Court Opinion

ID: 9827608
Source: CourtListenerOpinion
Date Created: 2023-09-01 17:41:53.041654+00
Date Added: 2024-06-11T07:42:33.744303
License: Public Domain

On Motion for Rehearing. .
In deference to the motion for rehearing of defendants in error, we deem it proper to discuss the evidence introduced to show that the American Company upon the one hand, and the Stewart companies upon the-other, entered into a conspiracy to bring non*553residents into Hidalgo county and sell them lands at inflated prices through false and fraudulent representations. In the original opinion we held that evidence was insufficient to establish the fact of such conspiracy. We adhere to that ruling, and will endeavor to state the substance of the evidence upon that issue.
1. On December 15, 1917, the’American Company entered into a contract with the Land Company to sell to the latter a body of irrigable land in Hidalgo county, aggregating 30,000 acres, which appears to have been -subdivided into small tracts of 40 acres each, or less. It was provided in this contract «that the land should be conveyed by the American Company to the Land Company or its nominees from time to time' as the purchase price was paid or secured to be paid by the Land Company, the first lot, of 2,000 acres, to be paid for $100,000 in cash at the execution of the contract, and $80,000 in cash on or before January 10, 1918, and then conveyed to the Land Company ; and. it was further provided that the remaining 28,000 acres should be taken by the Land Company at the rate of 2,500 acres every 90 days, to be paid for upon the basis of $22.50 cash per acre, and $67.50 per acre in first vendor’s lien notes to be executed by the Land Company or its vendees, to be secured in any event by deeds of trust. All of the land was to be thus taken and paid for on or before December 31,' 1920. The contract provided in detail for the extension over said lands of the American Company’s irrigation system, as well as a system of roads, and for forfeiture of the contract in event of default by the Land Company. The contract was in such form as to apparently enable either party to enforce specific performance against the other. The Land Company deposited with the American Company the sum of $25,000 as “earnest money,” to be forfeited to the latter in event of the former’s default in its obligations. This contract and the acts of the parties done thereunder are relied upon by defendants in error as evidence of a conspiracy between the two companies to procure and bring sundry persons into. Hidalgo county and sell them lands upon false and fraudulent representations and promises not intended to be fulfilled. It is contended that because of the terms of the contract, and the alleged conduct of the parties thereto in departing from the specific methods of carrying out some of the provisions 'thereof, the alleged' conspiracy was established. We overrule this contention. :The contract in question does not warrant or tend to support a finding of conspiracy. 'It provides in specific and enforceable' terms for the purchase and sale of the property, provides for the deposit of $25,000 by the vendee as evidence of its good faith and ability, for the payment by the vendee of $180,000 in-cash within three months from the date of the instrument, and for complete performance by the ven-dee within a specified, period, under penalty of the forfeiture of the cash deposit and of all rights of the vendee in case of its default. It is true, as defendants in error point out, that the instrument contained a provision that conveyances should be made to the vendee or, at its option, to its nominees, but this provision is by no means uncommon in large transactions in land, and raises no presumption of rascality. Neither does the charge that in the course of' the transaction the terms of payment were in certain instances modified by the parties to meet the varying emergencies and exigencies arising in the performance, of the contract. The parties -had the power to modify specific provisions of the contract, just as- they had the power to make the original agreement, and the fact that the vendor was willing to • concede such modifications in order to enable the vendee to perform the controlling provisions of the contract should not be construed into a conspiracy to defraud subsequent purchasers. The transaction was a very large one, involving the sale of a vast 'body of land lying in a- region which has become known throughout the' country for its remarkable productivity. It is a matter of course that the American Company knew these lands were to be resold in smaller tracts by the Land Company, but this knowledge would not within itself serve to charge the vendor with responsibility for the methods and representations subsequently to be used by its vendee in reselling the land or render the vendee the agent of the vendor. It is not such a case as that of Paschen v. Lovett (Tex. Com. App.) 255 S. W. 385. In that case, according to the construction of the Commission of Appeals, the' contract was one in which the vendor granted the vendee the exclusive, right to “buy and sell” the lands there involved; in which the vendor and vendee, by the express terms of the contract, together selected the agent by whom the resales were to be made, and stipulated the-terms of the resales whereby the vendor in effect retained control of the lands, designated the agent by whom they were to be resold, and did not bind the vendee to purchase any of the lands except such as it should be able to resell., None of these conditions, which controlled the decision in the cited case, exist in the contract now under consideration. In that case, moreover, the question was not one of conspiracy, but of agency, which is a very different thing. We hold, then, that there was nothing in the contract here in question or in the acts done. thereunder which showed -.or tended to show the existence of the conspiracy complained of by defendants in error.
2. Said contract of purchase.and sale was executed in December, 1917, and thereafter, in' October, .1919,. defendants in error *554Bellman purchased from the Stewart- Company the particular tract here involved which had been conveyed to the latter by the American Company in pursuance of said contract. Several months after defendants in error had so purchased the tract here involved, in February and May, 1920, the American Company and the W. E. Stewart Investment Company in one case, and the Stewart Farm Mortgage Company in the other, entered into other contracts, similar in nature, providing for the purchase and sale of other bodies of land than that covered by the first contract and involved in this suit. Defendants in error now contend that these subsequent contracts constituted further evidence of the alleged conspiracy, and introduced them in evidence as proof thereof. For the reasons -already stated with reference to the first contract, the later contracts, executed long after the time defendants in error claim to have been defrauded in pursuance of said conspiracy, did not support or tend to support the charge of conspiracy. If,-because of the presence of some provisions not included in the first contract, the later contracts had been objectionable as tending to show the alleged conspiracy, then they were not available to defendants in error in this cause, for the simple reason that they were entered into several months after defendants in error purchased the land now in controversy, and concerned lands in no wise involved in this suit. If the mating of the first contract and the acts done thereunder prior to Bellman’s purchase did not within themselves serve to show a conspiracy, then the subsequent act of forming a conspiracy could not concern defendants in error, whose rights and liabilities had long since been fully fixed. It follows, then, that the contracts and the acts done thereunder did not themselves evidence a conspiracy between the parties thereto to deceive defendants in error or other subvendees into the purchase of subdivisions of the larger tracts.
3. Prior to the transactions here involved, the American Company borrowed $1,200,000 from the Missouri State Life Insurance Company,- to secure the payment of which it gave said compapy its notes and' a deed of trust on the acreage covered by the several contracts we have discussed. In September, 1920, nearly a year after defendants in error purchased the land here in controversy, one of the Stewart Companies (which had purchased from the American Company the lands covered by its contract with the' latter company in May, 1920) transferred to the Insurance Company a large number of vendor’s lien notes taken in the sale of lands covered by said contract and not embracing the tract here involved. It was recited in this transfer that the American Company wás indebted to the Insurance Company, that the latter had released its lien from the lands covered by said notes, and that the transfer was being made directly to the Insurance Company under an agreement between the three parties for that purpose. Now defendants in error have set up the foregoing facts' as evidence of the alleged conspiracy between - the American Company and the Stewart Companies to deceive defendants in error (who had theretofore purchased the tract here in controversy) and others into purchasing small tracts out of the large bodies covered by the three contracts we have discussed. We perceive nothing of a sinister nature in this transaction, however. The American Company was Indebted to the Insurance Company, the Stewart Company was indebted to the American Company, both debts were secured by liens upon the same lands, and by the simple process of transferring the notes directly to the Insurance Company the Stewart Company in part paid its debt to the American Company, and to that extent reduced the latter’s debt to the Insurance Company, at the same time procuring a release of the lands from the original lien, so that the purchasers of the smaller tracts would take their purchases free of prior incumbrances. This was done by agreement of the three parties, and the whole transaction placed of record. It was a simple, practical, normal adjustment of legal obligations, was consistent with good faith, and did not raise or support the charge of conspiracy asserted by defendants in error.
4. It appears from the record that W. F. Shaw was manager and chief engineer of the American Company prior to 1920, when he became its vice president, and in 1921 its president. In the two contracts between that company and the Stewart Companies executed in February and May, 1920 (several months after defendants in error purchased the tract here in controversy), it was provided that the Stewart Companies should at their own expense construct canals and ditches on the land covered by said contracts whereby the American Company’s irrigation system could -be extended thereover. To this end Stewart organized the Capisallo Construction Company, a corporation, of which Shaw was made president. The construction company thus organized took over the work of constructing said canals, and in doing so employed some of the engineering force theretofore used by the American Company; it also established its offices in the same building in which the American Company’s offices were located. Shaw was designated as the representative of the latter company in approving and accepting the completed work of the construction company, which he' also supervised; the object of the parties being to secure uniformity in said canals and to properly co-ordinate them with the irrigation system already in operation. Defendants in error contend that these facts established or' tended to estab-*555lisia their charge that a conspiracy existed between the contracting concerns to deceive subsequent purchasers of smaller tracts of land covered by the contracts mentioned. We do not think the facts recited are inconsistent with good faith on the part of the two concerns, or indicate a conspiracy to defraud third parties who might thereafter —or as in this case, who had theretofore— purchased parcels of the land covered by the contracts, or, as in this case, other lands covered by the contract entered into long prior to defendants in error’s purchase. One of the parties to these contracts was engaged in the development, the other in the settlement, of a vast area now recognized as one of the so-called garden spots of the world. One owned, operated, and was extending an established irrigation system over large bodies of land within that area; the other had purchased and was endeavoring to sell those lands in small tracts to persons who would settle upon and cultivate them. The purposes of both were of themselves lawful. If either concern afterwards resorted to deceit in carrying out its particular purpose, such deceit would not necessarily condemn the whole project, nor could it be chargeable to the other concern, unless the latter was a party to the fraudulent acts. Here the two concerns were separate and wholly distinct corporations, and the fact, if true, that the Stewart corporation procured defendants in error and others in a similar position to purchase lands through the fraudulent representations of its agents, could not serve to establish a conspiracy between both corporations to defraud defendants in error and others, unless it was clearly shown that the American Company actually participated in or connived at the particular frauds complained of. The whole of defendants in error’s complaint amounts merely to an alleged showing that in a number of cases the Stewart Companies deceived certain individuals into purchasing small tracts of land out of the large bodies those companies purchased from the American Company. There was no evidence that the latter company participated in or in any manner connived at the alleged fraudulent acts of the other plaintiffs in error.
5. It further appears from the record that, several months after defendants in error had purchased the tract involved, W. F. Shaw, then vice president of the American Company, and president of the canal construction company mentioned, when approached by purchasers of small tracts out of a larger body of land not involved here, told them when in his opinion the irrigation canals would be extended to those tracts; that, a year after defendants in error purchased the tract here involved, Shaw wrote some person in Kansas, who ' had theretofore purchased a " smaller tract, that the canals would be extended to the latter’s farm in time for the ensuing crops, which was not done: Defendants in error now contend that these facts showed or tended to show the existence of the alleged conspiracy. For obvious reasons, this contention also is without merit.
The statement of facts in this cause covers 777 pages, of which approximately 600 pages are given over to copies of the three contracts we have discussed and to deeds through which small parcels out of the larger bodies of lands were conveyed to individual purchasers from the Stewart Companies. In the absence of any showing of a conspiracy, this evidence has no proper place in the case. Much of the remaining portion of the statement of facts is devoted to the testimony of numerous witnesses other than defendants in error concerning representations made to them by strangers to this litigation, as well as by agents of the Stewart Companies, which representations it is not contended were made to defendants in error, and which could have had no influence whatever upon them in purchasing the tract involved. In the absence of conspiracy, none, of this evidence has any proper place in the case. The question of fact in this case is one of alleged false representations, which in order to be effectual must have been made directly to defendants in error by authorized agents of plaintiffs in error concerning the land to be purchased, and it is hoped that upon another trial the evidence in the case will be restricted to the legitimate sourced and purposes of the real inquiry.
• We overrule defendants in error’s motion for rehearing.