William B. Roberts, Inc. v. McDrilling Co., Inc.

• Decision Date: 22 March 1979
• Docket Number: No. 1356,1356
• Citation: 579 S.W.2d 335
• Parties: WILLIAM B. ROBERTS, INC., et al., Appellants, v. McDRILLING COMPANY, INC., Appellee.
• Court: Texas Court of Appeals

Page 335

579 S.W.2d 335

WILLIAM B. ROBERTS, INC., et al., Appellants, v. McDRILLING COMPANY, INC., Appellee.

No. 1356.

Court of Civil Appeals of Texas, Corpus Christi.

March 22, 1979.

Rehearing Denied April 12, 1979.

William B. (Ben) Adair, Houston, for appellants.

William H. Scott, Jr., Browne & Moore, Houston, for appellee.

OPINION

BISSETT, Justice.

This is a suit to recover damages for breach of written contract, or, in the alternative, for fraud relating to the drilling of two wells, the Emma Oates well and the H. L. & P. well, in search of oil or gas. In the trial court, McDrilling Company, Inc., was plaintiff. William B. Roberts, Inc., and William B. Roberts, individually, were defendants. Following a jury trial, judgment was rendered in favor of plaintiff against defendants, jointly and severally, in the total sum of $101,493.09, together with interest thereon at the rate of 9% Per annum from date of judgment (January 17, 1978) until paid. Defendants have appealed.

According to the makeup and context of plaintiff's pleadings, it sued to recover actual damages in the amount of $52,306.57 due, first, because of the fraud allegedly perpetrated on it by defendants, or, in the alternative, the identical sum of $52,306.57 alleged to be due it by defendants under written contracts for the drilling of the wells. Plaintiff alleged that defendants, from the very beginning of their dealings with plaintiff, were motivated and actuated by an intent to defraud plaintiff in the drilling of the Emma Oates and H. L. & P. wells, and in order to carry out their scheme not to pay for all costs pertaining to the drilling of those wells, made material misrepresentations to plaintiff to induce plaintiff to drill the Emma Oates and H. L. & P. wells pursuant to written contract, and concealed from plaintiff their secret intention not to pay all of plaintiff's charges for the work to be performed under the contracts. Plaintiff further sought a recovery of punitive damages, and also asked for reasonable attorneys' fees because of breach of contract.

Defendants, in addition to special and general denials, pled several affirmative defenses to the action brought by plaintiff. Included in such affirmative defenses, but not by way of limitation, are claims for offsets because of negligence of plaintiff's drilling crews and overcharges by plaintiff.

Twenty-seven special issues were submitted. The jury found:

(No. 1.) When Roberts signed the contract on the Emma Oates well, he then intended not to pay for a substantial part of plaintiff's charges for work to be performed;

(No. 2.) When plaintiff performed work on the Emma Oates well, plaintiff relied on Roberts' promise to pay;

(No. 3.) When Roberts signed the contract on the H. L. & P. well, he then intended not to pay for a substantial part of plaintiff's charges for work to be performed;

(No. 4.) When plaintiff performed work on the H. L. & P. well, he relied on Roberts' promise to pay;

(No. 5.) Roberts concealed from plaintiff his intent to charge the plaintiff the cost of outside services incurred in freeing the stuck pipe, by deducting such costs from amounts due plaintiff;

(No. 6.) Such fact (had it not been concealed), would likely have affected plaintiff's judgment and performance on the Emma Oates well;

(No. 7.) Such fact (had it not been concealed), would likely have affected plaintiff's judgment and performance on the H. L. & P. well;

(No. 8.) Punitive damages in the sum of $22,500.00 should be awarded against defendants;

(No. 9.) The reasonable value of the services of plaintiff's attorneys in the case is $20,000.00;

(No. 10.) The insertion of the term "30 days" in the form contract so as to result in the provision for interest at the rate of 11/2 percent per 30 days, was the result of a good faith error on the part of plaintiff; and,

(No. 11.) The parties intended at the time of the execution of the contracts that interest should be for the rate of 1.5% Per month.

The remaining special issues (Numbers 12 through 27) were defendants' issues. They were answered unfavorably to defendants.

The court rendered judgment for plaintiff for $52,306.57, together with interest thereon at 6% Per annum from and after December 1, 1975, to date of judgment, with said principal and interest amounting to $58,993.09, and for $20,000.00 as attorneys' fees, and for $22,500.00 for punitive damages, being a total of $101,493.09, together with interest on the total amount of the judgment at the rate of 9% Per annum from and after the date of rendition of the judgment.

Defendants urge six points of error. Three are "no evidence" points.

In disposing of defendants' "no evidence" points, we follow the well-established rule which requires the appellate courts of this State to view the evidence in a light most favorable to and in support of the jury's findings and to consider only the evidence and permissible inferences which support such findings, and to reject the evidence and inferences contrary thereto. Miller v. Riata Cadillac Company, 517 S.W.2d 773 (Tex.Sup.1974).

Defendants in their first point of error, contend that there was no evidence that they committed an actionable tort in connection with a breach of contract, and therefore it was error to award punitive damages to plaintiff. We agree. Plaintiff's action is properly brought to recover damages for breach of contract, and such suit is not a basis for punitive damages since there is no evidence that the breach was tortious in nature.

While defendants do not bring forward points which directly challenge the submission of special issues 1 through 8, or the judgment insofar as it is based on the jury answers to those issues, on the ground of no evidence, the thrust of the point, when the statement and argument thereunder is considered, is such a challenge. Recent cases advocate a very liberal rule in determining the legal sufficiency of a point under our briefing rules. See Bass v. Metzger, 569 S.W.2d 917, 922 (Tex.Civ.App. Corpus Christi 1978, writ ref'd n. r. e.). The precise nature of point 1 is a complaint against the judgment, which awarded punitive damages, on the ground that there is no evidence to support the jury's findings, which, in effect, supplied the basis for a holding that defendants committed an actionable tort (fraud) in connection with a breach of contract. In disposing of the point, we must necessarily consider whether there was evidence to support the jury's answers to points 1 through 8 in order to determine the question of reversible error. See O'Neil v. Mack Trucks, Inc., 542 S.W.2d 112 (Tex.Sup.1976), which states that a Court of Civil Appeals should look to the statement and argument under a point "to determine the question of reversible error."

To constitute actionable fraud, there must be a misrepresentation or concealment of a material fact intended to be believed and acted upon and actually believed or acted upon with consequential injury to the person acting thereon. Further, the complainant must not have failed to exercise reasonable care to protect himself. There cannot be actionable fraud in an arms length transaction when each of the parties are equally cognizant of the facts. Moore & Moore Drilling Co. v. White, 345 S.W.2d 550 (Tex.Civ.App. Dallas 1961, writ ref'd n. r. e.); Roan v. Reynolds, 364 S.W.2d 763 (Tex.Civ.App. Amarillo 1963, writ dism'd). Fraud is never presumed, and it is plaintiff's burden to allege and prove actionable fraud. Turner v. Lambeth, 2 Tex. 365 (1847); Hawkins v. Campbell, 226 S.W.2d 891 (Tex.Civ.App. San Antonio 1950, writ ref'd n. r. e.); Ramos v. Levinston,536 S.W.2d 273 (Tex.Civ.App. Corpus Christi 1976, no writ); Hazle v. McDonald, 449 S.W.2d 343 (Tex.Civ.App. Dallas 1969, no writ).

A person's intent is a question of fact, which may be established by circumstantial evidence in connection with a breach of contract, but the breach alone does not establish such fact. Turner v. Biseoe, 141 Tex. 197, 171 S.W.2d 118 (1943); Seegers v. Spradley, 522 S.W.2d 951 (Tex.Civ.App. Beaumont 1975, writ ref'd n. r. e.). Mere proof of nonperformance of the contract will not support an inference of fraudulent intent. Medina v. Sherrod, 391 S.W.2d 66 (Tex.Civ.App. San Antonio 1965, no writ); Collier v. Bankston-Hall Motors, 267 S.W.2d 898 (Tex.Civ.App. Dallas 1954, no writ).

As a general rule, a promise to perform some act in the future, although made for the purpose of inducing another to enter into a contract, will not amount to legal fraud, though at a later date, the promise, without any excuse, is broken. This is a plain and well established proposition of law; otherwise, every breach of contract would amount to fraud. In order for a promise to constitute fraud, it is necessary that it should have been made at a time when the promisor knew that it would not be performed. When a representation, in the nature of a promise to be performed in the future, is alleged as a basis for fraud, it must be shown that the person making the representation did not intend to perform at the proper time. Cassel v. West, 98 S.W.2d 437 (Tex.Civ.App. Amarillo 1936, writ ref'd); Stone v. Enstam, 541 S.W.2d 473, 481 (Tex.Civ.App. Dallas 1976, no writ). Furthermore, a subsequent representation cannot be considered in determining whether a contract was obtained by fraudulent representations, since a transaction which is originally valid cannot be rendered invalid by a representation made after the transaction was originally entered into by the parties. Long v. Martin, 112 Tex. 365, 247 S.W. 827 (1923); Steine v. Hillcrest State Bank of University Park, 423 S.W.2d 443 (Tex.Civ.App. Dallas 1967, no writ); Burchill v. Hermsmeyer, 212 S.W. 767 (Tex.Civ.App. Fort Worth 1919, no writ).

In fraud cases, generally speaking, punitive damages may not be awarded unless the act complained of is of a malicious or wanton nature, and such an award cannot be supported if all that is shown by the record is...