Case ID: sw_242/html/0521-01.html
Source: Caselaw Access Project
Author: {"author": "HIGGINS, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

THOMASON et al. v. HAWLEY et ux.
    (No. 1319.)
    (Court of Civil Appeals of Texas. El Paso.
    May 4, 1922.
    Rehearing Denied June 22, 1922.)
    1. Appeal and error <&wkey;882(l5) — Failure to define term used in special interrogatories not error in absence of request.
    In an action to cancel a written instrument, the allowing of the special interrogatory whether defendant induced plaintiffs by fraudulent representations to deliver the instrument was not error for failing to instruct on the essential elements of “fraudulent representations,” in view of the fact that the court gave the special charges requested by defendant on the necessary elements of fraudulent representations.
    2. Appeal and error &wkey;jl064(l) — Submission of interrogatory referring to pleadings for issue not prejudicial error.
    Where the jury was not misled, the submission of a special interrogatory which refers the jury to the pleadings for the issue submitted is not reversible error.
    3. Trial <&wkey;>253(5) — Instruction as to defense of bona fide purchaser held erroneous as ignoring essential elements of rule.
    In an action for cancellation of a deed, where the defense of a bona fide purchaser was set up, defendant’s requests were erroneous as ignoring the question of constructive notice of plaintiffs’ equitable right or such facts as would put a prudent man on inquiry.
    4. Appeal and error c&wkey;2!5(!) — No review of court’s charge where, no objection was made.
    Where no objection was made to the trial court’s charge, no error, is presented.
    5. Vendor and purchaser <&wkey;242 — Burden of proving lack of notice on alleged bona fide purchaser.
    Generally the junior vendee has the burden of showing that he purchased for value and without actual or constructive notice.
    6. Judgment ¡&wkey;>707 — Judgment in another suit to which plaintiffs were not parties not res adjudicata.
    A judgment in another suit to which plaintiffs were not parties is not res adjudicata of the present suit.
    
      7. Cancellation of instruments &wkey;>24(l)— Where consideration worthless, restoration held unnecessary.
    To cancel an instrument executed in consideration of the issuing of stock, no offer to return the stock is necessary where it is utterly and wholly worthless.
    Appeal from District Court, Stephens County; W. R. Ely, Judge.
    Action by J. T. Hawley and wife against G. J. Thomason and others. Judgment for plaintiffs, and defendants appeal.
    Affirmed.
    H. G. McConnell, of Haskell, E. D. McKenzie, of Anson, and Wm. E. Hawkins, of Breckenridge, for appellants.
    W. C. Veale, of Breckenridge, and J. R. Stubblefield, of Eastland, for appellees.
   Statement of Case.

HIGGINS, J.

On May 2, 1910, the ap-pellees, J. T. nawley and Ms wife, executed the following instrument:

“The State of Texas, County of Stephens.
“Know all men by these presents that J. T. Hawley and M. A. Hawley, husband and wife, of Stephens county, Tex., the party of the first part, in consideration of the sum of $1.00 paid by ¾. L. Thomason and’ G.^J. Thomason, 4⅛? ties of the second part, the receipt of which is .hereby acknowledged, and the further consideration hereinafter mentioned, have granted, bargained, sold, and conveyed, and by these presents do grant, bargain, sell, and convey, unto the parties of the second part, their heirs and assigns, all of the coal, oil, and gas and other minerals in and under the following described land, together with the right of ingress and egress at all times for the purpose of drilling, mining, and operating for minerals and to conduct all operations and to lay all pipes and railway necessafy for the production, mining, and the transportation of the coal, oil, gas, water, or other minerals, and shall have the right to remove all machinery, fixtures, and improvements placed thereon at any time, reserving, however, to the parties of the first part their proportionate part of the cash dividends which shall be determined by the number of shares of stock owned by them and such payment made quarterly without demand, said land being described as follows, to wit: [Here follows description of land.]
“To have and to hold the above-described premises unto the said parties of the second part, their heirs and assigns, upon the following condition: In case operation for either the drilling of a well for coal, oil, gas, mining, or other minerals is not commenced and prosecuted with due diligence within 15 months from this date on the above-described premises or one or more of their leases owned by the parties of the second part, Coal, Oil and Gac Company then the second party agrees to pay the first party the sum of 10 per cent, per annum on the par value of each dollar of stock owned by first party; it being agreed that the first party is to take shares of the capital stock of the Diamond Coal, Oil & Gas Company above ■ named-ssrpe-ra-tion- at par value as payment of the above-named 10 per cent, until such well or shaft is commenced, and it is agreed that the completion of such well or opening up one mine, gas, or oil well shall be and operate as a full liquidation of all rental under this provision during the remainder of the term of this lease. Such payment shall be made direct to the holder of said stock.
“In case the parties of the second part shall bore and discover either coal, oil, gas, or other minerals, then in that event this grant, incum-brance, or conveyance shall be in full force and effect for 20 years from the time of the discovery of said product, and as much longer as coal, oil, gas, water, or other minerals can be produced in paying quantities thereon.
“Whenever sales are being made of the product on the land above described, such sales shall be added to the sales of the products from all leases owned by the parties of the second part. -SMBxsaá-Gs-ah-Gil-aEd-G&s-Gom-•Rftsy? a settlement shall be made at the end of each quarter.
“It is further agreed that the second parties, their heirs and assigns, may at any time hereafter surrender up this grant; and may be relieved from any part of the contract heretofore entered into that may at any time remain unfulfilled, and then and from thereafter this grant shall be null and void and no longer binding on either party.
“It is understood between the parties to this . agreement that all conditions between the parties hereunto shall extend to their heirs, executors, administrators, and assigns.”

On May 15, 1917, Hawley and wife brought this suit against G. J. Thomason to set aside and cancel the above-described instrument. The third amended petition, upon which the case was tried, contained a count in trespass to try title. In another count the lease was sought to be avoided upon various grounds which may be summarized as follows: Eraud practiced in procuring the lease in that Thomason induced the plaintiffs to execute the same by false and fraudulent representations, promissory in their nature, which promises Thomason at the time had no intention to perform, and made same for the purpose of deceiving and defrauding plaintiffs, and which he had wholly failed and refused to perform. In connection with the issue of fraud facts were alleged showing an excuse for not discovering the fraud until a time within which the statute of limitation had not run so as to bar the right of rescission because of such fraud.

It was further alleged that the recited consideration of $1 cash had not been paid; that the contract was unilateral and without consideration; that drilling operations had not been prosecuted with any diligence, and defendant had never performed any of the conditions of the contract; that the contract covered lands which in part were homestead; that the contract was not executed, but ex-eeutory, and therefore void as to the homestead; that the defendant had abandoned the contract and his rights thereunder.

On November 28, 1919, G. W. and Y. L. Thomason, brothers of G. J. Thomason, intervened in the suit and claimed an undivided two-third interest.in the mineral resources of plaintiffs’ land covered by the aforesaid contract by virtue of a conveyance thereof to them by G. J. Thomason dated January 16, 1911; that they acquired the same for value without notice; and that they were innocent purchasers thereof.

The case was tried before a jury and submitted upon special issues. The issues and the jury’s answers thereto are as follows:

“No. 1. Did the defendant G. J. Thomason by means of fraudulent representations induce the plaintiffs to execute and deliver the written mineral contract which was offered in evidence in this case, as alleged by the plaintiff? Answer ‘Yes’ or ‘No.’ Answer: Yes.
“No. 2. If you have answered the foregoing question in the affirmative, and only in that event, then answer the following question: Did the plaintiffs file this suit within two years after discovering such fraud, if any was committed, or within two years after they could have discovered said fraud, if any was committed, by the exercise of reasonable diligence. Answer: Yes.
“No. 3. Did the defendant G. J. Thomason pay a valuable consideration, either directly or indirectly, for the mineral contract in controversy? Answer ‘Yes’ or ‘No.’ Answer: No.
“No. 4. Did the defendant G. J. Thomason or interveners G. W. Thomason and Y. L. Thomason, or either of them, commence operation for either the drilling of a well for coal, oil, gas, or other minerals within 15 months from the 2d day of May, 1910, and prosecute the same with due diligence on the plaintiffs’ land, or on any land on which the said G. J. Thomason had a mineral contract? Answer ‘Yes’ or ‘No.’ Answer: No.
“No. 5. Did the defendant G. J. Thomason or the interveners pay to the plaintiffs 10 per cent, of the par value of the stock held by the plaintiffs in the Diamond Coal, Oil & Gas Company, either in money or in the stock of said Company? Answer ‘Yes’ or ‘No.’ Answer: No.
“No. 6. Did the defendant or the interveners complete a well or open up a mine, gas or oil well, either on the plaintiffs’ land or on any land on which the defendant or the interveners held a mineral contract? Answer ‘Yes’ or ‘No.’ Answer: No.
“No. 7. Was any part of the land described in the plaintiffs’ petition the homestead of the plaintiffs on the 2d day of May, A. D. 1910? Answer ‘Yes’ or ‘No.’ Answer: Yes.
“No. 8. Did the ' defendant and the inter-veners abandon the mineral contract in controversy? Answer ‘Yes’ or ‘No.’ Answer: Yes.
“No. 9. Did the defendant G. J. Thomason and the interveners abandon the rights, if any they had, to the land in, controversy? Answer ‘Yes’ or ‘No.’ Answer: Yes.
“No. 10. Did the intervener G. W. Thoma-son in January, 1911, purchase from G. J. Thomason one-third of the minerals described in said mineral contract which is in controversy, | without notice pf the claims of the plaintiffs in this case, and did he pay the said G. J. Thoma-son a valuable consideration for the same at the time? Answer ‘Yes’ or ‘No.’ Answer: No.
“No. 11. Did Y. L. Thomason in January, 1911, purchase from G. J. Thomason one-third of the minerals described in the mineral contract in controversy without notice of the claims of the plaintiffs in this- case, and did he pay the said G. J. Thomason a valuable consideration for the same at the time? Answer ‘Yes’ or ‘No.’ Answer: No.
“Special issue No. 1 requested by defendant: Could coal have been mined and marketed from any of the lands upon which leases were owned by the defendant or interveners at a profit from the fall of 1910 down to May 15, 1917? Answer ‘Yes’ or ‘No.’ Answer: Yes.
“No. 2 requested by defendant: Did defendant and interveners, on account of not having transportation and other facilities for operating for coal, await or defer further developments and operations for coal until such time as they could develop and produce the coal at a profit? Answer ‘Yes’ or ‘No.’ Answer: No.”

Defendant requested and the court gave two special charges which read:

“Gentlemen of the jury, you are charged that no oral statement, representation, or promise, if any, not included in and shown by the written conveyance of May 2, 1910, to defendant, is to be considered by you further for any purpose, and unless you find and believe from the evidence that such oral statement, representation, or promise was false at that time and was made by the defendant with the fraudulent purpose and d.esign of defendant to impose upon and defraud plaintiffs, and that but for such false and fraudulent statement, representation or promise, if any, plaintiffs would not have executed said conveyance of May 2, 1910.”
“Gentlemen of the jury, you are charged that, when an agreement in writing is executed by the parties to it, and is delivered, all prior negotiations and talk between them in the premises become either abandoned or waived or merged into such written instrument, and thereafter the terms or legal effect of such instrument cannot be changed or altered by oral testimony. Accordingly the written conveyance of March 2, 1910, from plaintiffs to defendant speaks the entire contract between the parties, and nothing can be added thereto or subtracted therefrom by oral testimony of any person. •And unless you find and believe from a fair preponderance of the evidence in this case that such written conveyance was obtained of plaintiffs through fraud of defendant, himself or fraud legally and fairly attributable and chargeable to defendant, you will consider and hear said conveyance or written instrument of May 2, 1910, as constituting the entire contract between plaintiffs and defendant.”

Upon the answers returned by the jury judgment was rendered in favor of Hawley and wife. The defendant and interveners appeal.

Opinion.

Error is assigned to the form of the submission of issue No. 1 upon two grounds, substantially as follows: (1) In failing to properly instruct tbe jury as to tbe essential elements of “fraud” and “fraudulent representations” as presented by tbe pleadings and tbe evidence. (2) In referring tbe jury to tbe pleadings for tbe issues of fraud instead of a specific submission of sucb issues raised, by tbe pleadings and evidence.

As to tbe first objection, tbis was a matter of omission to supply wbicb a proper instruction should have been requested. Tbe court gave tbe two charges above quoted at tbe request of defendant wbicb related to tbis matter, and it cannot be complained that such charges are not correct or sufficiently full.

As to tbe second objection tbe courts have often condemned tbe practice of referring tbe jury to tbe pleadings for the issues submitted. But it is uniformly held that sucb a submission is not reversible unless it is apparent that tbe jury bas been thereby misled. The evidence of fraud upon tbe part of G. J. Thomason in procuring tbe contract from Hawley and wife is plain and well-nigh conclusive. We are of tbe opinion that under tbe facts reflected by tbis record and in view of tbe special charges above quoted the jury could not have been misled by tbe form in wbicb the issue of fraud was submitted, and that tbe matter presents no reversible error.

As to the assignment complaining of the refusal of a peremptory instruction tbis is without merit. Tbe evidence abundantly raises tbe issue of fraud practiced in procuring tbe contract. It also raises an issue as to the diligence of plaintiffs in discovering the fraud so as to relieve them of being barred by limitation. And upon tbe whole record we bold that the issue of abandonment is also raised by tbe evidence. Whether or not tbe interveners were innocent purchasers for value is also raised by tbe evidence. These considerations alone required tbe refusal of tbe requested peremptory instruction.

The court instructed tbe jury that tbe burden of proving the affirmative of issues 10 and 11 rested upon interveners.

Interveners also requested two special charges as follows.:

“No. 2. The burden of proof as between tbe plaintiffs and the interveners is upon tbe plaintiffs to prove by a preponderance of the testimony that at the time interveners purchased from the defendant, if they did so purchase, an interest in the minerals in and under the lands described in plaintiffs’ petition,. they had notice or knowledge of the alleged fraud, if any you find there was, practiced upon the plaintiffs. And in this connection - you are charged that the interveners had the right to rely upon the recitations in the conveyance from plaintiffs to defendant of May 2, 1910, and to assume that they were true.
“No. 3. Under the pleadings and the undisputed facts in this case, the law will presume that the interveners (if they bought from defendant a two-thirds interest in the minerals conveyed to defendant by plaintiffs by the written instrument of May 2, 1910) bought such minerals in good faith and without knowledge or notice of the claims of fraud now here made in this case by plaintiffs. The burden of showing otherwise is on plaintiffs in order to defeat the claims of interveners as innocent purchasers for value.”

Error is assigned to tbe charge given up on the burden of proof and to tbe refusal of tbe requested charges.

Tbe point made is that interveners by the conveyance from G. J. Thomason acquired tbe legal title to two-tbirds of tbe mineral interest, and therefore tbe burden rested upon tbe plaintiffs to show that interveners acquired tbis title with notice of tbe equitable right of the plaintiffs to rescind on account of tbe fraud practiced upon them.

The rule involved has been thus stated:

“Where the subsequent purchaser gets the legal title, and another party, holding an equitable title, seeks to oust him, the burden of proof rests on the holder of such equity to show that the subsequent purchaser had notice, actual or constructive, of bis equitable title, or such facts as would put a prudent man on inquiry.” Peterson v. McCauley (Tex. Civ. App.) 25 S. W. 829, and cases cited.

In so far as tbe main charge is concerned, tbe matter presents no error, because no objection thereto was made in tbe court below.

The general rule as to the burden of proof is that it rests upon tbe junior vendee to show that be purchased for value and without notice, but this rule is subject to tbe exception indicated in Peterson v. Mc-Cauley. The requested charges did not correctly state tbe exception, because they ignored the question of constructive notice of tbe equitable right of plaintiffs or sucb facts as would put a prudent man upon inquiry. As drawn, they, in effect, required plaintiffs to show actual notice, and imposed a greater burden than tbe law required.

Tbe requested charges are also otherwise objectionable.

There is no merit in tbe contention that tbe judgment rendered in Ham v. Thom-ason is res adjudicata of the present suit, because these plaintiffs were not parties to that suit.

It was not necessary for the plaintiffs to offer to return tbe stock received by them in tbe Diamond Coal, Oil & Gas Company. Thomason’s own testimony shows that tbis $700,000 corporation, organized under tbe laws of Arizona, has not now, and never bas bad, any assets whatever. It bas never owned a dollar in money or property. Its stock is utterly and wholly worthless. The return thereof was not necessary to tbe right of rescission. Thomason v. McEntire (Tex. Civ. App.) 233 S. W. 617.

The view that the evidence supports the findings upon the issues of fraud, diligence in discovering same, abandonment, and the status of interveners as not being innocent purchasers for value renders unimportant many questions presented so ably by appellants’ distinguished counsel relating to the nature of the contract and the rights acquired thereunder by G. J. Thomason. Such questions are important only if rescission of the contract be denied the plaintiffs.

All assignments and questions presented and not specifically referred to have been considered and are overruled as without intrinsic merit, or, in any event, as not being of a reversible nature.

Affirmed. 
      <&wkey;>For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes
     
      ,<g=»For other oases see same topic and KEY-NUMBER In all Key-Numbered Digests and Indexes