Matthewson v. Fluhman (41 S.W.2d 204, 1931)

RYAN, J.

The petition of plaintiff in error (plaintiff in the court below) alleges, substantially, that: On November 5, 1924, Fritz Fluhman and his wife (the latter now deceased) made to E. G. Matthewson, a gas and oil lease on certain lands in Wilbarger county and which included a particular tract of 36.6 acres; that on or about February 26, 1926, at Fluhman’s solicitation, Matthewson released the lease on the 36.6-acre tract, in consideration of which and of Matthewson’s agreement to assist in procuring releases from certain other parties, of certain other leases on other tracts of land, Fluhman would execute to Matthew-son a commercial oil and gas lease, covering a term of three years, on a 20-aere tract adjacent to and north of the 36.6-acre tract, which agreement was entirely oral.

The petition alleges also, that relying upon such agreement on Fluhman’s part to execute such an oil and gas lease on the 20-acre tract, plaintiff on February 26,1926, without consideration, executed and delivered a release to the 36.6-acre tract, which was accepted by Fluhman and by him filed for record; that after securing said release, Fluhman refused to deliver to plaintiff an oil and gas lease on the 20-acre tract as he had promised and agreed, but afterwards, on or about August 7,1926, executed and delivered an oil and gas lease on said 20-acre tract to a third party, John F. Merrick. It was averred that therefore the release of the 36.6-acre tract was without consideration and of no force and effect; that specific performance of sueh oral contract is now impossible, because of the subsequent lease to Merrick.

The petition contains other averments, not necessary to repeat here.

Prayer is for damages in the sum of $200,-000 and legal interest, as the reasonable cash market value of the lease on the 36.6-acre lease so released by Matthewson, on December l, 1926, when Fluhman definitely refused to make the lease to the 20-acre tract, and, if not entitled to recover the value of said lease at that time, then for the sum of $80,000, and legal interest from December 1, 1926, as the reasonable cash market value of the 36.6-acre tract at the time of trial. In the alternative, plaintiff prayed for damages in the sum of $60,000, and legal interest from December 1, 1926, as the reasonable cash market value of the 20-acre lease at the time Fluhman definitely refused to make it, and, if not entitled to that recovery, then for the sum of $40,000 as the reasonable cash market value of the 20-acre lease at the time of trial, also “for costs of suit and all proper relief to which he may show himself entitled in law or in equity.”

Defendant answered by general and special exceptions, general denial, specially that the agreement in question rested in parol and is inhibited by the statute of frauds, and the abandonment by plaintiff of the original lease contract (which included the 36.6-aere tract) by the failure of plaintiff and his assignees to drill a well thereon to the full -depth of 2,200 feet and to pay certain rentals, as specified in said contract. Estoppel was also pleaded against plaintiff due to the 'fact, as alleged, that on February 26, 1926, when defendant received the release from plaintiff to the 36.6 acres, defendant offered to execute a lease at said time to plaintiff of 20 acres off his unleased land in the north part of same, notwithstanding he did not comply with his agreement, and plaintiff stated to defendant that he did not care for the lease on the 20 acres because he did not think it was worth anything, and thereafter defendant leased all of his acreage believing that plaintiff did not desire a lease on any of said unleased acreage in the north part of same, and, for said reason, plaintiff was estopped to sue defendant for damages as averred in his petition.

The case was submitted to a jury on special issues, resulting in the following findings:

(1)That defendant Fluhman agreed with plaintiff Matthewson to make him a lease on 20 acres of land lying immediately north of' the 36.6-acre tract, if plaintiff would release the latter tract and assist defendant in obtaining releases for certain other tracts; that defendant accepted plaintiff’s release of the 36.6-acre tract and the releases tendered him by plaintiff of other acreage covered in' the original 200 acres; that, at the time defendant accepted the release of the 36.6-acre tract, he promised plaintiff to make him a lease on the 20-acre tract immediately north • of the 36.6-acre tract, which promise was renewed by defendant from time to time thereafter, and relied on by plaintiff.

(2) That in December, 1926, defendant refused to deliver the lease of the 20-acre tract to plaintiff; that -the reasonable cash market value of the oil lease on the 36.6-acre tract was $50,000 in the early part of December, 1926, and was $25,000 at the date of trial, April 1929.

(3)' That the reasonable cash market value of the oil lease on the 20-aere tract'was $8,000 in the early part of December’ 1926, and was $2,000' at the date of trial.

(4) That the reasonable cash market value of the oil lease on the 36.6-acre tract was $366.60 in the latter part of February, 1926, and the reasonable cash market value of the 20-acre tract was $200 in the latter part of February, 1926.

(5) That the consideration for the lease of November 5, 1924, was plaintiff’s agreement to drill, or have drilled, upon the acreage covered thereby, a well to the depth of 2,200 feet, which was done by the Lippard Oil Company, and no complaint was made by defendant that said well had not been completed to the contract depth at the time he accepted the releases tendered by plaintiff, and he never demanded the procurement of any additional releases; that plaintiff did not-agree to procure releases .for the balance of the original 200 acres leased to him by Fluhman ; that plaintiff did not tell defendant that he did not care for the 20-aere lease.

(6) That when defendant promised to give plaintiff the 20-acre lease in question, in consideration of plaintiff releasing the 36.6-acre lease and assisting in getting up other releases, he (defendant) intended to carry out such promise.

The trial court accordingly rendered judgment against the defendant for $8,000 (value of the lease on the 20-acre tract in December, 1926, when defendant refused to deliver such a lease to plaintiff), with legal interest from date of judgment. ■

The Court of Civil Appeals reformed said judgment and adjudged to plaintiff the sum of $366.60, and affirmed the judgment, as so reformed, upon the theory (a) that the parol agreement of defendant to execute an oil and gas lease upon the 20-acre tract' was obnoxious to the statute of frauds, and no damages could be recovered based upon the value of such 20-acre lease, any more than an action for specific performance could be maintained; and (b) the only remedy open to plaintiff was to recover the value of the lease on the 36.6-acre tract, in the latter part of February, 1926, when plaintiff released same to defendant, in keeping with the agreement then made between them. 24 S.W.(2d) 751.

The questions for decision, therefore, are: Does the contract in question come within the statute of frauds (Rev. St. 1925, art; 3995, subd. 4) and, if not, what is the measure of damages for .its breach?

As said by Chief Justice. Cureton in Texas Co. v. Burkett, 117 Tex. 16, 296 S. W. 273, 279, 54 A. L. R. 1397: “The general rule is that, where one party to an oral contract has in reliance thereon so far performed his part of the agreement that it would be perpetrating a fraud on him to allow the other party to repudiate the contract and set up the statute of frauds in justification thereof, equity will regard the case as being removed from the operation of the statute, and will enforce the contract.”

And by Justice Gaines, in Morris v. Gaines, 82 Tex. 255, 17 S. W. 538, 539: “The doctrine is well established that where either party, in reliance upon the verbal promise of the other, has been induced to do or to forbear to do any act, and thereby, his position has been's