Reese v. Carey Bros.

286 S.W. 307, 1926 Tex. App. LEXIS 1039
CourtCourt of Appeals of Texas
DecidedMay 12, 1926
DocketNo. 2675.
StatusPublished
Cited by12 cases

This text of 286 S.W. 307 (Reese v. Carey Bros.) 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
Reese v. Carey Bros., 286 S.W. 307, 1926 Tex. App. LEXIS 1039 (Tex. Ct. App. 1926).

Opinion

JACKSON, J.

This suit was instituted in the district court of Wichita county, Tex., by E..S. Carey, O. W. Carey, J. E. Childers, W. T. Willis, and Guy Rogers, plaintiffs, against T. T. T. Reese, H. B. Patterson, W. P. Bolding, J. B. Stokes, J. J. Moran, and E. H. Breed-love, defendants.

The plaintiffs alleged:

That on or about May 1, 1919, they, together with E. H. Breedlove, J. E. Trigg, M. J. Michaelias, and H. D. Lewis, associated themselves together under the firm name ahd style of Carey Bros. Oil Company for the purpose of purchasing an oil and gas lease on the southeast 5 acres of block 88, Red River valley lands in Wichita county, Tex., to he drilled, mined, operated, and developed for their mutual profit and individual gain, and agreed that each should contribute one-tenth of the purchase price and share in proportion to his interest in all losses and profits.

That said tract of land was purchased and developed, oil found in paying quantities, and produced and saved therefrom. That the business was conducted as a mining partnership, and many items of indebtedness incurred.

That on or about November 19, 1919, J. E. Trigg, M., J. Michaelias, and H. D. Lewis, each separately, sold his respective interest to E. H. Breedlove, and, as a part of the consideration for each interest so sold, E. H. Breedlove assumed and agreed to pay the proportion of the outstanding indebtedness of the company chargeable to each interest he purchased. That on said date, or very shortly thereafter, E. H. Breedlove sold to J. J. Moran the interest he had purchased from J. E. Trigg, and, as a part of the consideration therefor, J. J. Moran assumed and promised to pay one-tenth of all the then outstanding indebtedness chargeable to Carey Bros. Oil Company. That E. H. Breedlove sold to T. T. T. Reese and FI. B. Patterson the one-tenth interest he had purchased from M. J. Michae-lias, and, as a part of the consideration therefor, they assumed and promised to pay one-tenth of the then outstanding indebtedness chargeable to the Carey Bros. Oil Company. That E. H. Breedlove sold to W. P. Bolding the interest he purchased from H. D. Lewis, and, as a part of the consideration therefor, Bolding assumed and agreed to pay one-tenth of the then outstanding indebtedness chargeable to the Carey Bros. Oil Company. That. J. B. Stokes purchased from J. J. Moran one-half of his one-tenth interest in the company.

That on and after the purchase by the defendants of their respective interests as aforesaid in the property, the Carey Bros. Oil Company continued to be, as theretofore, a going concern, and that the defendants who purchased from Breedlove bought with full knowledge of the organization, and have continued in said partnership expecting to receive their proportional share of the gains, if profits were made, and expecting to bear their proportional share of the losses, if any. That, since the defendants who purchased their interests from E. I-I. Breedlove, on or about November 19, 1919,.became partners, certain debts have been created and incurred in operating and developing the property, for which the plaintiffs and defendants are jointly liable, the exact amount of which debts can only be ascertained by an accounting. That the liabilities of the partnership greatly exceed the assets, and the debts are due and must be paid; hence it is' necessary to dissolve the partnership, have an accounting, and a general contribution among the partners, for all of which plaintiffs pray, as well as for general and equitable relief, both in law and in equity.

J. E. Trigg, H. D, Lewis, and M. J. Michae-lias, by permission of the court, intervened as plaintiffs, alleging that they were at one time members of the copartnership, and that they had done certain drilling and performed certain labors for the company, upon which was due them a balance of $6,S27.61; that the greater part of this indebtedness was created after interveners had retired from the co-partnership; prayed for an accounting, and judgment for such amount as might be due them.

Guy Rogers, individually, sued for the sum of $2,500, evidenced by a note of the partnership, and acquired by him for a valuable consideration, and asked for credit therefor on his contribution.

The Petrolia Supply Company intervened, asking judgment for the sum of $298.37; and the Republic Supply Company .intervened, asking for judgment for $130.36.

The defendants Reese, Patterson, Bolding, and Stokes, answered by general demurrer, *310 special exceptions, and denied generally the allegations of plaintiffs and of tlie interven-ers, denied partnership under oath, denied the assumption of the payment of any indebtedness outstanding against Carey Bros. Oil Company at the time of the purchase of their respective interests for which they each paid at the rate of $15,000, and pleaded that they were induced to purchase by the false and fraudulent representations of E. H. Breed-love, who represented to them that the Carey Bros. Oil Company had sold the property to the Seaboard Oil & Gas Company for a consideration of $300,000; that the company owe'd only $30,000 in addition to a few bills for current expenses, and had enough money in the bank to discharge them; that there were three completed wells on the property, and the derrick erected for a fourth; that the property had cost $180,000, and that the lease was producing more than 1,000 barrels of oil per day, and that the property and equipment above the ground had cost $100,-000; that each owner of a one-tenth interest in the lease had invested $15,000 — all of which representations were false, and made for the purpose of inducing them to buy, and upon which representations they did rely in making the purchase of their respective interests, and that the interests when purchased were worthless.

J. J. Moran, answered by general demurrer, special exceptions, general denial, verified denial of partnership, and alleged that he was induced to purchase his interest by the false and fraudulent statements of E. H. Breed-love, for the sum of $14,000, who represented to him that there were two wells on the lease, both in good condition, with a production at that time of 1,000 barrels per day, and that there was no indebtedness against the lease, all of which statements and representations were false, which he believed and relied upon, and but for which he would not have purchased, that plaintiff J. E. Trigg was a party to the fraud perpetrated on him, and asked recovery on his cross-action against Trigg for the $14,000 as the lease, as Trigg knew, was practically worthless.

Plaintiffs, in reply, by supplemental petition, pleaded that the defendants had waived the fraud, ratified the contract, affirmed their purchase, acquiesced in the partnership relations, and were in all things estopped to set up any matter of fraud as a defense to their liability and their subsequent participation as partners.

The pleadings are very voluminous, but .the above statement we consider sufficient for a consideration of the questions involved.

Pursuant to an order of the court, the books and records of the Carey Bros. Oil Company were audited for the period beginning June 23, 1919, and ending May 31, 1922, and a properly verified report of the auditor introduced in evidence.

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Bluebook (online)
286 S.W. 307, 1926 Tex. App. LEXIS 1039, Counsel Stack Legal Research, https://law.counselstack.com/opinion/reese-v-carey-bros-texapp-1926.