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VEATCH v. STANDARD OIL CO.

April 15, 1940

VEATCH et al.
v.
STANDARD OIL CO. OF CALIFORNIA



The opinion of the court was delivered by: LEIBELL

LEIBELL, District Judge.

This is a motion, with supporting affidavits, for a summary judgment under Rule 56(b), Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, in favor of the defendant as to the claim asserted by plaintiffs. The claim is set forth in paragraph "2" of the complaint as follows: "2. Between about January 18, 1934 and about June 1, 1934, the plaintiffs rendered services to and for the benefit of the defendant in procuring a purchaser for petroleum and petroleum products. Said services were rendered at the request of and were accepted by the defendant, and the defendant agreed to pay the plaintiffs the reasonable value thereof. Upon information and belief, the reasonable value of said services was the sum of eight hundred forty-three thousand eight hundred nineteen and 60/100 dollars ($843,819.60). No part of said sum has been paid, although payment has been duly demanded."

From the affidavits and exhibits submitted on this motion, the following appears to be a fair summary of the facts: In January 1934, plaintiff Hanover received a letter from Martin Sain, managing director of a Roumanian corporation, known by its abbreviated title as "Redeventza". The letter, written in Roumanian, dated December 22, 1933, contained a general survey of Redeventza's oil business and a statement that during the year 1934, Redeventza expected to market some 200,000 tons of refined petroleum products over and above the capacity of its own refineries, which excess would be acquired "either at our own domestic market, or direct from America or Russia". In outlining certain plans for the future, it was stated that a refinery for the middle of Europe was being planned and that "It is therefore more than probable that we would require crude oil for our refinery and we will import such from America".

 Hanover brought this letter to Veatch, who died since this action was started. Veatch was a geologist and at the time was engaged in the oil business, principally as an operator of producing properties. On January 18, 1934, Veatch sent the Roumanian letter to James B. Moffett at New York City and Veatch's letter of transmittal characterized the Redeventza letter as "indicating that that company would like to make a connection with an American company to supply it with oil products and crude". It continued as follows: "It has occurred to me that this might be of interest to the Standard of California in view of its accentuated interest in European marketing arising from its successful development in the Persian Gulf, and I am accordingly sending it to you for your consideration, with Mr. Hanover's translation. Should it prove of interest and business between yourselves and Redeventza result therefrom, I would expect from the business developed a reasonable return for myself to be shared with Mr. Hanover."

 The development in the Persian Gulf, referred to by Mr. Veatch, was that of a new field being exploited on Bahrein Island in the Persian Gulf by Bahrein Petroleum Co., Ltd., a subsidiary of defendant, Standard Oil Company of California. Commercial production on this field, however, did not commence until June 1934 and samples were not available until about a month later.

 When the Redeventza letter was forwarded to his office in New York, Mr. Moffett was not, nor had he been in the past, an officer of defendant, Standard Oil Company of California. He had informally accepted a position as Vice-President of the company and was on his way from Florida to San Francisco to complete formal arrangements with respect thereto. On January 21, 1934, in San Francisco, his designation as Vice-President was made effective retroactively as of January 15, 1934. It was contemplated that his duties would include the formulation of a plan for the development of a refinery on Bahrein Island, in addition to the supervision of marketing facilities for the distribution of Bahrein petroleum east of Suez.

 Mr. Moffett was absent from New York on January 18, 1934, when Veatch forwarded the Redeventza letter to him. Miss R. M. Holland, Mr. Moffett's private secretary, received the letter and on January 22, 1934, she wrote Veatch from Moffett's apartment in New York City, acknowledging receipt of the letter and advising him that Mr. Moffett would not be in New York for ten days or two weeks. Miss Holland forwarded the letter to Mr. Moffett in California. Veatch did not hear from Moffett and on February 20, 1934, wrote him and requested a return of the Redeventza letter in the event that Moffett had had an opportunity to consider the matter and found it of no interest. Miss Holland replied to this on February 26 stating that the Veatch letter of January 18 and enclosures had been forwarded to Moffett in California; that he had returned to New York with the letter in his papers to be taken to Europe; that she was sorry he had the papers with him if Veatch wished them returned immediately; that if there was anything Veatch wished her to do about it he should telephone her, otherwise she would wait until Moffett returned from Europe about April 1 and have him get in touch with Veatch at that time. Veatch acknowledged Miss Holland's letter on March 2 and stated that the fact that Moffett had taken the papers to Europe would indicate that the matter was of interest to him at that time and that in due course Veatch would hear from Moffett. About March 20 Hanover advised Redeventza of the above correspondence and described the business and standing of the Standard Oil Company of California.

 On April 25, 1934, not having heard from Moffett, Veatch wrote him, and after having reminded him of the earlier Redeventza letter (December 22, 1933) stated that Hanover had reported to Redeventza that Veatch had submitted the matter to Moffett and that Hanover had received another letter from Martin Sain of Redeventza, dated April 6 to the effect that "he (Sain) would welcome a mutually satisfactory arrangement with your company to supply Redeventza's needs as indicated above". In concluding Veatch again requested Moffett to advise him whether or not such a possible arrangement with Redeventza was of interest to Moffett's company (the defendant).

 Miss Holland also received this April 25 letter and on April 26 she telephoned Veatch advising him that Moffett was then en route from California to New York and would arrive in New York on Monday, April 30, and she asked Veatch if that would be soon enough for Moffett to attend to the matter. On May 2, in response to a call from Veatch, Miss Holland informed him that Mr. Moffett had reached New York on Monday, had gone to Washington and had returned from Washington that morning and was sailing for Europe at midnight; that she expected to see him about noon and would bring the letter to his attention. On May 3 Veatch again talked with Miss Holland on the phone and Veatch quotes Miss Holland as saying that, although she had not seen Mr. Moffett personally the day before, she spoke to him about noon regarding Veatch's letter of April 25; that Moffett directed her to send the letter to him at his home, saying that it was a matter that he would attend to on the other side and that he would communicate with Veatch from the boat. Veatch suggested to her that he would cable the Redeventza people that Moffett would take care of the matter when he arrived in Europe and "she said that she thought that would be a very good idea."

 On May 4, 1934, Hanover cabled Martin Sain with regard to Moffett's trip to Europe and suggested that Sain get in touch with Moffett at the Claridge Hotel, London, and added "we have advised him you would welcome mutually satisfactory arrangement". A night letter cablegram was sent to Moffett at the Claridge by Veatch May 8 stating that after conversation with Moffett's secretary Veatch had the Hanover cable sent to Sain, and quoted it. The Veatch night letter then concluded -- "It would be a courteous gesture if you would telegraph Sain indicating you would be glad to see him for purpose of determining whether some mutually satisfactory arrangement is possible and suggesting meeting place convenient to yourself".

 On May 22, 1934, Sain wrote Hanover from Bucharest and stated that the May 4 cable had arrived in Bucharest while Sain was away and that Sain received it after he had left London for Paris; that Sain then telegraphed Moffett to inquire whether Moffett was coming to Paris and that Moffett could not come, "so I (Sain) had to renounce this meeting, which, undoubtedly, I also consider, it would have been very interesting for both parties". No meeting did take place and, so far as the record shows, this was the last communication between plaintiffs and any officer or employee of defendant until March 3, 1936, when Veatch addressed a letter to Mr. Moffett stating that Hanover had been advised "that the business with Redeventza brought to your attention by ourselves has materialized". The letter asked Moffett to advise Veatch "regarding the business that has eventuated between Standard of California and Redeventza, and the return to Mr. Hanover and myself due thereon".

 Plaintiffs contend that from certain facts that will now be stated plaintiffs are entitled to conclude that the defendant, Standard of California, used the information contained in the letter of Redeventza dated December 22, 1933, which Veatch sent Moffett on January 22, 1934, and which was forwarded to Moffett in California by his secretary while he was there in conference with officials of the defendant. It appears that a Mr. Green of E.A. Gibson & Co. Ltd. of London was in California in conference with defendant's officers in April 1934 and later crossed on the same boat with Moffett to England, sailing May 4, 1934. Green opened negotiations with Redeventza at least by August, 1934. The uncontradicted affidavit of Green and the documentary records indicate that because of a drop in the price of American crude oil at Texas ports and the placing of eight cargoes of Iraq oil in the European market, Green was unsuccessful in his efforts to sell Bahrein crude oil to Redeventza in the fall of 1934. The negotiations came to an end in November 1934 without a sale being made. The situation was relatively quiet until May 1935 when there was an exchange of correspondence between a French Redeventza company and the defendant and defendant's special representative in Europe, a Mr. Beranger, of Paris. Nothing came of these negotiations. Again in August, 1935 E.A. Gibson & Co. Ltd. resumed negotiations with Belgian Redeventza and the first cargo of 10,000 tons of Bahrein crude oil was sold to the Belgian Redeventza Company, September 5, 1935, by Green's company, E.A. Gilbson & Co. Ltd. Pursuant to a contract of that date a total of 78,174.54 barrels was shipped, for which E.A. Gibson & Co. Ltd. were paid a commission of one cent a barrel, $781.75, on October 1, 1935. Two other sales were made of this Bahrein oil to Belgian Redeventza by other brokers or agents. About November 22, 1935, a sale of 85,000 to 100,000 tons of Bahrein crude oil to Redeventza, deliveries to be made throughout 1936, was arranged through Bowring Hardy & Co. Ltd., and the contract therefore was finally signed December 9, 1935. In fulfillment of that contract the Bahrein Petroleum Company, Limited, shipped to the Belgian Redeventza Company between December 1935 and November 1936 a total of 745,548.67 barrels, on which a commission of one cent a barrel was also paid. In March 1936, through a ship broker, H.P. Drewry & Co., the Bahrein company was able to sell 30,000 additional tons to the Belgian Redeventza on which no commissions were paid, because the Drewry Co. got certain returns on the shipping contract. Under that sale there were shipped by the Bahrein Petroleum Company, Limited, to the Belgian Company, 267,739.63 barrels of Bahrein crude oil between June 1936 and January 1937.

 Defendant, through its officers, contends that neither Moffett nor any officer of defendant saw the Veatch correspondence; that its Paris representative Beranger himself knew of Redeventza's plans and requirements; and that E.W. Lounsbury & Co. of New York on January 27, 1934, wrote defendant at its New York office enclosing a copy of a letter from Redeventza of Paris asking if Lounsbury could secure from an American refinery a permanent supply of gas oil having certain specifications and that Lounsbury also forwarded another Redeventza letter of March 1934 asking quotations on crude oil of certain specifications. Green also denies that anyone communicated to him any of the information contained in the Veatch letter and its enclosure. For the purposes of this motion I assume that the defendant's officers did see the Veatch letter of January 18, 1934, and its enclosure.

 Although paragraph 2 of the complaint quoted above pleads a contract of employment, yet plaintiff's bill of particulars with the correspondence and memoranda thereto annexed, and Veatch's deposition de bene esse plus Hanover's affidavit, clearly show there was no contract of employment of plaintiffs or either of them by the defendant, either express or implied. All that is shown is an effort on the part of plaintiffs "to count themselves in" on some oil business that was likely to eventuate because of defendant's development of the Bahrein Island fields and Redeventza's construction of a refinery in Belgium. Not a letter or a word of encouragement did plaintiffs receive from any officer or responsible representative or agent of defendant. Plaintiffs seek to build their case upon their own ...


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