87 P.2d 633 | Kan. | 1939
The opinion of the court was delivered by
This case arises out of an action to foreclose mortgages on certain land in Kearny county, Kansas. The question presented is whether the mortgages are senior to a certain oil and gas lease. The lease was given and recorded subsequent to the mortgages, but the lessee claims waiver of priority by the mortgagee. The mortgagee admits an agreement to waive priority, but contends that the waiver was forfeited by the lessee by failure to meet the conditions of the waiver. The trial court found that the waiver had been forfeited, foreclosure and sale were ordered in accordance with the findings, motion for new trial was overruled, and the lessee appeals to this court.
There is little disagreement as to the facts. They were before the court on written stipulation and oral testimony.
Harriett A. Jones and Joseph W. Jones, her husband, hereinafter
The twelve months’ period stipulated for completion of the well expired on December 23, 1936. The producing formation was not
It is admitted that the oil company had spent between nineteen and twenty thousand dollars in completing the well, and that two-thirds of the amount was spent after .December 23, 1936, and it was agreed in the written stipulation that the loan company “knew that a well was being drilled, knew that the well was not completed by December 23, 1936, but that said plaintiff did not have detailed information as to the progress being made in drilling same.”
The abstract discloses no testimony as to the weather or road conditions complained about or as to efforts to complete the well within the year. There was some testimony as to negotiations for a new waiver of priority, but the parties were unable to agree upon terms.
Petition to foreclose the two mortgages was filed June 22, 1937, and the oil company, as lessee, was made a party defendant. Trial was'had in the Kearny county district court, and on January 22, 1938, findings of fact were made and judgment rendered foreclosing the mortgages. The court found that the mortgage liens were prior and superior to the rights of the oil company, the lessee, and decreed
The issue here presented is whether the loan company, the mortgagee, by word 'or conduct waived the forfeiture provided in the agreement to waive priority of its lien.
The substance of appellant’s contention is that the loan company, if it intended to claim forfeiture, was bound to give prompt notice of such intention; that it failed to do so, although knowing that the oil company was continuing to spend large sums of money in completion of the well and that by its conduct it must be held to have waived forfeiture. The loan company, appellee, contends that the agreement to waive priority is unequivocal in its terms; that it provides for forfeiture of the waiver upon expiration of the year without completion of the well; and that forfeiture was not waived by word, act or conduct.
It is urged in support of appellant’s contention that “the law abhors forfeitures.” While that is true, it is equally true that the plain letter of an agreement is not to be disregarded. Forfeitures will be enforced where the language of the instrument is plain and unequivocal and shows beyond question that it was the intention of the parties to declare that a breach should operate as a forfeiture. (13 C. J. 541, 567, and cases there cited.) There is no abhorrence to the recognition and enforcement of a “condition subsequent” clearly provided in a conscionable contract, entered into in good faith. Whether a provision in a contract constitutes a “condition subsequent” or a “covenant” must depend upon the contract, the circumstances, and the intention of the parties. The general rule is that if the provision is a “condition subsequent” forfeiture ensues in case of a breach. (12 C. J. 411, and cases there cited.) In the case at bar there can be no question that the parties intended that the waiver of priority would be forfeited if the well was not completed within a year.
; Appellant' places a good deal of stress upon the case of Mickleson v. Gypsy Oil Co., 110 Okla. 117, 238 Pac. 194. In that case the court was .called upon to pass upon an assignment of an oil and gas ■lease. !The assignor made an assignment in the ordinary form and then-added:-a provision that the assignment was upon the express ■condition-that'he was to have all the drilling for oil and gas to be ■done-by ¡Gypsy Oil Gompany upon the land covered by the lease. The'-court held that the assignment was absolute and that there was created simply a covenant on the part of the assignee that he could
Appellant invokes the well-established doctrine enunciated in 21 C. J. 104, that “if there has been a breach of the agreement sufficient to cause a forfeiture, and the party entitled thereto either expressly or by his conduct waives or acquiesces in it, he will be precluded from enforcing the forfeiture, and equity will aid the defaulting party by relieving him against it, if necessary.” Did the loan company waive forfeiture? It is not contended that it expressly did so. On the contrary, when the oil company wrote asking it to extend the agreement, it replied the next day, declining to do so. But did the loan company by its conduct in failing to give notice of intention to claim forfeiture, although knowing that a well was being drilled and money was being expended subsequent to the expiration of the year, waive forfeiture? Where no notice of intention to claim forfeiture is required by the instrument, waiver of forfeiture must be manifested in some unequivocal manner by some distinct act or by inaction inconsistent with intention to claim forfeiture. Mere silence of a party is not waiver unless such silence is under circumstances requiring him to speak. The silence must be such a silence as can clearly be said to be deception. The rule is clearly stated in 67 C. J. 306. It is so well established in the law that there is little need for further reference to authorities. Among; the decisions of this court see Cure v. Insurance Co., 109 Kan. 259, 198 Pac. 940; Johnson v. Dumond, 130 Kan. 516, 287 Pac. 249; and Musgrave v. Equitable Life Assurance Society, 124 Kan. 804, 262 Pac. 571.
In Hinshaw v. Smith, 131 Kan. 351, 291 Pac. 774, it was held in an action to forfeit a mining lease because of failure to comply with the requirements as to drilling and prospecting that the lessor had not waived the right to insist upon a forfeiture, even though
By its letter of February 9, 1937, the oil company clearly implied that it considered the waiver no longer in effect. Other correspondence is of similar import. It is also a circumstance of note in this connection that the oil company, in its letter of May 24, 1937, addressed to the loan company, stated:
“We are not insisting on a permanent waiver of priority as we feel that the ranch is worth the amount of the mortgage and if it should come to a point of foreclosure we could step in and pay off the mortgage and feel that we bought a mighty cheap piece of property; however, this is the last thing we would want to do, as we want Mr. Jones to retain this land.”
If the oil company believed, as indicated in this letter, that the land was well worth the amount of the mortgage, it might well choose to complete the well even though the year had elapsed. The case is therefore clearly distinguishable from Kirsch v. City of Abilene, 120 Kan. 749, 244 Pac. 1054, cited by appellants, and many others of like import where equity refuses to uphold forfeiture on the ground that the party relying upon forfeiture has stood idly by and deliberately permitted the adverse party to enter into obligations and make large expenditures knowing that great losses will result which might be avoided by asserting claim. Not only does the agreed statement of facts in this case reveal that the loan company, though knowing the well was not completed by December 26, 1936, “did not have detailed information as to the progress being made in drilling same,” but there is nothing in the record to show that the completion of the well would necessarily result in loss to-the oil company. In fact, the oil company’s letter, just quoted, indicates the very opposite. The issue here is solely one of priority as between the mortgages and the lease. It cannot therefore be said on this record, or as a matter of law, that loss of priority meant inevitable loss to the party losing it.
The condition of forfeiture was clear and unmistakable. Appellant failed to meet the condition. The lessee had a right of priority as long as it had not broken the condition of waiver. Expiration of the year without completion of the well worked forfeiture under the clear terms of the instrument. We find no word or conduct on the part of the loan company which can be held to constitute waiver of forfeiture. (Harter v. Edwards, 108 Kan. 346, 195 Pac. 607; Wright v. Cummings, 108 Kan. 667, 196 Pac. 246; Ritchie v. K. N. & D. Rly. Co., 55 Kan. 36, 39 Pac. 718.)
Other contentions by the appellant are incidental to the issues already considered and require no further comment.
The judgment, order and decree of the trial court are affirmed.