Hunter v. Shell Oil Co.

For over 10 years, Paul Hunter (defendant) was a senior geologist employed and paid by Shell Oil Co. (Shell) (plaintiff). Hunter oversaw Shell’s exploration activities along the Gulf Coast of Texas and Louisiana. Hunter collected geological and geophysical information for Shell and advised the company where to purchase oil-and-gas rights and where to drill for oil. The information was strictly confidential, and Shell had a rule prohibiting its employees, including Hunter, from acquiring royalty and other mineral interests. In 1941, Shell discovered that Hunter had divulged Shell’s confidential information to three individuals and/or companies (associates) (defendants) and that Hunter’s associates had purchased royalty and other interests in 74 areas of Texas, Louisiana, and Arkansas. Hunter received fractional interests in the purchases as compensation for furnishing information to his associates. Shell sued Hunter and his associates, alleging Hunter’s breach of fiduciary duty. After a five-month-long trial, the trial court found that 59 of the areas involved had been purchased by Hunter’s associates through unauthorized information furnished by Hunter in breach of his fiduciary duty to Shell. The court entered judgment in favor of Shell, imposing constructive trusts on the acquired interests and ordering the return of wrongfully obtained monies. Hunter appealed.