Potts v. Fitch

English, Judge: M. B. Potts brought a suit in equity in the circuit court of Wetzel County against W. R. Fitch, F. P. Lowther, E. J. Thompson, and Henry Oil Company, a corporation, and. filed his bill at August rules, 1897, in which he claims that he and the defendants entered into an agreement to procure a lease for oil and gas purposes on a certain tract of land of about ten acres situated in Tyler County, W. Va., that said parties were to share equally in the expenses and profits of same: that said Fitch attended to taking the lease, and took it in his own name; that at the time said agreement was made an oil well was being put down in the immediate vicinity, known as “Wood’s Well No. I;” that, after said Fitch was advised that Wood’s well had been drilled, and was a producer, but before plaintiff was aware of the fact, he met Fitch, in the presence of said E. J. Thompson, and sought to obtain an assignment of one-fourth of the lease in accordance with the contract. Fitch, however, represented to plaintiff that he had already given to said Lowther, his father-in-law, an undivided half interest in the lease, leaving himself at that time only one-fourth interest, and that, if he assigned one-fourth of the lease to plaintiff, he would be left without any interest; which statement was false, as plaintiff afterwards learned. The plaintiff, relying on said false statement, agreed to accept one-eighth which was assigned to him, and paid his proportion of the money therefor, and received said eighth, protesting that he was entitled to one-fourth of the entire lease. The plaintiff also alleges that at the time the one-eighth interest was assigined to him said Fitch held three-eighth. Lowther one undivided one-fourth, and Thompson an undivided one-fourth, and that Fitch’s statement to him that he had conveyed one-half interest to Lowther, and, if he conveyed one-fourth interest to plaintiff, he would have 65 no interest left, was false. He also alleged that be had always been ready and willing to pay Fitch or any other person entitled to the said purchase price, or to pay the same into court, as might be ordered in this suit, and prayed that said Fitch be declared to hold said one-eighth of said lease claimed by plaintiff as trustee for him, and that he be ordered to convey said undivided eighth to complainant, or that a commissioner be appointed, if necessary, to convey the same; that a receiver be appointed to take charge of and preserve the oil produced from said property, etc. The defendant Fitch filed a plea, in which he relied upon the statute of frauds, and also filed his answer, denying every material allegation in the bill, and also demurred to plaintiff’s bill. Depositions were taken and filed by both plaintiff and defendants. The plea filed by t defendants was excepted to, and the exception sustained, and the cause heard upon the depositions filed. The plaintiff’s bill was dismissed, and from this decree the plaintiff obtained this appeal. The first assignment of error claims that the court erred in dismissing the plaintiff’s bill; the second, that the court erred in not decreeing the one-eighth of the leasehold described in the bill to plaintiff; and, sixth, the court erred because the jugdment was contrary to the law and the evidence. These assignments raise the same questions, and may be considered together. The evidence discloses the fact that there was an agreement between Fitch, Lowther, Thompson, and the plaintiff to jointly procure a lease for oil and gas purposes on a certain ten-acre tract belonging to William Ferrell and said parties were to share equally in the expenses and profits of same leasehold, for which they were to pay forty dollars. It appears that Fitch obtained said lease, and took it in his own name, and, when the time came to assign to each party his respective portion of one-fourth thereof, Fitch deceived and misled plaintiff by his false representations, and thereby induced him to accept one-eighth instead of one-fourth. Now, what was the legal effect of this state of facts? A court of equity surely would not permit the plaintiff to be deprived of the benefit of his contract by false and fraudulent representations. The contract alleged in the bill and shown, I think, by the weight of evidence, raised a trust in favor of the plaintiff. 66 In Walraven v. Lock, 2 Patt. & H. 547, it is held that: “If one purchases a piece of land, and takes a deed in his own name under a parol agreement with another that it is for his benefit, and that he may, within a reasonable time, by paying a certain sum, become entitled to the land, a trust is raised in favor of the latter, and the agreement may be proved in favor of the latter, and the agreement may be proved by parol evidence. The statute of frauds has no application to such case.” In support of this proposition, see also, Currence v. Ward, 43 W. Va. 368, (23 S. E. 329), where it is held that “neither an express nor constructive trust in lands need be created, declared, or proven in writing in this State, but may be shown by oral evidence.” Without entering into a strict analysis of the testimony taken in the cause, the allegations of the bill seem to be sustained by the weight of the testimony. Thompson, one of the original parties to the contract, says that, before the assignment of one-fourth of said lease was made to him and one-eighth to Potts, Fitch told him that he had heard that the Wood well had come in, and was showing for a good one, and he remarked, “We had better make out the assignment at once.” This was before dinner, and after dinner they went to witness room to make out the assignments, and, while writing the same, he asked Fitch the amount of Mr. Potts’ interest, so that he could specify it in the assignment, and Fitch replied, “One-eighth.” Mr. Potts was present, and demurred against one-eighth interest, claiming that one-fourth had been promised him. The substance of Fitch’s reply was that he could not give him a greater interest, because Dr. Lowther had taken a • half interest, and, if he assigned one-fourth to plaintiff and one-fourth to Thompson, he would have nothing himself. That the plaintiff was to have one-fourth interest in the lease is shown by the testimony of Hugh McEldowney, who says Fitch told him plaintiff took one-fourth interest; and by that of E. J. Thompson, who says it was understood that “we were to receive a quarter.” This witness received his fourth, but plaintiff was reduced to one-eighht upon said false representation. Wetzel also testifies that Fitch told him that plaintiff was to have one-fourth of said ten-acre lease. It is plain from the testimony that Fitch had heard that the Wood well No. 1 was a producer, and 67 conceived the idea of holding three-eighths of said lease, instead of one-fourth, as originally agreed and understood;- and, in order to carry out this design, represented to plaintiff that he had already assigned one-half to his father-in-law. But, when we look at Exhibit B filed with plaintiff’s bill, it appears that Lowther had assigned him only one-fourth interest, clearly showing that the plaintiff was induced to accept the one-eighth by misrepresentation and fraud. The facts proven establish an agreement between Fitch, Potts, Thompson, and Lowther that Fitch should acquire the lease on said tract, and they were to share equally. This arrangement created an express trust, which, in this State, is not affected by the statute of frauds, but may be shown by oral evidence. See Currence v. Ward, supra; Nease v. Capehart, 8 W. Va. 95 (Syl., point 1). In Murray v. Sell, 23 W. Va. 475., Snyder, J., delivering the opinion of the Court, said: “When the relation of trustee and cestui que trust is once established, that no subsequent dealings with the trust property by the trustees can relieve it of the trust as between him and his ces-tui que trust, is too well established to require argument.” It appears that at the time the one-eighth was assigned to plaintiff he was ready and willing to pay for one-fourth part, as agreed in the contract, and accepted the one-eighth under protest, although he paid for it, and was prevailed on to accept it under false representations. Such being the case, after reading the testimony in the light of the authorities above quoted, I am of opinion that said Fitch obtained the lease as trustee, and held the same for himself, and the other three, and that he fraudulently withheld from the plaintiff the one-eighth part thereof, and that said plaintiff, upon the payment of the remainder of his proportionate share of the purchase money for said fourth part, is entitled to an assignment thereof, and that the court erred in dismissing the plaintiff’s bill. The decree complained of is reversed, and the cause remanded.