Fitz-Gerald v. Hull

Court of Civil Appeals of Texas · 1950 · Corporations

232 S.W.2d 93 (1950)

Updated August 22, 2026

Corporationsjoint adventureconstructive trustoil and gas leasesinstructed verdictoral agreementoil and gas leaseTexas Trust Act

Facts

Hull and Green, employees of Texas Gulf Producing Company, alleged that they and Fitz-Gerald orally agreed that Fitz-Gerald would negotiate the best possible oil and gas lease on the Coble lands, submit the terms for possible acceptance by Texas Gulf, and, if the company declined, take the lease in the names of all three for their joint benefit, with plaintiffs jointly owning one-half and Fitz-Gerald the other half. According to plaintiffs' evidence, Texas Gulf declined the proposed terms, and Hull told Fitz-Gerald to take the lease for the three of them. Fitz-Gerald then obtained the Coble lease in his own name alone and later assigned a one-half interest to drilling contractors who agreed to assume drilling obligations. Plaintiffs sued to recover an undivided one-half interest in the lease on a constructive trust theory.

Issue

Did plaintiffs' evidence raise a jury issue that the parties had an enforceable oral agreement to acquire the Coble lease jointly, such that Fitz-Gerald's taking title in his own name alone could support a constructive trust? Also, was the suit barred either by the Texas Trust Act as an express parol trust or by the Texas Securities Act?

Rule

On review of an instructed verdict, the appellate court views the evidence in the light most favorable to the losing party, disregards conflicts, and indulges every reasonable inference in that party's favor; reversal is required if the evidence, considered by itself, would raise a fact issue supporting judgment for that party. An express parol trust in real estate is invalid under the Texas Trust Act, but constructive trusts are exempt; where parties agree property is to be acquired in all their names and one party instead takes title in his own name alone, equity may impose a constructive trust by operation of law. The Texas Securities Act regulates sellers and sales of securities and protects purchasers against sellers, not purchasers against sellers, so purchasers need not be licensed dealers to maintain such a suit.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

In Odessa, Nora Patel and Eli Mercer testify that they orally agreed with Grant Lyle that he would negotiate the best available mineral lease on a specified ranch, submit the proposed terms to their employer first, and if the employer declined, take title in all three names with Nora and Eli sharing one-half and Grant taking one-half. Nora and Eli also testify that the employer declined and that Grant then took the lease only in his own name. At the close of the plaintiffs' evidence, the trial judge directs a verdict for Grant because he denies any agreement and points to conflicting testimony from other witnesses.

On appeal, what is the strongest argument that the directed verdict was improper?

Explanation. The governing rule is that, on review of an instructed verdict, the court views the evidence in the light most favorable to the losing party, disregards conflicts, and indulges every reasonable inference in that party's favor. Reversal is required if the plaintiffs' evidence, considered by itself, would raise a fact issue supporting judgment for them. The majority opinion applied exactly that standard and held that conflicting evidence did not justify taking the case from the jury.