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Meyer v. Sharp





Appeal by plaintiffs from the Circuit Court of Wabash county; the Hon. CHAS. T. RANDOLPH, Judge, presiding. Heard in this court at the May term, 1950. Decree affirmed. Opinion filed September 20, 1950. Released for publication October 20, 1950.


In this suit, L.E. Meyer, the original plaintiff, charged that he and defendant, Olen D. Sharp, had entered into an oral partnership agreement in 1946, for the purpose of procuring blocks of oil leases, and the development of the projects, including drilling and other operations; that in January 1947, they prepared and signed a written agreement; that they had carried on the business ever since and acquired many oil leaseholds; that the defendant had secretly and clandestinely acquired interests in valuable oil leases by the use of the partnership good will and from the capital and income of the partnership, but had kept title thereof in his own name.

The complaint prayed that the court declare the defendant held such title in trust for the partnership, that the defendant be required to convey a one-half interest in all such leases to the plaintiff, and for an accounting and other appropriate relief.

Two corporations were made defendants for the purpose of tying up the income from producing properties, and they have no interest in this appeal, so that all references herein to the defendant apply only to Olen D. Sharp.

An answer was filed by said defendant, to which there was a reply. The issues of fact thereby raised, and argued on this appeal, resolve into the question whether either or both of the following two defenses are established: (1) That plaintiff had no interest in defendant's personal projects, because it was mutually agreed that no project should be undertaken unless both parties approved it, and none were undertaken for joint benefit except upon mutual consent; (2) That in the latter part of 1947, it was mutually agreed to discontinue the mutual arrangement, and to undertake no new projects, but to complete those already begun, and no new projects were thereafter begun under the old agreement. There was also a counterclaim, asserting that Meyer owed defendant for some advancements made.

The cause was heard in chancery, and after several days of testimony, the chancellor found the issues for the defendant and dismissed the complaint, except as to a small sum found due on accounting, for which judgment was given plaintiff, and the counterclaim was dismissed in toto. The decree specifically found that the arrangement was terminated about October 1947, except as to incomplete deals, and that Meyer had no interest in new projects thereafter undertaken by the defendant.

After the final decree, the plaintiff died and his administrators were substituted in this appeal by leave of this court. References in this opinion to the plaintiff apply to L.E. Meyer, the deceased.

The two issues of fact above stated are highly controverted in the voluminous evidence, so that this opinion must be devoted almost entirely to an analysis of the testimony. There is practically no relevant problem of law involved, except the contention advanced by appellants that the written contract of the parties constituted a full and complete partnership agreement, so that parol evidence was inadmissible as to terms of their agreement. The written contract, alleged in the complaint and admitted by the answer was as follows, signed by the two parties:

"It is hereby understood and agreed by the undersigned that as of this date, January 1, 1947 (1-1-47) the Olin D. Sharp Co. is formed. This company is owned solely by Olin D. Sharp and L.E. Meyer. Each, Olin D. Sharp and L.E. Meyer, are to furnish one half (1/2) of the money necessary for capital to operate this company. Each of the above named are to share equally in any profits or benefits derived from the operation of this company. The leases, interests and etc., are to be taken in the name of Olin D. Sharp. Olin D. Sharp in turn is to make an assignment to L.E. Meyer for a one-half (1/2) interest in each of the leases, interests, etc."

In our opinion a mere reading of the foregoing makes it obvious that it is not, and does not purport to be, the complete agreement between the parties. It does not state what business they are entering, nor where, nor whether either or both is to devote full time and effort to the company business, nor whether services rendered the company are to be compensated, nor which shall have management authority, or whether both shall be equal therein, and contains no indication whether either or both parties are precluded from making individual investments for personal benefit in "leases, interests, etc." or in anything else. In fact, the document is completely silent as to the duties and obligations of the parties, except that each shall contribute equally to the capital and share equally in profits and property acquired.

Even if it be assumed that the document is sufficient to create a partnership, still it would be subject to the usual rule pertaining to contracts: If the agreement does not purport to be complete, and is silent in essential particulars, or is ambiguous, parol evidence is admissible to establish the missing parts, even though not admissible to contradict those unambiguous terms which are expressed in the document. Fuchs & Lang Mfg. Co. v. R.J. Kittridge & Co., 242 Ill. 88; Gault v. Hunt, 183 Ill. App. 77. It was therefore proper to admit the testimony of the parties as to their conversations and dealings, in order to determine what they had agreed.

As a matter of fact, a great many additional terms of the agreement are alleged in the complaint as oral parts of the arrangement, and which it is assumed by appellants are in effect. Among others are these: that the business was for the purchase, exchange, assignment, sale and otherwise dealing in oil and gas leases, in and about Mt. Carmel, in Illinois and Indiana, for the assembling of leases in blocks of contiguous tracts; that it was to include all original processes and operations of promotion, also the engaging of drilling companies for test wells, including the first dealing of fractional interests, that there was to be a separate bank account for company funds, defendant was to be the manager, and that 25 leases previously acquired were part of the capital or business, as well as those later acquired.

Plaintiff's own testimony was to the effect that they had begun operations in 1946 under an oral agreement, which included an understanding that plaintiff was to advance all necessary capital, and defendant was to make up his share later as he was able, and that the purpose of the written agreement was to change this provision and make their obligations equal in the furnishing of capital, and that it was not intended to change their arrangement in any other way.

Referring now to the evidence, we find the following few items appear to be undisputed facts: The parties started their business dealings under an oral agreement early in 1946, and during that year acquired about 25 leases. About twice that number were acquired in 1947 after the date of the written contract. In October of 1947, plaintiff employed an accountant to prepare a statement of their financial dealings, which was done and showed a balance of a few hundred dollars to the credit of plaintiff. In December, plaintiff went to Florida, and was gone for three months, during which he did not communicate with defendant in any way. In 1948, there were only eight new leases acquired, and most of these appear from their descriptions, to be parts of contiguous blocks, the acquisition of which was begun in 1947. Practically all of these ventures resulted in nothing but dry holes. Early in 1948, while plaintiff was still in ...

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