Burns v. Veritas Oil Co.

230 S.W. 440, 1921 Tex. App. LEXIS 192
CourtCourt of Appeals of Texas
DecidedApril 20, 1921
DocketNo. 1792.
StatusPublished
Cited by12 cases

This text of 230 S.W. 440 (Burns v. Veritas Oil Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Burns v. Veritas Oil Co., 230 S.W. 440, 1921 Tex. App. LEXIS 192 (Tex. Ct. App. 1921).

Opinion

HUPP, C. J.

The appellant, Geo. A. Burns, filed this suit and by his petition complains of the Veritas Oil Company, a Delaware corporation, with its principal office in Dallas, Tex., with E. D. Steger, its president, and also E. D. Steger personally, E. H. Jones, H. E. Jones, Del Walker, J. W. Russell, J. W. Bailey, W. E. Norton, W. K. McClain, C. L. Bradford, Louis J. Rossett, and the Texas Company, and the Texas Pipe Line Company, corporations, and by amendment he brought In W. D. Cline, who he alleges was joint owner with W. E. Norton in the property hereinafter mentioned as the Norton property.

The allegations of appellant state the facts upon which he relies, and, omitting the verbiage in pleading, is about as follows: Ten men were consolidating their properties to form the American Production Company. They were A. A. Green, E. D. Steger, J. W. Russell, L. D. Pruett, E. H. Jones, H. E. Jones, C. B. Van Deman, Del Walker, W. K. McClain and W. D. Ross. L. D. Pruett and C. B. Van Deman were interested in two of the properties, which were to be placed in the consolidation, the Goose Creek Petroleum Company and the Producers’ Oil & Refining Company. The control, however, of the latter was in appellant, Geo. A. Burns, and in consideration of his conveying all of the properties of such company, estimated to be of the value of $150,000, to Steger, trustee, Burns was to receive 5 per cent, interest in the company to be organized. The ownership in the new company was in 10 equal parts. The consideration to Bums to enter with his properties was that he should have 5 per cent, which was agreed to by all the parties. A. A. Green brought together 10 men, and the new company was to be capitalized under a declaration of trust in the sum of $10,000,000. The trustees and directors were to be the 10 men above named, and were to be equally interested in said properties, each to own 10 per cent, interest in the American Production Company, and each was to be issued 10 per cent, of the original stock by the trustees of the proposed company. That said parties desired appellant to put into the new company the properties controlled by him. That it was estimated that its value was equal to 10 per cent, of the gross holdings of the new company, and that appellant’s interest therein was equal to 5 per cent. That it was agreed that he should receive 5 per cent, of the initial stock issued by the American Production Company, and was to own and have 5 per cent, therein, which was to be taken from the interest of Pruett and Van Deman.

A list of the properties to be placed into the consolidation by the three companies, the Goose Creek Petroleum Company, the Producers’ Oil Company, and the T. O. L. Company, the latter company being controlled by Steger, shows holdings all over the state of Texas and in many counties. This list was attached to the pleadings and made a part thereof. Burns, in conformity with the agreement, did cause a transfer of the properties of the Producers’ Oil & Refining Company to Steger as trustee for the American Production Company to be organized as agreed for the use and benefit of the company, which, the parties were endeavoring to organize. At the time the 10 men were endeavoring to organize the holding company it was contemplated that a producing acreage should be bought so as to stabilize the value of all the properties. That it was agreed the Producers’ Oil & Refining Company, so conveyed by appellant, was to be the entire consideration paid by Burns. That the original 10 men, who were promoting the new company, were to assume all liability for the purchasing price of such land, and see to the financing of its purchase. Steger purchased the Norton tract of land, which was made in pursuance to the understanding of appellant that producing acreage was to be bought in consideration of his transferring to Steger, trustee, the Producers’ Oil & Refining Company, and that when Steger made the contract for the purchase of the property (the Norton tract) he made it for the use and benefit of appellant, as well as the other 10 men. He alleges that appellant, at the time the contract of purchase was made, had paid his part of the purchase price. It is stated that it was understood the American Production Company was to buy producing acreage in *442 the northwest extension of the Burkburnett field, so that the value of that company might be stabilized, and in pursuance to that understanding a contract was made between W. E. Norton of Wichita cóunty and Steger, trustee, for the purchase of 27.1 acres of land in that county, describing the land. The contract for the purchase of that land was made between W. E. Norton and E. D. Steger, as trustee for the American Production Company, and $100,000 was paid in cash at the time of signing the option contract. It was stipulated in the contract that Norton was to drill five wells on said land, and that five days after the completion of the last well, Steger, trustee, was to have the right to make his election to take the property under the terms and conditions stated in the contract. In the event he took the property the consideration to be paid for the property was to amount to $2,250,000. If Steger elected to take the property, the $100,000 paid was to be applied on the total consideration. That Ste-ger, upon election to take the property, was at that time to pay in cash $200,000 and execute two notes in the sum of $100,000 each, due, respectively, 60 and 90 days after date, with interest at the rate of 6 per cent, per annum, which notes were to be executed by the American Production Company, and were to be indorsed by the organizers of that company, to wit, Green, Steger, E. H. Jones, H. E. Jones, Del Walker, and their associates, and the remaining $1,750,000 was to be paid out of the first seven-eighths of the seven-eighths of all of the oil produced and saved from the premises until the full amount of the remaining balance was paid. The oil was to be run to the pipe lines to which the wells might be connected, free of cost to the landowner, under the terms of the original lease. A copy of the agreement was attached to the petition, as part thereof. This contract stipulated:

In the event Steger “shall fail to make his election within five days, as above mentioned, then and in that event this option contract shall cease and terminate and be of no further force and effect.”

There was a provision also in the contract, if Steger should fail to elect to take the property, the $100,000 paid for the option shall remain the property of Norton. The contract also required, at the time of making the election by the trustee to pay the cash and execute the note stipulated for, “said notes shall be executed by the American Production Company (a company to be organized by the party of the second part)” meaning bteger, “as principal and said notes shall be further indorsed by” the 10 men originally named as promoters, of which appellant was not one. Appellant was not to be a trustee in the proposed company, but Steger and the others knew what his interest was to be, and agreed that his interest should be 5 per cent, in the company, and in making the contract Steger was acting for appellant and the other 10 men. That it was fully known to Norton that Steger was acting as trustee for the parties who were organizing the company. The $100,000 cash payment to Norton on the option contract was paid by the promoters of the American Production Company.

On July 3, 1919,

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Bluebook (online)
230 S.W. 440, 1921 Tex. App. LEXIS 192, Counsel Stack Legal Research, https://law.counselstack.com/opinion/burns-v-veritas-oil-co-texapp-1921.