Court Opinion

ID: 9668809
Source: CourtListenerOpinion
Date Created: 2023-08-24 02:27:39.102547+00
Date Added: 2024-06-11T18:15:48.693665
License: Public Domain

SUMMERS, Justice.
Plaintiffs Jack A. Hayes and Milton Knox named Fritz J. Muller defendant in a suit seeking judgment ordering defendant to pay to each plaintiff the sum of $300,000.00, or alternatively, for an accounting as a result of a contract of joint adventure involving a certain oil, gas and mineral lease. Plaintiffs allege that the contract of joint adventure was violated by defendant Muller. Defendant filed an exception of no cause or right of action which was maintained by the trial court and plaintiffs’ suit was dismissed.
Plaintiffs appealed to the Court of Appeal, Third Circuit, and that court reversed the judgment of the trial court, overruled the exception of no cause of action, and ordered the case remanded to the district court for further proceedings. However, upon application for rehearing the court of appeal granted a rehearing and certified certain questions to this court. See La.App., 146 So.2d 176.
Inasmuch as the record accompanies the certification, we treat this case in the same manner as if it had been appealed directly to this court. LSA-Const., art. 7, § 25; Grand v. American General Insurance Co., 241 La. 733, 131 So.2d 46 (1961) ; Rules of Supreme Court of Louisiana, rule 12, § 4 (Effective April 1, 1962), 8 LSA-R.S.
The petition sets forth that during October, 1953, and for several years prior thereto Knox was District Landman for Kirby Petroleum Company in Southwest Louisiana, and in this capacity had access to and acquired valuable and highly secretive information relating to the location of oil, gas and other mineral resources. Prior to October 1953 Knox, Hayes and. Muller entered into joint adventures and in connection therewith Knox would furnish information used in purchasing royalties and leases. In these adventures the parties contributed capital and the knowledge, skill and know-how possessed by each. The proceeds. and property resulting therefrom were equally divided.
On and prior to October 8, 1953, Knox, while thus employed by Kirby Petroleum Company, received and obtained valuable information concerning the oil and gas prospects of the Continental, W. Petti jean No. 1 Well in the Rayne Field. With his employer’s knowledge and consent Knox decided to purchase royalties and leases in the “Castille” area of the Rayne Field near *362■the Petti jean well, and to bring about this result he would enter into a joint adventure with Hayes and Muller.
Accordingly, the next morning Knox contacted Muller imparting the information which he possessed concerning the prospect. This information, among other, included electrical logs and core analyses. Knox and Muller agreed to the adventure and to associate Hayes. When Hayes was contacted it was specifically agreed by all three parties that each would contribute $20,-000.00, thereby making $60,000.00 available for the purchase of royalties and leases in the North Rayne and/or Castille area, and specifically in the area northeast of the W. Pettijean No. 1 Well concerning which Knox had obtained the valuable information. Their agreement was further to the effect that all available royalties and leases in the area would be obtained so long as the $60,000.00 was not exceeded and the costs and profits would be equally divided.
Later, on October 16, Muller sought information from Knox as to the advisability of buying royalties affecting properties adjoining the “Sweeney Lease.” Knox advised this purchase and any other royalties or leases in the Castille area, for information he possessed indicated a good prospect of production in the area.
In furtherance of the joint adventure certain royalties were purchased in the names of Muller and Hayes. The sum -of $46,-013.80 was expended in these transactions, the costs were prorated among 'the parties to the joint adventure and the interests thus acquired were equally divided by asssignments among the parties.
It is alleged that at this same time, on October 16, 1953, Muller, relying upon the information obtained from Knox and Hayes, obtained an oil and gas lease which will be referred to as the “Sweeney Lease.” This lease named Muller as lessee and was obtained at a cost substantially less than the amount thereto expended by the parties for the royalty purchases. Upon being informed of Muller’s purchase of the “Sweeney Lease” Knox and Hayes inquired of Muller why he had not advised them of the purchase and why they had not been asked for payment for their interest. Thereupon Muller advised them that this matter would be discussed at a later date. As activity in the area was then dormant, Knox and Hayes did not again question Muller concerning this lease for several months.
Early in 1959 Knox again inquired about the “Sweeney Lease” and Muller again advised that the matter would be discussed later. It was the practice of these parties to handle these matters verbally. Royalties and leases were placed in the name of one of the parties with the understanding that the interest of all parties would in due time be properly assigned. It is alleged that this *364practice and custom is common in the oil and gas industry and therefore Muller’s intentions as to the “Sweeney Lease” were not seriously questioned.
Thereafter on December 10, 1959, Mullet sold the “Sweeney Lease” which stood in his name to Louisiana Gas Corporation for $900,000.00. Knox and Hayes then made demand upon Muller for their one-third interest in the proceeds from the sale.of the lease. Muller denied their claim and refused to pay their interest or to account to them for any proceeds from the joint adventure entered into in October 1953.
The petition alleges fraud and bad faith on the part of Muller in his refusal to pay Knox and Hayes their share of the profits and in that he induced them to forego formal demand until he had an opportunity to transfer the “Sweeney Lease” to third parties.
■ Muller is further alleged to have breached the contract of joint adventure in failing to account to Knox and Hayes for the profits realized from their joint enterprise, 'for the párties had agreed that all available royalties and leases in the “Castille Area”, which includes the “Sweeney Lease”, would be obtained so long as the $60,000.00 was not exceeded and that the costs and profits would be equally divided among them. For these reasons plaintiffs allege they are entitled to specific performance bf the joint adventure agreement relating- to the division of profits and to an accounting of all profits and to receive one-third of all profits, resulting from the joint adventure, specifically those profits derived from the “Sweeney Lease.” Then follows the prayer for the payment to each of plaintiffs the sum of $300,000.00, or, alternatively, for arc accounting of the profits from the “Sweeney Lease.”
Plaintiffs’ demand for the accounting is: met by the defendant’s exception of no-right or cause of action. In support of his. exception defendant contends that because the agreement of joint adventure is verbal,, parol evidence cannot be used to prove that agreement, for the object of the agreement was to acquire and to dispose of immovable-property (oil, gas and mineral leases and royalties) and to share in the profits therefrom.
The premise of this contention is in part the proposition that by Act 205 of 1938, as amended by Act 6 of the Second Extraordinary Session of 1950 (LSA-R.S. 9 :- 1105), oil, gas and mineral leases were classified as real rights and incorporeal immovable property; this provision being further clarified by the 1950 amendment “as substantive as well as procedural so that the owners of oil, gas and other mineral leases and contracts within the purpose of this Section shall have the benefit of all laws relating to the owners of real rights in immovable property or real estate.” It *366is noted in this connection that while the rights actually obtained by the mineral lessee are not real rights in the sense that the lease is a charge and burden upon the land, as is a servitude, the legislature has seen fit to place owners of mineral leases on the same level as owners of land, by conferring upon them “the benefit of all laws relating to the owners of real rights in immovable property or real estate.” Reagan v. Murphy, 235 La. 529, 105 So.2d 210 (1958). It follows from this, according to defendant’s contention, that plaintiffs cannot assert title to the “Sweeney Lease” for the owners of that lease are entitled to require that an agreement affecting its title be in writing. LSA-Civil Code, arts. 2275, 2440. This being a “benefit” accorded to owners of real property to which a mineral lessee is also entitled. See Ingolia v. Lobrano, 244 La. 241, 152 So.2d 7 (1963).
He asserts, too, that a joint adventure is legally a partnership and, therefore, plaintiffs cannot prove that agreement, for Article 2836 of the LSA-Civil Code requires that if any part of the stock of the partnership consists of real estate, it must be in writing and the mineral lease referred to is “stock” of the partnership.
 It is conceded that plaintiffs have alleged the existence of a verbal contract of joint adventure. Also, there is no dispute between plaintiffs and defendant that a joint adventure can properly be defined as a special combination of two or more persons who jointly seek a profit through a specific adventure without any partnership or corporate designation. McCann v. Todd, 203 La. 631, 14 So.2d 469 (1943); Emerson v. Shirley, 188 La. 196, 175 So. 909 (1937); Ault & Wiborg Co. of Canada v. Carson Carbon Co., 181 La. 681, 160 So. 298 (1935) ; Daily States Pub. Co. v. Uhalt, 169 La. 893, 126 So. 228 (1930). We think it is true, also, that the relationship of joint adventure such as the one in the instant case is fiduciary in character1 and one adventurer cannot acquire and retain for himself2 any secret advantage in connection with the enterprise.3
In this State all things that are not forbidden by law, may legally become the subject of, or the motive for contracts. LSA-Civil Code arts. 1764, 1885. This authority would permit the conclusion that *368a contract of joint adventure, though assimilated to that of a partnership, may be formed without adopting all attributes of the partnership relation. It would permit such a relationship to have as its object the profits to be derived from an enterprise. As this suit has for one of its objects a demand for an accounting for profits realized from a joint adventure, we see no reason why plaintiffs have not stated a cause of action in that respect. See Ingersoll Corporation v. Rogers, 217 La. 79, 46 So.2d 45 (1950).
In Warnock v. Roy, 217 La. 224, 46 So.2d 251 (1950), this court held in answer to a similar contention involving a suit for an accounting for proceeds derived from production from a gas well that “ * * * plaintiffs suit was also for an accounting and for a personal judgment against the defendant for any amount that may be shown to be due him as a result of such accounting, and that all claims to be recognized as the owner of a real right were abandoned.” On the basis of this declaration the court ordered the defendant to file a complete accounting of the proceeds from-the production of the well.
It was also pointed out in the Warnock case that:
“[T]he true intent and interest of the parties was, not that Warnock should thereby acquire interest in the sense of title, in the well itself, but rather an interest in the financial returns and profits from the well.”
The foregoing language points out the gravamen of the instant case.
It is important to observe that the same situation exists in the case at bar for plaintiff has abandoned any claim to an interest in the lease now held by Louisiana Gas. Corporation, the assignee of Muller; that lease, therefore, cannot be and is not affected by this suit.
This suit has not as its object the assertion of an interest in an oil and gas. lease, nor does it have as its object an attack upon the title to such a lease. Plaintiffs’ suit has for its object an accounting for the profits resulting from the joint adventure, which is a personal contract. Their success is hot dependent upon proof that they had an interest in the “Sweeney Lease” in the sense that they had title thereto. Success in their cause depends upon whether they can prove that there was a joint adventure and that as a result thereof profits-were derived which were contemplated to-be divided among the joint adventurers. Like in partnership, to which the relationship of joint adventurers is sometimes, assimilated, joint adventurers do not have to-be co-owners of property used in the business of the joint adventure; the property-used in the joint adventure may be owned by only one of the joint adventurers and *370its use only devoted to the purposes oí the joint adventure. O’Neal, An Appraisal of the Louisiana Law of Partnership, 9 La.L. Rev. 307, 359. See also pp. 333, 488.
The case of Wampler v. Wampler, 239 La. 315, 118 So.2d 423 (1960) is sound authority for the position that when the suit is not between the parties to the contract of assignment of an oil lease, but where the controversy is between one of these parties in whose favor the assignment is given and a third person, “the parol evidence rule is without relevance as it applies only ‘ * * * where the enforcement of an obligation created by the writing is substantially the cause of action.’ ” In that case the court approved the statement of the law as contained in 32 C.J.S. Evidence § 1011, to this effect:
“The rule against the admission of parol evidence to vary or contradict a written contract does not apply where the writing as to which it is sought to introduce the evidence is collateral to the issue involved and the action is not based on such writing.”
Applying the rule of the Wampler case to the case at bar, we do not read the plaintiffs’ petition to mean that the obligation they seek to enforce is created by the writing which is the “Sweeney Lease.” To the contrary that lease is collateral to the issue. The prime issue being for an accounting under the joint adventure which is verbal, and it is that joint adventure agreement which is “substantially the cause of action.” Another case would be presented if plaintiffs sought to be declared the owner of an interest in the “Sweeney Lease.”
Thus defendant’s contention is inapplicable that plaintiffs cannot prove their title to the “Sweeney Lease” by parol evidence based upon Article 2275 of the LSA-Civil Code which requires “Every transfer of immovable property must be in writing • * * ” and Article 2276 which states that “Neither shall parol evidence be admitted against or beyond what is contained in the acts * * ; and Article 2836 which provides that “If any part of the stock of this partnership consist of real estate, it must be in writing, and made according to the rules prescribed for conveyance of real estate * * The contention is inapplicable because title to the “Sweeney Lease” is not involved.
In Emerson v. Shirley, 188 La. 196, 175 So. 909 (1937) this court said:
“The rule which forbids the proving of title to real estate by parol evidence is not applicable to evidence which is offered for some other purpose, for which it is relevant and competent, and which relates only collaterally and unavoidably to, and without establishing or affecting, the ownership of real estate. Wigmore on Evidence. (2d *372Ed.) Vol. 2, p. 863, § 1252; 22 C.J., p. 978, § 1224; p. 987, §§ 1230, 1231; p. 994, § 1249.” See also Dejean v. Whisenhunt, 191 La. 608, 186 So. 43 (1938).
With the Emerson case as a guide we see that the evidence, which plaintiff will be permitted to introduce under the allegations of their petition, will establish no title in, nor interest for, them to the “Sweeney Lease”; that evidence will not affect title to the “Sweeney Lease.” It can only serve to establish an agreement of joint adventure and their entitlement to a share of the profits resulting therefrom. It is only the fact that the “Sweeney Lease” was obtained by Muller and assigned for a profit which is pertinent to plaintiffs’ cause; that Muller did own that lease relates only collaterally to the right to recover a part of the profits from the contract of joint adventure. It is not the fact that plaintiffs had an interest in the lease which is necessary to their recovery. They need only prove that Muller acquired it and made a profit and that the profit derived therefrom was to be divided under the joint adventure agreement. Incidentally, (and for the purpose of the exception of no right or cause of action we consider that fact undisputed) Muller did acquire and sell the “Sweeney Lease” at a profit and this fact bears upon the question of whether a profit was derived from the joint adventure.
Nor do we read the petition to mean that' plaintiffs need to prove they were entitled.to an assignment of an interest in the lease, for they claim no interest therein. Their ciaim is for money profits derived from the joint adventure, from whatever source derived consonant with the object of the joint adventure, which was an enterprise for profits to be derived from oil and gas. leases and royalties brought about by pooling of their knowledge, know-how and’ capital. What plaintiffs have set forth in their petition is that they are claiming their share of the profits from the “Sweeney-Lease” not by virtue of any interest in the title to that lease, but by virtue of the joint-adventure agreement. Hence there is no-controversy between the parties here or the Louisiana Oil and Gas Co. as to the title-of the “Sweeney Lease”, the substantial basis for recovery is the joint adventure agreement.
In summary it may be said that plaintiffs’ entitlement to the accounting and profits, flow from the joint adventure agreement and not as a result of their ownership of an interest in the “Sweeney Lease.”
The allegations of the petition leave no-doubt that Muller obtained valuable information from one of his coadventurers, and used it for his own advantage in violation of the contract, derived a profit -such as was contemplated by the joint ad*374venture and refuses to account to his coadventurers.
For the reasons herein assigned, the judgment of the trial court is reversed, the exception of no right or cause of action filed herein is overruled, and this case is remanded to the district court for further proceedings according to law.

. Horne v. Holley, 167 Va. 234, 188 S.E. 169 (1936); Goldman v. Pryor, 172 Wis. 462, 179 N.W. 673 (1920); Selwyn & Co. v. Waller, 212 N.Y. 507, 106 N.E. 321, L.R.A.1915B, 160 (1914); 25 Tul.L. Rev. 382 (1951).

. Compare Shoufe v. Griffiths, 4 Wash. 161, 30 P. 93 (1892), with Dickinson v. Patterson, 160 U.S. 584, 16 S.Ct. 373, 40 L.Ed. 543 (1897).

.Tufts v. Mann, 116 Cal.App. 170, 2 P.2d 500 (1931); Harm v. Boatman, 128 Wash. 202, 222 P. 478 (1924); Menefee v. Oxnam, 42 Cal.App. 81, 183 P. 379 (1919). See also, 25 Tul.L.Rev. 383 (1951).