Sellers v. Sellers
Decision Date | 31 January 1967 |
Docket Number | No. 40895,40895 |
Citation | 428 P.2d 230,1967 OK 34 |
Parties | William C. SELLERS, Plaintiff in Error, v. James A. SELLERS, W. A. Fowler and Walter J. Eyestone, Defendants in Error. |
Court | Oklahoma Supreme Court |
Syllabus by the Court
1. A 'confidential relation' arises by reason of kinship between the parties, or professional, business or social relations that could reasonably lead an ordinarily prudent person in the management of his business affairs to repose that degree of confidence in the defendant which largely results in the substitution of the will of the defendant for that of the plaintiff in the material matters involved in the transaction.
2. Where a confidential relationship exists between parties to a transaction, there is no privilege of non-disclosure, and if a party to the relationship fails to make full disclosure of all material facts, the non-disclosure has the effect of a material misrepresentation.
3. Although fraud is never presumed, but must be established by clear, satisfactory and convincing evidence, it may be proved by circumstantial evidence.
4. The essential elements of an 'equitable estoppel' are: First, there must be a false representation or concealment of facts; Second, it must have been made with knowledge, actual or constructive, of the real facts; Third, the party to whom it was made must have been without knowledge, or the means of knowledge, of the real facts; Fourth, it must have been made with the intention that it should be acted upon; Fifth, the party to whom it was made must have relied on, or acted upon, it to his prejudice.
5. The burden of pleading and proving the facts constituting equitable estoppel rests upon the person who relies upon the same as the basis of his claim or defense.
Appeal from the District Court of Creek County; Kenneth Hughes, Judge.
Action seeking to rescind the sale of bank stocks and other interests and to enforce an oral agreement for the sale to plaintiff of certain such interests. From judgment for defendant and order overruling motion for new trial, plaintiff appeals. Affirmed in part and reversed in part, and remanded for new trial.
Paul W. Brightmire, Tulsa, and Streeter Speakman, Jr., Sapulpa, O. H. 'Pat' O'Neal, Tulsa, for plaintiff in error.
Gable, Gotwals, Hays, Rubin & Fox, Tulsa, for defendant in error James A. Sellers.
Houston, Klein & Davidson, Tulsa, for defendants in error W. A. Fowler and Walter J. Eyestone.
Plaintiff in error, as plaintiff in the trial court, sued James Sellers, herein referred to as defendant, and others for rescission of a sale and transfer of certain shares of stock in the Citizens Bank of Drumright, Oklahoma, together with fractional interests in realty and other stock, allegedly obtained from plaintiff under false and fraudulent misrepresentations during existence of a confidential relationship. For clarity, other defendants will be referred to by name. At the close of the evidence plaintiff dismissed without prejudice as to defendant R. A. Sellers, Sr., and the trial court sustained demurrers to the evidence interposed by the remaining defendants. This appeal is from the action of the trial court sustaining the demurrers to plaintiff's evidence and entering judgment for defendants.
The pleadings are extensive and will be summarized only so far as necessary to disclose the issues considered. The factual background, as disclosed by the pleadings and evidence, reflects the following matters which give rise to plaintiff's action:
The entire controversy evolved from transactions relative to family enterprises which had provided grounds for earlier litigation. Plaintiff and defendant are sons and members of the sizeable family of D. C. Sellers, a successful business man who owned the majority stock of the Citizens Bank prior to his death in 1955. Together with a brother, R. A. Sellers, Sr., a defendant herein, D. C. Sellers operated the bank as a family enterprise.
Upon D. C. Sellers' death the bank continued operation under direction of R. A. Sellers, Sr., and D. C. Sellers, Jr., until about November, 1960, when some difficulties were experienced. Dissension among the seven children of D. C. Sellers resulted in litigation over the estate, and particularly the bank stock. This culminated in four of the heirs selling their inherited interests to plaintiff and defendant at an agreed price of $325.00 per share. One heir already had assigned his share to the defendant, and another assigned his shares to the mother. Both plaintiff and defendant financed their purchase by individual loans in like amounts from an Oklahoma City bank for loans of $48,500.00 and loans in like amounts of $13,500.00 from a Tulsa Bank. All four of the notes for these loans were co-signed by R. A. Sellers, Sr.
In order to equalize their holdings the defendant sold plaintiff one-half interest in the shares purchased previously from the other brother. Those transactions resulted in plaintiff and defendant each owning 25% Of the bank stock plus 10 additional shares, thus giving them 50% Of the stock plus 20 shares. By agreement plaintiff and defendant each transferred 10 shares to R. A. Sellers, Sr., in order that he might exercise equal voting rights while engaged in active management. Thus plaintiff and defendant owned 50% Of the bank stock and R. A. Sellers, Sr., the remaining interest.
At the time plaintiff and defendant purchased these interests in the bank, they orally agreed to work together, apparently considering this necessary to protect their interests from others. As a part of this agreement, plaintiff and defendant agreed that both would be officers and directors of the bank, but as defendant lived at Drumright, he would work part-time at the bank to insure that their interests were protected. Further, they agreed that if either party ever desired to sell his stock, the other party would be given the first opportunity to purchase. Until December, 1962, both apparently complied with the terms of their agreement.
After November, 1960, earnings from the bank, although paid to the officers, were applied directly to the indebtedness against the stock. Under the management of R. A. Sellers, Sr., the bank prospered, and in October, 1962, plaintiff was advised that he then had an equity of approximately $30,000.00 in his stock. The health of R. A. Sellers, Sr., was failing and because of conflicting family interest, some dissension arose within the organization.
Either on or near November 28, 1962, defendant advised plaintiff he wished to leave his trucking business and make banking his career, and began negotiating for purchase of plaintiff's bank stock and plaintiff's fractional interest in the other properties. Plaintiff agreed he would let defendant have the bank stock to aid his position in the bank, although plaintiff would not sell to anyone else. Plaintiff further advised defendant that he would accept whatever consideration defendant was capable of paying. Early in December plaintiff prepared and executed assignments of his interests and the transaction was closed December 11, 1962.
Prior to the closing of the transaction between plaintiff and defendant, and beginning on December 5, 1962, one Schuber entered into preliminary negotiations for the purchase of the Citizens Bank. Although these negotiations were mainly carried on with R. A. Sellers, Sr., the defendant was present at part of the first meeting and was aware of Schuber's interest in purchasing the bank. Sometime around December 29, 1962, the sale negotiations with Schuber terminated unsuccessfully
On January 12, 1963, plaintiff learned that R. A. Sellers, Sr., and defendant were negotiating sale of the bank to defendants Eyestone and Fowler, and demanded that defendant pay him the difference between the amount received for his stock and the amount which it was expected to bring under the sale being negotiated. Upon discovering that the sale had not yet been closed, plaintiff then telephoned each of the purchasers, discussed the contemplated sale and informed them of his claim to the bank stock and his prior right to purchase additional stock if offered for sale. On January 14, 1963, defendant and R. A. Sellers, Sr., completed a sale of 100% Of the stock of the Citizens Bank for a price of $375,000.00 to defendants Eyestone and Fowler. The sale was subject to an agreement by the vendors for contingent reduction of the purchase price in event of depreciation from specified loan losses and assessment of additional income taxes. R. A. Sellers, Sr., also executed a personal indemnification agreement in favor of the purchasers to save them free of loss resulting from plaintiff's claim to the bank stock or claim of prior right to purchase additional stock. Following completion of the transaction plaintiff filed this action on January 16, 1963.
Plaintiff's petition charged the transfer of the 20 shares to R. A. Sellers, Sr., was under an oral agreement without consideration, whereby a constructive trust resulted in plaintiff's favor as to 10 shares. The first cause of action claimed plaintiff and defendant orally agreed in November 1960, that they would treat their bank interests as a joint venture, act as partners with respect to ownership and keep one another advised fully as to the bank in order that no other stockholder could take advantage of them; they further agreed orally that neither would dispose of his bank stock or interest in the estate without notifying and first making it available to the other; that plaintiff fully performed under such oral agreement and assumed defendant would do so until he learned of the sale in January, 1963; by virtue of being brothers, and in view of their oral agreement and plaintiff's performance thereunder, each was required to maintain the highest good faith toward the other; despite existence of such confidential...
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