the said W. B. Powell, his heirs, and assigns forever.

"Witness our hands this 4th day of August, 1931.

                            "J. W. Kelly
                                            "S. J. Taylor, Seller
                                            "W. B. Powell."
                

Later, and after some $24,000 had been paid on the contract, suit was brought by appellants against the assignees of said contract to cancel same, for the recovery of all usurious interest with legal penalties, and for an accounting. Appellants alleged that the contract was intended to represent a loan of $10,000 and that same was entered into in the form set out above for the purpose of evading the usury laws of Texas.

The appellees answered with a general demurrer and special exceptions, and other defensive allegations not necessary to mention here.

Upon a hearing, the trial court sustained the general demurrer and two of the special exceptions to appellants' amended petition, and they declined to amend, whereupon the case was dismissed. From which order of dismissal, they prosecute this appeal.

Appellants assign as error the action of the trial court in sustaining the general demurrer and special exceptions to their petition. We shall direct our attention first to the assignment of error complaining of the action of the trial court in sustaining the general demurrer to the amended petition. The sufficiency of the allegations of appellants' petition will be tested by the rules set out in the cases cited next below.

In the case of Bexar Bldg. & Loan Ass'n v. Robinson, 78 Tex. 163, 14 S.W. 227, 228, 9 L.R.A. 292, 22 Am.St.Rep. 36, it is said: "`The essential elements of a usurious contract consist of a loan with the understanding that the money loaned is to be returned, and that a greater rate of interest is paid than the statute allows. Whether this be done directly or indirectly, or whatever may be the form or phase the contract assumes, is altogether immaterial.'"

And in Campbell v. Oskey (Tex.Civ. App.) 239 S.W. 332, 334, the following rules are quoted with approval:

"`Before "usury" in the legal significance of the term is established, the following elements and essentials must be proved by a preponderance of credible evidence:

"`1. A loan of money, as distinguished from an advance of working capital.

"`...