Brief in Opposition to Petition for Writ of Certiorari — Snakard v. Frankfort Oil Co. (No. 488)

IN Til

— Court of the Gnited States

Oeroner Term, 1960

No. 488.

Wo. RF. SNAKARD.

Petitioner

FRANKFORT OLL COMPANY,

i division of Joseph BE. Seagvram & Sons, Ine.,

he, spondent

BRIEF IN OPPOSITION TO PETITION FOR A WRIT

OF CERTIORARI TO THE UNITED STATES

COURT OF a © THE TENTH CIRCUIT.

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Pine St

New Y¥ b \

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' Pine Str

New York a

[. Murray R

Leon Sipe,

Highto wer Buildiu

KkKlakoma © ()k

November 15. 1960

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PAGE

NN NI aicscssnssckensanseincasenianstonenvpaghpovennespcossnted “Sale

JURISDICTION ..02.0.200.-cnccsecccennenesnesees saneneses Miccccossaccemnsetrseies 2

QUESTIONS PRESENTED ............-.2+--s2-s:ssccesceeesesccceeeteneeetnes 2

Mieamamanatie ty ai UR OME inn sn sitncesssiccn ips vntonsnieninsinnsa 3

POU REMIE inc enccscrececcnsscvesess onssneenees Eoraacaccarsarcttacasaingaatvorsii - ' 8

T. The Court of Appeals properly reversed with-

out remanding for further findings................... 9

II. The Court of Appeals properly dealt with |

Oklahoma law and with the asserted fiduciary

and other obligations of respondent....... oe! 17

CONCLUBION « .........0...cccecssccssececssrendesssenteecsnees eeenenenes. secre 20

ii

TaBLe or Cases AND STATUTES.

‘Cases.

Bach v. Friden Calculating Mach. Co.,-148 F. 8a 407

SU ne

Burrell v. Martin, 232 F. 2d 33 (D. C. Cir. 1955) ates

_ Campbell v. Campbell, 170 F. 2d 809 (D. C. Cir. 1948)

City of Sumter ~. Spur Distributing Co., 110 F. 2d:

Be. CE GIL I icicecsecinsthenscoceacsonseserntenssininns cicinsiinn

Deering-Milliken & Co. v. Modern-Aire of Hollywood,

Inc., 231 F. 2d 623 (Sth Cir. 1955)................

Dimick v. Schiedt, 293 U.S. 474... eee

Fletcher v. Fletcher, 219 F. 2d 768 (D. C: Cir. 1955)...

Helfer v. Corona Products, Inc., 127 F. 2d 612 (8th

Pe I sone cherceicesdhduesionicceaees REIT SN Ste

Hook v. Hook & Ackerman, Inc., 213 F. 2d sues

Rk I eaiidaideiedie cacalnaithesscpintiatidiuntinati as atel te tea

Hopkins v. Wallin, 179 F. 2d 136 (3d Cir. 1949)..........

Hunter v. Scruggs Drug Store, Inc., 113 F. 2d 971

(4th Cir. 1940)... aaa

Indemnity Ins. Go. vy. Midwest Transfer Co., 184 F.

ee ee Ore Ge Bierce a

Trish y. United States, 295 F. 2d 3 (9th Cir. ange

Kelley v. Everglades Drainage District, 319 VU.

WEY -cuskiscssniesdnaadasasepner sckianstdusaaa dan teoctaaladdccnssastek? acne:

Kweskin v. Finkelstein, 223 F. 2d 677 (7th Cir. 1955)

New England Oil é Pipe Line Co. v. Rogers. 154

Okla. 285, 7 P. 2d 638 (1931)...

Paramount Pest Control Service v. Brewer, 177 F.

Be Ce ie I sete csintieisacineeisssnceniteesnseresesconss

Stella v. Graham-Paige Motors Corp.. 232 F. 2d 299

(2d Cir. 1956),-cert. denied, 352 U.S. 831 ...

PAGE

13,

. PAGE

United Shoe Mach. Corp. v. Kamborian, 160 F. 2d

WOR Chak Clr, NUT) nicer ees 15

United States v. Horsfall, 270 F. 2d 107 (10th Cir.

DICE BS NONE H TREES Resa 15-16

Victory Towing Co. v. Bordelon, 219 F. 2d 540 (Sth

| NN OEE mp eR Avrrecnn SeNE NET Secs von 15

Ward v. Mid-West &€ Gulf Co., 97 Okla. 252, 223 Pac. -

es | ht _ | eee eerepeomennerverrrnnen sont -S calinaiaies 11, 16

Wilkerson vo W aSson, 110 Okla. 66, 235 Pac. 206

ee 5 OPA ORLA 17

Winter Park ‘Te eshone Co. v. Southern Bell Tel. &

‘Tel. Co., 181 F. 2d 341 (Sth Cir. 1990).................. 15

“ Statutes.

28 U. $. C.,§ 1254(1) (2950) encciccseccncescicescsinsnmnenrns ‘9

12 Okla. Stat. Amn. § 1445 (1937) ....-....cccsccccecccteeeee ees 16

IN THE

Supreme Court of the Gnited States

Octoser Term, 1960

No. 488.

W. F. Swaxkarp,

Petitioner,

vs.

Fran kKFort Ot, Company,

a division of Joseph E. Seagram & Sons, Inc.,

. Respondent.

BRIEF IN OPPOSITION TO PETITION FOR A

WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE TENTH

CIRCUIT. .

Opinions Below.

The opinion of the United States Court of Appeals for

the Tenth Circuit is reported at 279 F. 2d 436 and is also

annexed as Appendix B to the petition.

The United States District Court for the Western

District of Oklahoma rendered judeme nt without opinion,

Its findings of fact and conclusions of law are unreported

but are annexed as Appendix A to the petition and are aleo

contained in the printed record at pages 115-21 and 124-26.

The judgment of the Court of Appeals i is dated, and was

enfered on, May 18, 1960. °

An extension of time until July 7, 1960 to file a petition

for rehearing was granted. The petition for rehearing,

applications for rehearing en banc and oral argument, qnd

an alternative motion to remand to the trial court for find

ings or further proceedings, were denied on J uly 21, 1960,

The: jurisdiction ‘of this Court is invoked under 2s

U.S. C. §1254(1) (1958). |

Questions Presented.

I. May a United States Court of Appeals reverse a

United States District Court without remanding the case

with instructions to the District Court to make a finding on -

a matter of’ fact where no question was raised ‘elow in

regard to the failure of the District Court to make a finding

on the matter, where the finding sought by petitioner would

not be supported by the record and would be’ inconsistent

with the findings that had been made by the District Court

- and left untonched by the Court of Appeals, and where the

proposition that the case should be so remanded was fully

presented to the Court of Appeals on a petition for rehear-

‘ing which was denied?

IE. Did the Court of Appeals fail to follow Oklahoma |

law or.otherwise fail properly to deal with petitioner's con-

tentions with respect t» the fiduciary and other obligations

claimed by petitioner to. be owing to him by respondent?

. Statement of the Case.

In October and November, 1954, petitioner and respond-

ent executed vatious decuments which are annexed to the

complaint as Exhibits A-F (PL Ex. 1A-1B, R. 18-53, 69, 177,

565, 568; App, 20a-55a"'). It is undisputed that they consti-

tutece in ‘effect a single overall agreement.

In one of these documents, petitioner agreed to assign

to respondent a !. interest in twelve short-term oil and gas

leases which petitioner had acquired in Lincoln County,

Oklahoma (Finding No, 1, R. 116, App. la). The assignment

was to be accomplished “forthwith” (R. 19, App. 29a}.

Respondent agreed to pay $1.00 an acre for its !5 interest

(Finding No. 1, R. 116, App. la). Respondent also consented

to assume half of petitioner’ s expenses relating to title

examinations and curative measures (ibid.). Respondent

farther agreed that a test well would be drilled on the

acreage at its sole expense and that petitioner | would feceive

the drilling contract for the tést well; the rate at whieh

petitioner was to be paid thereunder was set at approxi-

mately twice the customary drilling cost.in the area, and

was fixed te enable petitioner to make a profit ef approxi-—

mately°$20,000 for his work in acquiring the leases (Finding

No. 2, R. 116, App. la). *

Respondent also acquired a right of first refusal to pur-

chase any portion of petitioner's intere-* which he might

thereafter determine to sell (Finding Ne, 4, R. 116. App.

2a). 7

The parties fur.her agreed that, if the test well were

- productive’ of-oil or gas, respomlent was to become the

tho’ is used herein to refer -to the reeord as printed for the

use of the court below ind tiled in this Court with the petition ‘for

Writ of certiorari; ** App.”" is used herein to refer to the appendices

‘ antexed to the petition; °° P."" is use fierein to refer to the text of

the petition. se es

‘4

4

operator of the leases (R. Zi; App. S9a)oender the term. of

an attached operating agreement (R. 29-51, App. 41a-7ha)

, he operating‘agreement as amended provided that produc

tion from the leases would be owned between the partis in

the proportions of their interests in the leases, which Rer-

st ted to be a Iyth working interest for petidoner, and a

*xths working interest for respondent until it reeeuped ins

drilling costs, at which time respondent was to transfer a

3,ths working interest to petitidner and each would there-

after own half (R. 27-28, App. 39a-40a; R. 20, App. 45a).

A number of the leases were to expire by their terms on

July 1, 1955, but contained drilling clauses (Finding No. 5,

R. 116, App. 2a), «£e., the customary provision that cern-

mencement of drilling data anee would extend them beyond

that date.

The District Court (R. 120, App. 6a) and the Court of

Appeals (279 F. 2d at 441, App. 21a) agreed that the test

well was the only well which respondent had obligated

itself to drill by execution of the agreements.

_ However, the agreemen‘s. further provided that, after

completion of the test well, if either party desired to -

drill a well upon any of the remaining leases, it was to

give written notice to the other, who would then have ten

days ‘in which to decide whether to share in the costs of

dritling the well (R. 32, App. 45a). If the second party

chose to participate, the well was to be drilled for the

joint account of the parties and the cotend party became

obligated for half of- the drilling costs and entitled to hal!

the proceeds of production (Finding No. 3, R. 116, App. 1a).

. If the second party determined not to participate, the

figst party was at liberty to drill the well at its own eost

and expense (R. 32, App. 45a).

Under the terms of the contracts, if petitioner elected

not to participate, he was under no obligation to shar

-and ¥% of the werking interest thereafter {Finding No. 3

oe

the drilling costs and, if the well were a dry hole, the drilling

costs would be borne solely by respondent cibid.). Tf such a

well were productive, however, petitioner was to own the

same share of production as from: the test well. ie. lath of

the working interest until respondent had recouped itscosts,

R. 116, App. la-2a).

In contrast, if respondent eleeted not to participate

and petitioner then drilled a productive well, respondent

would have no interest whatever in stieh well (ihi0.),

The test.well, while not a producer, indicated that the

area was potentially prodnetive (Finding No. 6, R. 117,

App. 2a). A seeond well, designated the Erwin No. 1. was

then drilled and was completed as a producer in February,

1955 (Finding No. & R. 117, App43a). ; P

By this time relations between petitioner and respondent

had become strained. In part this had resulted trom the

commencement of a suit against petitioner by one Burkett

who claimed an interest in the leases which petitioner

had agreed to assign to respondent (Finding Ne. 7, R. 117,

App. 2a; R. 421-23). Pending the outcome of ths ltiga-

tion, respondent withheld a portion ef the funds due

petitioner (ibid.).

In addition, despite the contractual toquirement that

petitioner assign a '-

:forthwith’’ (R19, App. 29a), petitioner had refused to

interest in the leases te respondent .

execute Such assignments exeept as to leases on which

respondent drilled a well (Finding No. 23, R. 120. App. 6a;

R. 422,-24). Respondent ‘s interest in such other leases was

therefore unreedirded and unprotected. Respondent eon-

tinued to press petitioner for such as<ignment- and peti-

tioner persistently refused (R. 424, 483). On March »,

45, respondent, on the advice af counsel, tiled of record

a ‘‘caveat’’ which referred to the contracts, deseribed the

6

leases covered by the ‘contracts and asserted that respond-

ent had a 7ths working interest in these leases (Finding

No. 12, R. 117-18, App. 8a; PL. Ex. 19, R. 15-16, 177, 589).

The effect, of the caveat was to ‘inform the world of

respondent’s interest in the leases and as a corollary to

prevent petitioner from representing to those who might

otherwise be interested in working the leases with him

that he had an unencuinbered right to contract with them so

far as Working interests in the leases were concerned.

At no time did petitioner take any steps to have the

caveat stricken from the record, other than to inelude in

the general prayer for relief in this action a plea for judg-

ment ‘quieting title on the leases’? {R. 18, 69). ;

The producing well, the Erwin No.1, was located in the

west central portion of the lease area (PL Ex. 7, R. 666,

915). Respondent had substantial geological information -

which indicated the desirability of ‘drilling to the south

-(Finding No. 16, R. 11s, App. 4a). Respondent also had

veological information which indieated the desirability of

drilling to the northeast (Finding No, 22, R. 119, App. oa:

R. 385, 345, 34950, 405, 447-48). ae

M. R. Shaffer, respondent’s general manager during

this period anf] until the termination of his employment

in August, 1956 (R. 325-26), concluded that it was prefer

able to drill to the north and east. He thereupon under

took an extensive drilling program to the north and east

of the Erwin No. 1 well, drilfling’six additional wells at a

eost tu respondent of several hundred thousand dollar:

(R. 329- 3, = One was a A eaiegy — were non-

20-22, R. 119; App. 5a Re: 29- 35).

Early ih the course of this dr illing program, tlie Tul: ind

Oil Company proposed to Shaffer a *‘farm-out’’ to itself

of portions of the leases to the south, #.e., the Thomas and

7

Christian leases' (R. 331; PL Ex. 17-B, R. 177, 586-87 ; Find-

ing No. 10, R. 117, App. 8a). Under the terms of this pro-

posal, Inland was to drill at its sole expense a test well on

each of those leases (Pl. Ex. 17, R. 177, 583-85). Had the

wells been ‘dry holes, Inland would have borne the loss

itself (ibid.). Had the wells been producers, Inland weuld

have received half of the working interest in eighty acres

of the Thomas lease and in forty acres of the Christian

lease; respondent and petitioner would’ have divided: the

remaining halt equally between them (ibid.). This pro-’

posal was acceptable to Shaffer (Finding No. 10, R. 117,

App. 3a). ° Petitioner, however, rejected it, restating his

behef that the best drilling prospects iay in ihose leases |

and demanding that ‘respondent pay him an additionat

$00,000 to join in the arrangement? (R. 155-58, 179), This

‘respondent refused fo do.

On July 1, 1955, the date on which the Thomas and Chris- :

tian leases were to expire if drilling operations were not

commenced, petitioner, without notice to respondent in vio-

lation of the terms of the contracts, commenced drilling

operations thereon (Finding No. 26, » 120, App. 6a; R. 104-

05, 696).

Petitioner continued drilling operations on the Christian —

lease until after the caveat had bee released with respect

to that lease by an instrument dated Mareli 12, 1956, tiled

April 19, 1956 (R. 100, 104, 220); P]. Bx. 28, R. 168; R. 631,

412).

Petitioner continued drillmg operations ou the —_—

lease through the greater part of 1956, and, in October,

1906, completed a producing well-on this lease, which, peti-

oo

—_— ——_ _—__ __

' It is for the loss of the Thomas and Christian leases, by Virtae

of petitioner's failure to continue drilling operations thereon or sale”

of his interest therein, that this suit seeks damayes.

2 Previously, “Inland had unsueceessfully offered $100,000) for

peiitioner’s interest in the eatire lease block (Ro 145 46; Finding

No. 10 R. 117, App. da).

.

tioner testified, was ‘‘the best well in the field’’ (R. 104-

06, 709). The caveat had been released with respect to that

lease by an instrument dated February 6, 1956 (Pl. Ex. 27-A,

R. 168, 629). .

Respondent did not acquire any interest (other than as.

provided in the agreement with petitioner) in the Thomas

or Christian leases or in any other leases covered by the

agreement with petitioner (Finding No. 27, R. 120, App. 6a).

Argument.

The decision of the District Court was based upon the

conclusions (a) that respondent had breached its contractual

obligations to petitioner by failing to drill certain leases

which it had elected to drill and by filing the caveat reflecting

its interest in the leases involved (Conclusions of Law Nos.

4 and 5, R. 120-21, App. 7a), and (b) that respondent had

breached its fiduciary obligations to pegitioner by not suffi-

ciently revealing its geological information, by overreach-

ing petitioner by misrepresentation in connection with the

proposal farm-out, and by unwarrantedly claiming it *xths

interest in a lease through the filing of the caveat (Conclu-

sion of Law No. 6, R. 121, App. 7a).

The decision of the Court of Appeals was based upon

the conclusions that the pertinent relationships between

the parties were fully comprised in the muitiple agreement —

between them, and that respondent had acted well within

the terms of this agreement, stating in the concluding sen-

tence of its opinion, ‘‘We can neither rewrite the contract=

for the parties nor protect Bnakard from the results of the

contracts which he made.”’ (279 F. 2d at 445, App. 28a)

Accordingly. the decision of the District’ Ceurt was

‘reversed with directions to enter judgment in favor of

defendant Frankfort.’’ (/b1d.)

9

The central questions raised on this petition for certi-

orari—the collateral claim of malice in -filing the caveat

and the clair: of violation of fiduciary obligations under

Oklahoma law—were fully presented to the Court of Appeals

on petition for rehearing, together with the claim that the.

case should be remanded for a further finding on malice,

' The petition was. denied.

- The-Court of Appeals properly reversed without

remanding for further findings.

The petition for certiorari (P. 25-26) claims in one

‘breath that the District Court made a finding of malice, in

the next that the Court of Appeals should remand so the

District Court could make such a finding, and in the next

that the Court of Appeals has usurped the function of the

District Court by making a finding of no malice. ,

The record-on the point is as folfows. }

Conclusion of Law (not Finding of Fact) No. 5 of the

District Court says:

‘Tf, in fact, the defendant did not intend to

elect io drill all these undeveloped leases at the time

of the caveat filing, such filing was.a deliberate,

unjustified assertion of interest in these leases which

prevented plaintiff from snecessfully taking action

to develop some or all of these leases prior to their

expiration, a right plaintiff held under the terms of

the contract.

Whether defendant improperly clouded plaintiff's

title to coerce plaintit? into approving the contro-

verted farm-out, or for some other reason not appar-

ent in the record is imavterial. This was an act

contrary to defendant’s rights under the agreement

&

1U

and encroached upon plaintiff’s contractual rights.

separate and apart from the fiducial relationship.”

(R. 121, App. 7a)

- The Court of Appeals said:

‘‘Snakard contends that Frankfort slandered his

title by filing the caveat for record. A lawyer for-

Frankfort testified that he filed the caveat to protect

Frankfort’s interests because Snakard had not exe-

‘cuted all of the lease assignments to which Frankfort

was entitled. The caveat referred to the 1954 con-

tracts, described the leased land, and claimed a ‘x

interest in the leases fer Frankfort. The agreements ~

‘themselves could have been filed. The caveat is no

>.

‘more objectionable than the agreements, except for

the claim of a % interest. By the contracts, as to all

wells after the first, Frankfort, in wells in which .

Snakard elected not to participate, had a 7 interest

until reimbursed up to 200% of Snakard’s share of

the drilling costs: Thus, in some instances, I*rank-

fort’s interest was %g and in some 14.

The Oklahoma rule is that the principal element

in a suit for slander of title is malice. By filing the .

caveat Frankfort was asserting an interest in the

properties under its contracts with Snakard. It had

a right to do this unless. it was aciuated by some

wrongful motive which would establish malice. The

question of malice is for the trier of the facts. The

case at bar was tried to the court and the court made

no finding of malice. No question is raised by Snak-

ard in regard to the omission of such finding. It

follows that the judgment cannot be sustained on

the thcory of slander of title.*’ (279 F. 2d at 443,

App. 24a) (Footnotes omitted) seo

Thus, it is entirely clear that they District Court made

no finding of malige and that the Cou ot Appeals clearly

recognized that the makirg of findings was’for the District

Court and did not usury that function.

-

1]

Furthermore, the findings of fact which were made by

the District Court conclusively establish the ‘absence of

malice. ‘

The Court of Appeals upheld the findings of the District

Court in full. It vacated none of them, expressly or

impliedly. It had before it a record sufficient to enable it

finally to dispose of the case. The findings as entered by the

District Court'were even expressly approved by the attorney

for petitioner (R. 126, App. 14a).

The findings of the District Court in this case, which the

Court ef Appeals openly accepted and on which it rested

its opinions fully meet the test of the cases cited by peti-

‘tioner, e. g.. Kelley v. Everglades Drainage District, 319

U.S. 415. They establish beyond a doubt that no malice was

involved in the filing of the caveat by respondent.’

Under Oklahoma law concerning slander of title by

assertion of a claim to another's property, malice is held to

exist only where defendant has asserted a claim in which

he has n&‘reasonable basis for belief. If-defendant is act

ing in good faith, there is no recovery, Ward v. Mid-West

& Gulf Co., 97 Okla. 252, 223 Pac. 170 (1923).

Here the findings of the trial court demonstrate that

respondent had ample justification for its netion in filing

the caveat. Assignments of a! interest in the leases, for

which respondent had paid in advance, were long overdue

vet petitioner was still persistently refusing to exceuteé them

(Finding No. 1, R. 116, App. la; Finding No, 28, R. 129,

App. 6a; R. 423-24, 483). Respendent's }, interest therefore

lay at the merey of petitioner, unrecorded and completely

unpro ected against third parties. Equally unrecorded and

1 The test of the adequacy .of findings is not, as petitioner would

contend, whether there is a findirig on each and every possible paint,

~ > . : ) ar SS eiean

but whether the findings when viewed as & wh |e are sufficient to

indicate tie basis of a decision.

12

unprotected was respondent's right of first refusal in the

event of sale of petitioner's 's interest (ibtd.). And peti- .

tioner’s rights in the leases were already under§ttack in the

litigation brought fy Burkett (Finding No. 7, R. 117, App.

2a; R. 421-23). .

: Respondent therefore determined to pretect its interest.

In pursuance of that determination, and pursuant to advic»

of counsel, it filed the caveat (Finding No. 12, R. 117-18,

- App. 3a; Pl. Ex. 19, R. 15-16, 177, 589). That document

referred to the contracts, described the leases, and warned

any purchaser that respondent claimed a 7Xths interest ir

the leases (tbid.). .

Although the courts below have suggested that the

caveat may have misstated respondeént’s interest in the

leases by claiming a *xths interest rather than a ), interest

(279 F. 2d at 443, App. 24a; R. 121, App. 7a), the contract

involved gave respondent a present *<ths interest, subject

to reduction to a 4 interest either by petitioner's election

to participate or by respondent’s recoupment of drilling

costs ‘rom petitioner’s prgportionate share if petitioner

chose not to varticipate sth 21-28 App. 39a-40a; R. 30, App.

43a). Only in the event that netitioner made the original

decision to drill a particular lease would respondent's ini-

tial interest have been less than a ?gths working interest.

However, petitioner had informed respondent that he had

no intention of doing so (R. 454). In any event, it is not

contended that any claimed injury to petitioner arose from

this difference in fractions. :

The District Court found that the caveat hau been filed

‘*pursuant to advice of counse}”’ (Finding No. 12, R. 117-18,

App?3a). In fact, the Court of Appeals noted, ‘ta lawyer

for Frankfort testified that he filed the caveat. [himself]

to protect Frankfort’s interests because Snakard bad not

executed all of the lease assignments to which Frankfort

*

13

. was entitled."" (279 -F. 2d at 443, App. 24a; R437) It has

never been suggested-that the lawyer's advice or ection: Was

given or taken in other than good faith.

This in itself is sufficient to establish that respondent

acted without malice, New England Ol & Pipe Line Co. v.

Rogers, 154 Okla. J85, 7 P. 2d 638 (1931). That opinion,

afver stating in the passage quoted by petitioner (P. BS-B9F

that a presumption of malice miht be drawn in certain cir-

cumstances, also pointed out that other circumstances could

i ey presumption :

“'To nebut evidence of malice defendant may show

that he was advised by counsel, upon a-fair repre-

_ sentation of his claim, as to the course. to be pursued

in the protection of its rights. It mast appear, how -

ever, that the ‘defendant truthfully disclosed to his

counsel all the material facts within his knowledge.’ *

(7 P. 2d at 643)

No contention is made here that respondent withheld any

‘nformation from its counsel, whom the District Court called

respondent's ‘‘attorney and active representative’? (Find-

ing No, 15, R.i18, Aj. 4a; R. 425).

Obviously, instead o» the caveat. the contracts them-

selves could have been file al. They were rot filed becanse

of their bulk (R. 437). The caveat merely gave notice oF

. . °° .

‘the underlying contracts, as petitioner's attorney recess:

nized? (R. 580-81). Petitioner is seeking ‘to build a cause

of action on the filing of the caveat which he would not have

had if the agreements had been filed; although the effect

"

’ Petitioner’s poiut (P. 30-31) that the issue * f matice depended

on an assessment of the eredjbility of witnesse. is not well taken

The testimony concerning respondent's reasons for tiling the caveat

was undisputed.

|

*During the Mice period in which the caveat was on file

petitioner took no legal steps to have it stricken, although he. was

presumably in constant contact with his lawyers because.of the

several lawsuits in which he was then engaged (R. 1-0, 421, 733).

upon him would have been the same. ~

a

@

14

The foregoing makes it crystal clear that not only did .

the District Court fail to make an express finding of malice,

but that it could not have done so in harmony with its other

findings. Such a finding, if made, would have had to have

_ been vacated by an appellate court.’ are

_ It is also to be noted that petitioner has failed to select

any evidence from the record which he thinks would support

a finding of malice; nor has he referred the Court: te-any

offers of relevant evidence which were rejected: .

It is only by making the untenable assertion that a

’ specific finding containing the term ‘‘mali¢e”’ one way or

another is necessary to the final disposition of this case that .

petitioner can: build the Asserted ‘‘conflict’? with other cir-

cuits. An examination’of the cases cited at pages 26-30 of

the petition discloses that none of them lends support to the

contention petitioner makes here.

In Paramount Pest Control Service v. Brewer, 177 F. 2d

564 (9th Cir. 1949), the District Court had made detailed

findings of fact and conclusions of law. They were accepted

- by the Court of Appeals and the decisiori of the lower court

was affirmed. In Helfer v. Corona Products, Inc.,.127 F. 2a

612 (8th Cir. 1942), the District Court had entered neither

findings of fact nor conclusions of law; however, the Court

of Appeals was able to ‘‘infer’’ the amount of damages

_ from the master’s report and the District Court's opinion

and it directed entry of that amount as final judgment.

In Burrell v. Martin, 232 F..2d 33 (D. C. Cir. 1955), the

Civil Service Commission had failed to make an essential

‘The Court of Appeals did not reverse judgment below because

petitioner had failed to request any particular finding-as contended

by petitioner (P. 85-37). The Court of Appeals must have simply

concluded that petitioner had tried his case to his satisfaction and

was satisfied with the findings that were made. Otherwise the record.

would disclose some objection, and as set forth above. the findings

of fact which were made adequately covered the point and con-

clusively rebut any malice.

4

- finding of fact in a loyalty investigation; summary judg-

ment reversing the Commission’s order ousting the plaintiff

from her civilian position with the Army was therefore

directed. | |

In seven other cases, the District Court had made no find-

ings of fact at all; its decision was therefore reversed and

’ the case was remanded for findings. In one case! the Dis-

trict Court had not even written an opinion from which the

Court of Appeals could deduce the grounds of its decision. In

another? there was a memorandum opinion of the District

Court but no facts were set out in it. In the other five deci-

sions® there is no mention of even a memorandum opinion

below.

In the balance of’the cases cited by petitioner, the Dis-

trict Court had ‘either made separate findings of fact‘, or had

stated them in the course of its opinion’, but had done so ~

inadequate 1d had failed to determine the factual issues

which the Mt, of Appeals found critical.

Petitioner also cites (P. 29) United States v. Horsfall,

270 F. 2d 107 (10th Cir. 1959), as an asserted illustration of

the claimed practice of the Court of Appeals for the Tenth

1 Pletcher v. Pletcher, 219 F. 2d 768 (D. C. Cir. 1955).

? Hook v. Hook & Ackerman, Ince., 213 F. 2d 122 (3d Cir. 1954).

3 Hopk BS v. Wallin, 179. F. 2d 136 (3d Cir. 1949) ; Winter Park

Telephone. Co. V. Southern Bell Tel. & Tel. Co., 181 F. 2d 341 (5th

Cir. 1950) ; Victory Towing Co. y. Bordelon, 219 F. 2d 540 (Sth Cir.

1955) ; Bach v. Friden Calculating Mach. Co., 148 F. 2d 407 (6th

Cir. 1945) ; Kweskin v. Finkelstein, 223 F. 2d 677 (7th C ir. 1955).

‘ Stella v. Graham- Paige Motors Corp., 232 F. 2d 299 (24 Cir.

1956), cert. denied, 352 U. S. 831; Hunter v. Scruggs Drug Store,

Inc., 113 F. 2d 971 (4th Cir. 1940) ; Indemnity Ins. Ce. v. Midwest

. Transfer Co., 184 F. 2d 633 (7th Cir. 1950) ; Irish v. United States,

225 F. 2d 3 (9th Cir. 1955); Deering-Malliken & Co. v. Modern-

Aire of Hollywood, Inc., 231 F. 2d 623 (9th Cir. 1955) ; Campbell

v. Campbell, 170 F. 2d 809 (D. C. Cir. 1948).

5 United Shoe Mach. Corp. v. Kamborian, 160 F. 2d 461 (1st

Cir. 1947) ; City of Sumter v. Spur Distributing Co., 110 F. 2d 649

(4th Cir. 1940).

oa”

Circuit of supplying omitted findings o» essential issues of

fact. That was a personal injury action in which the

District Court had ewarded plaintiff $17,550 for future-loss

of time and $45,000 for permanent disability. Sirice there -

were no special findings concerning permanent disability,

the Court of Appeals found it reasonable to assume thaf the

lower court had included lost earnings in the award for

permanent disability, and-there was a duplication. Alterna-

tively, if the lower court bad intended the award for loss

of time to cover a period of temporary total disability it was

without support in the record; if the award for permanent

disability were intended to supplement lost earnings, it was

excessive. The court accordingly directed that plaintiff

remit $17,550 of the judgment or submit to a new trial on

the issue of damages.

It is apparent that petitioner’s attack on - case it

simply an attack on the practice pf remittitur, which. prac-

tice is long established in personal-injury actions in the

federal courts, Dimick v. Schiedt, 293 U. S. 474, 482-85.

The foregoing also‘ disposes of petitioner’s contention.

that the Court of Appeals failed to follow the case law of

Oklahoma .by ignoring ‘‘the plain meaning of the trial

-court’s findings and conclusions’’ (P. 37). As has been

_ demonstrated, the findings of fact of the District Court were

precisely the basis on which the Court of Appeals did rest

its decision. Those findings clearly e§tablished the absence

of. malice urder Oklahoma law, New England Oil & Pipe’

Line Co. v. Rogers, supra; Ward ¥. Mid-West € Gulf Co.,

supra.

‘The New England decision holds, in effect, that the

adviée of counsel is a ‘*justifiable motive’’ within the mean-

ing of section 1445 of Title 12 of the Oklahoma statutes,

relied on by petitioner (P. 38). That statute provides a pre-

sumption of malice only in the absence of such a motive.

17

Petitioner also asserts that ‘‘a general finding for

plaintiff in a slander of title action amounts to.a finding’

of malice. . . .’’ (P. 37) However, there was no such gen-

eral finding by the District Court in thia case. .Petitioner |

tried his case, not as a slander of title action, but on the

theory of a breach of contract,and damages were assessed

on that basis. (R. 122, App. 8a; R. 125, App. lla). Even

on that theory, the specific findings established that respond-

ent acted without malice in filing the caveat. The case cited

by petitioner, Wilkerson v. Wasson, 110 Okla. 66, 235 Pac.

206 (1924), does not aid him. There was no general finding

in that ease from which malice could be implied. To the

contrary, the Oklahoma court found that the defendant, had

- not acted in good faith but had filed the disputed document

solely for purposes of extortion.

Finally, in the light of petitioner’s full presentation

to the Court of Appeals in its petition for rehearing of.the .

very arguments with respect to malice now advanced in-its

petition for certiorari, it can be concluded that the Court of

Appeals fully considered the matter.and decided on the

entiré record before it that nothing would be gained by

remand, i.e., that no finding of malice could be supported.

The Court of Appeals property dealt with Oklahoma

law and with the assefted fiduciary and other obiiga-

tions of respondent.

Petitioner complains (P. 39-42) that the Court of

‘Appeals failed to follow Oklahoma law in assessing the

obligations toward each other of petitioner and respondent.

Petitioner asserts that the following is the law of that state:

‘Joint venturers are fiduciaries and owe each other

the utmost good faith.’’ (P. 40)

> —

18

This is iia what the Court of Appeals found to’ be

"the applicable law: |

“The relationship so created was fiduciary in char-

acter and required the utmost good faith on the part

of both parties.”’ (279 F. 2d at 443, App. 20a)

The Court of Appeals also recognized that the scope of

any obligation, including a fiduciary obligation, cannot be

determined im vacuo. Accordingly, it went on to note that: |

‘*The extent and effect of such relationship is deter-

mined by the written agreements between the parties

defining and delineating the powers and rights of

each. In such a situation it is presunied that they

delegated all the powers they wished to confer upon

. each other and withheld all powers or authority not

| affirmatively ‘delegated. The relationships between

them are contrelled by the terms of their agreements .

voluntarily made.’’ (ibid.) (Footnotes omitted)

|

|

|

The conclusion.of law (not Finding of Fact) of the Dis-

trict Court with respect to the asserted fiduciary obligations |

of respondent reads as follows:

‘‘Moreover, defendant Frankfort or its

fiducial duty owed plaintiff by failing to fairly and

openly reveal the geological information it possessed

directly bearing on the agreement’s subject matter,

by overreaching plaintiff in connection with the pro-

posed farm-out to Inland in affirmatively misrepre-

senting the location af the second Wilcox producing

structure, and by unwarrantedly claiming a 7ths

interest in this lease block through the caveat placed

of record on March 8, 1955:’’ (Conclusion of Law

No. 6; R. 121, App. 7a)

| The Court of Appeals dealt with the subject matter of

this conclusion of law most carefully and most fully (279

F. 2d at 443-45, App, 20a-28a). \

19

The Court of Appeals held that respondent did not.

breach any fiduciary duty to petitioner with respect to the

geological information it possessed (a) because respondent

had no contractual obligation to divulge that information,

(b) because the record showed that petitioner had his own

opinion as to ‘the significance of matters of: geological

information, which opinions were different from those of

respondent, and (c) accordingly, petitioner could neither

have been misled nor overreached.

The Court of Appeals held that petitioner had not been

overreached in connection with the proposed farm-out to

. Inland (a) because as stated above petitioner had his own

geological conclusicns, and (b) because of his own ‘volition

he elected not to pursue them at that time, although given

an opportunity to do so.

The Court of Appeals held that respondent did not

breach any fiduciary duty to petitioner in filing the caveat,

both for the reasons set forth in Point I above and because

respondent had a clear right to‘give notice of its interest

in the property. :

In this branch of the argument, petitioner is simply com-

plaining that the Court of Appeals reversed the District

Court on the conclusions to be drawn from the record as a

whole. If this sort of action on the part of the Court of

Appeals is to be ground for review by this Court by peti-

tion for certiorari, this Court would have to review virtu-

ally every case in which a Court of Appeals reverses a

District Court..

Petitioner’s final argument (P. 42-45) appears to com-

plain of the fact that nobody below considered the case on .

the legal theory that an intentional injury was inflicted upon

him by respondent ‘‘ without just cause and excuse.”’

No such theory was advanced to the District Court and

no such theory was advanced to the Court of Appeals, either

i Pe aero eee:

in connection with the argument of the appeal or in the |

petition for rehearing. . |

Furthermore, as _petitioner’s argument discloses, the

theory seems to be inexplicably intertwined with a ‘‘mali-

cious wrong’, and, in any event, the subject matter of this

theory is fully disposed of by the opinion of the Court of .

Appeals.

Conclusion.

The decision of the Court of Appeals was based on find-

ings of fact made by the District Court and left undisturbed

by the Court of Appeals, and on an accurate application cf

_ the relevant law of Oklahoma. No issue is tendered which

is appropriate for consideration by this Court. It is sub-

' mitted that the decision below was in all respects correct

and that the petition for writ of certiorari should be-denied.

aporene See eS eee ee ee

perigee

- Respectfully submitted,

Matuus F. Correa,

80 Pine Street, ee

New York 5, N. Y. |

Attorney for Respendent.

Ricuarp P. Lortvs,

JoHn W. NIz.ps,

Wruuo A. Jansen,

80 Pine Street,

New York 5, N. Y.

T. Murray Rosrnson,

Leon Surep,

Hightower Building,

_ Oklahoma City 2, Okla.

Of Counsel.

November 15, 1960.

AK Ar ¥ | [ Ottice Supreme Court. U.S,

“DEC A 1960

‘ IN THE

Supreme Court of the United States

Ocropen Trem, 1960 | ,

Neo. 488

W. FF. Saxavkarnp, Petitioner,

2 Vv.

1 FRaxkrort On. Company, a division of Joseph FE.

e. Seagram & Sons, Ines Respondent.

REPLY

Pryton Forp

1000 Comneetient Awe. No OW:

Washington. PD ©.

Aftornae 4 for Pe bibioner

Or Counsel:

orp. Lansen, GREENE

AND Ploman e

Washingten, D.C.

Joun BB Denrey, Ir.

Drones! Deoriy & Deprry ‘

Ok'ahoma City, Oklahoma

Cryer J. Wares:

Looney, Waris, Looney

& Ntettors

Oklahoma Citw, OKlahbomie

I. 1 Erwin

Charedler, Oklahomi

Hypow S Apaats, Wasniscton DC

on i

a

INDEN

. Privure

OB. The Caveat Pareres s 2 sr een re ee ice okt ae

ThA Real Conttiet Exists oo... {00..5. ee ee

IL. Deterpretation-of the Contract). . eEeeay | Ore es “o

IV. Respondent's Questions Prosentedl oo 06.00.04 et |

1 a Application of Oklehoma Law Srey et Ans 1

Fidneial Duties ....0000...00. ee en |

B. Enfeet of General Finding rn ere 14

yt 3 Additional an ee ee “A PAL eS san a ee mein

Vib. Summary nit ae ae

TABLE OF CASES

Mexandty “vy. ‘Nash Relator ee Ee ibe

Se Be cas Sie es sate baste s ¥ ay ;

Alexander ve Nash-Nelvinater, eT] F. 54 Saath ri

Blaekstoek ve Castan., DS4 Oklal dst se an Yab Vas7 34

Surkhard v. Burkhard, 175 FL 2d SM ooo Th

Central R. Sienal OH Co. ve Lenedem, CON 7) U4

gh Re: APRS epi pone rine Cree srs Pte Ae aN eae ie ee

Helfer vo Corona Products, Ine. Te FP. 2d Gl oe. t.. t)

Kingkade ve Phimimer, THT Okla. Dt 2su Po obs vale

New Seger Oil and Pipe Line Co. vo Rowers, Tod

te: A 2 ae ee ae a . ie

Ornatra Har faders Lurubyt Co. yo BL Phi ‘Di Loareatoet '

Ce Bae ee ee oo eo eee : LEEDS fe t)

Paramount Post Conteel Serviews *: Brewer, TH FF. *

Ge De Po ia ee Ce eae ay ee acne a

Paramount Pest Control Services ©. Brewer, ieee #

OE Ok ess eta rasta ae et =f a

Stanton: v. United States, we US ih -; re vaatcaes

United States ve Horstall, 270 FL 2 doe : “Fs.

Uonited States ve Naiser. na U a. Susy ceo are 21

- Ward v: Mid-West & Gulf Co. 97 Okla: 2o2, 225 r. tee

A

Wilkerson v. Kasoen, 1 WW Okla. 668, ho PL 208 IPs

han

Winn ve Warqer, 1a SAW? 2d ane f. Cin App

s