Peckham v. Johnson

• Decision Date: 16 October 1936
• Docket Number: No. 13429.,13429.
• Citation: 98 S.W.2d 408
• Parties: PECKHAM et al. v. JOHNSON.
• Court: Texas Court of Appeals

98 S.W.2d 408

PECKHAM et al. v. JOHNSON.

No. 13429.

Court of Civil Appeals of Texas. Fort Worth.

October 16, 1936.

Rehearing Denied November 20, 1936.

Appeal from District Court, Wichita County; Harvey Harris, Special Judge.

Suit by W. H. Peckham and others against F. T. Johnson, wherein defendant filed a cross-action. From an adverse judgment, plaintiffs appeal.

Reversed and remanded for another trial.

Bonner, King & Dawson, of Wichita Falls, for appellants.

Kilgore & Rogers, of Wichita Falls, for appellee.

SPEER, Justice.

This suit was originally filed by W. H. Peckham against F. T. Johnson for an accounting of the business of an alleged copartnership between the two while engaged in the ownership and operation of some named oil leases upon which there was small production. The plaintiff claimed that the defendant was indebted to him for overpayments of firm debts which the defendant should have paid but that, to protect his own interest in the property, plaintiff had paid them, and asked for a foreclosure of an equitable lien on the interest of defendant in the partnership property.

The suit remained on file a year or more, during which time certain adjustments were made between the parties, making it unnecessary for a trial of the issues raised.

In August, 1935, plaintiff, joined by two corporations which had acquired an interest in the oil leases, and about whose interest there is no controversy, amended the original petition so as to convert the cause into one of trespass to try title against the defendant Johnson. The amended allegations were sufficient for that purpose.

Defendant F. T. Johnson answered with a general denial, the plea of not guilty, and by special cross action against Peckham as cross-defendant, and for convenience in making a statement of the nature of the suit, we shall refer to the parties by their respective names as Peckham and Johnson, there being no necessity to further refer to either of the corporation plaintiffs.

By his cross-action, Johnson pleaded that in July, 1933, he and Peckham associated themselves together as equal partners in a joint enterprise of owning, developing, and operating certain oil leases and that the copartnership continued to exist until June 23, 1935. That pursuant to their agreement they did drill two wells on the properties, struck oil, and operated the wells, each contributing his respective share to the expenses incurred, and each were entitled thereby to participate equally in the profits derived from the venture; that by the terms of their contract and agreement, prior to June 23, 1935, Peckham was to supervise the entire operation, do the bookkeeping, pay the bills from funds received, and to account to Johnson for his share of the net profits. That in the early life of their contract they jointly operated the leases and each was familiar with conditions as they existed. That later, about seven months prior to June 23, 1935, conditions arose from which the parties deemed it wise that only one of them should devote his time to the venture, and it was agreed that Peckham should so handle it, and Johnson went to work in another county, where he had no means of knowing of the existing conditions in the area of the joint properties, and thereafter knew nothing of the operations and oil developments in that vicinity; that Peckham had other property in that locality, and employees, who aided him in operation of the joint property, kept him posted as to interest and development in that area; that Peckham knew when he purchased the interest of Johnson that the property in the immediate vicinity of that owned by the parties had materially enhanced in value, from wells being drilled and prospects for oil development close to that of the partnership, from inquiries had by him from prospective purchasers, and with full knowledge that Johnson did not know of said facts and that Johnson was relying upon him to look out for the interests of the copartnership and to keep him apprised of all facts of interest and benefit to both, and with the intention of acquiring the interest of Johnson in said leases for less than its value, he approached Johnson on Sunday, June 23, 1935, and told him that the gas supply, from which power was obtained to pump the wells, had diminished until it was no longer adequate, and that because thereof it would be necessary to incur additional expense in the matter of operation, and that the enterprise had been operating at a loss and that there was no hope of realizing anything thereon, and that he (Peckham) owned some other acreage in that vicinity which had little value, and if he could acquire Johnson's interest in these leases Peckham could group them with some of his worthless leases and perhaps make a sale.

It was further alleged that on said June 23, 1935, in an effort to buy Johnson's interest in the two leases, Peckham offered him $1,000, which was rejected, and then offered $1,500, which was accepted, and that they then and there wrote a letter from Johnson to Peckham confirming the agreement. That at that time, Peckham had on the preceding day entered into a written agreement with a solvent corporation to sell it the smaller of the leases, known as the Trew lease, for $3,000, and that the remaining lease, known as the Alice Johnson lease of 100 acres, was as valuable per acre as the Trew.

It was further alleged that Peckham then and there knew that numerous other persons and corporations interested in buying oil leases had approached him with a view to buying the leases; that twenty or more spudders were then operating in the vicinity of the leases in controversy, prospecting for oil and gas, all of which tended to make other leases salable, and that although the fiduciary relation of partners existed between them, with the knowledge Johnson did not know and had had no means of knowing such conditions existed in that area and that Johnson was relying upon the representations of his partner that the leases had little or no value, Peckham failed to disclose the facts in his possession, thereby deceiving him and inducing him to sell his interest at much less than its true value. That in keeping with said agreement, Johnson did execute his written assignment to Peckham on July 8, 1935, and a purported correction assignment thereof on July 15, 1935, covering an undivided one-half interest therein.

Johnson further alleged that at the time the purchaser of the Trew lease contracted with Peckham for same, on June 22, 1935, its president indicated to Peckham that he was also interested in buying the Alice Johnson lease of 100 acres, and that after Peckham procured Johnson's interest he did, pursuant to previous negotiations, sell to that corporation the remaining 100 acre lease at an agreed price of $75 per acre, and that because of the deception and fraud perpetrated on him, the said Johnson, by Peckham, the latter was not entitled to receive and retain any of the profits arising from the sale of the one-half interest so purchased from Johnson.

Johnson alleged that the property had passed into hands from which he could not repossess it and therefore could not compel a rescission of the assignment from him to Peckham, and elected to sue for his damages because of the alleged fraud perpetrated, and prayed for judgment for damages in the sum of $5,000.

Peckham filed a supplemental petition and answer to Johnson's cross-action, denying generally the allegations of fraud, and specially pleaded that from the beginning of the partnership in 1933 the parties were having differences in their business dealings, and that their relations as partners were not normal but strained and unsatisfactory to both; that when Johnson originally sold to Peckham a half interest in the leases, the seller agreed to drill two wells and equip one of them at his own expense, but that he had failed to comply with his contract and that the buyer had been forced to pay out more than $1,100 thereon to protect his own interests, and that he had sued Johnson for an accounting and that the suit was pending when the deal was made upon which the cross-action is based; that nearly a month after June 23, 1935, with full knowledge of all the facts alleged by Johnson as grounds for his action for fraud, he executed a correction deed of assignment without complaint and thereby ratified and confirmed his prior sale. That because of the strained relations between the parties, they did not enter into the contract of June 23, 1935, with the same confidential relations existing between them as that fixed by law, but that they dealt with each other as man to man and at arm's length, each relying upon his own judgment as to the existing facts.

The case was submitted to a jury on special issues, the substance of which, with their respective answers, were as follows:

(1) Prior to June 27, 1935, Peckham had been offered by Mudge Oil Company $50 per acre for the Trew lease.

(2) Prior to June 27, 1935, Peckham and Mudge Oil Company were negotiating for the sale of the Trew lease.

(3) Peckham did not make full and complete disclosures to Johnson of all material facts between him and Mudge Oil Company prior to June 27, 1935.

(4) The Mudge Oil Company had expressed to Peckham an interest in the purchase of the Alice Johnson lease prior to June 27, 1935.

(5) Peckham did not make full and complete disclosure to Johnson of all the material facts expressed by Mudge Oil Company prior to June 27, 1935, in the purchase of the Alice Johnson lease.

(6) Prior to June 27, 1935, Ed Ruwalt had expressed a desire to Peckham to acquire both leases on some sort of a drilling contract.

(7) That prior to June 27, 1935, Peckham did not disclose to Johnson the expressed desire of Ruwalt to acquire both leases.

(8) Prior to June 27, 1935, Ward Preston had proposed to Peckham to acquire the leases on some sort of a drilling contract.

(8a) Peckham did not communicate to Johnson...