Opinion
No. 20066. Department One.
February 14, 1927.
FRAUD (9, 22) — MISREPRESENTATIONS — SALE OF OIL STOCK — EVIDENCE — SUFFICIENCY. Findings that there was no fraudulent conspiracy in the sale of Wyoming oil stock are sustained, where it appears that the company had "proved land," was producing oil with fair prospects of success, and plaintiff purchased stock after making a personal inspection without any misrepresentations, and was satisfied until the price of crude oil dropped and the company had financial difficulties.
Appeal from a judgment of the superior court for Whitman county, Huneke, J., entered December 29, 1925, upon findings in favor of the defendant, in an action for fraud, tried to the court. Affirmed.
C.E.H. Maloy and Voorhees Canfield, for appellant.
Hanna, Miller Hanna and Le Roy McCann, for respondent.
The purpose of this action was to recover damages which the plaintiff claims to have been sustained by reason of a fraudulent conspiracy to which it is alleged the defendant was a party. The cause was tried to the court without a jury and resulted in findings of fact and conclusions of law denying a recovery. From the judgment entered dismissing the action, the plaintiff appeals.
[1] The facts may be summarized as follows: The Osage-Upton Oil Company was a corporation organized under the laws of the state of South Dakota and had qualified to do business in the state of Wyoming. In June, 1925, it had an oil lease on two hundred and forty acres of land near Osage, Wyoming, which was what is called in the testimony "proved land." Upon this two hundred and forty acres, there had been erected a refinery with a capacity of one hundred barrels per day, a pumping plant and the necessary storage tanks. There were ten wells from which were pumped from five to ten barrels of crude oil per day and one which had been a flowing well producing in the neighborhood of fifty barrels per day. There were from one to three rigs during the summer and fall of 1922 boring new wells upon the two hundred and forty acres. The company also had leases upon two thousand acres of land in the vicinity of Osage, Wyoming, and not a great distance from the two hundred and forty acres, but this had not been developed and was nothing more than a prospect at the time. It is referred to in the testimony as "wildcat," though classified as oil land. The company was incorporated for one million shares, of the par value of one dollar per share, one-half of which was treasury stock. The company had some responsible promoters and stockholders, one of whom was known to the defendant.
In the month of May, 1922, the directors of the company entered into a contract with one O.K. Wright, by which he agreed to sell one hundred thousand shares of the treasury stock of the company at one dollar per share and was to receive a commission of twenty-five cents per share. Wright, who was one of the directors of the corporation, and E. Roy Townsend, who was a stockholder, came to Spokane and vicinity for the purpose of selling stock. While in Spokane, they met the respondent who had lived for many years at Colfax. A day or two after meeting the respondent, Wright and Townsend went to Colfax and the respondent went with them out to see the appellant, who was a widow at the time and owned a ranch of approximately one thousand acres upon which she resided. Upon this visit the appellant purchased two thousand shares of the stock at one dollar per share, giving her note therefor. The respondent at about the same time purchased two thousand shares at the same price. On all stock sold, Wright was dividing his commission with the respondent. Wright from time to time was endeavoring to induce the respondent to purchase more stock, which the respondent declined to do until he had made an examination of the property or had an examination made. The result was that Wright contributed fifty dollars and the respondent twenty-five dollars toward defraying the expense of one Henry Drum to visit the company's property and report thereon. Drum visited the property, spent some days there and made a decidedly favorable report. Thereafter the respondent purchased five thousand shares from one of the stockholders, paying two thousand five hundred dollars therefor.
During the latter part of August, 1922, the appellant purchased ten thousand additional shares at the same price per share that she had paid for the two thousand. When she made this purchase, Wright told her that, if she would visit the property and was dissatisfied with her investment, he could cause to be returned to her all of the money she had invested. Shortly after the first of September, the appellant in company with Wright went to Osage and spent a day or two investigating the property. As she was returning home she sent or approved a telegram to which her name was signed and addressed to the respondent, which read:
"Found everything in the field better than represented. The Osage Upton Oil Co. has a real bunch of men at the head of it and our dividends are a real sure thing. Will be in Spokane Friday morning."
After returning from this visit, the appellant did not cancel her former purchases, but purchased thirteen thousand additional shares, and placed a mortgage upon her farm for twenty-five thousand dollars to pay for all of the stock which she had acquired. About the first of January, 1923, the price of crude oil went down and the company had financial difficulties. The company at no time was making a profit, though it had continued to operate up to the time of the trial.
Some of the men connected with the company were men of means and substantial citizens of the communities in which they resided. It cannot be held that the company was a mere stock selling proposition. The men connected with it believed that they were going to make it a going and profitable enterprise.
Upon a number of vital matters in the case the testimony is in conflict. The evidence, as abstracted, covers approximately three hundred and twenty-five pages. It would be impossible without extending this opinion to great lengths, which would serve no useful purpose, to discuss the evidence in detail. The trial court found that
". . . there was not any conspiracy such as set out in the complaint or at all entered into between defendant and O.K. Wright, and all representations made by defendant or that were made in his presence were substantially accurate and made in good faith and without any intent to defraud, and defendant, at all times covering the period plaintiff purchased her stock, had full confidence that the company would be a great financial success and bring large returns to the purchasers of stock on their investment."
After an attentive consideration of all the evidence we are unable to say that the trial court's findings were not supported thereby.
The judgment will be affirmed.
TOLMAN and MITCHELL, JJ., concur.