Rogers v. Harris

• Decision Date: 21 October 1919
• Docket Number: 9035.
• Citation: 184 P. 459,76 Okla. 215,1919 OK 301
• Parties: ROGERS et al. v. HARRIS.
• Court: Oklahoma Supreme Court

184 P. 459

76 Okla. 215, 1919 OK 301

ROGERS et al. v. HARRIS.

No. 9035.

Supreme Court of Oklahoma

October 21, 1919

Syllabus by the Court.

In an action for fraud predicated on a promise to be performed in the future, the gist of the fraud is, not the breach of the promise, but the fraudulent intent of the promisor at the time of making the promise not to perform the same, and the intent to deceive the promisee by such false promise. To render nonperformance fraudulent, the intention not to perform must exist when the promise is made, and, if the promise is made in good faith when the contract is entered into, there is no fraud, although the promisor subsequently changes his mind and fails or refuses to perform.

The opinion of the trial court, delivered in announcing judgment does not constitute "findings of fact," as contemplated under section 5017, R. L. 1910, and may not be considered as such, or to vary the judgment of the court as contained in the journal entry; but, when properly incorporated in the case-made, may be considered in determining the correctness of the conclusion on which the judgment is based.

[Ed Note.-For other definitions, see Words and Phrases, First and Second Series, Finding of Fact.]

Ordinarily where an action is predicated on fraud in the procuring of a written instrument, the proof must sustain the allegations by a preponderance so great as to overcome all opposing evidence and repel all opposing presumptions of good faith.

C. purchased the interest of H. in certain oil lands and leases, in the possession and under the management of C., including cash on hand and credit due H. A check previously issued and delivered to R., a joint payee, in payment of credits due H. and R., but not delivered to H. and of which he had no actual notice, was recalled from R. and canceled, treating the amount represented by the check as cash on hand. Held, the sale included cash on hand as shown by credits due and unpaid, delivery of the check to R. in the circumstances of this case amounted to payment, and H.'s interest in the check was not included in the sale.

This cause being one of purely equitable cognizance, the evidence reviewed, and held, the judgment of the trial court is clearly against the weight of evidence.

Error from Superior Court, Tulsa County; M. A. Breckinridge, Judge.

Action by Vernon V. Harris against Harry H. Rogers and others to cancel conveyance of certain land and oil leases by plaintiff to the McMan Oil Company and by it to defendant Rogers. Judgment for plaintiff, and defendants bring error. Reversed and remanded, with directions to enter judgment for plaintiff against defendant Oil Company.

West, Sherman, Davidson & Moore, of Tulsa, and Cottingham & Hayes, and Burford, Miley, Hoffman & Burford, all of Oklahoma City, for plaintiffs in error.

H. B. Martin and A. F. Moss, both of Tulsa, and Stuart, Cruce & Cruce, of Oklahoma City, for defendant in error.

OWEN C.J.

Harris alleges Chapman and Rogers conspired together to defraud him of his interest in partnership property, with the intention of purchasing same for Rogers, and that Rogers induced him to sell his interest for an inadequate consideration, by falsely representing that he (Rogers) was selling for a like amount, and by concealing the real value of the property.

Chapman denies he conspired with Rogers or practiced any fraud on Harris, or purchased his interest for the use and benefit of Rogers. He alleges he purchased the Harris interest in good faith for the McMan Oil Company, and that the sale to Rogers was an independent, bona fide transaction, subsequent to the purchase from Harris.

Rogers denies he concealed or fraudulently misrepresented the value of the property, or conspired with Chapman, or in any manner practiced fraud on Harris. He alleges he acquired the Harris interest subsequent to the conveyance of the same to the McMan Oil Company as a separate and independent transaction, without intent to defraud Harris.

The salient facts appear to be that Harris and Rogers formed a partnership during the year 1907 to practice law, with offices at Holdenville and Wewoka, and as partners acquired certain tracts of real estate and oil leases. Rogers accepted employment with the McMan Oil Company, and removed to Tulsa in January, 1913. It was agreed that Harris would continue to look after the joint interests of the firm during the year 1913, Rogers to pay him a portion of the salary received from the oil company. Rogers, under the terms of his contract, was to have an opportunity to acquire such interest as he might desire to take in properties acquired by the oil company, and it was agreed between Rogers and Harris that Harris would share these interests with Rogers. This relation continued until October, 1914, when Rogers and Harris agreed to dissolve the partnership and divide their holdings. A division was made of some of their properties, but it was found impractical to divide all holdings, and no settlement was made of the lands and leases involved in this action.

In the development of the properties involved, the interest owned by Harris and Rogers was charged with a proportionate cost of development and credited with a proportionate share of profits. These profits were paid when the oil was sold by the oil company; payments being made to Rogers, and he, in turn, paying one-half to Harris.

About the 5th of August, 1915, the McMan Oil Company made a proposition to Harris to purchase his interest, offering $60,000. Harris wanted $100,000. Negotiations were carried on until about September 9th, when Harris offered to sell for $80,000. In the meantime he had received a dividend of $7,500. This offer was accepted and this amount paid by Chapman acting for the McMan Oil Company.

Harris understood he was selling his entire interest, including cash on hand and credits due him from the Harris and Rogers interest, for the sum of $80,000, but claims he understood from Rogers that he would sell for a like amount and that the credit due the partnership interest was about $15,000, when in truth and in fact Rogers did not sell and the credit was something over $30,000.

It appears Harris is a bookkeeper and an expert accountant, formerly engaged in the banking business, and kept the books of the Rogers and Harris partnership, receiving monthly statements of the amount of oil to the credit of this interest, By mere calculation he could have ascertained the exact amount due. The statements were something like two months behind, but no effort was made by Harris to ascertain the exact amount; no contention is made that he was ever denied or refused a statement of the amount on hand to the credit of his interest. It appears Rogers guessed the credit to be about $15,000. Harris said at that time he thought it was probably $20,000 to $25,000.

Counsel contend that Chapman and Rogers conspired together to defraud Harris by inducing him to sell for an inadequate consideration, and that the sale to the oil company was a mere subterfuge for the use and benefit of Rogers, and in this connection insist that Harris would not have agreed to sell for $80,000 had he known the property had earned a credit of more than $30,000. This contention is not supported by the evidence. The evidence is to the effect that Harris had considerable experience in dealing in oil lands and leases in which Rogers had no interest. A representative of the McMan Oil Company purchased some of these leases from him about the 5th of August, 1915, and at that time made him the offer of $60,000 for his interest in the property in controversy. Rogers was then in California, and there is no proof or intimation that he inspired the offer or had any knowledge concerning it. Harris at that time offered to take $100,000, according to his own testimony. The testimony of witness Barnard is that he offered to take $80,000, but later, the price of oil having increased, stated he did not believe he would take $80,000, wanted $100,000, but said he would talk to Rogers about it. On Rogers' return to the state, Harris went to Tulsa, and while there received $7,500 from Rogers as profits from their joint interest. Harris consulted him concerning the offer he had received, and Rogers stated he would like to sell his interest and get out of the oil business and would be willing to sell for $80,000. Harris a few days later authorized Rogers to submit a proposition to Chapman to sell Harris' interest for $80,000. Rogers complied with the request, and Chapman, acting for the company, accepted the offer on September 9th. Rogers communicated this fact to Harris over the telephone, and it was agreed that Harris would write Chapman a letter setting out the contract as he understood it. On that date Harris wrote a letter to Chapman in which he stated:

"I made a verbal proposition to you through Harry, to sell my interest in all oil leases, and land in Creek county, in which you or the McMan Oil Company are interested, for the consideration of $80,000, to be paid cash, and Harry reported that you had accepted the offer. I write this letter to put the offer in writing. I think it well to refer specifically to the tracts of land, an interest in which I understand I am offering you."

After describing the land it was further stated:

"You are to assume all obligations that I may have for my part of drilling operations on the land, or leases or anything of the kind. You are to have all oil accounts, notes, cash now on hand from leases above mentioned."

Counsel contend that Harris, reposing great confidence in the judgment of Rogers as to values, agreed to sell only because he believed Rogers was selling, and that, because Rogers did not sell, this amounted to fraud and was sufficient...