Opinion
June 29, 1971.
Editorial Note:
This case has been marked 'not for publication' by the court.
Page 585
Calkins, Kramer, Grimshaw & Carpenter, Richard L. Harring, Denver, for plaintiff in error.
Anthony F. Zarlengo, Howard M. Kirshbaum, Denver, for defendants in error.
ENOCH, Judge.
This case was transferred from the Supreme Court pursuant to statute.
This action involves a claim by the plaintiff in error, Ralston, for payment of a commission allegedly owned him by defendants in error as a result of the sale of certain corporate debentures which Ralston contends was brought about through his efforts. The case was tried to the court which entered judgment for the defendants. The parties will be referred to herein by name.
Ralston claims the trial court erred in concluding that the opinion of the Supreme Court in Consolidated Oil & Gas v. Roberts, 162 Colo. 149, 425 P.2d 282, is limited in its application and further erred in finding and concluding that there was a written agreement concerning the sale of the debentures.
The record shows that Ralston was associated with Fred W. Pool and Irving Pasternak who together owned oil and gas properties in western Colorado. Ralston had an interest in this property. Franklin Supply Company (Supply Company), which is engaged in the business of warehousing and distributing oil field equipment and supplies, had advanced equipment to Pasternak and Pool. By late 1964, Pasternak and Pool owed the Supply Company in excess of $200,000. The Supply Company held a mortgage of slightly over $200,000 on the property. In addition, it had other liens of somewhat less than $100,000 on the property.
Some time prior to August 25, 1964, negotiations were held which contemplated the transfer of the Pool/Pasternak Colorado property to a Canadian company, Vauze Mines, Limited. Vauze Mines had approximately 3,000,000 outstanding shares of which 2,180,000 were owned by an individual by the name of Sheridan. It was determined that Pool would acquire 2,100,000 shares of Sheridan's stock at $1.00 per share, thereby giving Pool control of Vauze Mines. In addition, it was determined that Vauze Mines would purchase the Colorado property owned by Pool and Pasternak by issuing debentures and transferring 50% Thereof to Pasternak and 50% To Pool. The debts of Pool and Pasternak to the Supply Company were to be paid off by way of the sale of some of the common stock of Vauze Mines to be acquired by Pool.
On August 25, 1964, Harper, who was the chairman of the board of the Supply Company and president of Franklin Export Company (Export Company), was informed that Vauze Mines wanted to purchase the Colorado property owned by Pool and Pasternak, of which the Supply Company was the mortgagee. In an attempt to obtain payment of the debts owned by Pool and Pasternak to the Supply Company, Harper agreed that Franklin Supply Co.-Export Division (Export Division), a whilly owned subsidiary of the Supply Company, would temporarily acquire Pasternak's interest in the Colorado property, and then convey the property to Vauze Mines in return for Pasternak's share of the debentures. Pasternak valued his share of the property at $800,000. This agreement was subject to the condition that Ralston and Pool would immediately purchase the debentures from the Export Division for a total of $837,000.
Ralston was involved in the negotiations because of his dealings with Pool and Pasternak. Prior to August 25, 1964, Pool owed Ralston approximately $29,000. Ralston said that he already had a purchaser for the debentures which were to be acquired by the Export Division. He expected to sell the debentures to this purchaser at a profit.
On March 18, 1965, Vauze Mines issued a prospectus which disclosed that Pool was proposed as president and director of the company and that Ralston was proposed as vice president and director. This prospectus also proposed that Vauze Mines purchase the Colorado gas property which was owned by Pool and the Supply Company. (The Supply Company holding what was formerly Pasternak's share of the property.) Consideration for the property was to be $4,000,000 (Canadian funds). The prospectus proposed that payment be accomplished by issuing two classes of debentures. Series A were to consist of an aggregate principal of $1,800,000. This series was payable on demand and was backed up by current assets of Vauze Mines in excess of $1,800,000. Series B were to consist of an aggregate principal of $2,200,000. They were to be unsecured and to mature in 12 years. Pool ultimately received all of the $1,800,000 Class A debentures, plus some of the Class B debentures. The Export Division ultimately received only Class B debentures.
A special meeting of Vauze Mines shareholders was held on April 20, 1965. At that time Pool did not have enough cash to purchase Sheridan's common stock; therefore, the meeting was continued to May 12, 1965. Although the debentures were not issued until May 12, 1965, Ralston traveled to Europe after the April 20th meeting and obtained commitments from investors to purchase approximately $400,000 of Pool's Class B debentures. This, plus a bank loan of $1,800,000 on the Class A debentures, enabled Pool to accumulate the necessary cash to purchase Sheridan's interest on May 12, 1965. Ralston's testimony was that his remuneration for selling Pool's Class B debentures was 50,000 shares of common stock, plus $10,000 or $12,000 in cash.
The Supply Company released its mortgage on the property on April 16, 1965 in order that the sale could go through. At this time, Pool and Ralston were committed to purchasing the debentures for $837,000, which the Export Division was to receive from Vauze Mines for transfer of the Colorado gas property, which was formerly Pasternak's. However, when Pool and Ralston became directors of Vauze Mines, they were advised that they were no longer able to profit through sale of the debentures. Consequently, a meeting was held shortly after May 12, 1965 to determine what was to be done to dispose of the debentures held by the Export Division. It was resolved that Ralston was to attempt to sell them. There was no discussion with respect to a commission at this meeting. It was not until later that Ralston claims he was promised a commission for his efforts in disposing of the debentures.
During the summer of 1965, Ralston went to Europe and arranged to sell some of the debentures. Between November 29, 1965 and June 13, 1966, Ralston caused the Export Division to receive $286,854.14 through sale of the debentures to European investors. After deducting the debts incurred by the Export Division and its contemplated commission of $37,500, the Export Division was left with a profit of approximately $12,000.
I
In its findings of fact and conclusions of law, the trial court held Consolidated Oil & Gas v. Roberts, Supra, inapplicable to the facts of this case. We agree. In Consolidated, supra, the Supreme Court approved the finding of an implied contract where the record showed that Roberts, claimant finder, knew that Consolidated was interested in acquiring other companies in the oil and gas business. Roberts was asked to obtain pertinent engineering and financial data and submit it to Consolidated. In so doing, Roberts met with the president and principal stockholder of another company and only after such meeting did he disclose his prospect's name to Consolidated, and give it the data. From that time, Roberts was never asked to perform any further acts in connection with the transaction. However, he did keep in touch with the progress of the negotiations and upon completion of the deal, received a letter from Consolidated proposing a cash settlement in consideration of his services regarding the merger.
The Supreme Court specifically stated that to wait and see what the final negotiations were between the buyer and seller before determining the finder's fee was customary in mergers of oil and gas companies. Although the case at issue involves persons engaged in the oil and gas business, it does not involve a merger. Ralston claims a commission was due because of his sale of debentures. No commission agreement was made prior to the sale and the record is void of any evidence showing that it is customary in the sale of debentures to avoid predetermining the salesman's commission. Thus, the trial court was correct in its determination that the limited holding of Consolidated Oil & Gas, supra, did not apply.
II
The trial court further found that Ralston failed to sustain his burden of proof that there was an oral contract to pay Ralston the commission. The court also found that there was no oral contract or agreement between Ralston and any of the defendants, and that the only agreement concerning the sale of debentures was as set forth in the written agreements wherein Pool and Ralston were to purchase all of the debentures from the Export Company for $837,000. The findings and conclusions of the trial court are well supported by the evidence and will not be disturbed on review. Whatley v. Wood, 157 Colo. 552, 404 P.2d 537.
Judgment affirmed.
COYTE and DUFFORD, JJ., concur.