Case Name: AMERICAN GUARANTY CO. v. SUNSET REALTY & PLANTING CO., Inc., et al.
Court: Louisiana Supreme Court
Jurisdiction: Louisiana
Decision Date: 1944-11-06
Citations: 23 So. 2d 409
Docket Number: Nos. 37350, 37351
Parties: AMERICAN GUARANTY CO. v. SUNSET REALTY & PLANTING CO., Inc., et al.
Judges: O’NIELL, C, J., recused.
Reporter: Southern Reporter, Second Series
Volume: 23
Pages: 409–469

Head Matter:
208 La. 772
AMERICAN GUARANTY CO. v. SUNSET REALTY & PLANTING CO., Inc., et al.
Nos. 37350, 37351.
Supreme Court of Louisiana.
Nov. 6, 1944.
On Rehearing May 2, 1945.
Second Rehearing Denied June 29, 1945.
Ellis, Barranger & Suthon, of New Orleans, Frank B. Ellis, of Baton Rouge, Frank H. Langridge, of Gretna, and Charles D. Lancaster, of New Orleans, for plaintiff-appellant.
Milling, Godchaux, Saal & Milling, Chas. H. Blish, Roberts C. Milling, and M. Truman Woodward, Jr., all of New Orleans, Herold, Cousin & Herold and Sumter P. Cousin, all of Shreveport, and Du-four, St. Paul & Levy, John St. Paul, Jr., and Montgomery, Montgomery & Fen-ner, all of New Orleans, for defendant-appellee.

Opinion:
PONDER, Justice.
The plaintiff, the American Guaranty Company, brought two suits to set aside two quitclaim deeds on the grounds that they had been obtained through fraud. The two suits were consolidated in the lower court for trial, and separate judgments were rendered by the trial judge, rejecting the plaintiff's demands. The plaintiff has appealed. The cases were consolidated for hearing on the appeal with the understanding that separate judgments would be rendered.
The two consolidated suits involved herein bear Nos. 37,350 and 37,351 of the docket of this Court, and we shall hereafter refer to these suits as Suit No. 37,350 and Suit No. 37,351 for brevity.
Suit No. 37,350 was brought against C. B. Small, Sunset Realty & Planting Company, Inc., the Texas Company and Hibernia Bank & Trust Company, in Liquidation, to set aside a quitclaim deed executed on November 15, 1939, by the plaintiff in favor of C. B. Small, covering Lot 53 and Lots 104 to 119, inclusive, of Sub-District No. 1 of the Sunset Drainage District in St Charles Parish. The consideration recited in the quitclaim deed was $5,000 cash and $47,000 to be paid the plaintiff out of one-forty-eighth of the first oil, gas or other production from the property.
Suit No. 37,351 was brought against the same defendants and others, who had 'acquired rights from these defendants, to sét aside a quitclaim deed executed on November 15, 1939, by the plaintiff in favor of C. B. Small, covering Lots 34 to 52, inclusive, and Lots 530 to 533, inclusive, in the Sunset Drainage District No. 1. This deed contains a general or omnibus clause whereby the plaintiff released and quitclaimed all of its rights, title and claims to all the property acquired by the plaintiff from C. J. Sorrells in a certain deed of August 8, 1921. The consideration recited in this quitclaim deed was $2,000 cash and the payment of a royalty to the plaintiff equal to one-two-hundredths (booths) of the whole of the oil, gas or other minerals produced from Lots 34 to 52, inclusive, and Lots 530 to 533, inclusive. For the sake of brevity and certainty, we shall hereafter refer to the general or omnibus clause contained in this quitclaim deed as the omnibus clause.
The plaintiff contends that C. B. Small, acting for 'himself and the other defendants, fraudulently obtained the quitclaim deeds by misrepresentation and suppression of the true facts in that:
1. Defendant C. B. Small advised plaintiff that the well known as LL&E# 1 in the Paradis area was a gas well producing some condensate or distillate, when in truth and in fact said well was an oil well, and represented further that the properties covered by the quitclaim deed were capable of producing only gas when defendants knew said properties were bound to produce great quantities of oil.
2. Defendant C. B. Small represented to plaintiff that Sunset Realty & Planting Company, Inc., had a good and paramount title to the property described above, whereas in truth and in fact said Sunset Realty & Planting Company, Inc., had no title whatever to part of said property and a doubtful claim on the remainder.
3. On the day following the execution of the quitclaim deeds, the defendant C. B. Small substituted a redrafted copy in place of one of the original quitclaim deeds, wherein the omnibus clause was surreptitiously inserted without the knowledge of the plaintiff.
The defendants take the position that the well was in fact a gas well producing some condensate and distillate, and that at the time the representations were made, the defendants nor anyone else knew that the area covered by the quitclaim deed would produce oil in paying quantities. The defendants admit that Small represented to the plaintiff that the Sunset Realty & Planting Company, Inc., had a paramount title to some of the properties described in the quitclaim deeds and assert that the representation is true. The defendants also admit that Small requested the officials of the plaintiff company to sign another quitclaim deed on November 16, 1939, similar in verbiage and import to the quitclaim deed of November 15, 1939, in order to correct the spelling of Small's name and change the attestation of the secretary of the company, but assert that in all other respects the instrument was neither changed nor altered.
On October 6, 1938, the Sunset Realty & Planting Company, Inc., hereinafter referred to as Sunset, granted to the Texas. Company a mineral lease on a large tract of land which it owned in St. Charles-Parish. A part of this leased property is-involved in these suits. At the time the mineral lease was granted, the Texas Company held mineral leases on adjoining lands,, particularly those of the Louisiana Land & Exploration Company, lying across the Southern Pacific Railway right-of-way from the Sunset acreage. The Texas Company began drilling operations in November, 1938, on the lands of the Louisiana Land & Exploration Company near the Southern Pacific right-of-way and some eight hundred feet from the Sunset property. The well was completed in the month of June, 1939, as a gas distillate well or, in other words, as a well producing gas and distillate. This well will hereinafter be-referred to as LL&E#1.
Prior to the completion of this well, C. B. Small contacted the officers of Sunset,, who were also the officials of the State Banking Department engaged in liquidating, the Hibernia Bank & Trust Company, which owned an interest in Sunset as well as a large mortgage indebtedness against it, with the view of purchasing royalty interests. In examining Sunset's title to the property, Small's attorney discovered in the records of St. Charles Parish a deed dated August 8, 1921, whereby C. J. Sor-rells had conveyed the lands to the American Guaranty Company.^ The attorney informed Small that this deed had the effect of casting a cloud upon Sunset's title to these lands. Small purchased the royalty interest from Sunset with the understanding that a slander of title suit would be brought against the plaintiff company, the American Guaranty Company, for the purpose of removing the cloud. Pursuant to this agreement or understanding, deeds were executed by Sunset conveying the royalty interest to Small and placed in escrow pending the determination of the slander of title suit. Sunset brought the suit against the plaintiff in conformity with the agreement. While this suit was pending, Small endeavored to locate the plaintiff company. On being informed that the plaintiff was a Delaware corporation, Small found, after investigation, that the company had been inactive for approximately sixteen years, and its last known president was Mr. C. I. Link of Denver, Colorado. He also found that the plaintiff was in arrears in the payment of its franchise tax, and it would be necessary to have the company reinstated before it would have any authority to act. He immediately contacted Mr. C. I. Link with the view of acquiring a quitclaim deed from the plaintiff on lots 53 and 104 to 119, inclusive. After negotiations with Link, an agreement was entered into whereby Small was to pay all the expenses for having the plaintiff corporation reinstated with the understanding that the plaintiff for a recited consideration would execute a quitclaim deed to Small covering these lots. The negotiations between Link and Small continued for some three months and finally terminated in the execution of the two quitclaim deeds involved in these suits.
While the negotiations were in progress and prior to the execution of the quitclaim deeds, the Texas Company began drilling operations of another well on the lands of the Louisiana Land and Exploration Company, more than one and one-fourth miles from the Sunset acreage. In the latter part of October, 1939, the well was cored and showed an oil sand. The well was brought in as a producing oil well on November 26, 1939, after the execution of the quitclaim deeds.
A short time after the execution of the quitclaim deeds, Tom L. Sessions and other parties contacted the plaintiff with the view of setting aside the quitclaim deeds and acquiring a mineral lease and royalty interests. The plaintiff and these parties entered into an agreement whereby Link was paid $10,000; a mineral lease was executed to Sessions; and certain mineral rights were transferred. In this agreement, Sessions was to pay the expenses of all litigation necessary to cancel the quitclaim deeds, and the attorneys selected by him were to receive certain interests in the property and the royalties for their services. It is specifically provided in the agreement and the other instruments executed in furtherance thereof that the plaintiff does not warrant the title to the land.
Thereafter, these suits were brought. At the time these suits were filed, the property had become a part of a proven oil field.
The plaintiff contends that it was misled in executing the quitclaim deeds by Small's fraudulent misrepresentations and suppression of facts in the negotiations leading up to the execution of the quitclaim deeds.
The pertinent correspondence leading up to the execution of the quitclaim deeds is as follows:
"Shreveport, La.
"August 22, 1939
"Mr. Chas. I. Link
"Interstate Trust Bid.
"Denver, Colorado
"Dear Mr. Link:
"Since returning to Shreveport, I have been doing some work on the title to property which we discussed on two different occasions and will have some information which I will forward to you within the next few days.
"I hope that you have taken advantage of the time that has elapsed since our conversation and have gotten some information both as to the value and title to the property we discussed.
"I, also, want to thank you for your time and consideration given me while in Denver.
"Very truly yours,
"C. B. Small"
"C. I. Link
"Suite 612-614 Interstate Trust Building "Denver, Colorado
"August 24, 1939
"My dear Mr. Small:
"Yours of the 22nd. received this A.M. and note you are putting some time on arranging the matter you discussed with me on your recent trip here.
"As I stated to you, I hope to be able to cooperate with you in attaining your purpose.
"The Westcoats are on a cruise, my daughter had a letter from them this week dated Halifax, N. S.
"For your information I have before me a statement showing the Am. Guaranty Company spent $23,471.51 on the Paradis property from July 1st, 1921, to Dec. 31st, 1921.
"My plans now are to go to Illinois on business about September 15th.
"Very truly yours,
"(Signed) C. I. Link"
"Shreveport, Louisiana
"August 31, 1939
"Mr. Charles I. Link
"Interstate Trust Building
"Denver, Colorado
"Dear Mr. Link:
"Following my letter to you of August 22nd, I wish to say that I am now in a position to suggest to you the basis upon which I would be willing to acquire whatever claims the American Guaranty Company might have to Lot 53 and Lots 104 to 119, both inclusive, (totaling approximately 180 acres) of the Sunset Drainage District near Paradis in St. Charles Parish, Louisiana, about which you and I had considerable discussion when I was in Denver on the 12th and 14th of August last.
"As you told me you had found your file covering the acquisition by the American Guaranty Company of these and other lots in St. Charles Parish, I take it that you are familiar with the nature of the claim of the American Guaranty Company to these lots, and for that reason will- not discuss this phase of the matter. Besides, I take it further that if you do not have complete information as to the source of your claim of title, that you will prefer to make an independent investigation thereof.
"As stated to you, The Texas Company has drilled a well for oil or gas on the Louisiana Land & Exploration Company property lying to the west of the Southern Pacific Railroad. This well is west and opposite Section 39, and is approximately 6,000 feet from Lot 104 which, together with Lots 104 to 119, inclusive, lie to the southeast thereof, and is approximately the same distance from Lot 53, which lies to the northeast thereof. It is our information that this well was drilled to a depth of over 11,000 feet and was plugged back and completed as a gas well producing some condensate or distillate.
"I think that a trade could be worked out between you and me by which I would purchase all of the rights of the American Guaranty Company to the lots above mentioned for a cash consideration, say $2,000.-00, and I would further agree to pay as a portion of the price therefor $47,000.00, payable out of, and only in such wise, a proportionate part of all of the oil produced from the said lots, say l/48th of all of such production. This purchase, of course, would not be with warranty of title. In other words, if the property produces and either American Guaranty Company or Sunset Realty And Planting Company, Inc., has good title, I would be obligated to pay you, irrespective of whether your title is good, the sum of $47,000.00 payable out of l/48th of the production.
"If, after considering both the nature of your title and the value of the property involved, you should think that we could work out a trade somewhat along the suggestions contained above, I would be glad to meet with you further to see if such can be done. Of course, I would prefer to have the meeting here, and the advantage to you would be that you could more thoroughly have at hand any information you might desire.
"I hope you had a nice visit to Illinois, and that all is well with you.
"Very truly yours,
"C. B. Small"
"C. I. Link
"Suite 612-614 Interstate Trust Building "Denver, Colorado
"September 2nd, 1939
"My dear Mr. Small:
"Will co-operate with you on terms of your letter of August 31st, 1939, with one exception; namely; the cash consideration to be $5,000.00.
"Upon receipt of $1,000.00, to be wired, and to apply on cash account and to be used to defray legal and preliminary expenses will meet you in Cherryvale, Kansas or Tulsa to be decided after conference with Attorney Brady.
"Will give the matter my immediate attention upon -hearing from you.
"I am
"Respectfully yours,
"(Signed) C. I. Link"
"Sept. 25, 1939
"Mr. C. B. Small
"Shreveport, Louisiana
"Dear Mr. Small:
"This letter is written to confirm the oral understanding reached between us today which is as follows to-wit:
"It is your desire to purchase all of the right, title or interest of the American Guaranty Company in and to the following described property:
"All those certain lots hereinafter designated by number shown on the map of the Sunset Drainage District, formerly the St. Charles Municipal Drainage District, being a subdivision of Sections (or portions thereof) 10, 15, 21, 22, 23, 26, 27, 28, 29, 31, 32, 34, 35, 38, 39, 41, 43, 45, 46, 47, Township 14, South, Range 20 East, and Sections (or portions thereof) 3, 4, 5, 6, 9, 10, Township 15, South, Range 20 East as prepared by James S. Webb, Civil Engineer, and duly filed in the conveyance records in book 'N. N.' of St. Charles Parish, Louisiana;
"Following property situated in the Parish of St. Charles, State of Louisiana to-wit: All those certain lots hereinafter designated by number shown on the map of the Sunset Drainage District, formerly the St. Charles Municipal Drainage District.
"Lots 104 to 119 incl. and Lot 53, comprising 180 acres more or less.
"The consideration which you propose to pay to the American Guaranty Company for such interest is $5,000.00 cash with the further agreement that the American Guaranty Company shall receive $47,000.00 payable out of 1/48 of the whole of the oil, gas or other minerals if and when produced, saved and marketed from the above described property, provided that either the title transferred by the American Guaranty Company or the title of the Sunset Realty and Planting Company to the said property is good. This mineral payment shall be a covenant running with the lands and binding upon any future owner of said property. It is agreed that the sale from the American Guaranty Company to you is to be without warranty of title, even as to the return of the purchase price. The $5,000.00 is to be paid the American Guaranty Company upon the producing deed from the American Guaranty Company to yourself valid as to form, accompanied by satisfactory proof of the authority of the officer who might execute the deed on behalf of the American Guaranty Company to act in the premises.
"As president of the American Guaranty Company I favor the proposition that you have made and agree to cooperate to the extent of my ability in having the corporate privileges of the said company restored and in taking such steps it might be necessary to elect a board of directors for the said corporation and to present your proposition to such board of directors to the end of said board authorize me or some other officer of the corporation to make the conveyances to you as above outlined.
"It is my understanding that you will pay the sum of $402.50 to the State of Delaware in order to have the privileges of the American Guaranty Company restored under the laws of that state and you have today paid to myself the sum of $100.00 to cover actual expenses incurred by me in the furtherance of the interests of the American Guaranty Company in the instant trade; you have also paid today the sum of $100.00 to Mr. James A. Brady for legal services rendered by him in furtherance of the interest of the American Guaranty Company. It is agreed by me for and on behalf of the American Guaranty Company that the sum set forth in this paragraph which have been or are to be paid by you shall be deducted from the cash portion of the purchase price of $5,000.00 upon the consummation of the trade.
"This transaction shall be consummated by the delivery of the deed from the American Guaranty Company to yourself accompanied by satisfactory proof of corporate authority of the officer acting for such company to some bank in Shreveport, Louisiana, accompanied by. a sight draft in the amount of $4,397.50 upon the honoring of such draft deed shall be delivered to you.
"Yours truly,
"(Signed) C. I. Link"
The testimony shows that Small first contacted Mr. C. I. Link in July, 1939, with the view of acquiring a quitclaim deed to Lot 53 and Lots 104 to 119, inclusive. From that date until the execution of the quitclaims, Small and Link had several conferences. Link and Small were both represented by able counsel at most of these meetings. In pursuance to these conferences, the corporation was reinstated at Small's expense. The titles to these lots and others were discussed at these conferences. From the testimony, it appears that at these conferences Small made substantially the same representation as to the nature and character of LL&E#1 as he made in his letter of August 31, 1939, viz., "that the well was a gas well producing some condensate or distillate." Small admits that he told Link Sunset had a paramount title to some of the lots listed in the quitclaim deeds, but there is conflict in the testimony as to whether Small informed Link that Sunset had a paramount title to the other lots. For the purpose of this decision, we may assume that Small told Link that Sunset had a paramount title to all the lots described in the quitclaim deeds. As a result of these conferences and the aforementioned correspondence, two quitclaim deeds were finally executed on November 15, 1939. On November 16, 1939, Small presented Link with a quitclaim deed purporting to change some errors made in one of the deeds. This quitclaim deed was signed by the parties and substituted for the original.
The plaintiff contends that Small misrepresented the nature and character of LL&E#1 in that he fraudulently represented it to be a gas well when he, in truth and in fact, knew that it was an oil well.
This well was classified by the Conservation Commission as a gas well and operated by the Texas Company as such. The six expert witnesses who testified in behalf of the defendants classified the well as a gas well, making some condensate or distillate, or as a gas distillate well, which they stated conveyed the same idea. Only one expert witness testified on behalf of the plaintiff on this point. He classified the well as an oil well. However, he admitted that it would be correct to say that the well produced distillate. The trial judge viewed the well during the process of the trial and had it opened in the presence of all counsel and a large number of witnesses. The trial judge states, in his written reasons for judgment, that the well when opened began roaring and blew into the air a substance that looked like a stream of steam or white misty vapor which dampened the foliage underneath as though it had been wet by water. He further states therein that the foliage thereabouts was not discolored, and that he placed a handkerchief in the vapor which became damp, quickly dried out and showed no discoloration whatsoever. There is a pint bottle containing some of the fluid taken from the well in the record. This fluid is transparent . and looks like distillate or an inferior grade of gasoline. In view of the preponderance of the testimony, the experiment made by the trial judge in the presence of the parties at interest and our observation of the fluid contained in the bottle, the conclusion is inescapable that this well produces gas and distillate. Whether it should be characterized as an oil well or a gas well is of no particular moment so long as the actual production from the well was properly represented.
The plaintiff contends that Small and his principals deceived it when they withheld their knowledge that LL&E#2 was certain to be a highly successful oil well.
The plaintiff is under the impression that Small should have divulged all of the technical information respecting LL&E#2 in his or the Texas Company's possession. It is contended that even though Small was not in possession of this information the knowledge of the Texas Company is imputed to him for the reason that Small acted as agent of the Texas Company or as a joint adventurer or as a partner, and that the failure to transmit this information to the plaintiff constitutes fraud. It is argued that when Small transmitted some of the facts concerning the property and its prospects for producing minerals, it was his solemn duty to divulge all of the facts that would tend to show the land was situated in a proven oil field.
At the time Small began negotiating with Link with the view of obtaining a quitclaim, drilling operations were in progress on LL&E#2. This well is approximately one and one-fourth miles from the Sunset acreage. The well was cored after these negotiations had been going on sometime but prior to the execution of the quitclaims. Small testified that he was not in possession of any information tending to show the well would, when completed, be a producing oil well at the time the quitclaims were executed. We find no evidence in the record to the contrary.
The plaintiff takes the position that we should infer that Small was in possession of this information from the fact that the Texas Company contributed some of the funds necessary to perfect Sunset's title to the lands involved herein which were under lease to the Texas Company from Sunset.
We see no necessity to go into this question for the reason that it is immaterial whether Small was in possession of the information or whether he was chargeable with the information in possession of the Texas Company. In either event, there was no obligation on Small's part to transmit this information to the plaintiff since they were dealing at arms' length. We are not presented with a case -of an advantage being taken of an inexperienced person. The record shows that Link has had a wide business experience. He has been president of a number of corporations and is undoubtedly a shrewd business man. If Link did not know the value of the property and the status of the titles, it was his own fault. He had ample opportunity to investigate the titles and the value of the property. The negotiations between him and Small covered a period of approximately four months. Repeatedly, Small suggested to Link, especially in his correspondence, that he make an independent investigation. If he chose to act with his eyes closed, he was at liberty to do so, and there is no reason why he should now complain of a lack of information which he might have readily obtained by investigation.
"If, knowing, or being in a position to know, that the interest of the defendants might have been partially or wholly de-vested by an attachment or an execution against Buck, the bank chose to act with its eyes closed, it was at liberty to do so, but there is no reason why it should now complain of a lack of information which it might readily have obtained if it had kept its eyes open." Exchange Bank v. E. B. Williams & Co., 120 La. 901, 45 So. 935, 942.
It is suggested that Small knew at the time he requested Link to investigate the value of and title to the property that such request was an idle gesture for the reason that Small had knowledge that Link, who had been involved in some litigation in Louisiana, had been advised by his attorney never to return to this State. We are not impressed with the suggestion for the reason that when the case was tried, Link attended the trial and testified in the case. Moreover, Link had the advice of able counsel during the negotiations and there was nothing to prevent him from having some other person investigate the titles and value of the property.
The evidence does not show that Small made any false assertions as to the value of the property included in these suits. Even if he had made false assertions regarding the value of the property, they would not be such an artifice as to invalidate the quitclaim deeds when Link could have, under ordinary attention, detected the falsehoods. In such case, he is supposed to have been influenced more by his own judgment than by the false assertions. Article 1847, Revised Civil Code.
"As to the alleged fraud on the part of the bank and its agents in reference to the value and worth of the land, and the uses to which it had been and might be put, these are not such misrepresentations as to cause the contract of sale to be set aside. All of these matters could have been verified by an inspection of the land, which was accessible to the plaintiff at all times." Pike v. Kentwood Bank, 146 La. 704, 83 So. 904, 905.
"It is quite immaterial whether the verbal, written, and pictorial representations first made to plaintiffs were true or false. The) were from the start invited to visit and investigate the lands for themselves, and were definitely told that no land would be sold to any one who had not visited and inspected it for himself and at his own expense. This was distinct warning to plaintiffs that they must rely upon their own judgment alone in any purchase which they might make; " Davitt v. Long-Bell Farm Land Corporation at al., 162 La. 59, 110 So. 88, 89.
" as we have pointed out, the property which was the object of the contract which is now attacked was of such a nature and in such a situation that Ralph Fichet, 'with ordinary attention', — as the 3rd rule in article 1847 of the Civil Code puts it, — might have known as much about the value of the property as John Grivaud knew." Succession of Grivaud, 192 La. 181, 187 So. 284, 288.
"It is declared in the third paragraph of article 1847 of the Civil Code that a false statement made by a party to a contract of sale, as to the value of the object of the sale, is not such a fraud, 'such an artifice', as will give to the other party the right to annul the sale, if the object was of such a nature and in such a situation that he who was induced by the false statement to enter into the contract 'might with ordinary attention have detected the falsehood.' Therefore, if the statement in the circular letter which induced the plaintiff to sell her shares of stock for $50 per share, that the listing of the stock would be reduced to $38 on the nineteenth day after the date of the circular letter, should be regarded as a false statement, it was not a false statement of which the plaintiff may complain, because 'with ordinary attention' she could have learned all that any one else could know about the value of her shares of stock." Wessel v. Union Savings & Loan Ass'n, 198 La. 219, 3 So.2d 594, 598.
The record shows that during the negotiations between Link and Small, up to the date of the execution of the quitclaims, there was no operation on or production of minerals from the lands in these suits. The fact that there was a gas and distillate well on an adjacent tract of land and another well being drilled some distance from the land involved herein, showing prospects of being a successful oil well, would not show with any degree of certainty that the lands involved in these suits would produce oil if drilled. It was at that time uncertain and speculative as to whether or not oil could be produced from the lands involved in these suits. Even though the technical information regarding LL&E #2 might have indicated that there was oil under these lands, there would have been no absolute certainty that these lands would produce oil until drilled. The values of the lands involved herein, as well as the probability of their producing oil, would be a matter of opinion based on information, technical or otherwise.
"The uniform jurisprudence of this court is that error as to the value of land, which is the object of the contract, is. not error of fact, but error of judgment, for which the law furnishes no relief, since the value of the land could have been verified by inspection. Davitt v. Long-Bell Farm Land Corp. et al., 162 La. 59, 110 So. 88; Citizens' Bank of Louisiana v. James, 26 La. Ann. 264; Kirkland v. Edenborn, 140 La. 669, 73 So. 719." Davis v. Lacaze, 181 La. 75, 158 So. 626, 627.
"Error is said to be the greatest defect that can occur in a contract, but the error must be in respect to the object of the agreement, the identity or quality of the subject. Pothier, p. 10. 'That is called error of fact which proceeds either from ignorance of that which really exists, or from a mistaken belief in the existence of that which has none.' C. C. 1821. Now the defendant was not in error as to the existence of the thing which was the subject of his agreement with the bank, or its identity or quality. His error as to the value of the property which he agreed to buy was not error of fact, but, if it existed, error of judgment. This is an error for which the law furnishes no relief." Citizens' Bank of Louisiana v. James, 26 La.Ann. 264.
"The law does not hold one responsible for the extravagant notions he may entertain of the value of property, dependent upon its future successful exploitation, or the result of future enterprises; nor for expressing them to one acquainted with its general character and condition. How could an overestimate in such a case be shown? Other estimates would be equally conjectural. The law does not fasten responsibility upon one for expressions of opinion as to matters in their nature contingent and uncertain. Such opinions will probably be as variant as the individuals who give them utterance. A statement of an opinion assigning a certain value to property like a mine or a quarry not yet opened is not to be pronounced fraudulent because the property upon subsequent development may prove to be worthless; nor is it to be pronounced honest because the property may turn out of much higher value." Gordon v. Butler, 105 U.S. 553, 557, 26 L.Ed. 1166.
The U. S. Supreme Court in the case of Southern Development Company v. Silva, 125 U.S. 247, 8 S.Ct. 881, 883, 31 L.Ed. 678, quoted the following pertinent statement from Tuck v. Downing, 76 Ill. 71, 94:
"No man, however scientific he may be, could certainly state how a mine, with the most flattering outcrop or blow-out, will finally turn out. It is to be fully tested and worked by men of skill and judgment. Mines are not purchased and sold on a warranty, but on the prospect. 'The sight' determines the purchase. If very flattering, a party is willing to pay largely for the chance. There is no other sensible or known mode of selling this kind of property. It is, in the nature of the thing, utterly speculative and every one knows the business is of the most fluctuating and hazardous character. How many mines have not sustained the hopes created by their outcrop ?" Also see: Shappirio v. Goldberg, 192 U.S. 232, 24 S.Ct. 259, 48 L.Ed. 419; Roosevelt v. Missouri State Life Ins. Co., 8 Cir., 78 F.2d 752; Phillips Petroleum Co. v. Rau Const. Co., 8 Cir., 130 F.2d 499; Rau Const. Co. v. Phillips Petroleum Co., 317 U.S. 685, 63 S.Ct. 260, 87 L.Ed. 549; Id., 317 U.S. 713, 63 S.Ct. 434, 87 L.Ed. 567.
Moreover, the written instruments, the correspondence between the parties and the quitclaims show that the parties contemplated that oil might be produced from the property. In Small's letter to Link of August 31, 1939, written sometime before the execution of the quitclaims, he stated that he would be willing to pay as a portion of the price $47,000 out of a proportionate part of the oil produced from the property. It is to be noted that this payment was to be made out of oil not gas. The quitclaim executed in pursuance to this letter provided for this amount to be paid out of a proportionate part of the first oil, gas or other production that might be had from the property. In the other quitclaim, the plaintiff was to be paid a royalty equal to l/200ths of the oil, gas or minerals produced from certain property. These declarations and actions on the part of the parties show, in our opinion, that the parties evidently contemplated that the property had a potential value for oil purposes. The fact that the plaintiff company had information that gas and distillate were being produced near the property was sufficient to put it on guard and prompt it to investigate, if it saw fit to do so, for the reason that gas and oil are usually found in close proximity. Phillips Pipe Line Company v. United States, 40 F.Supp. 981, 94 Ct.Cl. 462, certiorari refused, 316 U.S. 679, 62 S.Ct. 1104, 86 L.Ed. 1753.
In support of his contention the plaintiff relies on the cases of Hossier Realty Co. v. Caddo Cotton Oil Co., 136 La. 328, 67 So. 20; Roby Motors Co. v. Price, La.App., 173 So. 793; Markey v. Hibernia Homestead Ass'n, La.App., 186 So. 757; and Smith v. Richards, 13 Pet. 26, 10 L.Ed. 42. These cases are not applicable to the present controversies.
In the case of Hossier Realty Co. v. Caddo Cotton Oil Co., supra, the vendor sold a quantity of cotton seed out of a certain mass of seed contained in a house on a plantation. At the time the seed were sold, the vendor knew that 50% of the seed were rotten but concealed this fact from the purchaser and made statements which induced him to buy the seed for a sound price without previous inspection. It was held that the transaction was fraudulent. The court was of the opinion that the seed could not have been conveniently inspected because they were not segregated from the other seed in the house, and that the sale was of a thing indeterminate in itself.
The case of Roby Motors Co. v. Price, supra, involved a rehibitory vice in an automobile.
In the case of Markey v. Hibernia Homestead Ass'n, supra, there existed a quasi fiduciary relationship between the parties. No such relationship exists between the parties to this suit.
In the case of Smith v. Richards, supra, a person was induced to purchase a tract of land through the fraudulent representation that there was a gold mine located thereon, having a vein of unusual value, which made it one of the richest tracts in the United States. The seller actually presented fraudulent specimens of ore purporting to come from the mine. The fraudulent representations were representations of fact and not of opinion.
The Supreme Court of the United States stated in a more recent case, "the law does not fasten responsibility upon one for expressions of opinion as to matters in their nature contingent and uncertain." See, Gordon v. Butler, supra, and the quotation heretofore set out in this opinion.
From our appreciation of the evidence in this case, Small and Link were dealing on equal terms and at arms' length. Link had ample opportunity, if he had exercised ordinary attention, to have investigated the property and surrounding area in order to inform himself of the prospective value of the property from an oil standpoint. There was no obligation on Small's part to transmit the technical information concerning LL&E#2. The evidence does not show that Small misrepresented the nature and character of LL&E#1. There was no production on the lands involved in these suits, and any expression made by Small that might be construed to indicate that the lands involved in these suits were or were not valuable from an oil standpoint was merely an opinion. The expression of an opinion relative to the value of the lands is an error from which the law furnishes no relief.
The plaintiff contends that it was induced to execute the quitclaim deeds by Small's representation that Sunset had a good and paramount title to the property when in truth and in fact Sunset had no title whatever to part of the property and a doubtful claim to the remainder.
From our examination of the record, we find that the titles to this property are considerably involved and will require a petitory action to determine whether or not Sunset had a superior title to the property prior to the execution of the quitclaim deeds. No purpose could be gained by a detailed discussion of the various muni-ments of title for the reason that the sole object of these suits is to set aside the quitclaim deeds. There is a petitory action now pending in the lower court between the parties to these suits.
The lower court in its written reasons for judgment in these cases went into a lengthy discussion of the various muni-ments of title and arrived at the conclusion that Sunset had a paramount title to the property prior to the execution of the quitclaim deeds. We do not believe that we would be warranted in passing on the titles in a suit of this nature. Such a question should be determined in a petitory action. It is only necessary for us to examine the various instruments introduced in evidence in order to ascertain whether or not Small procured the quitclaim deeds through fraudulent representations.
Mr. Charles I. Link testified that Small first approached him in Denver, Colorado, sometime during the latter part of July or the early part of August, 1939, with the view of acquiring a quitclaim on the 180 acres of land described in the first quitclaim deed. He stated that Small informed him that he was a royalty buyer interested in buying gas, oil and mineral rights and royalties; that he had contracted to buy a block of royalties from Sunset and that in this block of land was a piece of property which had formerly been in the name of the plaintiff; that in going over the records, he had found that the plaintiff had no claim on the property; that he examined the records carefully and found that no taxes had been paid; that there was a valid title issued to Sunset; that Small stated that his legal advisers in going over the abstracts had pointed out a defect in the tract of land covering 180 acres; that his, Small's, attorney advised Small to correct the error if possible; and that he visited Link for that purpose.
Mr. Link further stated that he was willing at that time to assist Small in any manner he could to clear the titles and offered to give him a quitclaim deed to the property. He testified that Small informed him that he would like to bring his attorney to see him.
Some two weeks thereafter, Small and his attorney contacted Link with reference to securing the quitclaim. From Link's testimony, it appears that no agreement was entered into at this meeting. Link stated that Small's attorney inquired as to whether Link had been informed with respect to a suit brought in Louisiana by Sunset against the plaintiff for the purpose of removing a cloud from the titles to lots 34 to 52, inclusive, and lots 530 to 533, inclusive. The record indicates that this was the first information Link had that such a suit was pending. Service had not been made on him at this time. Link stated that he again offered to give Small a quitclaim at this meeting, and Small's attorney informed him that they expected to pay Link for any trouble he might undergo.
Link's testimony discloses that Small's attorney informed him that within a short time a proposition would be formulated and submitted to him and something might be worked out of the production of the land.
During the month of October, 1939, Small had a conference with Link in Chicago, Illinois to discuss matters pertaining to the quitclaim deed to the 180 acres of land. At this meeting, the details of reinstating the plaintiff corporation were discussed. Link stated that Small told him at that time he thought he could get him $1,-500 on the 440 acres involved in the jacti-tation suit whereupon he informed Small he was not interested in the proposition.
Small's letters of August 22 and 31, 1939, to Mr. Link, heretofore set forth, written during the course of these negotiations, requested Link to make an independent investigation of the titles.
Our appreciation of Link's version of what transpired at these various conferences and the letters requesting Link to make an independent investigation of the titles leads us to the conclusion that the plaintiff and its officers were distinctly warned that they must rely on their own judgment as to the strength of American Guaranty Company's titles.
The facts that Small refused to accept a gratuitous quitclaim and subsequently, in his letter of August 31, 1939, offered to give a consideration of $2,000 and $47,000 out of l/48th of the production are additional reasons why the plaintiff should have been on its guard.
While these negotiations were pending, Small took the necessary steps, at his own expense, to have the plaintiff company reinstated. Link actively aided him in this respect.
It would appear to us that Link should have been impressed that the plaintiff had a muniment of title that cast a serious cloud on Sunset's title when he observed all the trouble and expense incurred by Small in addition to his offering a valuable consideration for the quitclaim.
Link, in his testimony, stated that his first knowledge of the existence of C. B. Small was on the date of his first meeting with him during the latter part of July or the early part of August, 1939. In fact, prior to that time Small and Link had been complete strangers to each other. It does not seem reasonable that Link would have agreed to part with the property of the plaintiff because of representations made by Small, a complete stranger, respecting title to the property.
Under the circumstances in this case, the conclusion is inescapable that the plaintiff had sufficient warning to place it on guard and to cause it to make an investigation of the titles. It had the same opportunity as the defendants to examine the records or have them examined. It cannot be relieved of its carelessness and neglect in failing to do so.
Link was a. man of wide business experience and was and had been president of numerous corporations. The record shows that Link was attended by his attorney at some of the conferences held with Small with respect to securing the quitclaim. Consequently, we are not presented with a case of an ignorant or inexperienced man having an advantage taken of him.
Moreover, the representations complained of are nothing more than Small's expressions of an opinion which he had formed after examining the records.
As to whether or not the taxes had been paid prior to the tax sale, there is considerable evidence in the record going to show that they had not been paid. However, there had been an entry on the tax collector's books indicating a payment of the taxes which had been erased. There is a letter in the records from the sheriff and tax collector to the Supervisor of Public Accounts stating that the taxes were not paid. Without passing on this question, it is sufficient to say that there were reasonable grounds for Small to believe that the taxes had not been paid by the plaintiff.
There appears to have been no misrepresentation of any fact relied on to sustain the titles of either party. Where a matter of judgment may be exercised, neither party can claim to have been influenced by the other, and no deduction of fraud can be drawn. When a person has sufficient grounds to believe that a title is paramount, he certainly has a right to assert its superiority until the matter is determined by a court of competent jurisdiction.
From our investigation of the authorities of this State as well as those of other states, no deduction of fraud can be drawn from a representation of this nature based on reasonable grounds, provided there is no misrepresentation of the facts relied on to sustain the titles. See: Saltonstall and Wife v. Gordon, 33 Ala. 149; National Park Bank v. Louisville & N. R. Co., 199 Ala. 192, 74 So. 69; Robins v. Hope, 57 Cal. 493, overruled by Seeger v. Odell, 18 Cal.2d 409, 115 P.2d 977, 136 A.L.R. 1291; Rogers v. Warden, 20 Cal.2d 286, 125 P.2d 7; Grill v. Driad Const. Corporation, Sup., 34 N.Y. S.2d 593; Hawkins v. Wells, 17 Tex.Civ.App. 360, 43 S.W. 816; Hoyt v. First Nat. Bank of Chester, W.Va., Tex.Civ.App., 247 S.W. 637; Farrar v. Churchill, 135 U. S. 609, 10 S.Ct. 771, 34 L.Ed. 246; Silbernagel v. Harrell, 18 La.App. 536, 138 So. 713; Breaux-Renoudet Cypress-Lumber Co. v. Shadel, 52 La.Ann. 2094, 28 So. 292; Chachere v. Superior Oil Co,, 192 La. 193, 187 So. 321; White v. Harrigan, 77 Okl. 123, 186 P. 224, 9 A.L.R. 1051; Seeger v. Odell, 18 Cal.2d 409, 115 P.2d 977, 136 A.L.R. 1291.
In Suit No. 37,351 it is contended that Small induced the president and secretary of the plaintiff corporation to sign a quitclaim deed on November 16, 1939, enlarging the contract between the parties by falsely representing that it was executed to correct minor errors appearing in the original contract, a quitclaim executed between the parties on November 15, 1939.
The plaintiff takes the position that the quitclaim deed executed on November 15, 1939, only conveyed to Small plaintiff's interest in Lots 34 to 52, inclusive, and Lots 530 to 533, inclusive, whereas the quitclaim of November 16, 1939 conveyed to Small all the plaintiff's interest in these lots and contains a general omnibus clause transferring all plaintiff's interest in the property acquired by it from C. J. Sorrells under a certain deed dated August 8, 1921.
The controversy is leveled at the general omnibus clause.
The plaintiff points out that the lots described in the original quitclaim deed of November IS, 1939, have an area of 459.78 acres and contends that by Small'.s fraudulent insertion of the omnibus clause, he obtained a quitclaim to an additional 431.70 acres of land. The district court, in its opinion, states that only 231 acres are involved in the omnibus clause. The exact acreage contained in the omnibus clause is of no particular moment, for the reason that the sole question presented to us is whether or not the omnibus clause was fraudulently incorporated in the deed.
We gather from the record that Small had his attorneys in Louisiana prepare for him a quitclaim deed covering the lands involved in the jactitation suit pending in Louisiana, namely, lots 34 to 52, inclusive, and lots 530 to 533, inclusive, before he went to Denver, Colorado on November 10, 1939. A copy of this proposed quitclaim deed is in the record, and it does not contain the omnibus clause or make any reference to any of the property embodied in the omnibus clause.
Sunset, sometime prior thereto, had suggested to Small that he secure a quitclaim on the property involved in the suit and if possible a quitclaim to the remainder of the property owned by the plaintiff in St. Charles Parish.
Small arrived at Denver, Colorado on November 10, 1939 prior to the meetings of the stockholders and Board of Directors of the American Guaranty Company set for November 15, 1939. After all negotiations with respect to a quitclaim to lot 53 and lots 104 to 119, inclusive, which we refer to hereafter as the first quitclaim, had culminated, Small then took up with Link the adjustment of the jactitation suit pending in Louisiana. The parties arrived at an agreement on the night of November 14, 1939.
Charles I. Link, Gordon Link and Mr. Frank E. Weaver testified that the agreement was to the effect that for a consideration of $2,000 and a l/200th royalty, the American Guaranty Company would transfer to Small the lots involved in the suit, but there was no agreement as to the remainder of the property which the American Guaranty Company had acquired from C. J. Sorrells. Mr. Small's testimony is to the effect that the agreement was to quitclaim the lots and the remainder of the property acquired from Sorrells.
Small testified that on the night of November 14th, he contacted Mr. R. C. Stewart of the Texas Company for the purpose of securing authority to pay an additional $500 and a royalty of l/200ths in order to clear title to the acreage covered by the Sunset suit. He had previously been authorized to pay $1,500 to clear this title. On the morning of November 15, 1939, the following telegram was received by Mr. Small:
"Western Union
"RXDA77 51 Ser-Shreveport, La., 15 915 A "1939 No. 15, AM 8 40
"C. B. Small Jr.
"Albany Hotel DVR
"Texas Company will pay five hundred dollars cash and royalty of one two-hundredths in order to clear title to acreage covered by Sunset suit. If this can be worked out suggest that contract be drawn so that Denver people quitclaim all interest they might have in any of Sunset acreage.
"The Texas Company, R. C. Stewart"
On the morning of November 15, 1939, Small telephoned his attorneys in Louisiana and requested them to wire him a purported draft of the quitclaim deed. The purported draft is in the record and does not contain the omnibus clause quitclaiming the remainder of the property acquired from Sorrells.
When the stockholders and Board of Directors of the American Guaranty Company met on the morning of November 15, 1939, the first quitclaim deed was taken up and discussed, and an agreement was reached with respect thereto. The board of directors authorized the president and secretary to sign this quitclaim. After this transaction had terminated, the second quitclaim was discussed. Small left the meeting and sometime thereafter returned to the meeting of the board of directors and presented a quitclaim deed and purported minutes of the board of directors. Small testified that when he left the board of directors' meeting, he had the attorney for the Texas Company prepare these instruments for him. After Small had presented the quitclaim and proposed minutes, there was some discussion regarding the quit claim. Mr. Charles I. Link stated that he did not read the instrument. Mr. C. Gordon Link, son of Mr. Charles I. Link, employed by the Commodity Credit Corporation, Mr. Ernest Lee Williams, a member of the Colorado Bar and former law professor of the University of Colorado, Mr. H. L. Chase, secretary of the American Guaranty Company, and Mr. Frank E. Weaver, building inspector for the city of Hamilton, Ohio and brother-in-law of Mr. Charles I. Link, all present at the meeting of the board of directors of the American Guaranty Company, testified that the purported quitclaim was read, and it covered only the property involved in the suit pending in Louisiana, there being no clause in it conveying the remainder of the property acquired from C. J. Sorrells.
Mr. Ernest Lee Williams, a member of the board of directors, testified that he did not agree to grant the quitclaim deed, which is corroborated by the other testimony in the record, until some provision was made to dismiss the suit in Louisiana. Mr. Small agreed that he and Mr. Williams would draw up an instrument to cure this defect in the quitclaim deed. This instrument was duly prepared and reads as follows :
"Denver, Colorado
"November IS, 1939
"The American Guaranty Company, "C/O C. I. Link
"Gentlemen:
"In consideration of the execution of that certain quit claim deed to lots 34 to 52 and lots 530 to 533, inclusive, in the Sunset Drainage District No. 1, formerly the St. Charles Municipal Drainage District No. 1, at the Parish of St. Charles, State of Louisiana, It is hereby agreed that in consideration of said deed I will have that certain action or suit, wherein the Sunset Realty and Planting Company, Inc. is plaintiff, and American Guaranty Company is defendant and pending in the Twenty-fourth Judicial District Court for the Parish of St. Charles, Louisiana, dismissed as to said American Guaranty Company with prejudice and without cost to the defendant.
"C. B. Small
n n CU v ui J — '. ►UiilLLii "
Thereafter, the board of directors authorized the president and secretary to sign the quitclaim. The transaction was rushed because of the nearness of the bank's closing time and the necessity for notarizing the documents before one of the bank's notaries. The instruments were notarized, and Small gave Link two drafts which were deposited to the account of the American Guaranty Company. The following notation appeared on the check for $2,000:
"Payment quitclaim deed
"Lots 34 to 52, Inch
"Lots 530 to 533, Inch
"Other Property."
Shortly thereafter, Mr. Small boarded the train to return to Louisiana. He testified that immediately after he boarded the train he retired for the night and awoke at about two a. m. feeling that something was wrong. He examined the quitclaim deeds and discovered that in the second quitclaim deed his name was misspelled, Cavill instead of Cavil, and the word "attest" appeared over the signature of the secretary. He stated that he became alarmed and alighted from the train at Des Moines, New Mexico. He employed a garage attendant to drive him back to Denver, some 200 miles, arriving there at or near noon of November 16, 1939. He contacted Mr. Charles I. Link arid requested him and Mr. Chase to meet him for the purpose of correcting the errors in the spelling of his name and deleting the word "attest" from the instrument. He testified that in the meantime he employed a stenographer to recopy the instrument and make the necessary corrections. The instruments were presented to Mr. Link and Mr. Chase who signed them. Mr. Small stated that Mr. Link and Mr. Chase read the documents before they signed them. Mr. Link said that Mr. Chase read the instruments, but that he did not read them. Mr. Chase stated that he did not read the instruments.
Mr. Chase had only recently become connected with the American Guaranty Company. He had been given five shares of stock to qualify him as a member of the board of directors.
Immediately after the substituted quitclaim deed had .been signed, Mr. Small tore up the original quitclaim deed and handed it to the secretary and president who threw it in the waste paper basket.
Mr. Link testified that he did not become aware of the omnibus clause in the quitclaim until sometime after it had been executed and that he had complained to his son, Mr. Williams and others.
The correspondence between Mr. Small and Mr. Charles I. Link thereafter shows that a friendly relationship existed between them, and Mr. Link urged the development of the property.
The omnibus clause complained of in the substituted quitclaim provides as follows:
"For the same Two Thousand Dollar ($2,000.00) consideration hereinabove recited as paid, the said American Guaranty Company releases and quitclaims to said C. B. Small all of its rights, title and claims and pretensions in and to all property acquired by American Guaranty Company from C. J. Sorrell by virtue of that certain deed dated August 8, 1921, in favor of American Guaranty Company executed by said Sorrell and recorded in the Deed records of St. Charles Parish, Louisiana, except the interests reserved by American Guaranty Company in a part of said land in this instrument and in that certain other instrument covering another part of said land bearing even date herewith and by and between the parties hereto. It is understood and agreed, however, that the obligation to pay the one two-hundredths (l/200ths) royalty herein reserved does not attach to and shall not apply to the land released and quitclaimed in this paragraph hereof, said obligation being intended to cover and attach to only the land hereinabove first described."
The attorney for the Texas Company produced a carbon copy of the quitclaim deed and minutes of the board of directors which he drew on November IS, 1939.
The stenographer who retyped the quitclaim deed testified that the only corrections made were the correction of the spelling of Mr. Small's name and the elimination of the word "attest." Mr. Small testified that these were the only changes made.
The minutes of the board of directors in connection with the substituted quitclaim show an additional paragraph which is not contained in the carbon copy of the minutes drafted by the attorney for the Texas Company. The additional paragraph reads as follows:
"Resolved, That the President and the Secretary of this company be and they hereby are authorized and directed to make, execute and deliver to the said Mr. C. B. Small or his nominee, in the name of and in behalf of this company and under its corporate seal, a written instrument covering the transfer of all rights to said tract of land from the American Guaranty Company in and to the name of said Mr. C. B. Small or his nominee and to execute and file any and all other documents necessary to consummate the sale of all right to said tract of land."
The evidence shows, without dispute, that the original quitclaim deed executed on November IS, 1939, was destroyed and a quitclaim deed purporting to correct minor errors was substituted in its place on November 16, 1939. It is conceded that the board of directors did not meet and authorize the substitution. Consequently, the sole question presented is whether the substituted quitclaim complies with the authority granted by the board of directors. Since the quitclaim authorized by the board of directors has been destroyed, parol evidence is admissible to prove its contents. Art. 2279, R.C.C.; Succession of Granger, 155 La. 225, 99 So. 46.
Four members of the board of directors testified positively that the original quitclaim did not contain the omnibus clause and that no authority was given the president and secretary of the American Guaranty Company to execute a quitclaim on the balance of the property acquired from. Sorrells. The only testimony to the contrary is that of Mr. Small. The preponderance of this testimony is to the effect that the original quitclaim did not contain the omnibus clause and no authority was given to execute a quitclaim on the property contained therein.
From our examination of the minutes of the board of directors, we find that the minutes show the nature and details of the transaction touching the first quitclaim deed independently of the copy of the deed embodied therein. There is nothing in the minutes of the board of directors with respect to the second quitclaim deed showing the nature and details of the transaction independently of the copy of the quitclaim deed therein embodied. In other words, the minutes with reference to this second quitclaim are so general that a substitution could have been made and the minutes would have been applicable. The minutes would have been applicable to a quitclaim deed transferring rights to lots 34 to 52, inclusive and lots 530 to 533, inclusive, or equally applicable to a deed quitclaiming these lots and the remainder of the property.
Mr. Small testified that the original quitclaim deed and the minutes of the board of directors were prepared by the Texas Company's attorney. The Texas Company's attorney's testimony is to the effect that he prepared a purported quitclaim deed and purported minutes for Mr. Small on November 15, 1939. He presented a carbon copy of these instruments. However, he was not present at the meeting of the board of directors and was in no position to and did not testify that Mr. Small presented these instruments to the board of directors.
Mr. Small as well as the stenographer, who retyped the instruments on November 16, 1939, testified that no changes were made in the instruments except the spelling of Small's name and the deletion of the word "attest." If that be true, the minutes presented to the board of directors on November 15, 1939, by Mr. Small could not have been the ones prepared by the Texas Company's attorney for the reason that they are not identical and contain a complete paragraph which is not reflected in the copy of the proposed minutes presented by the Texas Company's attorney. We have been given no reasonable explanation of this discrepancy.
The draft of the proposed quitcla;-.i which Small had his attorneys draw for him before he went to Denver, Colorado, on November 10, 1939, does not contain the omnibus clause. The telegram of November 15, 1939, from Mr. R. C. Stewart indicates that the deal was to cover only the lots involved in the litigation. However, he did suggest that Small endeavor to secure a quitclaim on the balance of the property. The proposed draft wired Small by his attorneys on November 15, 1939, in answer to his telephone message of that date shows that the transaction did not cover the property embodied in the omnibus clause.
The instrument drawn by Mr. Small and Mr. Williams on November 15, 1939, which Mr. Williams demanded before he would authorize the execution of the quitclaim, shows that there was no quitclaim to the property set out in the omnibus clause. This instrument is signed by Mr. Small.
The testimony relative to the conferences between Small and Link on the night of November 14, 1939, prior to the execution of the quitclaims shows that Link insisted on a l/100ths royalty but finally agreed on a l/200ths royalty. It is passingly strange that Link would agree to release all royalties on a large tract of land and at the same time insist on a greater royalty interest only on the property in litigation.
The notation on the draft given in payment of the quitclaim indicates that other property was quitclaimed, and the two telegrams sent by Small on the night of November 15, 1939, indicate that the omnibus clause was in the original quitclaim deed-
The preponderance of the testimony as; to what transpired at the meeting of the-board of directors as well as all the other -facts and circumstances surrounding this case leads us to the conclusion that the original quitclaim deed did not contain the omnibus clause. Under such circumstances, we are compelled to eliminate the omnibus clause from the quitclaim deed.
Mr. Small had the plaintiff corporation reinstated. He dealt with it as a corporation. The president and secretary had only such authority to execute a quitclaim as authorized by the board of directors. Authority was given by the board of directors to quitclaim lots 34 to 52, inclusive, and lots 530 to 533, inclusive, but no authority was given to quitclaim the balance of the property acquired from Sorrells as set out in the omnibus clause. The quitclaim is valid insofar as it was authorized. However, the omnibus clause will have to be eliminated because there was no authority given by the board of directors to quitclaim the property described therein. Munn v. Hoyt, 150 La. 729, 91 So. 169.
We are not unaware of the fact that a party who signs an instrument is supposed to know its contents. However, we are not presented with a case of an individual selling his own property. In this case, the president and secretary were quit-claiming the property of the corporation. The party acquiring the quitclaim was cognizant of the authority granted the president and secretary by the board of directors. The meeting of the board of directors was held at his instance, and he was present during the meeting.
The appellant complains of the overruling of its motion for a new trial by the lower court.
The motion for a new trial is predicated on the discovery of evidence touching mu-niments of title and the discovery of evidence tending to show that the defendants knew the property was of great value at the time the quitclaims were being negotiated.
The appellant has consistently contended throughout the trial of this case that the titles were not at issue. If the lower court had not passed on the titles, in all probability the appellant would not have raised this issue. Be that as it may, we have re frained from passing on the muniments of titles for the reason that such should be determined in a petitory action. Consequently the evidence in this respect could serve no purpose. In view of our conclusions that the parties were dealing at arm's length, the defendants' knowledge of the value of the property and any technical knowledge that they might have in their possession would be of no aid.
For the reasons assigned, the judgment of the trial court in Suit #37,350, entitled, "American Guaranty Company v. Sunset Realty and Planting Company, Inc. Et Als," bearing #2779 of the docket of the lower court, is affirmed at appellant's cost.
It is ordered, adjudged and decreed that the judgment in Suit #37,351, entitled, "American Guaranty Company v. Sunset Realty and Planting Company, Inc. Et Als," bearing #2780 of the lower court, is amended so as to decree the quitclaim deed valid insofar as it transfers the plaintiff's rights in lots 34 to 52, inclusive, and lots 530 to 533, inclusive, to the defendant Small and annulled insofar as it seeks to transfer the plaintiff's right in other properties acquired from C. J. Sorrells as set forth in the omnibus clause. As thus amended, the judgment is affirmed. Costs of the appeal to be borne by the appellee. All other costs to be paid by the plaintiff appellant.
O'NIELL, C, J., recused.
HAMITER, J., concurs in part and dissents in part.