Court Opinion

ID: 9855813
Source: CourtListenerOpinion
Date Created: 2023-09-24 06:31:32.677646+00
Date Added: 2024-06-11T09:37:11.465197
License: Public Domain

HALLEY, Justice
(dissenting).
I am compelled to dissent. Although the original action in this case was filed by the Oklahoma Company the transaction out of which the case arises was master-minded by Harold Westcott, the President of OkKla-homa Company. Westcott and his wife own all the stock in this company except one qualifying share.
Westcott was an experienced oil man of the promoter type. Working under the guise of a friend he fast-talked some of the defendants into purchasing interests in the oil and gas leases involved in this action. They paid $12,500 for a tenth interest. These particular defendants got friends to invest in the deal. Westcott represented it would take $125,000 to buy the leases but stated if he could buy them for less he would do so. He bought them for $85,-000 but told one or more of the defendants that he was unable to buy for less than the $125,000. $10,000 was paid to two men, Levine and H. C. Alexander, for assistance in making the purchase of the property. The propriety of this expenditure is exceedingly doubtful. 'To say the least, West-cott expended for the leases $30,000 less than what he represented.
This was a joint adventure from the start and Westcott was to operate the leases.
The evidence is clear that no sooner than Westcott began operating the properties he began to defraud his partners, the defendants herein, in such operations. The most blatant conduct in this phase was the attempt to charge $3 a foot for drilling certain wells when the actual cost was $2.
The Oklahoma Company sued originally in this action for $45,000 for the expense in operating the lease and the trial judge found the amount due to be $25,467.93. This amount did not credit the defendants with the sum that was due them because of the overcharge on the purchase of the leases originally.
The majority opinion justifies the unconscionable conduct of Westcott by saying that the defendants signed an agreement which relieves the Oklahoma Company from Westcott's overreaching. Plaintiff was and is still responsible for his acts. The defendants did not know at the time of signing the agreement that they had been defrauded. They were still under the impression that Westcott was honest and that they were dealing with a friend. They did not know that the geologist whom Westcott represented as a disinterested scientist was to share in $10,000 if and when they put up their money. They did not know that a one-thirty-second interest in their purchase was given to Whit Ingram without their consent and without consideration. There was nothing in these agreements that showed in any way that the defendants knew of or condoned Westcott's conduct.
The defendants reposed trust and confidence in the integrity of the President of Oklahoma Company, one Harold Westcott, and a confidential and fiduciary relationship *547existed between the parties. See Fipps v. Stidham, 174 Okl. 473, 50 P.2d 680.
This memorandum agreement of June 18, 1956, did not cover the original transaction between the parties and was not intended to take the place of the previous negotiations having to do with the acquisition of the oil and gas leases. I say again, that at the time this agreement was executed the defendants were unaware of the fraud that had been perpetrated upon them and did not discover the fraud until after this action was filed.
The authorities relied upon by the plaintiff to the effect that a written agreement supersedes oral negotiation are all cases wherein there was an absence of fraud. Previous oral discussions are not merged into or superseded by the terms of an executed written agreement where there is fraud. Johnson v. Harris, 166 Okl. 23, 25 P.2d 1072.
The perpetrators of fraud should not escape liability by concealing their fraud until after a written agreement had been executed. Especially is this true where the memorandum agreement does not cover the original agreement,. This agreement was only an understanding as to the operation of the leased properties.
Although this was a difficult case, it was capably tried by the judge and lawyers taking part.
The trial judge heard all of the testimony and was familiar with all the evidence. He entered judgment for the defendants. The great weight of the evidence sustains his decision. It should not have been set aside.
Due to the lack of confidence in Westcott this business cannot be carried on without a receivership. The only practical solution is to put the defendants back in their original situation. The entire transaction is so shot through with fraud and deception that I am of the opinion that the judgment of the trial court is the only way this case can be properly disposed of. To the judgment of the majority reversing the trial court, I dissent.