It did not the parties buying or selling, in determining, crazy, and went wild after that. look like values had much of a limit. It didn't The subject of inquiry was the value of the lease owned by the Caldwell people. It is our opinion that there was no prejudice to the appellant in this testimony, and the assignment is overruled. "I was about the Thrall oil field during the spring of 1915, while that oil excitement was going on. I stayed there nearly all the time for about two months. I do remember the well that was brought in by the Caldwell oil people. I had a lease adjoining it on the north. My lease was also on the Diebold survey. There were 10 acres in my lease. There was development going on on my land at the time the Caldwell people brought in their well. I was having a well bored. I did sell some of my property. I sold a quarter of an acre, and then sold one-sixth of an acre. I got $2,000 for the quarter acre, and I retained a one-eighth royalty above the royalty I was giving. I sold my one-sixth of an acre at $500, with the royalty of the same. I did have a number of offers to sell that whole 10-acre lease. The best offer I had was $50,000. There was no producing well on it. That lease was on the north and adjoining the lease owned by the Caldwell people; the Caldwell people were directly south of my tract. There was quite a good deal of activity in the real estate market for oil purposes, and a good many people were up there buying and selling leases. After the Caldwell oil well was brought in, it had a very stimulating effect on property in the neighborhood, ín [5] The fourth assignment of error complains of the action of the court in permitting the witness L. W. Hensley to testify over the objection of the plaintiff with reference to the value of the Caldwell oil lease, because the testimony clearly shows that the said witness was not qualified to give an opinion as to the value of said oil lease; he having had no experience in the oil business, and had no information with reference to the values of oil leases, and had not seen any sales made in the oil field of Thrall, and therefore was wholly disqualified from testifying as to the value of the said oil lease. This testimony was objected to on the trial of the case, which objections were overruled, and the witness permitted to testify what, in his opinion, was the value of the oil lease. It seems that Hensley was one of the original incorporators, and he was permitted to state to the jury the reasons he had for placing the value he did on the lease, and his testimony shows substantially: That he had held a position of sheriff of the county for about 12 years. That they put up the money for the lease, and that they sent Jenkins to purchase the property. That after the purchase of that lease they put down a well, and got a flowing well. That they drilled six wells all told; that No. 2 was a flowing well, and the other wells had a little oil, but not very good. That he had occasion, after well No. 2 came in, to go into Thrall and measure the oil that came out of No. 1. "J. Louis Giddings, B. F. Delemater, and myself went up there and measured the oil in that well. The way we measured it was we had two tanks. I don't remember what they were, but I believe they were 1,000 barrels and 1,600 barrels. We had a measuring pole, and we put it in the tank to see how deep the oil was, then turned the oil in for a certain number of hours, I believe 12, and then calculated to see what it was putting out in 24 hours; the two wells, first one, and then the other. According to our calculations, both wells having been turned in, they were producing about 1,300 barrels per day. That was something like two weeks after we incorporated. I was present the night they agreed to incorporate at Taylor, and was also present We believed that this well was putting out | lar to the Caldwell Oil Company's 10-acre anywhere from 2,000 to 2,500 barrels per day, lease with reference to quantity, quality, and we were getting something like 45 cents per barrel for the oil, so we knew that would be something like $1,000 to $1,200 per day, and that is the basis on which we figured and arrived at that $120,000 valuation. We estimated among ourselves that it was really worth $200,000. We made that estimate on the well's production, and we put it in at $120,000. I did not offer to sell any of my stock in that well, because it was not for sale. I did enter into an agreement among the majority of the stockholders to hold it. That agreement was that we would hold our stock and not sell it. We put a value of $50 on the stock; that is, 22 for 1." Taking in consideration the fact that the appellant claimed that the lease was not worth anything like what it was valued at, and placed in the corporation for, in our judgment it was proper, under the circumstances, for the witness to testify how he and his associates arrived at the value they placed on the lease, and that the way they arrived at the value of the property was to show the revenue it was producing. The Fuchs and Murphy wells were still producing apparently the same amount of oil as when first brought in, which had been two months before the Caldwell Oil Company brought in their well. Therefore these people had the right to presume that this well would continue to flow oil, together with the other wells to be sunk by them on the lease, and to value it accordingly. The jury were entitled to know the facts, and in our judgment the assignment must be overruled. [6] The fifth assignment complains that the court erred in permitting the witness Dr. L. L. Lee to testify, over the objection of the plaintiff, that he had sold one-fourth of an acre of land near the Caldwell Oil Company's lease for $2,000, and one-sixteenth of an acre near the said lease for the sum of $500, because the testimony was wholly irrelevant and immaterial, and no evidence was shown that the land sold by Dr. Lee and the land on which the Caldwell lease was were in any manner similar, and nothing is shown with reference to whether or not the royalties on the land were the same or different, and for the further reason that the value of the Caldwell lease could not be determined by showing what a segregated one-fourth acre of another tract might sell for, as it is a matter of common knowledge, and is also shown by the evidence in the record, that a larger price can be obtained for small tracts than for large tracts. Without going into the matter at length, we are of opinion that there is no merit in the assignment, and it is therefore overruled. character of improvements, and terms of the lease, and further because it is an undisputed fact in this record, testified to by defendants' own witnesses, that a tract of onefourth of an acre, or one-sixteenth of an acre, would sell for more money per acre than a 10-acre tract, and further because the proof of isolated sales is not competent to establish the market value of other property. It is urged by appellee, that there was no error in the action of the court in permitting the witness to give the testimony complained of in this assignment of error; that appellant, upon cross-examination, caused this witness to testify to similar matters not brought out on direct examination; that the witness testified that he thought this sale was before April 20, 1915; that it was after the Caldwell well came in; that this piece of ground adjoined that of appellees, and it was therefore admissible to show what it sold for, as a circumstance in establishing value. We are of opinion that there is no merit in the assignment, and same is overruled. [7] The seventh assignment complains that the court erred in permitting the witness G. W. Grant to testify, over the objection of plaintiff, with reference to what he was offered for some of the stock of the Caldwell Oil Company, because the said offers could not constitute the value of the said Caldwell oil lease. This assignment will be considered in connection with the eighth and ninth assignments, which will be grouped and considered together. It will be noted that appellees, in making application for the charter to the secretary of state, having stated, in the affidavit accompanying the application with reference to the value of the lease. that "we and each of us, whose names are hereto subscribed, solemnly swear that the value of $120,000 which we have placed on this property is reasonable and conservative, and we further swear that every dollar of the stock of each of the stockholders herein can be sold at par and above," it was proper, in our judgment, to show what was offered for the stock and what it was sold for. The stock represented the property of the corporation, and, if the stock could have been sold for par, then the lease with the well on it was worth $120,000, the value placed on it by appellees. We find no merit in these assignments, and they are therefore overruled. The tenth assignment complains that the court erred in permitting the witnesses M. D. Rodgers, J. R. Fraim, G. W. Grant, C. C. The sixth assignment complains that the Nelms, E. G. Jenkins, C. B. Oliver, J. E. Gidcourt erred in permitting the witness J. R. dings, L. L. Lee, and T. G. Heslep to testiFraim to testify, over the objection of the fy over the objection of plaintiff with refplaintiff, with reference to what one-six-erence to what the stock in the Caldwell Oil teenth of an acre and one-fourth of an acre Company sold for; and the eleventh assignin the Thrall oil field sold for, because it ment complains of the action of the court was not shown that these tracts were simi- in permitting the witness G. W. Grant to tes cause what he traded for the said stock could tify, over the objection of plaintiff, that he bought $1,600 worth of the stock in the Caldwell Oil Company at $27 per share, because and for the reason that such testimony does not show that said witness paid the prevailing market price of such stock at said time, but only shows a single and isolated transaction, which cannot and does not prove or establish the reasonable market value of either the stock in the Caldwell Oil Company or the value of the lease held by them. The stock of the Caldwell Oil Company represented the property of the company, and, in order for the jury to arrive at the value of the property of the corporation, it was proper to prove what was offered for the stock, and what the stock in the corporation sold for, and also those applying for the charter of the Caldwell Oil Company, in the affidavit as to the value of the property, having 'stated that all of the stock in said company could be sold for par and better, it was proper to permit the witnesses to state what was offered for the stock, and what it actually sold for, and if all of the stock in the Caldwell Oil Company could have been sold for par, or better, then the property of the corporation was worth $120,000. The assign-established for the stock, and plaintiff ofments are overruled. The twelfth, thirteenth, fourteenth, and fifteenth assignments of error are considered together. These assignments are: (a) "The court erred in permitting the witness T. Kraitcher to testify, over the objection of the plaintiff, that he traded two certain houses and certain town lots upon which said houses were situated, which he considered to be worth $2,000, for 80 shares of the stock of the Caldwell Oil Company, because and for the reason that such testimony is inadmissible and incompetent to prove the value of the lease of the Caldwell Oil Company, which was the only issue in question, since market value contemplates a sale for cash, and not a mere trade for other property, and such proof as to what the stock of the Caldwell Oil Company may have been traded for, and for other property, would not and could not establish the cash market value of such stock or of said lease, all of which is more fully shown by plaintiff's bill of exception." (b) "The court erred in permitting the witness T. Kraitcher to testify, over the objection of the plaintiff, that he traded an Overland automobile for 7 shares of the stock of the Caldwell Oil Company, said trade being made with Ed Dusek, and that said Dusek afterwards sold said automobile for $300, because and for the reason that said testimony was incompetent and inadmissible as tending to show the reasonable market value of the stock of the Caldwell Oil Company or the market value of the lease of said company, and because market value of the stock or lease cannot be proven by evidence as to what certain stock may have brought when traded for other property, unless the market value of such other property be also shown in connection therewith, which the defendants failed to do in this case." (c) "The court erred in permitting the witness E. G. Jenkins to testify, over the objection of the plaintiff, that he traded an automobile worth $800 for 40 shares of stock in the Caldwell Oil Company, because said testimony was irrelevant and immaterial, and had nothing to do with the inquiry involved in this suit, that 1s, as to the market value of the lease owned by the Caldwell Oil Company, and further be [8] Appellant's contention in the court below was that the property had no market value, for the reason that no 10-acre lease similarly situated in the Thrall field had been sold, and that no market value had been fered its oil scouts to prove the value of this lease. We believe the testimony of the witnesses complained of was admissible, as a circumstance to show the value of the property owned by the Caldwell Oil Company; its weight was for the jury. All of the witnesses whose testimony was complained of in the above assignments stated without objection the value of the property they traded for stock in the company, or traded stock in the company for. A critical examination of the testimony shows that there is no merit in the assignments, and therefore they are overruled. The sixteenth and seventeenth assignments of error are as follows: L. S. Hensley to testify, over the objection of (a) "The court erred in permitting the witness which the value of the Caldwell Oil lease was the plaintiff, with reference to the manner in ascertained by the several owners thereof at the time the charter of the Caldwell Oil Company was obtained from the secretary of state." C. B. Oliver to testify, over the objection of the (b) The court erred in permitting the witness plaintiff, with reference to the manner in which the value of the Caldwell oil lease was ascertained by the several owners thereof at the time the charter of the Caldwell Oil Company was obtained from the secretary of state.' The assignments are overruled. The eighteenth assignment challenges the action of the lower court as being error in permitting the witness J. R. Fraim to testify over the objection of the plaintiff with reference to what he could have sold the stock of the Caldwell Oil Company for, because such testimony was irrelevant and immaterial, and because proof of what stock in the Caldwell Oil Company could have been sold for is not admissible to show the market valfor is not admissible to show the market value of the lease in question; further because the dates upon which said sale or sales could to receive, file, and record the charter of have been made by the said Fraim do not such company in his office, and give a cerappear; and further because testimony from tificate showing the record thereof. It is a witness as to what he believes he could further provided that the satisfactory evihave sold stock for is incompetent to show dence shall consist, among other things, the market value of the stock, and certainly of those who execute the charter stating is incompetent to show the market value of a lease owned by the company. From what has been said heretofore, it follows that these assignments must be overruled. The nineteenth assignment claims that the court erred in permitting the witness Dr. Y. F. Hopkins to testify, over the objection of the plaintiff, to the market value of the Caldwell Oil Company's 10-acre lease, be cause it was not shown that said witness knew the market value of said lease, or was in a position to know, or had such training and information as would permit him to give his opinion as an expert. Dr. Hopkins having been shown to be familiar with the value of property for oil purposes, it was proper to state the facts upon which he based his estimate of the value of the property. The assignment is overruled. The twentieth and twenty-first assignments complain that the court erred in permitting the witness Dr. Hopkins to testify with reference to what the stock of the Thrall Independent Oil Company sold for, because the market value of stock in the Thrall Independent Company's 10-acre lease cannot be established by the proof of isolated sales of stock in that company, and in permitting him to testify over objection of plaintiff as to what the lease owned by the Thrall Independent Oil Company could be sold for. We have considered this matter heretofore, and there is no merit in the assignments, and same are overruled. The [9] The twenty-second assignment complains of the verdict of the jury as being against the great weight and preponderance of the evidence, in that the lease in controof the evidence, in that the lease in controversy was not worth over $25,000 at the time of the incorporation of the Caldwell Oil Company. This is a voluminous record. case was submitted to the jury on special issues. The jury returned a verdict that the lease, with the well on it, at the time the Caldwell Oil Company was incorporated, was worth $120,000. No complaint is made with reference to improper conduct on the part of the jury, and in our judgment the evidence sustains the verdict of the jury. [10] The statutes of this state authorizing the creation of private corporations provide that, whenever the stockholders of such company shall furnish satisfactory evidence to the secretary of state that the full amount of the authorized capital stock has in good faith been subscribed, and 50 per cent. thereof paid in cash, or its equivalent in other property or labor done, the product of which shall be to the company of the actual value at which it was taken or property received, it shall be the duty of said officer, on the it shall be the duty of said officer, on the payment of the official fee and franchise tax, the cash value of any property received, giving its description and location, from whom and the price at which it is received, and that, if the secretary of state is not satisfied, he may, at the expense of the incorporators, require other and more satisfactory evidence before he shall be required to receive, file, and record said charter. The subscribers in the instant case to the charter fully complied with this section in every respect. The secretary of state was satisfied with the value placed upon the property and recorded the charter as required by law. The secretary of state being the officer appointed by the state to pass upon the value of property, his acts in accepting the value placed upon the property are prima facie right, and can only be called in question in case of fraud. We understand in this case that there is no contention on the part of appellant that appellees fraudulently overvalued the lease, and there is no claim that they knowingly placed a fictitious value on the property, and deliberately perpetrated a fraud on the secretary of state. In the case of Coit v. Gold Amalgamated Co., 119 U. S. 345, 7 Sup. Ct. 233, 30 L. Ed. 420, the court uses the following language: "When the charter authorizes capital stock to be paid in property, and the shareholders stead of money in payment of their subscriphonestly and in good faith put in property intions, third parties have no ground for complaint. The case is very different from that in which subscription to stock is payable in cash, and where only a part of the installment has been paid. In that case there is still a debt due to the corporation, which, if it becomes insolvent, may be sequestered in equity by the creditors, as a trust fund liable to the payment of their debts. But where full-paid stock is issued for property received, there must be actual fraud in the transaction to enable the creditors of the corporation to call the stockholders to account. A gross and over valuation of property would be strong evidence of fraud." In the case of Tuck v. Downing, 76 Ill. 71, the court says: "No man, however scientific he may be, could certainly state how a mine, with the most flattering outcrop or blowout, will finally turn out. It is to be fully tested and worked by men of and sold on a warranty, but on the prospect. skill and judgment. Mines are not purchased The sight determines the purchase. If very flattering, a party is willing to pay largelv for the chance. There is no other sensible or known in the nature of things utterly speculative, and mode of selling this kind of property. It is, every one knows the business is of the most fluctuating and hazardous character. How many mines have not sustained the hopes created by their outcrop!" In the case of Young v. Erie Iron Co., 65 Mich. 111, 31 N. W. 814, it is said: "But it is equally well settled that such corporators are not responsible for an honest error of judgment, or a mistake in placing a valuation upon property appropriated or used as capital by a manufacturing or mining com- | the ground to see the conditions and to sell pany. Nor can the fact that a jury or court its goods. He saw the well brought in by finds property of the nature of a leasehold nec- the Caldwell Oil Company, and was anxious essarily fluctuating and speculative in value, worthless now, and but of little actual value to and did sell said corporation the goods. at the time of its appropriation as capital, be He sold the goods to the Caldwell Oil Comcontrolling in deciding whether or not such appropriation was fraudulent as against the cred-pany, and probably expected the well to conitors of the corporation. Such finding will be tinue to flow in oil, and, if it did, he was presumptive evidence of fraud; but if it be taking no risk in selling the goods to the shown that those forming the company honestly company. There was no show at concealbelieved it to be worth the amount specified in the articles, and that their mistake was one of ment on the part of appellees as to what conjudgment only, their action cannot be consider- stituted the capital stock of the Caldwell ed fraud, either in fact or law. The law im- Oil Company. The agent of the company poses no penalty of this kind upon the stockholders or trustees of a company for a mistake saw the well producing oil, and sold the or erroneous judgment in the honest and faith- goods to the company on the strength of it. ful discharge of his duties." [11] All of the testimony that was admitted in this case by the trial court, over the objection of appellant, and especially that by appellees as to how they came to place the value they did on the lease, was admissible on the question of their good faith in valuing the property as they did. The expression "good faith," as it is used in law, simply means: "Honestly; without fraud, collusion, or deceit; really, actually, without pretense." Words and Phrases, vol. 4, p. 3117. A careful examination of the record leads us to the conclusion that the case was fair- It is therefore On Second Motion for Rehearing. We desire to say that in our original opinion we cite the case of Cathey v. M., K. & T. Ry. Co., 104 Tex. 41, 133 S. W. 417, 33 L. R. A. (N. S.) 103, and use a quotation therefrom which is apparently not used in said report. However, the confusion was brought about Article 1210, Vernon's Sayles' Statutes, by improper punctuation, and on account of reads as follows: the fact that the opinion does not show where the quotation ended, and where the language of counsel began. Therefore the said case will be omitted from the opinion in this case. However, the views expressed in the remainder of the opinion have not been altered, and in our judgment must be adhered to. The motion for rehearing is overruled. |