Shell Petroleum Corp. v. Howth

COMBS, Justice. On the Sth day of September, 1936, appellee, C. W. Howth, as plaintiff, filed his original petition in this cause, naming as defendants Shell Petroleum Corporation, Ford Clevenger, O. H. Noland, C. O. Wier and a group of parties which we shall designate as the “Gregory Heirs”. For cause of action appellee alleged the following facts: (1) On the 12th day of January, 1931, appellee owned in fee simple, and was in possession of, a certain tract of land, a part of the A. Horton survey in Jefferson County. On that date he executed to the Shell Corporation, on the nominal consideration of $10 and certain other considerations named in the instrument “an option agreement or contract to acquire a mineral lease” on two subdivisions or tracts of his land in the A. Horton survey, tract No. 1 described as containing 45.56 acres of land, and tract No. 2 as containing 66.65 acres of land. By supplemental agreement, executed by ap-pellee and Shell Petroleum Corporation on the 3d day of October, 1933, based upon an actual survey, the description was corrected so as to describe the land as containing 117.12 acres. By the terms of this agreement no title was invested in the Shell Petroleum Corporation, denominated in the contract as lessee, “but only the right to acquire a mineral estate or interest therein upon precedent conditions to be complied with by Shell Petroleum Corporation certain of these conditions were plead — the duty and right to pay “delay” rentals which were regularly paid, etc. (2) It was further alleged that Shell Petroleum Corporation had forfeited all interest in the contract by the following facts: In the latter part of July, 1936, Shell Petroleum Corporation discovered oil on a tract of land about a half mile from appellee’s land by drilling thereon an oil well. After discovering this oil, Shell Petroleum Corporation entered into a conspiracy with the defendants Noland, Wier and Clevenger, to search out and find the heirs of Thomas W. Gregory, deed., who at one time held an executory contract under appellee’s “predecessors in title,” whereby Gregory had the right to purchase the land, and procure from the Gregory heirs a power of attorney, to be taken in the name of Noland, and also to secure “certain other conveyances and contracts”; this scheme originated with Shell Petroleum Corporation and its agents, and was financed by them. The — 256 — Gregory heirs had no title; more than 15 years prior to the filing of this suit appellee had acquired all interest in the. land from the owners of the legal title, and also from the Gregory heirs; he had fenced, claimed, cultivated, used and enjoyed the land more than 15 years, thereby perfecting title under the statutes of limitation; (3) Shell Petroleum Corporation and the other conspirators searched out and found the Gregory heirs, secretly and without knowledge of appellee, and induced them to assert a false and fraudulent claim to appellee’s land, and induced them to enter into a contract whereby “the fruits and revenues of the land” were to be divided, seven-eighths to Shell Petroleum Corporation, and one-eighth to the other conspirators and the Gregory heirs. These things were done by the conspirators secretly and without the knowledge of appellee, and to his great injury. All expenses incurred in securing these contracts from the Gregory heirs were paid by Shell Petroleum Corporation and its fellow conspirators, for their joint benefit and behalf. The Gregory heirs were induced by the conspirators, acting jointly, to assert a false and fraudulent claim to appellee’s land which they had never before asserted, though some of them had lived in the immediate neighborhood of the vicinity of appellee’s land for more than 15 years; and all of the Gregory heirs knew that they had no title in the land, that appellee owned the fee simple title thereto, and during the 15 years had acquiesced in his title; (4) acting together, the conspirators secured a power of attorney from the Gregory heirs, and Noland, Wier and Clevenger, and the Gregory heirs, acting together, executed to Shell Petroleum Corporation a mineral lease on appellee’s land “for a previously agreed large cash consideration.” Asserting a claim under the contracts executed to it by the Gregory heirs, Shell Petroleum Corporation claimed a right to go upon appellee’s land and develop it for oil, to the exclusion of the duty owed by it to appellee to develop the land for his benefit and, claiming under the contracts from the Gregory heirs, Shell Petroleum Corporation asserted a title to appellee’s land as against the title it held under appellee; (5) by acting with the Gregory heirs and its fellow conspirators, in the manner detailed above, and by its bad faith towards appellee, Shell Petroleum Corporation “forfeited” all rights, title or claim “under its contract with appellee, executed on the 12th day of January, 1931”; (6) the acts committed by Shell Petroleum Corporation were fraudulent and to appellee’s injury, and were within the provisions of Arts. 430 and 430a of the Penal Code, Vernon’s Ann.P.C. arts. 430, 430a; (7) under its contract with the Gregory heirs, and its fellow conspirators, Shell Petroleum Corporation acquired no title or interest in appellee’s land; it was not necessary for Shell Petroleum Corporation to make the contract with the Gregory heirs “in aid or protection of an estate which it did not own” or acquire under its contract with appellee; all interests in the land were owned by appellee and subject to its conditions conveyed by him to Shell Corporation by the contract dated the 12th day of January, 1931, that is to say, that contract was an optional contract and under its provisions Shell Corporation had the right to acquire all right, title and interest in the land covered by its provisions; (8) by instigating the Gregory heirs to assert a f-alse and fraudulent claim to appellee’s land and to trespass thereon, and to assert a false claim to his property, Shell Petroleum Corporation “has forfeited and abandoned all claims to further hold optional rights to acquire” appellee’s property, and has “estopped” itself to assert any rights under that contract; (9) appellee alleged that “through these unlawful acts, his title has become clouded by the defendant, and its marketable value greatly impaired. That as a natural consequence of such fraudulent assertions so precipitated against him he is compelled to resort to otherwise needless expenses incidental to the remedies herein sought against them. Plaintiff therefore alleges that he has been damaged by reason of the premises in actual damages in excess of one hundred thousand ($100,-000) dollars, and that there should be awarded against the promoters of this conspiracy, as hereinbefore alleged, exemplary damages in the sum of one hundred thousand ($100,000) dollars, particularly as to the defendant, Shell Petroleum Corporation, whose managing officials and executors are alleged to have authorized, participated in and procured the illegal acts and conduct herein complained of, whereby said corporation should be made to respond therefor.” Appellee prayed that the contract executed to Shell Petroleum Corporation by the Gregory heirs, and its fellow conspira — 257 — tors, be cancelled as casting a cloud upon his title; that his contract with Shell Petroleum Corporation, dated the 12th day of January, 1931, be cancelled, and, in connection with this prayer, appellee offered “to do equity”; he prayed further for his actual and exemplary damages and for general and special relief, and for costs of suit. The defendants plead general and special demurrers, general denial and pleas of not guilty. Appellee correctly summarizes the pleadings of the Gregory heirs, as follows: “The Gregorys, through J. P. Miller and C. F. Stevens as counsel, filed formal answer October 13, 1936. Wier and Noland filed a similar answer December 11, 1936. The Gregorys then filed a first amended answer and cross-action on December 11, 1936. It consisted of the following namely, Exceptions 1, 2 and 3 to the plaintiff’s petition as insufficient, and in the fourth and fifth paragraphs a general denial and plea of not guilty was made. “In the sixth paragraph it is alleged that a deed signed by Sam Gregory, Mary Gregory and the other Gregory heirs, dated 3rd day of September, 1921, to Howth and O’Fiel, recorded in Jefferson County, was made pursuant to the employment of Howth and O’Fiel in the defense of Ralph Gregory to defend him against a charge of murder. The allegation is in this language : “ ‘That under said employment the said Howth and O’Fiel were to be paid the sum of one thousand ($1,000.00) dollars as attorneys’ fees for defending Ralph Gregory, and whatever the form of the instrument signed by the parties above named, apparently in the form of a conveyance, it was so signed by the said grantors and it was so understood by all the parties connected therewith, particularly the said Howth and O’Fiel, to be a mortgage to secure the payment of the said one thousand ($1,-000.00) dollars attorneys’ fees. That the said Mary J. Gregory and the other parties signing said instruments were lead to believe by said Howth and O’Fiel that they had actually signed a mortgage upon said premises described in said instrument.’ “This paragraph of the answer contains a description of the land embraced in said instrument. “The paragraph winds up with this language : “ ‘But that the said Howth and O’Fiel, being lawyers, over-reached and mislead the said defendants in this cause who appear to have signed said instrument. That these defendants had no knowledge that they had signed what purported to be a deed until about the - day of July, 1936.’ “In the seventh paragraph of this answer in reply to the plaintiff’s plea of limitation, they pleaded the minority of three of the children of Gregory, and in the eighth paragraph pleaded the coverture of certain of the children, giving the dates of their marriage, etc. “The ninth paragraph, after notifying the plaintiff to produce the deed on the trial, repeated the allegation that it was ‘intended to be and was understood to be a mortgage to secure said debt to Howth and O’Fiel, wherefore the same is not such an instrument as will support the statute of limitation by adverse possession.’ “The tenth paragraph alleges that Howth and O’Fiel ‘had entered into a conspiracy to defraud the defendants and to acquire an illegal title to said lands.’ “The eleventh paragraph alleges that David O’Fiel, about the years 1921 to 1929, ‘represented the said Mary J. Gregory, as administratrix of said estate of Thomas M. Gregory, deceased, both in the Probate Court of Jefferson County, Texas, and in the District Court of Jefferson County, Texas, in which proceedings the land described in said purported deed to the said Howth and O’Fiel were involved in attempts to foreclose vendor’s liens against the same, and that the said Howth and the said O’Fiel recognized the claim of the estate of Thomas W. Gregory to said property and the claim of these defendants, their actions in these regards showing that they held no hostile claim against these defendants.’ “The allegation concludes with the statement that such situation created a fiduciary relation during the period of 1921 to 1930, and that any rights acquired by Howth and O’Fiel inured to their benefit. “The twelfth paragraph of this answer sought to bring in O’Fiel and his wife and a large number of other persons who had acquired interests in the land and to make them parties to this suit, and winds up with the allegation that according to their paragraph No. 6 they had only executed a mortgage in the form of a deed and sought — 258 — judgment for $50,000.00 damages and for the possession of the land. “The thirteenth paragraph re-asserts ‘all the facts set forth in paragraphs 1 to 11 of the foregoing answer and pray that the same may be considered a part of this cross-action.’ “The prayer concludes' the paper by asking' that said instrument to Howth and O’Fiel he ‘adjudged to be a mortgage and the purported deed be set aside.’ They prayed that 'all these new parties be made parties to the cross-action and ‘for title and possession of the above described premises and that writ of restitution issue and for such other and further rents, damages and costs of suit, and for such other and further relief, special and general, in law and in equity, that they may be justly entitled to, etc.’ ” The second amended answer of the Gregorys offered to do equity and pay off the Broussard and Ward indebtedness which appellee had discharged. This answer also eliminated the pleas of the prior answer which undertook to set aside the mortgage. Plaintiff then plead a number of exceptions and the statutes of three, four and ten year limitations. During the progress of the trial the Gregorys filed a trial amendment wherein they alleged: “Now come and offer to do equity and to pay to the plaintiff any liens of any character owned or held by him, particularly, against these defendants, under those certain vendor’s lien notes and judgments, rendered in favor of J. E. Broussard, and of M. L. Ward, against Mary J. Gregory as the administratrix of the estate of Thomas M. Gregory, deceased, being the identical judgments offered in evidence by the plaintiff in this case during the trial thereof and prior to the filing of' this trial amendment, and these defendants stand upon this trial amendment solely- as alleging and averring their right to exercise the equity of redemption against said liens and judgments. And in this connection they say that they stand ready and willing and offer to pay off said judgments to the plaintiff, he being the owner of the same, in full; wherefore, they pray that they go hence without day and that the plaintiff take nothing by his suit, and that said defendants be adjudicated to be the owners of the premises in controversy upon their paying off and discharging said liens and judgments. They further pray for full general and equitable relief.” By his charge the court instructed the jury: “Gentlemen of the Jury: “The court holds in this case as a matter of law that the title to the land involved in this controversy is, under the undisputed evidence, invested in C. W. Howth, the plaintiff.” The charge submitted to the jury the following issues, all answered in the affirmative : “Special Issue No. 2: Do you find, from the preponderance of the evidence, that the Shell Petroleum Corporation sought to procure the lease executed by what is known as the Gregory heirs and Noland and Wier to itself for the purpose of asserting an adverse claim against the plaintiff, C. W. Howth? “Special Issue No. 3: Do you find, from the preponderance of the evidence, that Ford Clevenger cooperated with Wier and Noland in securing the lease in controversy to the Shell Petroleum Corporation? “Special Issue No. 4: Do you find, from the preponderance of the evidence, that Ford Clevenger shared with Noland and Wier in the financial receipts from the lease executed by the Gregory heirs and by Noland and Wier to the Shell Petroleum Corporation? “Special Issue No. 5: Do you find, from the preponderance of the evidence, that the Shell Petroleum Corporation, by and through its representative, Ford Clev-enger, instigated the assertion of claim for said property involved herein on behalf of the Gregory heirs against the plaintiff, C. W. Howth? “Special Issue No. 6: Do you find, from the preponderance of the evidence, that the Shell Petroleum Corporation acted maliciously in instigating (if it did instigate) the assertion of claim for the property involved herein on behalf of the Gregory heirs against the plaintiff, C. W. Howth? “Special Issue No. 16: Do you find, from the preponderance of the evidence, that the sales value if any of the property herein involved was defeated by the assertion of the claim to the said property by the Gregory heirs? “Special Issue No. 17: Do you find, from the preponderance of the evidence, that the defeat of the sales value, if any, — 259 — of said properly involved herein was directly and proximately caused by the acts of the Shell Petroleum Corporation in instigating (if it did instigate) the Gregory heirs to assert an adverse claim to said property ?” To question 18: “What do you find, from the preponderance of the evidence, to he the reasonable amount of the damages, if any, sustained by plaintiff, C. W. Howth, by the defeating of the sales value of said property (if it was so defeated) ?” The jury answered $65,000. By its answer to question 19, the jury found that Shell Petroleum Corporation should pay appel-lee “some amount of money as exemplary or punative damages”; and by its answer to question No. 20, fixed the amount at $50,000. Questions 7 to 15 submitted to the jury the issues of attorney’s fees and expenses incurred by appellee in prosecuting this suit, and the “loss of credit” suffered by appellee by reason of the false and fraudulent claims “advanced by Shell Petroleum Corporation against his land”; the jury assessed the following damages on these issues: Attorney’s fees, $15,000; expenses, $1,000; damage to credit, $10,-000. On the facts found by the court, it was decreed in his judgment that appellee “is and was invested” with the legal title to the land described in his petition, and in the cross action of the Gregory heirs, and that he “was vested with the legal title to said land a long time prior” to the time the Gregory heirs executed their powers of attorney, and prior to the execution of the mineral leases to Shell Petroleum Corporation. And it was decreed that the “powers of attorney and said mineral leases be, and same are hereby cancelled, set aside, vacated and held for naught”; it was further decreed, as a matter of law on the facts found by the court, that the Gregory heirs take nothing on their cross action against appellee as to the three tracts of land described in their cross action, a part of the A. Horton survey in Jefferson County, tract No. 1 described as containing 26½ acres, and tract No. 2 described as containing 61.5 acres, and tract No. 3 as containing 156.4 acres — the land thus described included the land covered by appellee’s contract with the Shell Petroleum Corporation, dated the 12th day of January, 1931; the judgment “divested” the title to the land out of the Gregory heirs and “invested the title in appellee”; the Gregory heirs were perpetually enjoined from asserting any claim to the land as described in their cross action. On the issues made by appellee against Shell Petroleum Corporation, Noland, Wier and Clevenger, the judgment recited all the issues submitted to the jury, and their answers thereto, and then awarded judgment in favor of appellee,, against Shell Petroleum Corporation, Noland, Wier and Clevenger, jointly and separately, for the following items: attorneys fees, $15,000; expenses, $1,000; damages to his credit, $10,000; actual damages, $65,000; and exemplary damages, $50,000. By the judgment, the contract executed by appellee to Shell Petroleum Corporation, on the 12th day of January, 1931, was “cancelled, set aside, vacated and held for naught” on the following findings made by the court, and recited in his judgment: “And it further appearing to the court from the answers of the jury to the special issues above set forth that the said Shell Petroleum Corporation, cooperating with the said O. H. Noland, Ford Clevenger and C. O. Wier, procured and instigated the procurement of the power of attorney and the mineral leases hereinabove set forth for the purpose of setting up an adverse claim to the plaintiff to the land and premises described herein; and it further appearing to the court from the answers of the jury to the special issues above set forth that the defendant, Shell Petroleum Corporation, was actuated by actual malice in so doing; and it further appearing to the court that said Shell Petroleum Corporation attorned to said adverse claimants and recognized their said alleged claim to the land against the claim of plaintiff, C. W. Howth; and it further appearing that the contract, heretofore executed between the plaintiff and the said defendant, Shell Petroleum Corporation, dated January 17, 1931, recorded in Vol. 353, page 324 of the Deed Records of Jefferson County, Texas, is a mere option to acquire an oil and mineral lease and is not a conveyance in pres-entí of any portion or of any interest in the oil, gas and other minerals in and under said land herein described, and that the said option contract, together with the confirmation of the purported lease executed by the said C. W. Howth dated May 2, 1933, recorded in Vol. 378, page 205 of the Deed Records of Jefferson County, Texas, should be in all things cancelled, set aside and held for naught.” — 260 — The motions for new' trial of all the defendants were overruled on the 29th day of March, 1937. Shell Petroleum Corporation duly perfected its appeal by filing supersedeas bond. All the other defendants, except Clevenger and Susie B. Summers, who did not perfect an appeal, perfected their appeals by filing affidavits of their inability to pay costs; most of these affidavits were filed on the 29th day of April, 1937, more than 20 days, but within 30 days, from the date the motions for new trial were overruled; the affidavits did not recite that the affiants lived out of Jefferson County, where the case was tried; the district court of Jefferson County by law could continue, and in fact did continue, in session more than eight weeks.