Waggoner v. Magnolia Petroleum Co.

The Magnolia Petroleum Company sued R. M. Waggoner and C. L. Green upon the allegations:

"That defendants are the successors to the Burk-Waggoner Oil Company; that, upon dissolution of said Burk-Waggoner Oil Company, the defendants herein assumed the obligations of said company; that while the Burk-Waggoner Oil Company was doing business the plaintiff herein sold and delivered to the defendants, at their special instance and request, the goods, wares, and merchandise, list of which is attached hereto, marked Exhibit A, and made a part hereof, whereby defendants became liable and bound to the plaintiff," etc.

Defendant C. L Green was eliminated from the case on the ground that he had been adjudged a bankrupt, but defendant Waggoner answered, under oath, with a specific denial of the assumption, and by special pleas of lack of consideration, failure of consideration, and the statute of frauds. Upon a trial before the court, without a jury judgment was rendered for the plaintiff. The trial court filed findings of fact and conclusions of law reading as follows:

Findings of Fact. "I. I find as a fact that the Burk-Waggoner Oil Company, a corporation, of which R. M. Waggoner was president, and Clois L. Green was a member of the board of directors, was on or about the 27th day of September, A.D. 1920, insolvent and was largely indebted to R. M. Waggoner and Clois L. Green for personal funds advanced to the company for use in the company's business, and that the Burk-Waggoner Oil Company, a corporation, owed a large number of other debts, among which was the debt of the Magnolia Petroleum Company, for the sum of $135.49.

"II. I find as a fact that on or about said date there was held a meeting of the directors of the Burk-Waggoner Oil Company, at which meeting of the directors all were present, and that at said meeting a proposition was made to the board of directors by Clois L. Green, acting for himself, and as agent and representative and as the duly authorized agent and representative of R. M. Waggoner, and that he, the said Clois L. Green, and R. M. Waggoner, would take over all of the assets of the corporation and assume all outstanding indebtedness of the company.

"III. I find as a fact that the board of directors accepted this oral proposition of Clois L. Green and R. M. Waggoner made as aforesaid, and agreed to deliver to R. M. Waggoner and Clois L. Green all of the company's assets in consideration of the said R. M. Waggoner and Clois L. Green paying the outstanding debts of the company.

"IV. I find as a fact that the assets of the company consist of a large amount of personal property, such as drilling rigs, casing, pipe, and the like, together with a large amount of oil and gas leases, among which was a 2 1/2-acre oil and gas lease with 3 producing wells thereon, situated in Wichita county, Tex., and also 5,000 acres of oil and gas leases in Wise county, Tex., on which a well was being drilled, together with oil and gas leases in various other counties of the state.

"V. I find as a fact that, subsequent to said meeting of the board of directors, and by authority of a resolution passed by the board of directors of the Burk-Waggoner Oil Company, the duly authorized officers of the Burk-Waggoner Oil Company transferred and assigned by written instrument, under seal, all of said assets to said C. L. Green.

"VI. I find as a fact that R. M. Waggoner instructed S. A. L. Morgan, vice president of the Burk-Waggoner Oil Corporation, who was the officer executing said transfer and assignment along with the secretary of the company, to make the assignment of the assets of the company to Clois L. Green, and that an assignment thereof was duly made by the duly authorized officers of the company, under the seal of the company, transferring to the said Clois L. Green all of said personal property and all of the real property, consisting of the oil and gas leases owned by the company to Clois L. Green in consideration of the said Clois L. Green assuming the outstanding indebtedness of the company.

"VII. I find as a fact that said assignment was in writing under the seal of the company, and that, though said assignment was made to Clois L. Green, it was made on instructions of R. M. Waggoner, and the assets of the company consisting of the personal and real property above mentioned were taken over by Clois L. Green for himself and for the benefit of R. M. Waggoner.

"VIII. I find as a fact that all of said property was delivered to Clois L. Green at the direction of R. M. Waggoner for the use and benefit of Clois L. Green and R. M. Waggoner jointly.

"IX. I find as a fact that Clois L. Green has been adjudicated a bankrupt, and that he has not yet been discharged as a bankrupt, and that the proceedings above mentioned occurred prior to the time of his adjudication, and that the bankruptcy proceedings against Clois L. Green are now pending.

"X. I find as a fact that, although the agreement of R. M. Waggoner to take over said real and personal property was an oral agreement, said agreement was fully consummated by the written transfer, and assignment in evidence to Clois L. Green, who took said property for himself and for the benefit of R. M. Waggoner, which property constituted all of the assets of the company, and that the contract on the part of the Burk-Waggoner Corporation was fully executed.

"XI. I find as a fact that all of the assets of the company, both real and personal, have been handled by Clois L. Green, individually as his own personal business, and that a part of said assets, consisting largely of personal property, was sold to R. M. Waggoner for the sum of approximately $50,000, but that this was an individual trade between R. M. Waggoner and Clois L. Green, in which the Burk-Waggoner Oil Corporation had no interest."

Conclusions of Law. "I. I conclude as a matter of law that a parol contract for the purchase of property, both real and personal, which is fully executed, is sufficient to take the agreement out of the statute of frauds.

"II. I conclude as a matter of law that an assignment and transfer of personal and real property under seal of the corporation to one individual for himself and for the benefit of another, accompanied by an actual delivery of the property to the first individual, is sufficient to charge both of said parties for the payment of the consideration of said assignment and transfer.

"III. I conclude as a matter of law that R. M. Waggoner is estopped to deny the assumption of the liabilities of the Burk-Waggoner Oil Company, jointly with Clois L. Green, in consideration of the delivery of the assets of the company to him and Clois L. Green.

"IV. I conclude as a matter of law that, the contract being fully executed, Clois L. Green and R. M. Waggoner are jointly and severally bound and obligated to pay to the Magnolia Petroleum Company in the sum of $135.49, and that, where a party like Clois L. Green is in bankruptcy, no judgment can be rendered against him, but that R. M. Waggoner is liable for the entire debt of the Magnolia Petroleum Company herein, and accordingly render judgment for said amount in favor of the plaintiff Magnolia Petroleum Company and against R. M. Waggoner, with interest thereon from and after date at the rate of 6 per cent. per annum, together with all costs of suit herein."

The appellant contends, by proper assignment, that there is no evidence to support the finding of the trial court to the effect that the conveyance to C. L. Green was for the use and benefit of R. M. Waggoner as well as C. L. Green. We feel we are required by law to sustain this assignment. Although the directors of the company voted on September 27, 1920, to make the sale, no conveyance was made until October 6, 1920. The deed recites that it is made "in consideration of the sum of $10 and other valuable considerations paid by Clois L. Green, and the further consideration that the said Clois L. Green has assumed and by these presents does assume all the outstanding debts, liabilities and obligations of said corporation, wherever located and of whatever kind and character." The only witnesses used in the case were R. M. Waggoner, C. L. Green, Harry C. Weeks, and S. A. L. Morgan. Waggoner denied that he assumed the debts or received any of the assets. He declared he had no interest in the conveyance or the property. Green corroborated him. Weeks, an attorney, stated he advised Waggoner, following the directors' meeting, "to notify, Mr. Morgan, as vice president of the company, that he would not have anything to do with the transaction." The attorney said he knew Green took over the assets. The only evidence tending to sustain the finding is that given by Mr. Morgan, who testified:

"They were already in possession of this personal property, Mr. Green as vice president and general manager of the company, and he retained possession of it, the title was passed, and they became the property of Mr. Waggoner and Mr. Green at the time of that meeting. * * * Mr. Waggoner told me to make the assignment out to Mr. Green I didn't know what was in his mind, it was none of my business, I didn't see any objection to it from the standpoint of the board of directors."

We believe that Mr. Morgan's statement that "the title was passed and they became the property of Mr. Waggoner and Mr. Green at the time of that meeting" is a mere opinion, evidently based on the parol agreement of Mr. Waggoner made at the time of the directors' meeting. If so, whether the title then and there passed as stated must be determined by an inquiry as to whether or not such facts would sustain the legal conclusion drawn by the witness.

It is held by our Supreme Court that title must be proven by facts and circumstances, and that "it cannot be established by the conclusion of a witness." Webb v. Reynolds (Tex.Com.App.) 207 S.W. 917. Therefore, following the rule in this case, the conclusion of the witness, though admitted without objection, must be rejected as incompetent to prove title. Southern Surety Co. v. Nalle (Tex.Com.App.) 242 S.W. 201.

Upon the foregoing statement of the pleadings and evidence the appellant insists that the proof of Waggoner's alleged verbal promise is barred by the statute of frauds. We are not prepared to say there was no consideration moving to appellant when Green took over the company's liability. Bank v. Freeman, 107 Tex. 523, 181 S.W. 187. Neither are we disposed to hold that appellant's alleged contract to pay the company debts was one required by the statute of frauds to be in writing. Simpson v. Green (Tex.Com.App.) 231 S.W. 375; Showalter v. McDonnell, 83 Tex. 158,18 S.W. 491; Latham v. Kistler (Tex.Civ.App.) 235 S.W. 938. However, in this case such contract was reduced to writing, as shown by the deed. Parol evidence is admissible in suits on written contracts "where the original contract is verbal and entire, and part only of it was reduced to writing." Thomas v. Hammond, 47 Tex. 52. But when the parties to the transaction placed this part of the contract in writing it is presumed that they merged therein all prior stipulations tending to enlarge or diminish such obligation. Houston Carriage Co. v. William (Tex.Com.App.)221 S.W. 1081; Manley v. Noblitt (Tex.Civ.App.) 180 S.W. 1154 (writ refused). Although it is the general rule that the consideration of a deed may be explained by parol evidence (Johnson v. Elmen, 94 Tex. 168,59 S.W. 253, 52 L.R.A. 162, 86 Am. St. Rep. 845; Leeson v. City of Houston [Tex.Com.App.] 243 S.W. 485), such rule is not applicable if the consideration stated in the deed is "contractual." The authorities supporting this rule are fully reviewed by Judge Hall in Matheson v. C. B. Livestock Co. (Tex.Civ.App.) 176 S.W. 734. The consideration in the case at bar was contractual. The deed was made in consideration of a written contract, to wit, the grantee's promise to pay the company debts, and under the rule stated parol evidence adding to such consideration was not admissible in behalf of one seeking to enforce the contract. Muir v. Morris, 80 Or. 378, 157 P. 785; Union Mach. Sup. Co. v. Darnell, 89 Wash. 226, 154 P. 183; Sayre v. Burdick, 47 Minn. 367,50 N.W. 245. See Annotations, L.R.A. 1916A, 615. The result is not changed by seeking to make Green's written contract binding on appellant on the ground of agency. If Green was an agent, appellant was a disclosed principal. The deed bound Green only, and it is therefore evidence of the vendor's election to accept Green as the obliger. Sanger v. Warren,91 Tex. 472, 44 S.W. 477, 66 Am. St. Rep. 913; Heffron v. Pollard,73 Tex. 99, 11 S.W. 16, 15 Am. St. Rep. 764. Hence we believe that, under the parol evidence rule, applied as substantive law, the plaintiff failed to establish by competent evidence the express contract sued on. Railway Co. v. Wiseman (Tex.Civ.App.) 247 S.W. 695.

Reversed and rendered.