Summary
In Warren, defendant was found guilty of theft by deception in connection with an agreement he had entered into with two investors to purchase interests in an oil well from defendant's oil company.
Summary of this case from People v. BallardOpinion
No. 70-213 Judgment reversed.
November 30, 1971.
APPEAL from the Circuit Court of Rock Island County; the Hon. JOHN L. POOLE, Judge, presiding.
Isadore I. Katz, of Rock Island, for appellant.
James N. DeWulf, State's Attorney, of Rock Island, for the People.
The Defendant, Jerry Warren was charged in a two-count indictment with the crime of theft by deception in an amount exceeding $150. Count One alleges that the victim was Spero Polios and Count Two alleges the victim to be Theodore Grevas. The defendant was subsequently convicted on both counts by a jury and sentenced to probation with orders to make restitution in the amount of $4,000 to each of the complainants.
Subsequent to the formation of the Warren Oil Company, Spero Polios, a businessman and Theodore Grevas, a medical doctor, were procured by the defendant's brother-in-law for the purpose of investing and speculating in oil. The two investors entered into an agreement with the defendant's oil company on December 15, 1967. There were actually two separate identical written agreements by which each purchased a three-eights' working interest in a certain well called Wilcoxen #1, located in Pike County, Indiana. At that time the well had not been drilled. The defendant signed the contract on behalf of the Warren Oil Company. According to the agreement, during the first stage, each investor was to pay $7,000. The reciprocal obligation of the Warren Oil Company was to drill to a certain depth or else to refund the $7,000.
A rotary rig was then brought on to the Wilcoxen lease, set in place and the actual drilling was begun on December 20, 1967. Paragraph Two of the agreement stated that, "If first party should decide to set casing, second party is to pay $7,500 to be applied on the equipment and completion from casing point on, of said well, within (5) days from notification from first party that they have set casing on said well. * * *". On January 2, 1968, the defendant and the two investors met in Rock Island, Illinois. Prior to this meeting the well had been drilled to the required depth and each investor had made his initial payments. The defendant advised them of his decision to go ahead with the completion stage of the Wilcoxen well. Pursuant to that decision the investors each paid to the defendant an additional $7,500 and casing was put down by defendant which was in accord with Paragraph Two of the contract. While there was some conflict during the testimony offered at trial, it is apparent that Thomas Metcalf, a petroleum engineer, employed by the Warren Oil Company to examine the Wilcoxen well and study the samples, was pessimistic about the ability of the Wilcoxen well to produce, even though he found free oil at 1,742 feet. He made his opinion known to the defendant.
On January 24, 1968, Polios and Grevas met again with Warren and entered into an agreement for offset wells, the Thorn and the Vinson. Each of the investors claimed that they were induced to enter into this new agreement on the basis of the defendant's alleged representations that the Wilcoxen well would be a productive well. At this time each investor knew that there had been no oil production from the Wilcoxen well. The form of the new contract was identical to the Wilcoxen contract. Each investor was to invest $4,000 for drilling and $4,000 for completion of the two offset wells. In return, they were to receive a one-eighth interest each in both wells. Metcalf testified that while he was pessimistic of the productivity of the Wilcoxen well, he felt that the Thorn and Vinson wells were worth developing. Each of the two investors eventually acquired a one-quarter interest in the Thorn and Vinson wells.
The Wilcoxen, Thorn and Vinson wells were completed in accord with the respective contracts. The Thorn and Vinson wells evidently have been productive wells and payments, though somewhat irregular, have been made to Polios and Grevas, the last payment having been made approximately four months prior to trial. Polios and Grevas, at the time of trial, still owned their respective interests in the wells and equipment. The investors indicated that they both have previously been involved in oil well ventures and were aware that investing in oil is highly speculative.
In seeking to reverse his conviction the defendant among other assignments of error, contends that as a matter of law no criminal offense was established by the evidence. The State indicted the defendant under the following statute, "A person commits theft when he knowingly: * * * (b) Obtains by deception control over property of the owner: * * * and (1) Intends to deprive the owner permanently of the use or benefit of the property: * * *." Ill. Rev. Stat. 1967, ch. 38, par. 16-1(b) (1).
• 1, 2 We agree with the State's contention that the intent requirement in this case as in any theft case may be proved by the surrounding facts and circumstances. We further agree with the State that the factual issues are for the jury to determine and the jury finding will not be disturbed unless the proof does not meet the requirements of the law. People v. Thicksten, 14 Ill.2d 132, 150 N.E.2d 813.
Let us first examine the contract itself. Paragraph Two of the contract provides that in the event the Warren Oil Company decided to set the casing the complainants Polios and Grevas were to pay $7,500 on equipment. (second stage of the agreement) Paragraph Seven of the contract provided if the well produced oil or gas the second party would receive an assignment. The language in itself guarantees the complainants nothing in the way of oil production.
The evidence shows that the complainants paid money to the defendant's oil company in accordance with the agreement. The defendant performed according to his promises in the agreement. Pursuant to his promises the evidence shows that the defendant purchased the necessary equipment and performed drilling in accordance with the contract. The estimated costs of drilling and casing the well exceeded the amounts paid by the complaining witnesses and it is undisputed that defendant had paid or had agreed to pay all of such costs.
Although the defendant was charged with knowing deception it is difficult to ascertain from the brief of the State just what conduct is relied upon to support such charge. From the testimony presented it appears that the State is contending either that the defendant by some deceptive and fraudulent scheme obtained the second stage payments on the Wilcoxen lease or induced the complainants to enter into the offset contracts. Notwithstanding the fact that Paragraph Two of the Wilcoxen contract vested the discretion as to whether the well would be cased and the additional payments therefore made by the complainants to the defendant and notwithstanding the fact that the contract was complied with by the defendant, the State contends that the defendant intended to deceive the complaining witnesses. How the complaining witnesses could have been deceived by the defendant's exercise of his judgment as required by the contract escapes our understanding. ( People v. Greer, 321 Ill. 69, 151 N.E. 604 and People v. Bischoff, 319 Ill. 262, 149 N.E. 756.) Whether the opinion of the expert Metcalf supported the defendant's decision is immaterial and the only conclusion to be drawn from the evidence is that the defendant acted for the benefit of all parties to the contract in accord with its terms.
To support its contention that the requisite criminal intent was proven in spite of the contractual arrangements between the parties the State cites, Jackson v. People, 126 Ill. 139, 18 N.E.2d 286 and Moore v. People, 190 Ill. 331, 60 N.E. 535. Neither of such cases is applicable to the facts in the case at bar. In Jackson, the defendant fraudulently misrepresented the condition of a horse and sought to avoid the consequences of such fraudulent conduct by relying on an exculpatory written warranty given after the sale had been concluded. The defendant in the Moore case executed a mortgage representing that he owned cattle secured by the mortgage which he in fact did not own. No such conduct as is shown in either of the foregoing cases is presented by this record.
• 3 Nor do we believe that defendant knowingly deceived the complaining witnesses in inducing them to contract with respect to the offset wells. So far as the production of oil from the Wilcoxen well is concerned, the complaining witnesses knew that no oil had been produced from such well and indeed there is nothing from which it may be inferred that defendant knew any more about the Wilcoxen well than the complainants. Viewing the evidence in its aspect most favorable to the State, the only inferences which may be drawn from such evidence is that the defendant and for that matter the complaining witnesses, were optimistic about the prospects of production from the Wilcoxen well. The fact that such optimism was both premature and contrary to later developments does not thereby render such conduct unlawful. Lory v. People, 229 Ill. 268. 82 N.E. 261.
Much evidence was presented and either admitted or excluded which was irrelevant to the issues and its only tendency could have been to confuse the jury. In view of our conclusion concerning the insufficiency of the evidence to support the offense alleged it is unnecessary to consider the other errors urged.
For the foregoing reasons the judgment of the circuit court of Rock Island County is reversed.
Judgment reversed.
ALLOY, P.J., and DIXON, J., concur.