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Fowley v. Braden





APPEAL from the Circuit Court of Christian County; the Hon. WARD P. HOLT, Judge, presiding. MR. JUSTICE MAXWELL DELIVERED THE OPINION OF THE COURT:

Ann M. Fowley and Gilbert L. Dierson, plaintiffs, filed a complaint against Gertrude H. Braden and others in the circuit court of Christian County seeking to establish ownership of undivided interests in four oil-and-gas leases. This appeal is from an order dismissing the second amended complaint, as amended, upon the ground that the action was barred by the Statute of Frauds. A freehold is directly involved.

Although several complaints and amendments were filed we need only consider plaintiffs' final pleading, which was the second amended complaint as amended.

Such complaint alleged in substance that plaintiffs were engaged in the developing and producing branch of the oil business, that on November 15, 1952, one James L. Braden, who owned or claimed to have the right to purchase four oil-and-gas leases in Christian County, asked plaintiffs to assist in raising funds to pay for the leases and drill a test well thereon, that a verbal agreement was made on December 2, 1952, whereby plaintiffs were to assist in raising funds for such purchase and drilling by selling undivided interests in the leases and that the profits, whether in cash, oil or unsold interests in the leases, were to be divided equally between the two plaintiffs, Braden and one T.M. Pruett.

It was further alleged that Fowley went to Chicago from her office in Centralia, that she contacted certain of "their investors," that at her request Pruett and Braden made two trips to Chicago, the latter at her expense, that as a result of plaintiffs' efforts $7500 was raised by the sale of 27/64ths working interest in the leases to outside parties, that the funds were deposited in a Centralia bank about December 18, 1952, that two or three days thereafter the leases were purchased in Braden's name with funds advanced by Pruett and that within ten days after acquisition Braden and Pruett agreed with Welker Oil Company that the latter would drill a well for $5300 plus 1/4 interest in the leases.

The complaint alleged various assignments of undivided interests in the leases to defraud plaintiffs and charged the purchasers with knowledge. It is also alleged that the $7500 payable to Pruett was withdrawn from the bank by the depositors and redeposited in escrow to be paid Braden and Welker Oil Company, one of the assignees, upon completion of the well and that such change was made with the connivance of the bank to deprive plaintiffs of their interests. Attached to the complaint as exhibits were copies of the leases and an assignment together with copies of two affidavits recorded for the purpose of giving notice of plaintiff's claim.

The complaint concludes with a prayer that plaintiffs be decreed the owners of certain interests in the leases, that the court find the verbal agreement to constitute a joint venture, that a fiduciary relationship existed with respect to the leases acquired by the parties as joint adventurers and for certain collateral relief.

Motions were filed by the defendants to dismiss the action on the ground that the complaint shows that the relief sought is based upon the alleged parol agreement for the assignment of interests in oil-and-gas leases contrary to the Statute of Frauds.

Plaintiffs properly observe that the only question presented is whether the complaint states a cause of action. If it states a proper cause of action, it must be one that is legally enforceable. Admittedly, the action is based upon a parol agreement relative to the ownership of oil-and-gas leasehold interests, which are freehold estates. (Transcontinental Oil Co. v. Emmerson, 298 Ill. 394; Poe v. Ulrey, 233 Ill. 56.) The cause is therefore barred by the Statute of Frauds (Ill. Rev. Stat. 1953, chap. 59, par. 2,) unless it comes within a recognized exception.

The complaint is vague as to the theory upon which plaintiffs rely to avoid the bar of the statute. The prayer asks the court to find that the parties entered into a joint venture but is silent as to any trust created by implication or operation of law. The position assumed in plaintiffs' brief is that sufficient facts are alleged to (a) establish a joint venture, (b) establish performance of the agreement by plaintiffs, (c) establish a constructive trust, and (d) establish a resulting trust.

A number of cases have been cited by plaintiffs to the effect that where parties agree to engage in the business of purchasing and selling real estate for a profit that such agreement constitutes a partnership or joint venture and is not subject to the bar of the statute. It is first necessary to ascertain whether the theory of a partnership or a joint venture can be supported by the complaint.

Two practically identical affidavits dated January 17, 1953, jointly executed by plaintiffs, are attached to the complaint as exhibits "A" and "G" and were filed in the recorder's office of Christian County on January 19, 1953, and March 9, 1953, respectively. Exhibit "F" related that Braden failed and refused to turn over to the affiants a one-half working interest in one lease plus the sum of $5000. Exhibit "G" stated that he failed and refused to turn over a one-eighth interest in three leases. Each affidavit stated that the named consideration "was to be compensation for obtaining monies to drill." Since exhibits constitute a part of the pleadings for all purposes under the Civil Practice Act (Ill. Rev. Stat. 1953, chap. 110, par. 160,) the effect of the affidavits must be considered.

There is considerable difference of opinion between the parties as to the weight to be given the exhibits. Plaintiffs concede the law generally to be that where there is a variance between the exhibit and the pleading, the exhibit will govern. They contend, however, that there are cases, such as this where the action is not based upon the affidavits of ownership but upon a verbal contract, where the rule does not apply. No cases are cited in support of this view.

We have analyzed a number of cases, some cited by defendants, and others from our own research. Types of exhibits attached in certain cases were as follows: In Greig v. Russell, 115 Ill. 483, a contract for the sale of real estate sought to be construed as a mortgage; in Armstrong v. Douglas Park Building Ass'n, 176 Ill. 298, a lease and mortgage involved in a foreclosure; in Price v. Solberg, 269 Ill. 459, a contract for sale of real estate where specific performance was prayed; in Lyons v. 333 North Michigan Avenue Building Corp, 277 Ill. App. 93, a reorganization plan was exhibited; in Fetherston v. National Republic Bancorp, 280 Ill. App. 151, advertising and literature were attached in a suit to impose a trust on bank funds; in Austin v. Abrams, 309 Ill. App. 421, the suit was upon a contract of employment; in Woods v. First Nat. Bank of Chicago, 314 Ill. App. 340, in an action upon an account which was attached; in Bertlee Co., Inc. v. Illinois Publishing and Printing Co. 320 Ill. App. 490, a publishing agreement was involved; in Wuellner v. Illinois Bell Telephone Co. 322 Ill. App. 284, a building contract was being sued upon; and in Conkling v. McIntosh, 324 Ill. App. 292, a note and trust deed were attached in a suit to foreclose the latter.

In each of the cases it was held that the exhibits control over the facts alleged in the bill or complaint. It will be noted that in each case the exhibit was either the instrument being sued upon or was the basis of plaintiffs' action, while here exhibits F and G were ...

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