Empire Lease & Royalty Co. v. Jones

BURROUGHS, J.,

pro

tem

This is an action to have canceled and delivered up to the plaintiff, a certain promissory note executed by it in favor of the defendant in the principal sum of $15,023.77. There are three separate counts in the complaint. The first count alleges that said note was given without consideration. The second count alleges that subsequent to the execution of said note the consideration therefor, if any, entirely failed and since said time there never has been any consideration therefor. The third count alleges that said note was obtained by fraud. The answer admits the making and delivery of said note, but denies that it is without consideration or that the consideration has failed or that there was any fraud in its procurement. As affirmative matter the answer alleges that said note was given for a good and valuable consideration. The court found in favor of the defendant and entered its judgment accordingly. The plaintiff has appealed.

It is claimed that the findings and judgment are without support in the evidence. The evidence discloses that the plaintiff is a Delaware corporation engaged in the business of acquiring leases and royalties on potential oil lands. The basis of the organization was the exercise of a co-operative plan between the organizer and promoter and the land owners. One S. W. Mellon was the organizer of the plaintiff corporation and the defendant was also in some manner connected with the plaintiff. On December 4, 1925, said Mellon received a letter from the defendant

to

the effect that he, the defendant, deemed it advisable to step out of the plaintiff organization; that he did not feel it advisable

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for him to obligate himself to the extent of $50,000 for the plaintiff; that the only way he would be interested in devoting any more time or money would be to furnish and maintain the office expense and the expense attached thereto; also the expenses of preparing the leases and paying the salary to the lease men he should select to work in the field; that he would not, however, agree to any specific length of time or amount of money, that would have to be left to the defendant’s discretion both as to the expenses and the time that he should carry on said business. After demonstrating that it was possible to make a success of the company he would expect notes covering the amount of money he had advanced in the interest of the company, the notes to be duly executed by the officers of the company and to be paid to him out of the first moneys received from the operation or income of the company; that it would be his duty to make the company a success. The letter closes with a reference to some conversation had between the parties to the letter as to the arrangement between them concerning the interest to be given the defendant in the company.