Langford v. Oklahoma State Bank

Interveners present only the first assignment of error in their brief, which is error of the court in overruling the motion of interveners for a new trial. Under this assignment of error they argue three propositions:

"First. There was a complete failure of the plaintiff to introduce proof in support of the allegations of his petition, not in some particulars only, but in the general scope of his alleged cause of action.

"Second. That said contract in so far as it attempted to determine the amount of damages in advance of any breach thereof is void.

'Third. The court erred in directing a verdict against the interveners for the amount of the money in controversy."

Under the first proposition it is urged that under the terms of the contract sued on the plaintiff, R. O. Ray, is specifically designated as the owner of the oil and gas leases described in said contract, and that upon the trial of the case it developed that he owned none of said leases, and that by the terms of the modification of said contract thereafter made by the parties, plaintiff ceased to have any interest individually or as a representative of others in the subject-matter of the action. An examination of the record in this case does not support this contention under the facts shown. It appears from the evidence that certain landowners in Tillman county desired to have a test well put down, and in order to induce some one to make the test they executed leases on their lands and turned the same over to R. O. Ray, for the purpose of entering into negotiations with some one to do the drilling. Ray was selected by them as their trustee for this purpose. He entered into the written contract with Langford and Gresham, but after its execution Gresham and Langford decided that they preferred straight commercial leases instead of those originally executed. Interveners and plaintiff together with the cashier of the defendant, visited all of the landowners who had signed leases and explained why new forms of leases were required and upon the distinct representation to such landowners by the cashier of the defendant that the money was on deposit in the bank as required by the original contract, said landowners agreed to execute new leases upon the form required by interveners and expressly agreed among themselves that plaintiff should continue to act as their trustee to see that the terms of the modified contract were fully performed and the $10,000 deposit collected in the event there should be a breach of the contract. It is not considered that any material or fatal variance is shown between the pleading and the proof, nor that there was a failure of proof within the meaning and intent of Comp. Stat. 1921, section 314.

It is insisted under the second proposition that the contract whereby interveners deposited the sum of $10,000 in the defendant bank to be paid to the owners in the event said well was not completed to the contract depth was a provision for a penalty and is unenforceable. In this connection it is disclosed by the record that the acreage embraced in the leases and contract amount to 800 or 1,000 acres. It is further shown that at the time of the execution of the contract lease values in that neighborhood ran from $10 to $25 per acre. The principal, if not the only, inducement which led the landowners to execute the new form of leases and to destroy the old ones, was the assurance given to them by the cashier of defendant that the $10,000 was actually on deposit and that the defendant bank guaranteed the payment of this sum if they would execute the new leases and the interveners should fail to drill the well to the contract depth. Under this state of the record it is considered that the language of Justice Kane, in the case of McAlester v. Williams, 77 Okla. 65, 186 P. 461, is applicable when he said:

"We think our statutes which seem to be declaratory of the rule in equity are decisive of the case at bar. Clearly the stipulation or condition in the contract under consideration provides for the payment of an amount which was presumed by the parties to be the amount of damage which would be sustained by one of the parties in case of a breach of such contract by the other party. Unquestionably the obligee would suffer some damage by a breach of this stipulation. Obviously from the nature of the case it would be impracticable or extremely difficult to fix the actual damage. In these circumstances it seems to us that the stipulation involved must be held to be valid by the direct mandate of the statute, and that it falls squarely within the rule laid down in Sun Printing, etc., Ass'n v. Moore, 183 U.S. 642, 47 L. Ed. 366."

Under the third proposition it is urged that the court erred in directing a verdict in favor of the plaintiff and against these interveners and in rendering a personal judgment against said interveners upon said verdict. It is considered that this last contention of interveners should be sustained. Under the third paragraph of plaintiff's amended petition, heretofore quoted, it is apparent that plaintiff relied upon the express guarantee of the defendant bank that it would pay the sum of $10,000 to the plaintiff as trustee for the benefit of the landowners if interveners breached their contract. No recovery of any kind or character was sought against the interveners in plaintiff's original or amended petition, and no allegations were made from which a claim of personal liability on the part of the interveners could be inferred. Touching plaintiff's theory in the filing and presentation of this action, it is stated on page 2 of his brief:

"But as a matter of fact we did not sue the Oklahoma State Bank for the specific fund deposited by Langford and Gresham, but did sue them for the sum of $10,000 on their guarantee made in connection with the contract between Ray and Gresham and Langford, as later modified when the farmers put up new leases. This is shown by the amended petition of plaintiff."

Plaintiff's sole contention in his brief to sustain the personal judgment rendered against the interveners is that they came into the case and filed a cross-action asking for affirmative relief against the plaintiff, and that they thereby became the principal defendants in the action and liable personally for whatever verdict was recovered by the plaintiff. The record discloses, however, that the order of the court making Langford and Gresham parties directed that they should intervene in the action, and while it is true that their plea of intervention contained a cross-action for damages resulting from alleged fraud of the plaintiff, yet upon the trial this cross-action was abandoned and interveners introduced no evidence whatever in support thereof. The only evidence introduced in the case was that offered by the plaintiff. No contention is made that the sum of $10,000 called for in the contract was not actually deposited by Langford and Gresham in cash in the defendant bank. They had, therefore, performed the contract to its fullest extent in so far as the liability which they were to incur by failing to drill to the contract depth could be compensated for in money. To render a personal judgment against them for an additional $10,000 is to double the liability which they assumed when they executed the contract with the plaintiff. There is no reason or authority to support such a result. It would indeed be a penalty and a severe one under the terms of the contract if they could legally be subjected to a liability in double the amount which they assumed by the execution of the contract.

It is further urged by the plaintiff in support of the judgment that if interveners had not filed a supersedeas bond in this action plaintiff could have withdrawn the $10,000 from the Oklahoma State Bank. It is a sufficient answer to this contention to state that after interveners executed a supersedeas bond ordered by the court in the sum of $20,000, and after the approval and filing of said bond in the trial court, said interveners made application to the court for an order to withdraw said deposit from the defendant bank during the pendency of this appeal, and that said application was by the trial court denied. Thus the $10,000 which interveners originally deposited to cover their liability under the contract remains beyond their reach while the judgment in the action makes them personally liable for another $10,000 which they never contracted or agreed to pay. Under these circumstances it is considered that the trial court erred as a matter of law in entering a personal judgment against the interveners upon the verdict of the jury. The verdict and judgment against the Oklahoma State Bank, where the $10,000 was actually on deposit, was the limit of plaintiff's right of recovery under his contract.

For the reasons herein stated, it is considered that the judgment of the trial court should be modified so as to eliminate therefrom any personal judgment against the interveners, and as modified the judgment should be in all things affirmed.

By the Court: It is so ordered.