Hall v. Edge
782 P.2d 122
Okla.
1989
Check Treatment

*1 122 de- the defendant agreement (1877). Generally, guaranty 424 the common-

L.Ed. obligation with guaranty otherwise, sires to setoff provides that mutual debts law plaintiff. allegedly made payments by operation of automatically not setoff are counterclaim Thus, that Howard’s hold we Jones, 497, 274 265 v. S.C. law. Gilliland the action defense permissible raises a Farmer, (1980); 4 264 S.E.2d Green guaranty. on the 651; 1 Wm Bl. 98 E.R. 154 Burr. appropriate

(1768). (Lord Summary judgment is latter case Mansfield no there is sub says only it is clear that equity did observe that when “[n]atural controversy material fact. compensate stantial should each oth- cross-demands Ward, 529 er, by deducting Montgomery the less sum from the Northrip v. (Okl.1974); Pryor 489 Weaver v. only greater and the difference is the Jefferso (Okl.1977). The trial nian, P.2d 967 due”.) justly which sum can be summary judgment against Howard court’s however, Insolvency, may allow guaranty was due on the fixing the amount Insolvency for different result. of one of defenses proper with Howard’s parties may equity, create an unresolved. counterclaims it, strengthen least sufficient to allow a Appeals The Court is obligations. setoff mutual 3 J. Sto summary judgment vacated and the ry, Equity Jurispru Commentaries on against The cause Howard reversed. dence, eq This § remanded to the District Court’ of Tulsa principle applied uitable has been for the County proceedings further consistent benefit of in cases involving borrowers in as the herewith such time automatic solvent national banks. Scott v. Arm stay proceedings Bank- U.S. strong, 13 S.Ct. U.S. 36 L.Ed. litigation ruptcy Court shall bar (1892); Hibernia National Bank v. counterclaims. Deposit Corp., Federal Ins. F.2d HARGRAVE, C.J., HODGES, (10th Cir.1984); 1407-1408 Seattle-First LAVENDER, SIMMS, DOOLIN, ALMA F.D.I.C., Bank v. Nat. 619 F.Supp. KAUGER, JJ., WILSON and (W.D.Okl.1985). ap It has also been LUMPKIN, GARY L. (Appointed S.J. plied Republic in a recent bankruptcy place OPALA, V.C.J., who proceeding, Republic In re Financial Cor disqualified), concur. (Bankr.N.D.Okl. poration, 47 B.R. 766 1985). In that case the court addressed the

equities of a Thrift setoff of a Certificate

against Note, a Promissory and stated: stay granted Court orders

“[TJhis Corporation Re Republic Finance Hall, and Suzanne HALL Jeff Savings Corporation be public Trust and Appellants, modified so as to allow Movants to setoff against claim RFC with their obli pursuant to 11 gation owed to RT & SC EDGE,* Edge Energies, Herman d/b/a 47 B.R. U.S.C. 553.” Id. Jackson, and Ronald W. Ronald d/b/a grave injustice and cause “It would be a Company, Appellees. W. Jackson & hardship monetary loss substantial No. 65592. deny mutual to Movants to setoff obligations claims and virtue Supreme Court of Oklahoma. corpora- acts and activities of the debtor Oct. Id. 47 B.R. at 770. tions.” grave injustice denying setoff as injustice described above is no less aon bringing suit plaintiff insolvent

* Edge Energies part Herman has taken in these proceedings d/b/a appeal. *2 (1) appeal hold as follows:

now Hall is dismissal of Suzanne the order of (2) The order us. properly before re- must be summary judgment granting *3 awarding (3) must the order So versed. opinion of the Court attorney The fees. fur- for and we remand Appeals-is vacated by the trial court. proceedings ther of this discuss the merits Before we ad matters must be procedural case two “Motion to Hall has filed a dressed. Tulsa, Hall, Ap pro requesting se. that the Court of Jeff Strike” deem the peals opinion be stricken. We Hall, Tulsa, pro se. Suzanne moot because we have Motion to Strike Hickman, Hickman, Hickman & Frank R. and herein va previously granted certiorari Tulsa, appellee Jackson. Appeals opinion. cate Court SUMMERS, Justice. procedural is wheth The next issue appellate review his preserved er Hall Hall sued small Jeff and Suzanne judgment. objections claims court to recover funds invested pronounced on summary judgment was gas drilling ventures. unsuccessful oil and 12, Monday, Sep September 1985 and on they to the district court After removal 1985, 23, filed a motion to tember Defen- petition allege their amended seeking it. A motion vacation of a vacate Jackson, Public Ac- dant as a “Certified days judgment is filed within 10 which for these countant who was the accountant may regarded as the func the decision professional Drilling Ventures and who had equivalent of a motion for new trial. tional knowledge of the financial and confidential Horizons, Co., Leasing Inc. v. KEO 681 each,” fraud had committed situation (Okl.1984). P.2d 759 Hall’s motion to against by verbally misrepresenting them the time within which vacate thus extended good when ventures as investments appeal preserved ap issues for our of the falsi- he knew or should have known pellate review. statements, the Halls ty of the and that upon these had relied to their detriment had also misrepresentations. Plaintiffs HALL I. DISMISSAL OF SUZANNE fraud, of securi- filed an action for violation The trial court dismissed Suzanne against Herman ties laws and conversion appear. petition Hall’s for her failure to Edge Energies, Edge, d/b/a Appeals affirmed the trial The Court partnerships. That partner of the limited prior set aside its dismis court’s refusal to part stayed the action was find, plaintiff. sal of Suzanne as a We Energies bankruptcy. After con- declared however, appellate jurisdiction that no ex litigation, action paper siderable Suzanne’s her dismissal. This court has ists to review appear, dismissed for her failure to was duty inquire jurisdiction. its into Mat summary judg- granted was and Jackson Petition, ter Initiative ment. (Okl. Suzanne was dismissed as vacate Jeff Hall then filed a motion to July party on 1985. On June summary judgment. That motion the dismis she filed a motion to set aside granted overruled and the Court sal, August which motion was denied judgment attorney fees in an additional summary judg 1985. Jackson’s motion for $3,000.00. the sum of granted September ment was 23, 1985, the Halls filed a appealed. Ap- September On

Plaintiffs The Court Summary Judgment “Motion to Vacate the peals affirmed the trial court’s orders The “dismissal” granted and Set Aside Dismissal”. have earlier certiorari. We we argument Mays producing concerned the A. I knew the were not of that motion well, still, very due “dismissal” of Jackson as at that time no sustaining operator the order the motion for summa determination had ry judgment. appeal dry-hole did not Suzanne been made to them. (30)

August ruling thirty within Q. change they But that didn’t the fact days. appellate jurisdiction Thus our has wells. bad not been invoked to review her dismissal agree. IA. would Bad as far as who- O.S.1981, trial court. 990. We I say ever invested them. would must leave intact the trial court’s dismissal potential getting that their of ever party. of Suzanne Hall as a money very back was slim.” *4 (O.R. at II. SUMMARY JUDGMENT FOR “Q. you When did first become dissat- THE DEFENDANT your isfied with investment in these complaint against Jeff Hall’s Jackson partnerships? limited ... may be summarized as follows: 1. Jackson Q. you’re I telling you take it me that Edge Energies’ was the accountant lim- identify any particular cannot time In partnerships; February ited 2. of 1983 you became dissatisfied with general partners when Hall told one of the your investment. partnerships of the limited that he did not IA. think the my dissatisfaction of in- want to in invest the ventures the time, vestment came gradually over Jackson, partner him invited tó call Ron probably starting spring with the Accountant, Certified Public “who Í982, learning things like the tanks Drilling accountant for these Ventures and being gauged tempera- weren’t professional who had and confidential coming ture when the trucks were knowledge of the financial situation of each up, that the tanks weren’t locked. and who could vouch for their worth as an May The indecision of the well of (Amended Petition,); investment” 3. Jack- dry-hole whether to it or shut it Edge Energies’ son said to Hall that limit- down, yet they charging continued deal”, partnerships “good were a operating expenses and continued they “good moneymakers”, “they were operating. expecting something two-year were like a Q. happened spring And that or (Tr. 37); payoff” 4. Jackson was dissat- summer of 1982. Edge Energies isfied drilling with some (O.R. spring right_” 45-46). ventures in the of 1982 due to mis- A. That’s management by operators; 5. Jackson support of his motion for Edge in knew 1982 that some of the Ener- judgment deposi- Jackson relied on Hall’s gies’ investments; partnerships were bad tion. Hall had testified that the conversa- drilling in Jackson was an investor ven- “short”, they tion with Jackson was 1982-VI; ture did not limit Jackson “generalities”, in talked that Jackson stat- Edge Energies’ part- recommendation of drilling Edge Energies ed that ventures nerships specific partnerships; 8. Hall deal”, “good “good moneymakers”, were a relied on the recommendation of Jackson they expecting year and that a “two Edge Energies’ drilling and invested in ven- argued payback”. Jackson that he made 1982-VIII; tures 1982-VI and and 9. Hall drilling “a statement to all ventures of lost his investment. Edge Energies” spe- but that he made no petition Hall attached to his amended representations concerning drilling cific pages deposition in of Jackson a differ- ventures 1982-VI 1982-VIII. Jackson pertaining ent case to investments contended that the statements were true Energies’ partnerships. testimony This drilling when made because ventures of part: states in Edge Energies profitable were often result- argued “Q. Mays ing in returns to investors. He also you And knew the were bad relationship special that no existed with wells. drilling good deals or require ventures were not Hall dis- which would Jackson two-year pay- makers good money close to Hall. Jackson ar- with information back, specific representa- representations or made the gued that because had ground believing tion occured as to ventures 1982-VI and without a reasonable 1982-VIII, misrepresenta- phone no material false them to true at time tion of was made. Jackson concluded fact conversation.1 that Hall failed to all of the had show Tindell, 733 P.2d 407 Dawson elements fraud. (Okl.1987)we said of fraud: responded also moved sum- “The fraud are elements actionable mary judgment. Attached to Hall’s re- material, false which are sponse excerpt dep- was the from Jackson’s knowledge falsity, made their with showing osition earlier referred Jack- knowledge recklessly made without son’s some in- dissatisfaction 1982 with assertion, positive and as a truth Edge Energies partnerships. vestments they with the intention that be acted report prepared by Also attached was another, upon by and relied thereon February 7, injury.” another to his Id. 733 partners venture for the 1982-VI limited *5 P.2d at 408. report the Hall that the venture. asserted Generally, representation the false must be to him time of undisclosed at the his existing a statement of and not a fact mere February 11, conversation with Jackson on expression opinion. of v. Hum Greene report and that the showed an eleven- (Okl.1954); phrey, 274 P.2d Haz year payback the Hall on venture. also Wilkin, (Okl.1914). 140 P. lett (defendant general partner stated that the example, opinion For a seller’s which is $34,046.43, Edge) owed on December nothing “puffing”2 give than will not more Edge partnership money to an misrepresenta rise to an action based on collected drill two had not to wells which Enterprises, tion. Presidio Inc. War this been drilled. connection with alle- Distributing Corp., ner 784 F.2d Bros. gation attached Hall material Jack- (5th Cir.1986). However, courts have fash deposition son’s which that indicated on exceptions general this ioned several to December there was the $2.00 allow, rule and will under certain circum partnership Although bank account. Hall stances, of action on a a cause based false up particular not did link this material with representation which was in the form of an partnerships, limited Hall attached material opinion. publication stating from a an that auditor explained exceptions three One court to particu- drilling partnerships of should be general this rule as follows: part- larly commingling of concerned with nership sponsor. and the the indicate that funds funds of “Where circumstances the argued appeared parties position Hall that this had to have did not stand in a partner- respect happened. parity Hall also that normal wariness with asserted ship being subject representation, held in escrow to the of the funds were how- ever, prior activity exceptions to and that an have carved been out of general excep- this the these auditor should be concerned with as rule. Most of (O.R. 357-359). summary, legitimacy from well. tions derive their circum- argued that the that Jackson either knew the stances that would lead reasonable English argued appeal 1. Hall that he had a cause of from interested motives. 12 The Oxford (2d 1989). exaggerated the Dictionary, action based on 71 Oklahoma Securities Act. ed seq. Although 1 et he refers to § O.S.1981 praise “is considered be offered under- "simple security this case as a petition fraud case” in his expression opinion as seller’s stood an certiorari, argue his failure to this only, is to be as such the which discounted authority issue with relevant on certiorari buyer, on which no reasonable man would it waives our review. Keeton, Prosser, rely”. Prosser W. and W. Torts, at 757 Keeton on the Law Puffing extolling, commending praising, or extravagant usually in inflated or terms and explained implicit pre- principle have as person to believe that Keeton this opinion of fact follows: diction or is an assertion represen- upon recipient the which recognized very has been that often “[I]t might prudently rely. the

tation Where expression opinion may carry the an making person representation occu- the assertion, implied only with an that it fiduciary position pies a or other of trust speaker the which knows facts would remarks, recipient for the of his for in- preclude opinion, such an but stance, recipient may justified in be justify does know facts which it. There only assuming the correctness not of fac- general agreement quite as- such opin- tual but also implied sertion is to be where the defen- ions_ partners partner- Since as to holds dant himself out or is understood se, ship matters are fiduciaries inter it is having special knowledge of the mat- partners often found were entitled ter plaintiff, which is not available to the rely opinions opinion of their col- so that his becomes effect an leagues. summarizing knowledge. assertion Thus, ordinary man is free to deal

Another to the re upon opinion reliance expert an misrepresentation quirement that the diamond, jeweler as to the value of a existing appears one of fact in the situa attorney upon point law, of a speaker may reasonably tion where physician upon health, a matter of having opin be understood as based upon validity banker a signature, prediction ion on facts that are un or the owner of land at a distance as available the listener either because he worth, though its even is that does not have access them or because *6 antagonist of in bargaining his a transac- obviously incapable interpreting he is of Keeton, Prosser, Pros- tion.” W. and W. them. a Still third based Torts, ser and Keeton the Law upon assumption the logical that one who of at 109 760-761 ed. § asserts that a future event come will to pass impliedly warrants that he knows of opponent’s on an knowledgable Reliance prevent no fact that will its occurrence.” opinion as an element of fraud has been Day Avery, 63, v. U.S.App.D.C. 179 548 recognized in St. & Louis jurisdiction. this 1018, (D.C.Cir.1976), cert. F.2d 1026-1027 Reed, v. 350, S.F.R. Co. 37 Okl. 132 P. 355 denied, 908, 1706, 431 U.S. 97 S.Ct. 52 (1913). plaintiff In this case the relied (1977), (footnotes omitted). L.Ed.2d 394 physician’s alleged company opinion. She also, Kropinski Exec v. World Plan See physician that she the told her “was but Council-US, 948, utive 853 F.2d 953 slightly injured and her would recover (D.C.Cir.1988). time, health in a short her injuries and that expressed exceptions only slight These are of Re consisted bruises and the (Second) Id. at jar statement Torts. shock 542.3 and of the ears at the time of her also, First S L cars, See Walters v. Fed. & attempt to enter that was said she Phoenix, 324, ’n. hurt, Ass 131 Ariz. 641 scared she that worse than was and (1982). P.2d she 238 Professors Prosser would never know she had been hurt part: 3. Section states: f to § 542 Comment 542 states in complexities specializations misrepresenta- "The of mod- recipient "The of a fraudulent solely opinion jusiti- the tion maker’s ern commercial and financial life have created relying upon it many fied in transaction with the special experience situations in which maker, opinion the fact unless to which the necessary training are to the formation of a material, relates is and the maker judgment. In if valuable this case the one (a) purports knowledge special to have of the training special experience purports has or or have, recipient that matter the does not or them, other, them, have the if without is entitled (b) fiduciary or stands in other similar rela- upon honesty rely opinion the of the former’s recipient, tion trust and confidence to the or importance and to attach to it the that is war- (c) successfully has endeavored secure the by superior competence.” ranted recipient, the confidence of or (d) special expect has some other reason to rely recipient opinion.” that the will on his 128 might an accountant opinion as In re- Jackson’s morning.”. 132 P. 356.

by Id. in effect an assertion “become be found to signed a release. In liance thereon she knowledge”. Prosser summarizing his allegations commenting Plaintiffs on the Torts, supra. Law Keeton on the allega- examination we stated: “[a]n reply shows a sufficient plaintiff’s tions of used the term Jackson’s The charge Id. 132 P. at 357. of fraud”. containing the representation “good”. A argued that “the statements of defendant insufficient, cir in certain “good” is term expression of an physician the were but the Po cumstances, fraud. to show actionable probable duration opinion as to the Bender, 87 Ariz. ley said: injuries”. disagreed Id. We Freeman, (1959). 72 Kan. Else v. misrepresenta- “The of fraudulent gist (1905). ex The Kansas court 83 P. impres- producing of a false tion is the plained meaning “the of the word party, upon the mind of the other upon sion as ‘good’depends entirely its almost actually accomplished words, and if this result other and relation sociations with accomplishing are imma- it means it subject-matter which is used”. about Cyc. 14. terial. applying P. this rule the Id. 83 “good expression superior found that physician had court In this case the conveyed vague idea too fence” knowledge subject-matter under representa plaintiff, shown uncertain to be an actionable as discussion. However, found evidence, ignorant a Vermont court woman tion. representation a seller’s that a stock knowledge; such there- and did not have opinion good gold”, “as as in connection with expression of an which was fore his statements, entertain, emphatic other to be “an asser it was con- did because facts, corporation enough misrepre- that the had assets trary was such a tion to make stock dollar dollar warrant the cancella- its worth sentation would Corp. Finance tion the release secured reason better”. Commercial (1932). Gale, 105 A. P. Vt. thereof.” Id. 132 today’s alleged Louis, physician case Hall supra, In St. partnerships stated that the expressed “an he did not entertain” *7 case, deal”, “good “good they a mon plaintiff. In our Hall tendered were to the eymakers”, “they expecting and portion deposition were to the trial court a something two-year payoff”. like a showing was of Jackson that Jackson of phrase something like a two- opinion Edge “expecting4 the Ener that some of the phrase year payoff” significant. This partnerships were bad investments gies’ “good “good quantifies terms deal” and partner the prior to his commendation thus, Louis, moneymakers” may be found supra, the and to ships to Hall. In St. representation quality of the knowledge of a physician superior had the be quali of representation A the subject-matter. In our case Jackson was investment. ty bought may superior property unseen be the represented having to Hall as of inducing a Edge for fraud contract for sale. knowledge of financial worth of basis the (Okl. Carney, 263 P.2d 744 Energies’ partnerships to his status as v. due Finefrock Thus, 1953). partnerships. the the accountant for Keeton, raising." representation pectations Prosser, W. and W. Generally, be re must false Torts, existing garding to future events. facts and not and Keeton on the Law Prosser Realtors, Lyon, 1984). (Footnotes Inc. 610 P.2d Citation Co. omit at 762 § ted). (Okl. exception to this An fact that state One court has stated: "The however, does, prophecy rule is thus: "Such preclude relate to the future will ments always carry implied representation that the liability were in for fraud if such statements prevent it speaker facts which will knows of no accepted as of fact tended and being accomplished; and as in the case of peculiarly within the and involved matter opinion, held that there other it has been knowledge." & speaker’s Claus v. Farmers upon may assertion reliance the be reasonable Bank, Wyo. Stockgrowers 781, 63 P.2d State special speaker purports to have where the knowledge also, (1936). Avery, supra. Day v. See justify the ex would facts which argument responded attorney opponent Jackson to this on te award fees when an faith, summary judgment by arguing in vexatiously, has acted wanton- bad good oppressive ventures were “because at or for ly, reasons. Id. 565 P.2d the time the statement was the drill- made at ing Edge Energies were ventures of often Jackson relied on the Owens bad (O.R. 294). profitable”. argu- Jackson’s seeking attorney’s faith in ment is that his all of concerned the He fee. based this claim on the amount Edge partnerships generally and not the papers by pro filed Hall and on an se specific partnerships by invested in Hall. argument that Hall’s action was frivolous. responded Hall that he understood Jackson The trial awarding judgment court’s order to making representation that each for fees such finding. makes no Nor do we partnerships and all of the limited would conclude that the trial of the cause this payback. have a two-year issues These are gives point rise the Owens bad faith properly jury. left a by for resolution exception. Tice, (Okl.1983), In Tice v. 672 P.2d 1168 Owens, emphasized we oppressive the “[wjhen we stated that is properly fraud plaintiff’s nature of that actions. alleged by by one and denied the facts, Clearly, the plaintiff’s under ac- party, other the existence or non-existence tions oppressive plaintiff dragged — question fraud becomes a fact”. Id. court, into put defendants them to at 1171. In Wynn, P.2d 1126 White trial, expense without the chance (Okl.1985), we observed that where facts of having favor, suit determined concerning any plead issue raised expenditures time, caused fruitless ef- ings supporting materials are such that fort, money by all involved while men, in

reasonable of fair exercise plaintiff, time, oppor- at the same had the impartial judgment, might reach different tunity strength to test the and weakness conclusions, summary judgment must be short, plaintiff of his case. used the required prove denied. Hall courtroom as a rehearsal hall ex- challenged case Jackson’s motion pense of people. his adversaries and the summary judgment. satisfactorily Owens, supra, at 7. alleged fraud and showed factual issues in Owens, In contrast Thus, Hall’s case was response to Jackson’s motion. we judgment. decided Jackson grant must reverse the trial court’s order put expense has not been of a trial ing summary judgment to va judgment resolving this time the Appeals opinion cate the Court affirming case his favor must be set aside. There that order.5 no finding that Hall has acted such *8 III. AWARD OP bring ATTORNEY’S FEES faith bad as to this ease within the general limited to the rule enun- Attorney ordinarily fees are not re Owens, in supra. ciated The trial court’s party against coverable one another in awarding attorney order fees to Jackson is the absence statute or an enforceable thus reversed. contract. City National Bank Trust (Okl.1977); Owens, v.Co. 565 P.2d 4 summary, Appeals opin- Mat Court of Katschor, ter Estate P.2d 855 ion vacated. The trial court’s order dis- (Okl.1981); Publishing missing Oklahoma Co. v. party Suzanne Hall as a for her (Okl.1982). Miskovsky, 654 P.2d 596 appear How failure to stands due unreviewed ever, exceptions do timely appeal. exist to the her failure to The trial principle that each bear granting summary judgment should court’s order expenses reversed, legal representation. his own Jackson is is the trial court Owens, example, For supra, granting attorney’s in we found order fee. equitable power that the denying court had inherent The order of the trial court Hall’s portion 5. The trial court's denial of motion Hall's for ri intact. trial court order is left summary judgment is not before us on certiora- left in- judgment for motion is remanded to trial

tact. case proceedings.

court further

HARGRAVE, C.J., OPALA, V.C.J., LAVENDER, DOOLIN, HODGES, KAUGER, JJ.,

ALMA WILSON

concur.

SIMMS, J., part, dissents concurs

in part.

SIMMS, Justice, concurring part,

dissenting part: granted in this

I would have certiorari only purpose the limited ex-

matter

amining attorney’s fee to defen- award

dant Jackson. majority’s reversal of

I concur with attorney’s fee award the reason a defendant who transfers statute court, out as Jackson case of small claims case,

did in the instant is unable to recover O.S.1981,

attorney’s fees. Under subject pay- such a defendant is plaintiff’s attorney’s plain- if fees

ment recipro- prevails,

tiff but is afforded a right prevail. Thayer

cal should Co., Okl.,

Phillips Petroleum (1980), that statu- this Court reviewed

tory differentiation of treatment and held repugnancy results. constitutional here.

That statute controls TURLEY, Appellant,

Windle

FLAG-REDFERN OIL

COMPANY, Appellee.

No. 72408.

Supreme Oklahoma. Court of

Oct.