Appellee, Tennessee-Louisiana Oil Company, a corporation, brought this suit against Appellant, Dixon H. Cain, seeking a recovery upon a breach of contract, praying for restitution of the sum of $57,750.00, theretofore paid him, and in the alternative, for damages in the sum and amount of $150,000.00.
Prior to the development of this controversy, Appellant Dixon H. Cain was the president of Fifteen Oil Company, a corporation engaged in drilling and producing oil and gas with some of its properties being situated in the State of Louisiana. In June, 1958, Appellee, through the officials of its parent corporation, Tennessee Gas Transmission Company, sought to acquire the assets of Fifteen Oil Company through direct negotiations with Appellant, Dixon H. Cain, its president. Being unsuccessful, Tennessee Gas Transmission Company, through its stockbroker, then acquired more than 20% of the stock of Fifteen on the open market, without the knowledge of Fifteen. Thereafter, in May, 1960, Fifteen agreed to the sale of its assets to Appellee. Under the terms of the agreement, Fifteen agreed to sell all of its assets to Tennessee-Louisiana Oil Company in exchange for a certain amount of shares of stock of Tennessee Gas Transmission Company. Immediately prior to the consummation of the transaction, the Board of Directors of Fifteen Oil Company, granted severance pay to three of its officers in an amount equal to one and one-half (1½) years' salary. Cain's severance pay was set at $57,750.00, being one and one-half (1½) times his yearly salary. Upon being advised of this action by the Board of Directors of Fifteen, Tennessee made no objection, but according to Cain's testimony reduced the consideration to be paid Fifteen by reducing an equivalent amount of shares of stock from that theretofore offered, and further required that Appellant, Dixon H. Cain, and the other two officers, to execute what they termed as a "retained advisory letter." The letter was as follows:
"With reference to the Plan of Reorganization entered into on January 14, 1960 and
Among the numerous assets transferred by Fifteen to Tennessee was a 50% interest in a mineral lease upon a four thousand (4,000) acre tract of land known as the Martinez Lease. Appellant's father, J. W. Cain, owned one-fourth (¼) of the minerals under the lease, having owned same since 1936.
The mineral lease covering the Martinez four thousand (4,000) acre tract, which Appellee, Tennessee, thus acquired, was originally executed on May 25, 1933, and contained the following provision:
On October 19, 1960, approximately twenty-one (21) days before the expiration of the six-month period in which Appellant agreed to remain available in a "retained advisory capacity," he wrote a letter as attorney-infact in behalf of his father, J. W. Cain, addressed to Tennessee-Louisiana Oil Company, in which he advised them of the provisions of the lease hereinabove quoted, and further advised them as follows:
A copy of this letter was then sent to some twenty (20) other owners of a mineral interest in the Martinez Tract. Presumably, as a result of this letter, at least one of the other owners, who owned a one-half (½) interest in the tract, demanded the surrender of the lease for failure to develop.
After declining to either develop the lease by drilling, or to attempt a re-negotiation of the leases, the management of Tennessee finally decided to voluntarily surrender all leases except forty (40) acres surrounding each of the producing wells. Shortly after releasing the mineral lease, Cain's father by two conveyances, conveyed all of his interest to his son, Dixon H. Cain, Appellant, who thereafter leased the acreage for oil and gas purposes for the sum of $45,000.00.
Thereupon, this suit was then brought by Tennessee against the Appellant, Dixon H. Cain, for restitution of his severance pay, and in the alternative for damages for breach of contract. Upon trial before a jury, seven (7) Special Issues were submitted to the jury, but only three (3) of the issues are deemed pertinent to this appeal. The issues, together with the jury's verdict thereon, are as follows:
Based upon these findings, the Court entered judgment against the Appellant, Dixon H. Cain, in the sum and amount of $57,750.00, Appellee having requested the Court to enter judgment only for an amount equal to his severance pay rather than the full amount of $60,000.00 awarded by the jury.
Appellant has assigned three Points of Error by which he contends that the judgment is erroneous because (1) the Trial Court erred in submitting Special Issue No. 1 because it was an attempt to have the jury answer an issue of law rather than an issue of fact, and (2) because there was no evidence Cain agreed to act for Appellee, he having only agreed to remain in a retained advisory capacity for a period of six months, and (3) that there is no evidence to support the submission of Special Issue No. 2, because the contract did not create a fiduciary relationship.
The judgment for Appellee is apparently based upon the theory that the jury in response to Special Issue No. 1 found as a matter of fact that Appellant agreed to bcome an agent or agreed to become bound by some other type of contractual relationship which, as a matter of law, resulted in a confidential or fiduciary relationship, the betrayal of which, in equity, would require Appellant to respond in damages or make restitution of his terminal salary in the amount of $57,750.00. Since the judgment contains no independent findings in support thereof, the primary inquiry resolves itself into a question of whether or not Special Issue No. 1 as submitted by the Court calls upon the jury for a finding of fact or whether it calls upon the jury to make a finding of law.
Both the word "act" and "agreed" as contained in Special Issue No. 1 carry definite legal implications.
The word "act" denotes affirmative action or performance and an expression of will or purpose. An "act" signifies something done voluntarily by a person. An act is the result of the exercise of the will. Black says: "In a more technical sense it means something done voluntarily by the person, and of such nature that certain legal consequences attach to it." Duncan v. Landis, 3 Cir., 106 F. 839, 45 C.C.A. 666; Randle v. Birmingham Ry., Light & Power Co., 169 Ala. 314, 53 So. 918, 921.
Webster defines "agreed" as "United or settled in or by a common opinion on consent. Can two walk together, except they be agreed. Amos III: 3." McMurtry v. Addington, (Tex.Civ.App.) 354 S.W.2d 655.
In order to determine whether Appellant "agreed" to "act," the Court referred the jury to the "Plan of Reorganization." This was a legal instrument containing some fifteen (15) printed pages. Among other things, it contained numerous representations and warranties by the parties, as well as a provision which was somewhat similar
We believe Special Issue No. 1 to be subject to all of the objections leveled by Appellant in his first Point of Error. The issue, as framed, submits to the jury a mixed question of law and fact, if not purely a question of law. It begins by referring the jury to two separate instruments and then requires the jury to interpret the instruments and to arrive at a conclusion as to whether or not, in their opinion, Appellant "agreed" to "act" on behalf of Tennessee. The issue does not ask the jury to find any particular question of fact, but calls for the jury's conclusion based upon their interpretation of the two instruments.
Appellee's argument that Special Issue No. 1 was merely a submission of the issue of whether or not the Appellant did "in fact" agree, would ignore the fact that Special Issue No. 1, specifically tells the jury to find whether "* * * by virtue of the Plan of Re-organization of Fifteen Oil and the letter of agreement of May 2, 1960, between Dixon Cain and Tennessee-Louisiana Oil Company, Dixon Cain agreed to act * * *." Thus, as pointed out before, the Court directed the jury to construe two written instruments simultaneously and to determine whether or not, under their interpretation, Appellant "agreed" to "act". The vice in the issue lies in the fact that the Court requires the jury to base their verdict, not upon the acts and conduct of Appellant, but upon whether or not the two instruments executed by Appellant amounted to an agreement by him to "act' for Tennessee. It was the duty of the Court to interpret the instruments and to determine the legal effects following therefrom. A finding by the jury upon a question of law or a mixed question of law and fact, will not support a judgment based thereon, after a proper objection has been made to its submission.
In view of our ruling requiring a reversal, we will defer a discussion of Appellant's remaining points raising only questions of sufficiency of the evidence.
Because of the error pointed out hereinabove, this cause must be reversed and remanded.
Reversed and remanded.