*1 al., INC., Appellants, SUSANOIL, et COMPANY, Appellee. OIL
CONTINENTAL
No. Appeals Texas, of Civil
Court Antonio. San 22, 1975.
Jan.
Rehearing Denied Feb. *2 Davis, Harlingen, Leon F. & Johnson
Steinle, Jourdanton, appellants. for Schleider, Harry Dippel, Jr., Ben H. G. Houston, appellee. for KLINGEMAN, Justice. appeal an summary judg-
This is from a defendant, entered in favor ment Conti- Company, by nental in a filed Oil suit Susanoil, plaintiffs, Harry Jacobs, Inc. and exemplary, seeking damages, actual and for obtaining de- fendant of a unitization operations (Es- in the Velma waterflood County, Field in Atascoas Texas. condido) The herein suit involves Counts One and brought by original Three of an suit ten plaintiffs against named numerous defend- seeking variety of ants a wide relief error, separate point eight has had of their first counts.1 This court previous appeals involving during negotia two various assert: phases and, original leading suit for a more tions to the execution Susanoil, complete Agreement, et background, see Inc. the Unitization Continen representative Company, tal’s al. 516 S.W. assured Oil *3 (Tex.Civ.App. operating equipment 2d 260 Antonio all owners of well — San ;writ) equally respect no Sivert Continental Oil would be with Com treated to pany, (Tex.Civ.App. Agreement the S.W.2d 482 Unitization and in connec — San Antonio n.r.e.). writ ref’d Counts tion with the transfer of to defendant the right, One and not only possession Three are the counts use and the of removable previously disposed equipment. well operating (2) of. Such
sentations in were false that letter dated 3, 1962, accepted October and on October point Plaintiffs’ first of error asserts 19, 1962, separate a agreement undisclosed that the trial erred de- granting court in Bering group releasing was made with the fendant’s judgment motion for equipment their affording well and plaintiffs’ them because pleadings a cause stated special respect to considerations with of damages action for for which lim- fraud plugging. (3) representations were law, itations did not bar of and as matter made plain with the intent to induce the depositions, pleadings, the answers to inter- tiffs Agreement to execute the Unitization rogatories, file, and together admissions on thereby assign and and well their leases affidavits, the with the disclosed existence equipment rent-free defendant. to disputed of fact issues. pleading pertaining eight Plaintiffs’ to fraud al- as fol 1. The counts summarized leged represented alleged damages that defendant them that for lows : One seeks Count operators Susanoil, all required and obtaining lease owners were in execution from Harry in Inc., the transaction to contribute the and Jacobs of the Unitization right of, practical possession they use and or in Agreement agreed of wherein to let Con equipment, effect, loan production equipment their wells and lease tinental use their oil op- rent-free, proposed sign to defendant for the understanding rent-free the that all with ; plaintiffs promised equal required were eration do ers of were the treatment; representations secretly were likewise, fact, appellee that such in had when false in did not and fraudulent that defendant the released another leasehold owner representations; comply intend to with such provision take rent-free and was allowed to that, Bering actuality, group in were be- most of such off the land. Count ing given damages deal Ber- against more favorable in that and Two seeks Continental ing in it could re- was assured advance H. Doran because of their failure W. equip- secondary lease move and use all of its surface and maintain recov to conduct expiration upon ery operations good faith, prudent ment and that of the need for and in a leases, Bering manner, the casing either withdraw could with the and accordance Unitiza plug Agreement. have the wells or Continental Three seeks exem tion Count casing well; in the plary damages against do in return for the so in that Continental carefully con- complained deal was wrongful acts in Count One its of plaintiffs only plaintiffs; cealed from Four were willful fraudulent. Count signed Pensco, because of damages against the Unitization seeks Doran repre- equal through wrongful produc treatment their reliance on Inc. conversion ; ma- belong sentation tion and sale of oil that did plaintiffs’ use exemplary of of terial because the dam seeks them. Five Count operating ages against and well surface he Doran because what did great plaintiffs; did not value to seeks dam and fraudulent. Count Six willful many years injury later ages the fraud until discover and Doran for discovery pro- examining, they plaintiffs. were when Count to the land of one op- subsequent ceedings, Agree unit of a files seeks to remove Unitization Seven misrepresenta- (Doran) ; plaintiffs’ erator title. Count ment as a cloud on great declaring declaratory judgment a cause Eight defendant was tions of seeks plaintiffs. damage par rights relationships legal loss and ties. upon representations relied Plaintiffs sert that this contention misconstrues subsequently gist entering into the thrust their suit for fraud. The Unitiza plaintiffs’ Agreement. action is that Ber- (S) Plaintiffs suffered-a for fraud secretly loss of their consequence ing group had been released ad- representations. provision, at vance from the use and knew signed the time that the Unitization Defendant asserts a matter of Agreement subject that it would not be fraud; law there was no that defendant provision actuality re- could use misrepresentations no materi- tain surface and remove their lease fact; al alleged representations, any, ; given ment were an simply promises relating to future equal Bering group, although deal with the events and have established the same both executed Unitization intent part defendant; to defraud on the *4 Agreement; equip- the use of their that under the Agreement Unitization de- them; ment was of material value to fendant right had absolute to do what in early negotiations their with defendant it They did. further assert that cause pertaining Agreement, to the Unitization plaintiffs may of action that have is barred plaintiffs attempted to retain of use by the of statute limitations. equipment; they only agreed and that they such use after been Conti- had told Although factually disputes defendant they nental their could retain virtually every allegation and contention equipment on the lease because defendant by plaintiffs, it also asserts that even going Agree- to form a Unitization accept we allegations true all such operators ment containing other lease and contentions, and there still would everyone going to be treated fraud; pursuant its conduct was same; Bering they that had known that the and consistent with the Agree- Unitization deal, group had a different was, therefore, ment and lawful. would not have entered into such Unitiza- In this connection defendant par- relies Agreement. ticularly portion Unitization Agreement provides which rely basically follows: Plaintiffs on the hereinaft- er set forth evidence
“Assignors expressly except reserve and fraud: of their of action for cause assignment from conveyance this ti- tle equipment; to all such wells and Letter defendant C. (1) to J. however, group of use and possession Wynne dated October of such part wells reads pertinent which hereunder, are transferred to Continental as follows: period that, for the time the sole previous correspon- keeping “In with our Continental, any discretion of such well we are proposed on our waterflood dence equipment may be deemed use- to be you following prepared to make operations ful in the on the Unitized may your sur- proposition. You remove production
Area and the of Unitized including pumps, equipment, face lease Substances, or until the termination of only tanks, rods, leaving etc. tubing, agreement, this whichever the earlier casing In this two wells with intact. date.” possi- your way salvage can realize you provi- in the unit Defendant asserts that this now and still share under bilities sion, you. previously use production could whatever outlined to this operation advantages deemed in the under useful of the unit Your proposal readily apparent, and at part equip- release all became partic- longer ment at these any time. Plaintiffs do such time as we no need you your disagree ularly with but as- either withdraw this contention leases November, 1962; repre- casing plug (d) we ment in plug the wells or will you casing sentations were continued in the sense that them for return for propos- every agreement this written or memorandum give these two wells. Please your explaining and let the written indicated al serious consideration us your being response.”3 well owners in fact have favorable equally arrange- treated contractual appli- Wynne, Affidavit C. of J. representations ments; (e) such were false part of which cable is as follows: in that at the time defendant delivered plaintiffs on Unitization Oc- “McKitterick then me the letter wrote 16, 1962, secretly offered had tober 3, 1962, I fur- (Exhibit J). October had operator a release (Bering group) another corresponded ther with Continental and Bering’s equipment certain further up (Exhibit others to October plug considerations letter Octo- accepted which P) I Continental’s 1962; representations ber the false (f) proposal group. on behalf of our At were material in that point, McKitterick, as of October could have either used such well 3rd, had us to offered to allow remove it; representations (g) or sold caused equipment, including our surface lease damages their because tanks, rods, pumps, leaving only etc. released, ment, instead of was tied casing wells and intact. also offered He. up eight years unitization in the *5 casing to us to and allow withdraw our it damaged, lost or stolen much was plug plug the wells or have Continental period; plaintiffs the did not during (h) casing them us in the in for return for repre- and discover had no that the notice accepted wells. the two I that. With sentations were in 1971 when untrue until me, acceptance proposal by the of that I produced discovery certain were documents had firm deal with that Continental agreement. the revealing side equipment go our surface was to into protect- the waterflood we and would in Finkelstein further affida- states pro- obligation, the plugging ed to commencing vit the that about end in such vided letter.” in plaintiffs by were .contacted Continental pres- Finkelstein, with (3) proposed Affidavit of S. connection the waterflood H. parts operation negotiations Susanoil, pertinent carried on Inc., ident of the were period time; pertaining to be summa- for an that dur- fraud which extended Septem- ing plaintiffs insisted negotiations rized follows: On about (a) 19, 1962, operating represented ber that would retain their well Continental to units, plaintiffs including pumps pro- equipment, that all in pumping well owners the August, posed equipment; Velma Field would be and other that (Escondido) equally by phase one of the treated Continental indicated that respecting Continental agreement operators as- would be all assignment the of the use of that to Continental Continental, possession sign to operating the leasehold interest of well producing ment; to use made the wells was (b) presently that part equipment property; intent the with the of Continental on September agree- plaintiffs went into plaintiffs to induce Unitiza- the to execüte the make trying ment with to thereby assign their whereby they leases, deal retain surface property, use of 11 would including the oil units, including pumps, pumping wells, equipment, operating equip- the use of well Continental; well plain- tubing, rods and other removable (c) ment rent-free to equipment; upon representa- that at such time tiffs relied Continental’s everyone Agree- tions were told substance executing the Unitization —all proposal accepted appears on Octo- It was the evidence 19, 1962, Bering group. ber the being well owners—were called essential elements of the cause of action. upon agree pos- proof to commit the use and the The burden on movant and session their presently genuine doubts as the existence of a Continental; located the leases to are him. issue resolved All plaintiffs were disregarded assured in substance that conflicts in the evidence are everyone equally with would be treated re- evidence which tends to gard possession committing position party use and opposing mo operating Farley of well accepted to Continental tion is as true. v. Pruden proposed operation; Company, waterflood tial Insurance S.W.2d 176 would not be allowed to take (Tex.1972). any equipment everyone off because was
being (no exceptions treated the same gen authorities announce ; any well owners) plaintiffs finally eral rule that to constitute actionable fraud agreed everything to leave there since ev- appear: it (1) must that a material eryone same; being treated made; false; (2) sentation that it that was submit- thereafter it, speaker that when the made he (3) ted to every- them showed on its face that recklessly knew was false one was transferring their without wells knowledge without truth and as any reservations and treated insertion; positive (4) that he made it exactly agreement; alike the contractual upon with the intent that should be acted never had occasion sus- party; party acted in pect prior that the fact was otherwise it; upon thereby reliance he (6) that suf discovery papers undiscovered injury. Jones, fered 45 S.W.2d Wilson discovery proceedings May, holding ap (Tex.Comm’n App.1932,
proved) Tex.Jur.2d, and Deceit : 25 Fraud A party (1961). who moves for a sum §
mary judgment has the burden estab 4004, Article Ann.Tex.Rev. Vernon’s lishing his thereto as a matter of law provides as follows: (1966),5 Civ.St. and all doubts as the to a gen existence of uine issue toas a material fact must be re fraud with re- “Actionable State against solved the moving party. Campbell or in to in real estate gard transactions Avinger, v. 505 (Tex. S.W.2d 1974); corporations joint 788 or stock com- stock Gibbs v. Corporation, rep- General Motors a false panies 450 of either shall consist S.W.2d (Tex.1970); 827 existing or material past Great American of a resentation Reserve Company Insurance promise do act fact, San Anto or false to some Plumbing nio Supply Company, as a material 391 which is made S.W.2d future the 41 (Tex.1965).4 is It enter into ques party settled that the to another inducement appeal tion on promise and in said the trial is for which court and but a contract whether a said summary judgment proof have entered into raises party would promise issues with a thus made reference to essential ele Whenever contract. action, by party ments complied of a cause of the but whether not been has time, it the a proof within reasonable making establishes as falsely and a matter that it was genu presumed of law that there is no shall be made, shall and the burden fraudulently ine issue of fact as to or one of the more summary judgment position un- proceeding, considered is not the the movant’s proof 41 at 391 S.W.2d burden of is on the uncontradicted. movant all less it is genuine doubts as to the existence is- as to sue a material fact are resolved disregarded as Sec- 1967 him. All conflict of evidence is reenacted 5. Article 4004 was & Comm.Code the evidence which tends to Tex.Bus. the the tion 27.01 position party opposing (1968). Ann., the motion the V.T.C.A. accepted as true. Evidence which favors 236 promisee by promise. party making the it to show that such false 37 Am. Jur.2d, prevented Fraud and good made in faith Deceit 68 (1968). but § complying by the act of therewith Although defendant contends that God, enemy by equi- public the some or representations, were guilty persons of such table reason. All made, promises simply relating to a person de- shall be liable to the actionable, future event and not suffered, damages all actual frauded for assert that even presupposing defend damages difference being the rule of really September 13, 1962, ant intended on rep- property between value comply with its equal treatment as it would have been worth resented or sentation, entirely by it was aware October fulfilled, promise had the been 3, 1962, that such statement was false and property in the condi- actual value of the separate bargain and better tion is delivered at the time of Bering. Knowing offered it to making All false persons contract. this, legal duty Continental owed a to dis representations promises per- all or arrangement close fraud, deriving said sons the benefit of closing accept before the transaction jointly severally shall be liable Marco, ing assignment. See Stevens v. thereto, damages, and in addition actual 669, 357, Cal.App.2d (2nd 147 305 P.2d 682 wilfully false persons making 2, 1956).6 District Division representations promises knowingly advantage shall of said fraud taking summary proceed judgment In a exemplary damages to the be liable ing, summary if the affidavits or other person defrauded in amount shall judgment evidence raises a fact issue jury,
be assessed
not to exceed
fraud,
improper
grant
it is
damages
of the actual
double the amount
Bank
judgment.
First National
Bates v.
suffered.”
Waco,
(Tex.Civ.
184
S.W.2d
App.
writ);
no
Abraham v.
— Waco
gist of
fraud in cases in
Company, 498
Amoco Production
S.W.2d
promises
volving
made with no intention to
(Tex.Civ.App. — Waco
perform is
promise,
not breach of the
but
Dolch,
;
writ) Farnsworth v.
S.W.2d
promisor,
the fraudulent
intent of
writ ref’d
(Tex.Civ.App. — Waco
existing
false
of an
inten
Employers In
n.r.e.); Young v. Texas
perform
Association,
where
intent is in
surance
equipment It had been removed. additionally asserts that there are other In opinion, our judg plain- factors alerted which should have ment evidence disputed raises material fact put tiffs them notice that including (a) issues whether defendant Bering group equip- had removed their represented plaintiffs would be ment; portion a substantial given equal treatment with all other own equipment the Bering was removed and equipment ers of regard well to the obvious, its open removal was transfer assignment oper of their well plain highly done in view on two travelled ating equipment; repre (b) whether such public any passer-by roads and visible to false; sentation (c) whether at equipment and that the absence of such time defendant made such clearly open and obvious from these it knew it was false or subsequently public certainly any- roads and obvious to falsity prior discovered its to consummat leases; one on the that in Finkelstein ing its plaintiffs; transaction with (d) travelling employee with an of Conoco upon whether relied passed within a distance of the Bowen short sentation in executing the Unitization Legion and American leases and that since Agreement; (e) whether suf equipment had been removed any injury fered as a result thereof. time, probably Finkelstein saw it should Defendant asserts have noticed the any event, absence any cause of action which ment. may have barred the statute of limitations.7 In Finkelstein, controverting in his affida- support of such contention, urges vit, any categorically denied that he had plaintiffs’ pleadings show on their face knowledge any of the removal of fraud on which the action equipment May, until such affi- is founded occurred in 1962 but was not davit, positively he states that he was not discovered until pro when discovery present any re- when ceedings were instituted. moved from such leases and did see removed; equipment being
Defendant of the well advances arguments two basic Houston, (1) that that he lives in some 200 miles the evidence discloses that Finkel- stein the Velma Field and (Escondido) made a bid for the (Escondido) Velma occasion, time, that he Field had no at to ob- waterflood unit in and that the packet bid well Bowen and which serve the Finkelstein obtained from Legion Continental and American leases. on which he made his bid contained this statement: “All material
other than that Assuming plaintiffs above property listed is the had seen that Company Bering group’s of Susanoil (Finkelstein) on loan *8 removed, Company Continental Oil had been not and must be such removal would put plaintiffs returned when necessarily that a waterflood control on notice terminated.” Defendant secret with the asserts that it is had been made clear from the language group prior total the execution of the there whereby was no type Agreement Unitization in 1962 or character belonging operating whatsoever Bering group to the could remove their well equipment. as logically Plaintiffs Velma unit at the time could (Escondido) pursuant sume been solicited such bids and at the removal had gave time copy Finkelstein received to the Unitization which year on two of limitations. Defendant relies statute 238 BARROW, power any equip- (concurring).
defendant the to release Chief Justice its provision ment and allow use I concur that removal at time.8 proof law does establish as a matter of there is issue of fact as to genuine rule, general for re As suits one more of the essential elements of deceit, lief fraud and statute appellants’ cause of action. until begin limitations does run complainant has the fraud or discovered person aput facts
has learned sufficient which, ordinary prudence inquiry if discovery.
pursued, 37 Tex. would lead (1962),
Jur.2d,
69
Limitation
Actions §
clear
cited therein.
It is
cases
prevents
running
of the statute
PINE, Appellant,
Robert E.
limitations until discovered
rea
diligence might
sonable
have been discov
v.
Courseview,
Phillips
ered.
v.
Inc.
Petrole
ASSOCIATION,
GIBRALTAR SAVINGS
397,
Company,
um
Tex.
312
S.W.2d
Appellee.
Steele, 141
(1957);
Glenn v.
Tex.
No. 16383.
Stone, 500
(1933);
Hunt,
142 Tex.
(1944); v. 485 S.W.2d Crow (Tex.Civ.App. Waco, 1972, no writ). — summary judgment proceeding, summary judgment evi
affidavits or other fraud, issue
dence raises as to granted.
summary judgment should not be Crow, supra;
Crow Farnsworth v. v.
Dolch, supra; Young Employers v. Texas Association, supra; Dudley
Insurance
Lawler, supra. judgment
The summary evidence plaintiffs’
does not establish that cause
action for fraud was barred limitations
as a matter of law.
We have concluded that
judgment improperly for defendant was
granted. judgment is reversed and
the cause remanded to the trial court for a
new trial. *9 inventory owner time, time, ment shown
8. “At and from time to Con- thereof.” return other tinental well or