76 F.2d 94 | 5th Cir. | 1935
The appellants Y. Allen Holman, Sudie D. Holman, and J. D. Holman brought a bill on September 12, 1930, to cancel for fraud a transaction had on September 13, 1921, whereby several litigations concerning the title to very valuable oil properties in Claiborne parish, La., were compromised and disposition made of the interests of a dozen or more parties. The other appellants, Dominion Oil Company, F. P. Jackson, and C. O. Owens, were made defendants, but filed pleadings in support of the bill. The chancellor after hearing the evidence decreed against the relief prayed for. The pleadings need not be stated nor the rulings touching them be considered, since the case is controlled at last by the proofs. To understand the circumstances of the compromise and the frauds asserted against it, a brief history is necessary.
In 1889, the 91 acres of land involved belonged to one‘Thornton Bridgeman, who sold it on three years’ credit for $6 per acre to a negro, Isom McGee, making him a deed, but taking a mortgage back. Whether McGee ever paid for the land does not appear. He married a wife who already had an illegitimate daughter, Lillie Gussie Taylor, and a legitimate daughter Mattie was born. Isom in 1894 became the victim of a lynching, and his family fled to Arkansas. In 1904, one G. L. Bridgeman made a deed to the land to Harris, who deeded to Mrs. Ada Bridgeman, tutrix, in 1907. The heirs of G. L. Bridgeman next conveyed to George West, a negro, in 1914 and he went into possession. In January, 1919, oil was discovered in the vicinity, and West, reserving a royalty, made an oil lease to one Walker, who was a member of the law firm of Gold-stein & Walker. Walker, retaining an additional royalty of one-twenty-fourth, transferred the lease to Gulf Refining Company, which in November drilled wells upon the land and began on December 27th to produce vast amounts of oil from it. Meanwhile, since no deed from Isom McGee appeared of record, Foster, Looney & Wilkinson, a firm of lawyers, set in motion a search for his heirs. Lillie Gussie Taylor was located in Texas, and it was learned that Mattie McGee had died in 1903 leaving' her mother as'her heir, and the mother had died soon after leaving her illegitimate daughter, Lillie Gussie Taylor, as her heir, provided Lillie had been so acknowledged as under Louisiana law to be capable of inheriting. Taylor on October 31, 1919, by a formal writing, employed Foster, Looney & Wilkinson as her attorneys to recover the land, agreeing to convey to them an undivided one-half interest for services rendered and to be rendered, and giving them exclusive authority to compromise the suit. This agreement was filed for record November 25th. On November 24th she conveyed in fee simple to Foster, Looney & Wilkinson the one-half undivided interest as promised, and the deed was filed for record on December 30th. Meanwhile, on November 18, 1919, Taylor executed an oil and gas lease on 80 acres of the land to Y. Allen Holman, reserving a one-eighth royalty; Holman agreeing to pay also a bonus of $1,000 per acre for all of the land title to which should be established by judgment or compromise, and to pay the expense of litigation, except attorney’s fees. The ■ lease stipulated that no compromise should be effective without the consent of Taylor and of Foster, Looney & Wilkinson, and that “all litigation shall be conducted by the firm of Foster, Looney & Wilkinson.” Foster, Looney & Wilkinson prepared this lease, and, though they did not sign it, one of them attested it. The lease has been treated as though they were parties to it, and they have since claimed only one-half of the bonus of $1,000 per acre to be paid, and one-half of the reserved royalty. They filed suit in the name of Lillie Gussie Taylor against George West in the United States District Court, and first lost, but later won it; an appeal being then taken by West to the Circuit Court of Appeals. He, represented by Goldstein & Walker, claimed title by prescription based on ten years’ possession under deeds transla-tive of title, but there was grave question whether some of the deeds were such. Taylor’s trouble was her illegitimacy and the want' of formal acknowledgment of her by her mother according to the requirements of article 203 of the Louisiana Civil Code. She obtained from the probate court an uncontested decree of heirship, but it was appealed to the state supreme Court by Gulf Refining Company, and at its instance and expense by the state of Louisiana as parties interested, the Gulf having foreseen that the land might be held to have escheated to the state and having arranged in that event a lease; of it from the state. Y. Allen Holman had transferred his léase on the 80 acres to Caddo Central Oil & Refining Corporation, reserving an additional royalty in which J. D. Holman had got part which he subsequently
The Gulf Refining Company paid the $1,000,000 for the compromise and removed all the oil, and would be chiefly affected by the rescission demanded. Foster, Looney & Wilkinson got only a settlement for bonus and royalty rights which they would be entitled to under the Taylor title and leases. The severest charges against the Gulf of preconcerted fraud and actual misrepresentation were not supported by evidence, and were formally abandoned by amendment. It was proven that West’s title, instead of being used merely to defeat Taylor, was regarded as substantial, and that the Gulf took Walker’s lease under it on advice of counsel and refused to buy a lease under the Taylor title. The Gulf did not, as charged, grossly misrepresent the quantity of oil produced in order to forward the compromise, but truly stated it, and on the basis of that statement the $1,000,000 was divided among the appellants and others by a document over their own admitted signatures. The only remaining direct fraud testified to against the Gulf was that when Looney asserted that Caddo and the others had agreed to settle and leave the Holmans to fight alone, the truth being that the settlement proposed was in globo and subject to the Holmans’ approval, the attorney for Gulf was present and made the same argument. Looney denies making this representation. Story, who represented Caddo and participated in the discussions with the Holmans, was dead when the bill was filed, as were Foster and Wilkinson. If the argument was used by Looney and Story, it may not have been wholly false. The Holmans of course knew that their approval was sought and that no one had actually settled. Wilkin- . son’s proposal to Gulf in truth was in globo, but the qualified acceptance of it failed to make a contract binding any one. If the Holmans, knowing the true facts, had refused to approve, the matter would have been open for Gulf to settle separately with Caddo and any others, and what was really said on that line may have been justified. However that may be, both Looney and the Gulf’s attorney deny that the latter was present at all or had anything to do with inducing the Holmans to consent, and the District Judge who heard the witnesses testify finds that this is true. Seeing that appellants’ memories after this long lapse of time were wholly wrong about the Gulf’s misrepresenting the oil produced, we follow the District Judge’s finding and absolve the Gulf also on this point. There remains as to the Gulf only the indirect fraud claimed in that it, knowing of the pooling contract between Foster, Looney & Wilkinson and West and Goldstein & Walker, did not disclose, but knowingly took advantage of it in making the compromise. See Louisiana Civil Code, art. 1847 (9). We will look narrowly at that contract as a basis of fraudl
Foster, Looney & Wilkinson were employed by Taylor as her attorneys at law, and were paid in advance by a recorded deed in fee simple to a one-half interest in the subject of the litigation. The lease under which the Holmans claimed stipulates that all litigation shall be conducted by the firm of Foster, Looney & Wilkinson, and that no compromise shall be made without the latter’s consent, and that all expenses' of litigation shall be borne by lessees, except counsel fees. The Holmans and their privies, though they did not employ these attorneys and were not bound to them for fees, were in our opinion their clients in the contemplated litigation, for the attorneys were by consent managing their interests in court. Some of the appellants indeed paid these attorneys a special fee after the compromise. The attorneys in any dealing with their clients about the business in their hands owed them the fullest disclosure of relevant facts and the amplest good faith. If they acquired any adverse interests in the subject-matter of litigation without the consent of their clients, they were liable to be called to account as trustees. On the other hand, with the knowledge of every one, Foster, Looney & Wilkinson had a proprietary as well as a professional rela
There are other considerations that condemn it. It would manifestly be impossible to restore the status. If the money received by the complainants could equitably be- held back till they could establish their title and right to an account, the contest itself over the title cannot be put back where it was. The decision of the state Supreme Court cannot be erased, nor the suit of Gulf against Clayton be reinstated, nor West’s appeal to the Circuit Court of Appeals be made effective, nor can dead witnesses be recalled to life or the memory of living ones made fresh again. And this reflection raises the question of laches. The District Judge thought that because full discovery of the contents of the pooling agreement of June 23, 1920, happened within five years of the filing of the suit there was no bar either by
Judgment affirmed.