Harry L. James and C. R. Virtue v. Honaker Drilling, Inc., a Kansas Corporation

254 F.2d 702, 1958 U.S. App. LEXIS 4097
CourtCourt of Appeals for the Tenth Circuit
DecidedApril 28, 1958
Docket5726_1
StatusPublished
Cited by16 cases

This text of 254 F.2d 702 (Harry L. James and C. R. Virtue v. Honaker Drilling, Inc., a Kansas Corporation) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Harry L. James and C. R. Virtue v. Honaker Drilling, Inc., a Kansas Corporation, 254 F.2d 702, 1958 U.S. App. LEXIS 4097 (10th Cir. 1958).

Opinion

BRATTON, Chief Judge.

Harry L. James and C. R. Virtue sued Honaker Drilling, Inc., to recover damages for alleged wrongful acts on the part of the defendant which made it impossible for plaintiffs to earn a broker’s fee from San Juan Exploration Company. It was alleged in the complaint that plaintiffs were brokers; that defendant advised plaintiffs that it desired to sell its oil and gas properties; that defendant employed plaintiffs to negotiate for it a sale of such properties; that plaintiffs were instrumental in interesting San Juan Exploration Company as a prospective purchaser of the properties; that the prospective purchaser agreed to pay plaintiffs a commission of $30,000 if it purchased the properties; that the defendant was advised of the agreement of the prospective purchaser to pay such commission; that in the course of negotiations between defendant and the prospective purchaser, defendant offered to-sell the properties to the prospective purchaser for $1,700,000; that by mutual agreement between the defendant and the prospective purchaser, the latter was given a specified time within which to complete its investigation of the properties; that the prospective purchaser - advised defendant that it would purchase the properties at approximately the price-set by defendant, but before the investigation of the properties was completed, defendant sold them to Colorado Oil and Gas Company; and that in such wrongful manner defendant breached its contract of employment of plaintiffs and made it impossible for plaintiffs to earn the commission which the prospective purchaser had agreed to pay them in the-event it purchased the properties. By answer, the defendant denied that it employed plaintiffs to negotiate a sale of the properties; denied that it made an unqualified offer to sell the properties to- *704 the prospective purchaser; denied that the prospective purchaser ever advised defendant that it would purchase the properties at defendant’s price; and denied that the prospective purchaser was ever ready, able, and willing to make the purchase at defendant’s price. After issues were joined, the depositions of both plaintiffs and of R. J. Bateman, agent of the prospective purchaser, were taken. Thereafter the defendant filed a motion for summary judgment in its favor. Upon consideration of the pleadings and the depositions, such judgment was entered; and plaintiffs appealed.

Without conflict, the depositions disclosed these facts. James and Virtue resided in Oklahoma City, Oklahoma; and they maintained offices there. They were brokers dealing in oil and gas properties and drilling operations. Louis Thompson, a resident of Hutchinson, Kansas, was also a broker dealing in like properties and operations in Kansas. Hon-aker was a corporation with offices in Great Bend, Kansas, and it owned certain oil and gas properties in Kansas. Joe J. Honaker acted for the corporation. San Juan Exploration Company maintained offices in Dallas, Texas, and it was engaged in the business of acquiring, developing, and selling oil and gas properties. Bateman resided in Oklahoma City, and he was agent for San Juan. James had an arrangement with Bate-man through which he submitted to Bateman from time to time for the consideration of San Juan purchasable oil and gas properties. While in Wichita, Kansas, looking for production deals for purchasers whom they represented, James and Virtue met Thompson and learned from him that a portion of the properties owned by Honaker could be acquired for approximately $340,000. Thompson arranged an appointment for James and Virtue to call on Honaker. Upon reaching Honaker’s office, James and Virtue stated to Honaker that they were brokers and had buyers for properties. They stated that, they were not px*ospective purchasers but represented somebody else that had money and could buy the properties. Honaker stated to James and Virtue that he did not want to offer the properties for sale until an engineering report then being made was completed and he had time to review it. James and Virtue told Honaker that they would contact him again later after he had received the report. About a week later, James called Honaker on long distance telephone and was told that Hon-aker had received the report but had not had time to review it and that he and his associates were not in position to furnish any information at that time. But he agreed to call James when the review had been made. About a week latex*, Honaker called James on long distance and told him that the Honaker Company had decided to sell all of its properties and he inquired whether the people whom James and Virtue represented would be interested in a deal that large. James and Virtue contacted Bateman. From Bateman’s office, James called Honaker on long distance and placed Honaker and Bateman in communication with each other on the telephone. James, Virtue, and Bateman went to Great Bend. Hon-aker and Bateman negotiated respecting the properties. While Bateman was examining certain data in the offices of the Honaker Compaxiy, James and Virtue told Honaker that San Juan had agreed to pay them a commission of $30,000 if the properties were acquired. Honaker placed a sale price of $1,750,000 upon the properties. Later in the day, he reduced the price to $1,700,000. Bateman stated to Honaker that he thought the properties were worth about $1,600,000, but he did not state that San Juan would purchase them at that price or at any other price. It was agreed that San Juan should have a certain time within which to make its investigation of the properties, and the time was extended once or twice. While engaged in making its investigation of the properties, San Juan advised Honaker that it was interested in further negotiations relatixxg to the sale and purchase of the properties, but it did not make any commitment whatever to purchase them at the price fixed by *705 Honaker or at any other price. By reason of certain operating agreements, Colorado Oil and Gas Company held a preferential right to purchase a portion of the Honaker properties in the event Honaker desired to sell all or any portion of its properties. While San Juan was engaged in making its investigation of the properties, Colorado exercised its preferential right of purchase and did purchase all of the properties owned by Honaker; and Honaker immediately notified San Juan that a sale to Colorado had been consummated.

It is sought to overturn the judgment upon the ground that where a broker, at the request of the owner of property, finds a purchaser who is able to buy and brings the two together, and thereafter the owner takes the negotiations into his own hands, and the owner makes a firm offer to sell at a stated price and extends to the prospective purchaser a definite time within which to accept such offer, and prior to the expiration of such extended time, the owner sells the property to another party thereby making it impossible for the broker to earn a commission which the prospective purchaser had agreed to pay him if and when the sale and purchase were consummated, the owner becomes liable in damages to the broker in a sum equal to the amount of the commission. The case of Zeligson v. Hartman-Blair, 10 Cir., 135 F.2d 874, is relied upon to sustain the contention. There the district court dismissed the action for failure of the complaint to state a cause of action upon which plaintiff could recover. On appeal, the judgment was reversed.

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254 F.2d 702, 1958 U.S. App. LEXIS 4097, Counsel Stack Legal Research, https://law.counselstack.com/opinion/harry-l-james-and-c-r-virtue-v-honaker-drilling-inc-a-kansas-ca10-1958.