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HOWARD E. HULTS, ET UX. v. HENRY L. TILLMAN

NOVEMBER 20, 1985

HOWARD E. HULTS, ET UX.
v.
HENRY L. TILLMAN



BEFORE WALKER, HAWKINS AND DAN LEE

HAWKINS, JUSTICE, FOR THE COURT:

Howard E. Hults and his wife, Velma Hults, appeal from a decree of the Chancery Court of Jackson County adjudicating they were joint venturers in a contract for the sale of fill dirt and that Henry L. Tillman was entitled to one-third of the proceeds as such joint venturer.

Tillman has cross-appealed alleging error in the chancellor's requiring him to pay certain costs and expenses incurred.

 The only issue we are required to address on this appeal is whether a joint venture relationship was ever established between the parties.

 Finding there was no such relationship, we reverse and render on the direct appeal. This renders it unnecessary to address the cross-appeal, which we dismiss.

 FACTS

 Hults, 60, was in the seafood business in Jackson County, as majority shareholder in Hults Seafood, Inc., a family corporation. In late 1977 or 1978, Tillman a Jackson County lawyer, began representing Hults and the corporation. A native of Jackson County and with so-me familiarity with the fishing industry, Tillman represented Hults as general attorney, and also as an attorney with some expertise in marketing fish. They discussed developing a market for fish in Mexico, and made one trip together to Mexico. Tillman testified that he made other trips on Hults's behalf. Nothing ever materialized on this, however.

 In 1980, following Hurricane Frederic, Hults was besieged with financial problems. The record is not clear whether Frederic caused, or merely contributed to his financial woes. He had involved himself financially

 in some off-brand religion, owed the Internal Revenue Service over $170,000, and seven or eight creditors had filed suit against him. Hults applied for a Small Business Administration loan. Tillman represented Hults in these varied legal affairs and involvements. Hults contemplated filing bankruptcy, and was quite depressed. Tillman counseled Hults not only as his lawyer but as a friend.

 Hults and Mrs. Hults owned several hundred acres near the Alabama state line. In 1980 the public became aware that Chevron USA would expand its refinery in Jackson County. It is not clear from the record who of the two first learned that fill dirt from the Hults property might be a source of supply in the construction project, but in January or February, 1980, Hults and Tillman began discussing the prospect of selling fill dirt to Chevron. Tillman testified they agreed in March, 1980, they would divide the proceeds 60% to Hults and 40% to Tillman. Hults testified Tillman said he would have to be paid on a contingency fee basis, but the amount was never discussed until shortly before a contract was executed in December for sale of the dirt.

 Tillman expended considerable time and effort in 1980 to assist Hults in securing a contract for the sale of the dirt. He talked with representatives of Chevron, Brown and Root (the prime contractor), members of the Board of Supervisors of Jackson County (as to the permit needed), the sheriff of Jackson County (about route to be traveled in supplying dirt from Hults's property), representatives of the Environmental Protection Agency, and studied regulations and specifications for dirt requirement. He secured soil sampling. Approximately 55 acres were involved in the dirt excavation area, and Tillman helped prepare the description following a survey. Tillman also went onto the property with interested parties, and discussed the area with representatives of dirt contractors and real estate agents.

 Hults was not altogether passive, but discussed the prospect of selling dirt with certain of these representatives as well, and secured the survey, and a right-of-way from the Hultses property to a public road. The record indicates, however, that Tillman was far more active than Hults, and did virtually all the talking to prospects. Tillman testified he devoted practically all his time to trying to secure a contract, and reduced his secretaries from two to one.

 Tillman was informed approximately 4,000,000 cubic

 yards of dirt would be required. He remembered the logistical problems involved in trucking the fill dirt in 1964 when the refinery was constructed. It was this knowledge which enabled him to anticipate some of the problems which would be encountered with removing and transporting dirt from the Hultses land, and prompted his contacting various county and state officials. Hults wanted to excavate the dirt himself, but Tillman advised against it.

 On August 8, 1980, Tillman executed the following non-exclusive royalty agreement to Mid State James Paving Company:

 NON-EXCLUSIVE ROYALTY AGREEMENT

 I, HENRY L. TILLMAN, acting under the authority of owner, HOWARD E. HULTS, do hereby agree to sell to MID SOUTH JAMES PAVING COMPANY dirt removed from the property so described below for a period of the duration of the project for $0.25 a yard and provide the easement to the County Road known as Fort Lake Road.

 WE, MID STATE JAMES PAVING COMPANY, agree to comply with the State and Federal requirements on permits agreed upon by the owner and contractor and secured by owner. Land to be restored to satisfy these permitted areas to the satisfaction laid out in said permits.

 Land included is approximately Two Hundred (200) acres, more or less, North of Collins Creek, West of the Mississippi-Alabama State Line in Section 5, Township 6 South, Range 4 West, and/or Section 32, Township 5 South, Range 4 West.

 DATE: 8/8/80 HOWARD E. HULTS

 BY: s/Henry L. Tillman, His Attorney

 HENRY L. TILLMAN

 On August 29, 1980, Hults executed the following right to negotiate the sale of fill dirt to Tillman:

 STATE OF MISSISSIPPI

 COUNTY OF JACKSON

 I, HOWARD HULTS, hereby grant the exclusive right to negotiate with any and all parties for the sale, removal and transfer of any and all soil, dirt, sand, gravel or other material located on all properties which I own, in Jackson County, Mississippi and/or Mobile County, Alabama, during the period of construction of the Chevron U.S.A. project in Jackson County, Mississippi unto HENRY L. TILLMAN, said property being described in Deed Book 672, Page 241-44, Office of the Chancery Clerk.

 WITNESS MY SIGNATURE, this the 29th day of August, A.D., 1980.

 s/Howard Hults HOWARD HULTS

 SWORN TO AND SUBSCRIBED BEFORE ME, this the 29th day of August, A.D., 1980.

 s/Kay Murray NOTARY PUBLIC

 STATE OF MISSISSIPPI

 COUNTY OF JACKSON

 PERSONALLY APPEARED BEFORE ME, the undersigned authority in and for the aforesaid County and State, the within named, HOWARD HULTS, who acknowledged to me that he signed and delivered the above and foregoing instrument on the day and year therein mentioned as his free and voluntary act and deed.

 GIVEN MY OFFICIAL HAND AND SEAL OF OFFICE, this the 29th day of August, A.D., 1980.

 s/Kay Murra NOTARY PUBLIC

 Tillman recorded this instrument on September 18, 1980.

 On December 6, 1980, Tillman, on his legal stationery, wrote Patterson Enterprises, Inc., authorizing that firm to commence preliminary preparation for soil excavation "from the Hults property."

 In the latter part of November or early December, 1980, there was a meeting in Tillman's office between Roy Brenson, project manager for Patterson Enterprises, Ltd., a dirt contractor; Miller Watson, a representative of T. L. James, another dirt contractor; W. C. Ford, owner of Ford Trucking Company; and Tillman. Hults also came to attend the meeting, but Tillman either suggested or instructed Hults that he not be present in the discussion. When the meeting terminated, Tillman told Hults he had agreed to a figure of 25 cents a cubic yard. Hults testified he was disappointed, since he had told Tillman he wanted to get 35 cents per cubic yard. Tillman testified he told Hults 25 cents per cubic yard was an excellent price, and that they were elated to get that, since they were afraid they might not get over 15 or 20 cents per cubic yard.

 Brown and Root, a Texas corporation, as prime contractor of the construction of the refinery, subcontracted the supplying of fill dirt to Patterson Enterprises, Ltd., a Mississippi corporation, and T. L. James Company, Inc., a Louisiana corporation.

 On December 12, 1980, Hults and his wife Velma, as Lessors executed a "lease Agreement" to these dirt contractors Patterson and James as Lessees, authorizing them to go upon the described property, excavate and remove dirt, and to compensate the Hultses at the rate of 25 cents per cubic yard. The lessor was to be paid on bi-monthly invoices. Dirt was to be measured by Brown and Root and approved on their delivery tickets. Tillman as notary public took the acknowledgment of the Hultses' signatures.

 Section V. of this Agreement states:

 WARRANTY OF TITLE AND OWNERSHIP

 Lessor hereby warrants and agrees to defend the title to the leased premises and further warrants that he is the sole and only owner of the leased premises free and clear of all liens and encumbrances not subordinated to this lease. Lessor agrees to Indemnify Lessee from any and all claims by third parties based on rights of title or possession. In case of any title dispute or litigation, Lessee is hereby authorized to withhold payment until final adjudication or settlement of said disputes.

 Tillman testified that in November, 1980, he and Hults discussed the division or compensation he was to receive, and the two of them agreed the division would be two-thirds to Hults and one-third to Tillman. Hults testified there had been no discussion as to the amount of fee that Tillman would ask until it became certain they would receive the contract in December, 1980, at which time Tillman called him to his office. According to Hults, Tillman first wanted 50%, and Hults offered 10%, but finally agreed on a one-third fee, Hults claiming he agreed to pay this after telling Tillman his creditors would have to come first. Hults testified he was disappointed because he thought they were going to get 35 cents per cubic yard and would sell 4,000,000 cubic yards. Only 2,250,000 were actually removed.

 On October 15, 1980, Hults had paid Tillman $15,000 when Tillman said he needed some money. Tillman never made it clear ...


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