Burchill v. Hermsmeyer
Burchill v. Hermsmeyer
Opinion of the Court
This suit was instituted by appellee against appellants, Belle M. Burchill, Edna Burchill, and the Ft. Worth Oil Development Company, a corporation, to recover $10,000 paid for stock in the oil company named. The right to recover is based upon two grounds: First, on the ground of certain alleged false and fraudulent representations, which will be hereinaft *768 er indicated; and, second, upon the ground that at the time the stock subscription contract, which was in writing, was entered into, appellants Belle M. Burchill aud Edna Burchill orally agreed to return to the plaintiff the said $10,000 in the event oil was, not developed.
The case was submitted to a jury on special issues, which were answered favorably to appellee, and judgment was rendered accordingly in the sum for which he sued.
The record, statement of facts, and appellants’ brief are all voluminous. For the most part, however, the assignments of error go to the action of the court in overruling general and special exceptions to appellee’s petition, and to the failure of the court to sustain appellants’ numerous objections to the evidence offered in support of the supposed objectionable allegations. We think, therefore, that we can probably more clearly dispose of the case by announcing our conclusions in a general way than to undertake a ■discussion of each assignment. So proceeding, we will first address ourselves to the questions which relate to the alleged oral •contract.
To the. petition and to the evidence it was objected that the effect of the oral contract was to vary and change; in material particulars, the terms of the written contracts which had been entered into between the parties. Appellee’s advancements to appellants were at different times and in different sums, all aggregating the sum for which he sued. For some of these sums a brief written receipt was given which recited that the sums advanced were to be applied on stock payments, or to be applied on stock issued when called for, and at yet other times more formal instruments were executed. To the end that the force of appellants’ objections may be more clearly seen, we will set out several of these more extended contracts. The first reads as follows:
“Ft. Worth, Tex.,'Fob. 10, 1916.
“This receipt witnesseth: . That I, Belle M. Burchill, have this day received as trustee, as stated below, from H. C. Hermsmeyer, the sum of one thousand ($1,000.00) dollars, to be applied to the payment of one hundred (100) shares of stock in a corporation to bo by her associates hereinafter organized for the purpose of prospecting for oil and developing an oil field on about thirty five (35) acres of land belonging to said Belle M. Burchill and Edna M. Burchill, situated in Tarrant county, Tex., near the eastern limits of the city of Ft. Worth, and known as a part of the old Burchill homestead, which land is to be hereafter convoyed to said proposed corporation. Said corporation is also to acquire leases on other lands in that vicinity for the purpose of drilling for oil, gas, etc.
“The said sum of $1,000 which is this day paid is to be held by said Belle ⅞1. Burchill as trustee until said corporation is organized and said stock is isnued, when same is to be expended in the development of said field.
“Said H. O. Hermsmeyer shall have the right, at his option, to acquire, if he so desires, an additional five thousand ($5,000) dollars of stock in said corporation at any time prior to April 1, 1916, same to be paid for by him at par as same is taken; all stock to be nonas-sessable.
“The proposed corporation is to be organized and incorporated with a capital stock of not to exceed fifty thousand ($50,000) dollars. The development of said field is to commence within sixty (60) days from this date and is to be tested for oil and gas on said premises by sinking thereon with reasonable diligence a well not to exceed twelve hundred (1,200) feet, but same may be stopped short of that distance if oil or gas be struck in paying quantities at lesser depth. [Signed] Belle M. Burchill.
“Edna M. Burchill.”
On April 19,1916, thereafter, oil not having been developed, within 1,200 feet, as originally contemplated, appellee subscribed for an additional amount of stock, the subscription being evidenced by a written instrument which reads as follows:
“Know all men by these presents that we, H. O. Hermsmeyer and William Hermsmeyer, of Ft. Worth, Tarrant county, Tex., herewith subscribe eight thousand six hundred and fifty dollars for stock in the Ft. Worth Oil & Development Company, said stock to be issued to the above-named parties when paid for at par and non-assessable.,
“Witness our hands this 19th day of April, 1916. [Signed] W. G. Hermsmeyer.
“H. O. Hermsmeyer.”
The payment of the subscription last set out is evidenced by the following instrument executed on July 3,1916:
“The State of Texas, County of Tarrant.
“Know all men by these presents that this agreement this day made and entered into by and between the Ft. Worth Oil & Development Company of Ft. Worth, Tex., party of the first part, and H. C. Hermsmeyer, party of the second part, witnesseth that said parties have agreed and do hereby agree as follows, to wit:
“I. In consideration that the said second party shall pay to the Palo Pinto Oil & Gas Company the balance due it on well drilling by it for said first party near Ft. Worth, which balance is about four thousand ($4,000) dollars, and in further consideration that said second party has heretofore paid said Palo Pinto Oil & Gas Company the further sum of three thousand dollars, which has been applied on the cost of said well, it is agreed that said second party shall have the right and option to demand of said first party that it issue and deliver to him stock in said Ft. Worth Oil & Gas Company equal in amount at its face or par value to the amount so paid by him to said Palo Pinto Oil & Gas Company, which being done, said second party shall be entitled to all the rights and privileges of a stockholder in said Ft. Worth Oil & Gas Development Company. Such demand for the issuance of said stock to him may *769 be made by second party whenever he desires to make same.
“II. It is further agreed that said second party shall, if he so desires, increase his subscription tp the stock of said company to an amount not to exceed fifteen thousand dollars in all, and to demand the issuance of stock therefor at par value upon the payment of the amount so subscribed for.
“III. Whatever amount is so paid by said second party for such stock in excess of the amounts so paid to said Palo Pinto Oil & Gas Company, viz. about seven thousand twenty dollars, shall be expended by said first party in the development of its oil field near Ft. Worth and in the necessary expense of so doing, provided that no part of said amounts so paid and to be paid by second party shall be used to pay agents’ commissions on sale of stock in said development company.
“Witness our hands this the Sd day of July, 1916. [Signed] Ft. Worth Oil & Development Company, by B. M. Burchill, President, Party of the First Part. H. O. Hermsmeyer, Party of the Second Part.”
Plaintiff, after setting out in Ms petition the subscription contract dated February 10,1916, above quoted, and after setting forth the alleged fraudulent representations which induced its said subscription, thus alleges the oral contract upon which he relies, viz.:
“Plaintiff further avers and alleges that he was induced and caused to pay over the $1,000 by false representations of facts aforesaid and was caused to accept the receipt aforesaid because of the confidence which he had reposed in the defendant Belle M. Burchill that she would return his said money to him unless oil was discovered and had confidence in her to the extent that he did not require her to place said provision in the contract which she and her daughter signed, and avers and alleges that he would have had said oral agreement to return his said money written into said receipt had he not reposed such confidence in the said defendant.”
The plaintiff, after setting forth several other receipts for other sums of money and the contract of July 3, 1916, above quoted, further referred to the oral contract in the following terms:
“Plaintiff would further aver and show unto -the court that at the time that each of the aforesaid receipts were issued to him and any of said purported contracts entered into that he was completely under the influence and control of the said Belle M. Burchill by reason of the aforesaid false representations of facts and by reason of the aforesaid tricks, artifices, and frauds perpetrated on him, and that he reposed absolute confidence in the said Belle M. Burchill and paid no particular attention to the fact that said receipts were signed, part of them by the Ft. Worth Oil & Development Company, and for the same reason paid no attention to the fact that it was not specifically mentioned in each one of said receipts that plaintiff’s money was to be returned tq him in the event oil was not discovered, and here avers and alleges that the matter of leaving out the oral agreement on the part of the defendants with this plaintiff to return his said money unless oil was discovered was the exact fraud defendants were undertaking to and did perpetrate upon this plaintiff by executing and delivering to him the aforesaid receipts.”
“Parol testimony cannot be received to contradict, vary, add to, or subtract from the terms of a valid written instrument.”
See Jones, Blue Book of Evidence, vol. 1, § 434; Greenleaf on Evidence, vol. 1, § 275. The rule is thus expressed in Seitz v. Machine Co., 141 U. S. 510, 12 Sup. Ct. 46, 35 L. Ed. 837:
“Undoubtedly the existence of a separate oral agreement as to any matter on which a written contract is silent, and which is not inconsistent with its terms, may be proven by parol, if under the circumstances of the particular case it may properly be inferred that the parties did not intend the written paper to be a complete and final statement of the whole of the transaction between them. But such an agreement must not only be collateral, but must relate to a subject distinct from that to which the written contract applies; that is, it must not be so closely connected with the principal transaction as to form part and parcel of it. And when the writing itself upon its face is couched in such terms as import a complete legal obligation without any uncertainty as to the object or extent of the engagement» it is conclusively presumed that the .whole engagement of the parties, and the extent and manner of their undertaking, was reduced to writing.”
“To the above rule [the general rule above noted], however, we think that there is a well-founded exception, though there is a conflict in the authorities upon the question. It has been distinctly recognized and announced by the Supreme Court, however, in this state. The exception may be stated as follows, and in reference to the case in hand: If the railway company, at the time it made the representations and promises before mentioned to the plaintiffs, did so with the design of cheating and deceiving the plaintiffs, and had no intention at the time of performing the promises, but used them merely as false pretenses to induce the plaintiffs to execute the deed, and if its conduct did have that effect, then we think that such acts and declarations, coupled with its subsequent utter failure and refusal to perform the promises or assurances, would amount to such actual fraud as would authorize the plaintiffs to have the contract rescinded and the land restored to them. But, upon the other hand, if the promises or representations were made in good faith at the time of the contract, and the defendant subsequently changed its mind and failed or refused to perform the promises, then such conduct of the company, originally or subsequently, would not * * ⅜ ' justify the rescission of the contract or the cancellation of the deed.”
While, inferentially, the petition presents allegations of false- representations that are material, as, for instance, that the geologist had investigated defendants’ lands and had given opinions favorable to the existence of oil thereunder, and that the lands for the purpose of developing oil had been sought by the Standard Oil and other oil companies who might reasonably be supposed to so act because of a well-founded belief of the existence of oil under said lands, yet, in the nature of things, many of the allegations made relate to mere matters of opinion which are wholly insufficient to constitute a support for plaintiff’s action. In the very nature of the subject it must be known that neither a geologist nor any other person can predict with absolute certainty the existence of oil underneath undeveloped tracts of land, and neither the opinion of the geologist nor of the defendants could legally have been accepted by plaintiff as an absolute fact, and, when we come to the evidence of this cáse, it is much less forceful than the allegations. The plaintiff testified at great length at the trial, but it does not appear from his testimony that the defendants’ statements to the effect that the geologist had passed favorably upon the lands in question were false. They may, indeed, have given the most favorable opinions on this subject. So far as the record shows, the defendants themselves may have had the utmost faith-in the existence of oil under their lands, and they may have believed with all sincerity in such fact.
The representations as to the value of the lands in procuring the charter for the incorporation cannot be accepted as a basis for fraud in this case. While it was shown by the evidence on the trial by several witnesses that the value of the lands was much less than that represented to the secretary of state, yet the opinions of the parties who made the several estimations were, at most, mere estimates. The lands for farming or ranching purposes or for a city addition may have been worth, in the opinion of witnesses, a given value, while a much greater value would be placed thereon by persons actuated by a belief of the existence of oil thereunder, and' which it was proposed to develop. The question of tire value of these lands could-only be material in an action on the part of the state to annul the charter, or in an effort on the plaintiff’s part to cancel his subscription contracts and for damages, but this hé has not sought to do, other than as is perhaps to be implied from his effort to recover the amount of money paid in by him.
But if under any possible set of circumstances representations of the character mentioned could be made the basis of equitable interposition, the present suit presents no such case. There is no allegation that the plaintiff is mentally deficient qr wanting in ordinary business acumen, nor evidence that the medium mentioned in the testimony did not, in fact, give the assurances imputed to him, or that defendants themselves were without confidence therein. Indeed, it is not shown that the test well undertaken by the -parties to this litigation has been entirely abandoned. So far as the evidence called to our attention shows, the work may now be *772 continuing, and, while the oil has not been developed as near the surface as was contemplated, the truth of the spiritual prophecy that oil in paying quantities is to be found beneath the lands of the defendants may yet be demonstrated.
It should be further said on this branch of the subject that some of the spiritual revelations relied upon were made subsequent to plaintiff’s subscription and payment for stock, and hence in no event could have been an inducement therefor. The communications detailed at greatest length and apparently most relied upon by plaintiff were those of Mr. Kaiser designated as a medium, who assured plaintiff that “the oil is there all right; he said he saw it, saw the oil there, and he was sure of that, and he thought it was down 600 feet.” These assurances, however, as shown by the evidence, were given to plaintiff first in the absence of the defendants, and we fail to find any evidence that either of the defendants authorized or incited the medium named to make the statements. Indeed, it seems difficult to point out any theory sustained by the pleadings and evidence in this case which will support the judgment as actually rendered in plaintiff’s favor.
As before observed, the plaintiff does not, in direct terms, seek to cancel his subscription contracts and recover damages because of a depreciated value of his stock in the corporation and tender a return of such stock. Nor is there any clear showing, so far as we have been called upon to consider the record, that the corporation is not a solvent going concern, or that its stock is worthless, or that the right secured by plaintiff in his subscription contracts to acquire additional stock at par is without value. On another trial the record should not be left in doubt on these matters; for it needs neither argument nor citation of authorities to support the proposition that plaintiff cannot retain the benefits, if any, of these subscription contracts and at the same time recover the money paid therefor.
We conclude that the judgment should be reversed, and the cause remanded for a new trial in accord with the views we have indicated.
Judgment reversed, and the cause remanded.
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Reference
- Full Case Name
- BURCHILL Et Al. v. HERMSMEYER
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- 19 cases
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- Published