E. L. Baker and R. L. Price v. Howard G. Nason

236 F.2d 483, 6 Oil & Gas Rep. 644, 1956 U.S. App. LEXIS 4841
CourtCourt of Appeals for the Fifth Circuit
DecidedAugust 27, 1956
Docket15768_1
StatusPublished
Cited by23 cases

This text of 236 F.2d 483 (E. L. Baker and R. L. Price v. Howard G. Nason) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
E. L. Baker and R. L. Price v. Howard G. Nason, 236 F.2d 483, 6 Oil & Gas Rep. 644, 1956 U.S. App. LEXIS 4841 (5th Cir. 1956).

Opinion

CAMERON, Circuit Judge.

Appellants, E. L. Baker and R. L. Price, plaintiffs below, brought this action for an accounting and money judgment, recovery of title to mineral interests and for other relief against appel-lees, defendants below, Howard G. Na-son, his wife, Mrs. Anice H. Nason, Charles McCamic, and Union Producing' Company, 1 growing out of a contractual relationship entered into between plaintiffs and defendants in March, 1951, covering the ownership of oil and gas rights and the development thereof by drilling. At the conclusion of plaintiffs’ case the Court below sustained a separate motion for a “directed verdict” filed by each of the defendants sued, upon the ground that the entire arrangement between-plaintiff and defendants was nothing but • a fraudulent scheme to cheat the landowners of Monroe County, Mississippi,, out of their mineral rights.

This appeal, therefore, presents the primary question whether the evidence supports this ruling of the trial Court. If not, we are called upon to consider the entire case as made by plaintiffs to determine whether they were entitled to any relief thereunder and whether plaintiffs are barred from recovery by-the several affirmative defenses relied on by the defendants. Since the ruling of the Court below was made upon motions for directed verdict, we must, for the purpose of this opinion, accept as true the credible evidence adduced by plaintiffs.

Plaintiffs offered evidence by which, if believed, the facts hereinafter set out may be considered as established. In March, 1951 defendants owned, under contract dated August 28, 1950 and subject to the conditions therein imposed, oil and gas leases delivered in escrow covering a block of 6,115 acres of land located, near Muldon, Monroe County, Mississippi *486 2 - • Having theretofore failed to find a: driller'who would enter the project with them, -defendants proceeded, by prior arrangement, on "March 6, 1951 to Tyler, Texas, in an'attempt to make a deal with plaintiffs,- owners "of drilling equipment' and experienced in drilling oil and gas' wells, to enter arrangements with them tó clean out the Sanders well. Plaintiff Price and" defendants spent a half day discussing the whole proposition and on the following day plaintiff Baker entered the discussions. All agreed that the Lenoir block was not adequate for such a venture and that it should be enlarged and rounded out by obtaining leases on about four thousand' additional acres, and defendants were equipped and will- ■ ing to do that.

1While defendants’ most pressing need was to obtain a letter from a drilling contractor .showing that'an agreement had been made to re-work ffhe Sandérs well, they were interested in'assembling other blocks of acreage in the general vicini- * ty of the Muldon block and procuring drilling operations to be conducted thereon. As the result of these discussions plaintiffs and defendants agreed to enter into a joint venture, pooling and combining the leases defendants already had arid those they would obtain, with the drilling equipment and capabilities of plaintiffs and dividing both the expenses and the profits of the venture on an equal basis. 3 Plaintiffs advised defendants that they would have to follow their usual custom in such' developments of obtaining assignments of their half interest in the leases so that they could pledge this interest to investors in order to obtain money for the Sanders operation and the other developments in contemplation, and defendants were agreeable to this.

' At the end of the first day’s discussion McCaskill set himself the task of drawing up a writing which he submitted tó the others on March 7th. After making one change the contract was copied on the typewriter and all signed it. 4 *487 Pursuant to the discussions between the parties, plaintiffs also delivered a letter 5 which it was agreed defendants needed and would use in convincing the Lenoir group and other landowners that drilling operations would be begun after the Muldon block had been completed.

By the use of this letter defendants were able to obtain the additional leases to complete the Muldon block, which completion was accomplished about July 15th. By the use of the letter and contract of March 7th defendants were also enabled to procure a contract to be executed under which a lease from Sanders to Nason of the 960 acres on which the abandoned Sanders well was located, was delivered in escrow. This contract between Sanders and Nason was dated March' 27, 1951 and referred to and was made eoter-minous in duration with the contract between plaintiffs and defendants dated March 7th, fn 4 supra; and it constituted in effect a working agreement or joint venture, between Nason and Sanders with respect to the defendants’ interest in the Muldon block.

On the faith of the letter of March 7th defendants also assembled the further block known as the Rye block. The chief portion of this block was conveyed by contract dated May 15,1951 between Rye and his associates and defendants, under whieh a large batch of leases were delivered in escrow to defendants upon condition of successful development. This contract gave defendants the express right to assign the leases conveyed by it. Defendants also obtained, April 18, 1951; an option to purchase mineral leases on *488 about four thousand acres of land and covering the interest therein owned by Federal Land Bank. Plaintiffs were never advised that defendants had obtained this option or assembled the Rye block, and certain writings executed by defendants in July indicated that plaintiffs were deliberately kept in ignorance of these facts.

In the meantime, plaintiffs and defendants discussed the cleaning out of the Sanders well on about a dozen occasions and some writings passed between them on the subject. Defendants were demanding that plaintiffs start work on the cleaning project, and plaintiffs were demanding that assignments be made to them of their interests in the assembled acreage according to what plaintiffs claim was the agreement between them as well as the universal custom in handling such transactions, so that they could procure advances of money thereon. Defendants took the position that such a division of the leases would be harmful to the whole operation and that they were not bound by the written contract to make the assignments until plaintiffs had finished the clean-out operation. This argument gave rise to an impasse which continued until September 11th, when plaintiffs and defendants signed a mutual release annulling the contract of March 7th and discharging all obligations arising therefrom. Plaintiffs testified that this release was obtained from them by fraud and was and is, therefore, void.

In the meantime, beginning in July, defendants had initiated discussions with others whom they attempted to interest in taking over the drilling obligations laid, by the agreement of March 7th, upon plaintiffs. Among these was one Briscoe, a promoter in West Virginia through whom the defendants made con-

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Bluebook (online)
236 F.2d 483, 6 Oil & Gas Rep. 644, 1956 U.S. App. LEXIS 4841, Counsel Stack Legal Research, https://law.counselstack.com/opinion/e-l-baker-and-r-l-price-v-howard-g-nason-ca5-1956.