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Stewart v. Schnepf

Supreme Court of Arizona

April 30, 1945

E. J. STEWART, as Administrator of the Estate of William W. Damron, Deceased, Appellant,
JACK M. SCHNEPF, and MAUDE SCHNEPF, His Wife, Appellees

APPEAL from a judgment of the Superior Court of the County of Maricopa. Dudley W. Windes, Judge.

Judgment affirmed.

Mr. W. J. Van Spanckeren, for Appellant.

Messrs. Snell, Strouss & Wilmer, and Mr. Richard G. Johnson, for Appellees.

LaPrade, J. Stanford, C. J., and Morgan, J., concur.


LaPrade, J.

Page 530

[62 Ariz. 442] This is an appeal by the administrator of the estate of William W. Damron, deceased, from a judgment requiring him to specifically perform an alleged oral agreement made by his intestate to convey to Jack M. Schnepf and Maude Schnepf, his wife, certain farm properties in the vicinity of Mesa.

William W. Damron was killed instantly on August 1, 1941, as the result of an automobile collision. For more than twenty years prior to and at the time of his death, deceased was a resident of the State of Kentucky. He left surviving three children, all residents of the State of Kentucky. His son, William Wallace Damron, became the administrator of the estate in Kentucky. The mother of deceased, Elizabeth Damron, a resident of Mesa, also survived him, as did two sisters, Maude Schnepf (one of the appellees) and Lucy Chesley, who are residents of Mesa, and two brothers, Frank L. Damron and Roy Damron.

The Arizona administrator brought the action to quiet the title to certain farm lands and city lots. The defendants named in the complaint are Maude Schnepf, Jack M. Schnepf, her husband, and Gertrude Hall, who was sometimes known as Gertrude Damron. The complaint to quiet title is in the usual form and alleges the ownership of the lands to be in the deceased;

Page 531

that the sole heirs of the deceased were his children; and that the defendants, Jack M. Schnepf, Maude Schnepf, and Gertrude Hall (Damron), claimed some interest in the property.

The amended answer and cross-complaint of the defendants Schnepf admit the death of deceased, and upon information and belief allege that the defendant [62 Ariz. 443] Gertrude Hall was, at the time of the death of deceased and prior thereto, the wife of deceased.

Summons was served upon Gertrude Hall, but, upon motion of counsel for the defendants Schnepf and for the defendant Gertrude Hall, the summons was quashed and the action went to the judgment appealed from against the defendants Schnepf, alone.

Appellees, in their amended answer and amended cross-complaint, allege that in February 1936 Schnepf was gainfully employed as a salesman at a salary of approximately $ 150 per month; that during that month deceased proposed that he and Schnepf should become partners in the acquisition, development, and operation of farms; that Damron agreed to pay the purchase price and finance the operating costs until the properties should become self-sustaining if Schnepf would quit his then employment and devote his entire time to the planting and development of forty acres of citrus and the development and improvement of other ranch properties; alleging further that if Schnepf would do so deceased would "deed and convey to the said Jack Schnepf and Maude Schnepf a one-half interest in the properties purchased by him under the agreement."

It is further alleged that all the properties involved in this action were acquired under the agreement. The agreement is alleged to provide that Schnepf should withdraw from the finances furnished by deceased and the income from the ranch property only sufficient funds to sustain life and purchase life's necessities. Full performance by Schnepf is alleged, and, in addition, it is stated that Schnepf and his wife expended upon the property an amount in excess of $ 3,000 of their separate monies. The prayer of the cross-complaint is that the administrator of the estate of the deceased be required to convey an undivided one-half interest in all the farm properties and the city lots to the Schnepfs.

[62 Ariz. 444] In our narration of what we consider to be the ultimate facts established by the evidence in this case, we have been guided by principles often repeated in cases decided by this court. These applicable principles are that upon an appeal from a judgment and order denying a motion for a new trial, all reasonable inferences which may be drawn from the evidence supporting the judgment and order appealed from will be so drawn and applied; that all conflicts in the evidence will be resolved in favor of the appellees; and all evidence in the record, unless inherently impossible or improbable, supporting the judgment and order appealed from, is taken as true. Atlantic Commission Co. v. Noe, 47 Ariz. 123, 53 P.2d 1088; Phoenix Title & Trust Co. v. Continental Oil Co., 43 Ariz. 219, 29 P.2d 1065; Mutual Benefit Health & Accident Ass'n v. Neale, 43 Ariz. 532, 33 P.2d 604; Broderick v. Coppinger, 40 Ariz. 524, 14 P.2d 714; Lillywhite v. Coleman, 46 Ariz. 523, 52 P.2d 1157. "Where evidence is of such a nature that either of two inferences may be drawn therefrom, we are bound by the one chosen by the trial court." Collins v. Collins, 46 Ariz. 485, 52 P.2d 1169, 1173; Moeur v. Farm Builders Corp., 35 Ariz. 130, 274 P. 1043.

Appellees had a family consisting of six or seven children in 1936, and lived in a home located upon a two-acre tract near Mesa. Appellee Jack Schnepf was then employed by The Arizona Implement Company as a "trouble shooter" and salesman. He earned $ 150 per month and up, based on a salary and a 5% commission on sales. In addition, he was furnished an automobile, and received an expense account. He had a good job and his chances for advancement were good. Schnepf was an experienced farmer, having followed that vocation practically all his life.

In the spring of 1936, W. W. Damron came to Mesa to visit his mother and his sisters, Mrs. Schnepf and Mrs. Chesley. While in Mesa he lived with his mother [62 Ariz. 445] in her home for about two months. After a short time he made inquiry of his mother as to the kind of farmer appellee Schnepf was, if he was capable of running a farm; stating that he (Damron) was interested in buying a farm, that he would like to help appellees, and would buy a farm if they were capable of taking care of it. Mrs. Damron assured her son that Jack

Page 532

was a capable farmer, that he also was a good mechanic, and that he had a wide experience in farming. Damron thereupon proposed to Schnepf that he (Damron) would buy some run-down farms and they would farm them on a partnership basis. Schnepf was to plant forty acres of citrus, put the farms in good condition, and at the end of five years Schnepf was to receive a deed to one-half of the property so acquired and developed. Schnepf accepted this proposition and, with Damron, immediately started looking for some land.

After looking at a number of tracts, they located a 40-acre tract and an 80-acre tract, which Damron purchased. Schnepf immediately quit his employment, and started planting citrus on the 40 acres and putting the 80 acres into cotton. They moved into the old house on the 40 acres and started remodeling it, landscaping the yard, and putting the lands into first-class condition. An account was opened in the Valley Bank at Mesa, designated as the "W. W. Damron Farms" account, upon which Schnepf wrote checks. During the first year (1936), 14 acres of the 40-acre tract were planted to citrus, and in 1937 21 additional acres were planted. When the planting was completed in the spring of 1938, there were between 3,600 and 3,900 citrus trees growing. The trees alone cost between $ 7,200 and $ 7,800. The income from the 80 acres was insufficient to buy machinery, pay the costs of growing the grove, improving the farms, and give Schnepf enough to live on. Beginning in 1937, Schnepf rented land in his own name, and, on his own initiative, farmed it for the benefit of the partnership venture. Schnepf [62 Ariz. 446] borrowed money from the Western Cotton Products Co. to finance these operations. He signed all leases, notes, and mortgages individually and was personally liable thereon.

W. W. Damron returned to Arizona in the spring and fall of 1937 and remained some time on each occasion. While here in the spring, an additional 30 acres was purchased by Damron under the arrangement, to help carry the project as the 80 acres was insufficient. He also looked at and tried to buy an 80-acre tract to supplement the operation, but this place was not purchased until 1938.

Throughout operations, the farms account would run short of money. Schnepf would borrow money on his personal note and deposit this to the partnership account, and the notes would be paid out of income from the partnership ranches or from leased land. In 1939 Schnepf leased around 240 acres and farmed this, with the profits going for his living and for partnership purposes.

The evidence discloses that Damron forwarded something in excess of $ 14,000 for farming operations in addition to the purchase price of the land. With this money appellees lived for five years, acquired sufficient machinery to farm 230 acres of land, entirely remodeled the home, and brought to an excellent state of growth and development the 40 acres of citrus. Schnepf drew varying amounts as support money averaging from $ 120 to $ 125 per month or a total of $ 8,191.78 over the five-year period.

In 1941 Schnepf desired to secure additional finances. He applied to the Western Cotton Products Co. for a loan up to $ 22 per acre. Solely for the purpose of allowing an advance up to that amount, the gin clerk (who appeared as a witness) prepared a lease form running from Damron to Schnepf covering the entire acreage except the 40 acres of citrus, and Schnepf affixed Damron's name as lessor, his own as lessee, [62 Ariz. 447] and Damron's name as landlord to the crop waiver. A check for $ 1,710 was issued payable to Schnepf and Damron; Schnepf endorsed his and Damron's name, and deposited it to the partnership account. The record also discloses that at the time the W. W. Damron Farms account was opened, a check was issued by deceased on a bank in Kentucky, made payable to "Jack Schnepf, Foreman." This check was endorsed "Jack Schnepf, Foreman." During the year 1936, Schnepf drew many checks payable to himself with the notation on the check stub that the check was drawn in payment of his salary as foreman.

Through the five years from 1936 to the evening before his death, Damron expressed satisfaction with his agreement and venture and with Schnepf's performance. The night before his accidental death, Damron, on a trip with his brother, Frank L. Damron, told his brother, who had been associated with him for a number of years in the oil business, that he, W. W. Damron, wanted to go to Arizona as soon as they finished drilling "this well"; that "Jack (Schnepf) has a good farm, he sent me

Page 533

some fruit. He has a nice grove out there now, and I am going out there and give him his half of the property."

That Damron and Schnepf should become partners in the acquisition and operation of farms and engage in farming operations in the vicinity of Mesa was testified to by sixteen witnesses, including Elizabeth Damron (mother of deceased), his brother Frank L. Damron, his uncle George Damron, and his sisters Lucy Chesley and Maude Schnepf. Jack Schnepf, Lucy Chesley and Frank L. Damron all testified that a part of the oral agreement was that Damron would purchase such lands as were necessary to carry on successful farming operations and finance the costs until the lands to be acquired, including the citrus property, were placed an a self-sustaining basis.

[62 Ariz. 448] Some eight witnesses stated that the oral contract provided that Damron would convey to the appellees a one-half interest in the properties acquired by Damron and Schnepf under the partnership agreement and developed by Schnepf. Among these witnesses were the brother, uncle, and two sisters.

The crux of this case is the nature of the parol agreement under which Schnepf took possession of the land. With reference to the inception of the contract, Jack Schnepf testified as follows:

"A. At that time Mr. Damron asked me if I would be interested in farming. Naturally, I told him yes, that was my, that was what I like to do best, to farm. So he wanted to know if he bought some farms would I take these farms over and run them. I told Mr. Damron at this time, I said, 'Bill, what do you mean? Do you mean that I go out and take a job on these farms as a farm hand?' I said, 'If that is what you mean, why, I don't want it. I have a pretty good job and make pretty good money.' And he said, 'No, no, I don't mean that,' he said, 'I know that you have a better job than that, but would you be interested in taking them on a partnership basis?' And I told him I would, that I would be interested, that that was my desire, was to get in the farming business for myself."

Subsequent to the acquisition of the 40- and 80-acre tracts, Damron and Schnepf had the following conversation, as related by Schnepf:

"A. Well, that was in, after the lands were purchased, that would be in the early part of February some time, probably the first week or ten days of February, and we, Mr. Damron says, 'Jack, let us put this 40 acres into citrus.' I didn't like the idea. I had been listening to the weeping and wailing of citrus growers for quite a while, and I knew their problems quite well. I knew what they were up against. I tried to discourage him all I could, but there wasn't a chance. He told me, he said, 'You put this into citrus, Bill.' I told him 'I am not interested in planting a crop that is going to take everything I can possibly make to [62 Ariz. 449] raise it.' I said 'I have got to make some money. I have a large family. I have got to feed them. I have got to make some money.' So then he made me this deal. He said to me, 'Jack, if you will plant this 40 acres in citrus, the whole thing, you can't plant it all this year, nor I don't suppose you will get it all planted next year, but you plant the whole thing into citrus and you grow it and make a good grove out of it, and you develop it,' and he ...

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