Wells v. Hiskett

• Decision Date: 16 February 1956
• Docket Number: No. 6857,6857
• Citation: 288 S.W.2d 257
• Parties: Jack K. WELLS, Jr., Individually, as Trustee for Jack K. Wells, III, and as Administrator of the Estate of J. K. Wells, Deceased, Appellant, v. Clyde L. HISKETT et al., Appellees.
• Court: Texas Court of Appeals

Page 257

288 S.W.2d 257

Jack K. WELLS, Jr., Individually, as Trustee for Jack K Wells, III, and as Administrator of the Estate of J. K. Wells, Deceased, Appellant, v. Clyde L. HISKETT et al., Appellees.

No. 6857.

Court of Civil Appeals of Texas, Texarkana.

Feb. 16, 1956.

Rehearing Denied March 22, 1956.

Edwin M. Fulton, Gilmer, Pearson & Moon, Oklahoma City, Okl., Earl Roberts, John M. Smith, Longview, for appellant.

Earl Sharp, Longview, Sam S. Gill, Oklahoma City, Okl., Hurst & Burke, Wm. Hurwitz, Longview, for appellees.

DAVIS, Justice.

J. K. Wells, hereinafter referred to as 'Mr. Wells,' and Minnie I. Hiskett Wells, hereinafter referred to as 'Mrs. Wells,' were married in Oklahoma on September 20, 1922. Each of them had previously been married. Mr. Wells had on child by his first marriage, viz., Jack K. Wells, Jr.; and Mrs. Wells had two children by her first marriage, viz., Clyde L. Hiskett and Floyd G. Hiskett. No children were born of the marriage between Mr. and Mrs. Wells.

Prior to her marriage to Mr. Wells, Mrs. Wells worked as a clerk and buyer in a millinery department of a store. Prior to said marriage, Mr. Wells was engaged in different kinds of business and owned several business lots and buildings in Oklahoma City. They were both making their home at a hotel at the time of their marriage and continued to live in a hotel until each died.

After said marriage, Mrs. Wells worked but very little, if any. Mr. Wells commenced buying and selling oil and gas leases and minerals. In the early part of 1931, he went to East Texas to do some trading and while there he met one H. P. Gann, a resident of Oklahoma, who claimed to have several years' experience in the oil well drilling business. Gann had neither money nor credit. Mr. Wells had both money and credit. So they entered into an agreement whereby Mr. Wells was to furnish the money and credit and Gann would furnish his 'know-how' and they would go into the oil drilling and producing business and share equally in the profits and losses. Pursuant to the agreement, apparently reached in East Texas, they went to Oklahoma City, organized a corporation, secured a charter on May 9, 1931, from the State of Oklahoma, with Mr. Wells and Mr. Gann each being issued 99 shares of stock and I share each being issued to two others to comply with the laws of Oklahoma. Then they came to Texas and secured a permit to do business in this State from the Secretary of State. The corporation was given the name 'Wells and Gann Drilling Company,' hereinafter referred to as the 'Corporation.'

The Corporation opened an office in Tyler; also a bank account in the Citizens National Bank. The Corporation bought a drilling rig in Oklahoma and had it moved into the East Texas oil field where several oil wells were drilled on contract with others.

On August 13, 1931, the Corporation acquired a lease upon 4.78 acres of land in the Mary Van Winkle Survey in Gregg County, Texas, upon which five producing oil wells were drilled. The lease was paid for by the Corporation; $250 in cash and $14,090 in oil. The Corporation also acquired other leases in Gregg and Henderson Counties, Texas.

It was agreed and stipulated in open court that it would not be necessary to present evidence concerning any of the property except the 4.78-acre lease and that the judgment of the court on the 4.78-acre lease would govern the rights of the parties to the other leases.

The Corporation was dissolved by order of the District Court of Oklahoma County, Oklahoma, on the 23rd day of January, 1943, effective February 1, 1943. Upon dissolution of the Corporation, a 99/200 interest in and to the leases owned by the Corporation was conveyed to Mr. Wells in consideration of the cancellation of his 99 shares of stock. The other 101/200 interest was conveyed to the other shareholders in proportion to their shares of stock in consideration of the cancellation of same.

Mrs. Wells died, intestate, in Oklahoma City on January 12, 1953. Mr. Wells died, testate, in Oklahoma City on February 28, 1954. Mr. Wells willed all his property to his son, Jack K. Wells, Jr., except $10,000 which he left in trust for his grandson, Jack K. Wells, III, with Jack K. Wells, Jr., as Trustee.

On July 21, 1954, Clyde Hiskett and Floyd G. Hiskett, children and only heirs of Mrs. Wells, formerly Minnie I. Hiskett, deceased, as plaintiffs in the trial court, filed suit against Jack K. Wells, Jr., individually, as Trustee for Jack K. Wells, III, and as Administrator of the Estate of J. K. Wells, deceased, as defendants in the trial court.

On January 5, 1955, Floyd G. Hiskett, in order to circumvent the inhibition of Article 3716 of the Revised Civil Statutes of Texas, known and referred to as the 'Dead Man Statute,' purportedly conveyed all his alleged interest in the estate of his mother, Minnie I. Wells, to his step-son, Billy J. Morrison, and Morrison was substituted as plaintiff in lieu of the said Floyd G. Hiskett. Appellees' statement of the nature and result of the suit is as follows:

'This was an action, the 'First Count' being in trespass to try title, and the 'Second Count' alleging in the alternative that the property was community property of J. K. Wells and wife, Minnie I. Wells, or it was acquired under circumstances giving rise to an express, or resulting or constructive trust in favor of Minnie I. Wells, under whom appellees claim title; and for an accounting. The accounting feature was severed by agreement and upon a motion for judgment on the jury verdict and to disregard certain findings of the jury judgment was entered in favor of appellees.'

Trial was to a jury which found that: 1. Mrs. Wells, Mr. Wells and H. P. Gann entered into an agreement immediately prior to May 9, 1931, to go into the oil drilling and producing business in Texas. 1-A. Mrs. Wells did not agree at any time and place to furnish $2,500. 1-B. Mrs. Wells was not to receive a 1/4 interest in such business. 1-C. Mrs. Wells did not furnish Mr. Wells $2,500 on or about May 9, 1931. 1-D. Mrs. Wells' money was not used in the furtherance of the business of the Corporation. 1-E. Mr. Wells did not mix any such funds with the funds of the Company. 1-F. Mr. Wells did not mix such funds in such manner that no exact record was kept of the use thereof. 2. Mrs. Wells did furnish Mr. Wells $1,500 in connection with the acquisition of the 4.78-acre lease. 2-A. Mrs. Wells was not to have a 1/4 interest in said lease for furnishing said $1,500. 3. Mr. Wells did not hold 1/2 of the stock issued to him by the Corporation for Mrs. Wells. 4. The acquisition of the 4.78-acre lease by the Corporation resulted wholly or in part from the toil, talent, labor, industry and effort of H. P. Gann rendered and exercised in the State of Texas. 5. The acquisition of the 4.78-acre lease by the Corporation resulted wholly or in part from the toil, talent, labor industry and effort of Mrs. Wells rendered and exercised in the State of Texas. 6. The acquisition of the 4.78-acre lease by the Corporation resulted wholly or in part from the toil, talent, labor, industry and effort of Mr. Wells rendered and exercised in the State of Texas. 7. Mr. and Mrs. Wells were not domiciled in Smith County, Texas, immediately prior to August 13, 1931. 8. Mr. Wells, after payment of the current bills of the Corporation, divided the net profits of the Corporation equally between himself and Gann. 9. The other holders of stock certificates did not share in a proportionate distribution of the net profits of the Corporation along with Mr. Wells and Mr. Gann. 10. Mr. Wells paid no consideration for the stock issued to him by the Corporation on May 9, 1931. 11. Mr. and Mrs. Wells were domiciled in the State of Oklahoma from May 9, 1931, until their respective deaths. 12. The cause of action asserted by plaintiffs against the defendant did not accrue more than two years prior to the filing of this suit on July 21, 1943. 13. The cause of action asserted by the plaintiffs against the defendant did not accrue more than four years prior to the filing of this suit on July 21, 1954. 14. Jack K. Wells, Jr., and Jack K. Wells, III, and those under whom they claim, have been in peaceable, adverse and continuous possession of the 4.78-acre lease, cultivating or enjoying the same for a period of ten years or more prior to the filing of this suit on July 21, 1954. 15. Mr. Wells paid in excess of $10,000 during the year 1931 to or on behalf of the Corporation. 15-A. The payment of such money was not in payment for 99 shares of stock issued to Mr. Wells by the Corporation on May 9, 1931.

The verdict was received and both plaintiffs and defendant filed motions to disregard the jury findings unfavorable to them and asked the court to render judgment in their favor. Defendant's motion was overruled. Plaintiffs' motion was granted. Defendant's motion for new trial was overruled. Hence the appeal.

Appellant brings forward 16 points of error. By Point 1 he complains of the action of the trial court in disregarding the corporate entity of the Corporation and in rendering judgment for appellees. The trial court entered judgment for appellees for title and possession of an undivided 1/2 interest in and to the 99/200 interest in the leases acquired by the Corporation that was conveyed to Mr. Wells upon dissolution of the Corporation. The only reason assigned by the trial court for his action is found in the judgment and is as follows: 'It is, accordingly ordered, adjudged and decreed that for the purpose of this suit based upon the principles of equity, fairness and justice, and to avoid the circumvention of Article 4619, Revised Civil Statutes of Texas (Vernon's Ann.Civ.St. art. 4619), the corporate existence of Wells and Gann Drilling Company should be, and the same is hereby disregarded.'

On page 24 of appellees' original brief, we find the following statements contained in the first two sentences: 'Appellees' suit...