132 F.2d 819 | 10th Cir. | 1942
On November 19, 1934, Lee Statler and Ed King were the owners of a 160-acre tract of land in Coal County, Oklahoma. The record title stood in the name of Statler. The state of Oklahoma held a mortgage on the land. The Commissioners of the Land Office of the state of Oklahoma had obtained a judgment in foreclosure and the land had been sold in the foreclosure proceedings and a sheriff’s deed issued. Certain tax sales certificates were also outstanding against the land.
Statler, acting for himself and King, entered into a contract with Hart, Twyford, and Smith, whereby Twyford and Smith, members of the Oklahoma bar, agreed to prosecute an action to vacate the sheriff’s deed and set aside the judgment on the ground that no proper service had been made upon Statler in the foreclosure proceedings, and Statler agreed to convey 20 per cent of the mineral rights in the land to Twyford and Smith and 20 per cent of the mineral rights in the land to Hart.
Thereafter, the parties to the contract agreed that Statler should execute and deliver an oil lease on the land and, with the proceeds of advance royalties received, discharge the mortgage and tax liens, and that such oil lease should be superior to the mineral rights of Twyford, Smith, and Hart.
Early in 1935, Twyford, Smith, and Hart requested Statler to execute two mineral deeds, one running to Twyford and Smith and the other running to Davis. They agreed not to record the deeds until the lease had been executed and recorded
Contrary to their agreement with Statler, Twyford, Smith, and Hart recorded the mineral deeds on September 18, 1935.
On November 13, 1935, Statler and King executed and delivered to C. G. Whit-church an oil and gas lease on the land, commonly referred to as an “unless” lease. The lease provided that it should run for a term of ten years and as long thereafter as oil, gas, casinghead gas, casinghead gasoline, or any of them could be produced. It reserved a one-eighth royalty to Statler and King. It provided that if operations for the drilling of a well for oil and gas should not be commenced on the land on or before one year from the date of the lease, the lease should terminate unless the lessee should, on or before one year from the date, pay or tender to the lessor or for the lessor’s credit in the First State Bank of Stonewall, Oklahoma,
Before the Whitchurch lease was given, Statler showed Whitchurch a copy of the contract between him and Twyford, Smith, and Hart and the letters set out in Note 1, and Whitchurch relied thereon.
On November 18, 1935, Twyford, Smith, and Hart recorded the contract of November 19, 1934.
On December 12, 1935, Davis executed and delivered to A. D. Hudspeth, Jr., a mineral deed purporting to convey some interest in the minerals in the land. On the same day Hudspeth executed and delivered three mineral deeds purporting to convey some interest in the minerals in the land, one to Claude Wright, one to J. V. Holt, and one to Davis. All of the mineral deeds referred to in this paragraph were executed, delivered, and recorded after the recordation of the Whitchurch lease.
On December 31, 1934, Statler executed an oil and gas lease, in which the name of the lessee was left blank, in order to aid in the sale of an oil and gas lease to raise funds with which to discharge the mortgage. No consideration was ever paid therefor. The name of W. A. Villines was thereafter filled in the lease as lessee, without the knowledge or consent of Statler. Twyford, Smith, Hart, and Davis
On November 15, 1935, Davis, acting as trustee for Hart, and Twyford and Smith made and delivered to the Pacific Petroleum Company, a corporation in which Twyford and Smith were officers and directors, an oil and gas lease on the land. It was recorded on November 16, 1935. At the time of the execution of such lease the par
On November 23, 1935, William G. Davisson, acting as attorney for Whitchurch, wrote a letter to Twyford, Smith, and Davis wherein he asserted that Whitchurch’s lease was prior and superior to their mineral deeds and claims of title and requested them to execute the necessary instruments to recognize the priority of the Whitchurch lease over their grants and claims of title. In a letter to Davisson dated December 10, 1935, Twyford and Smith asserted that the mineral deeds to them and Hart and the Villines lease were prior and superior to the Whitchurch lease, and refused to subordinate their claims of title to the Whitchurch lease. At all times thereafter Twyford, Smith, and Hart denied the validity of the Whitchurch lease and asserted that their claims of title were superior thereto.
Whitchurch paid the rentals to the State Bank for the years 1936, 1937, 1938, and 1939. The State Bank went into liquidation on June 13, 1940. On July 4, 1940, the Case State Bank
' The appellants had refused to accept the delay rentals deposited prior to November, 1940.
Whitchurch commenced this action in the state court against appellants, and others. His petition contains two causes of action. In the first, he sought a decree quieting the title to his lease. In the second, he sought damages on account of the failure of the defendants below to recognize the validity of his lease. The cause was removed to the District Court of the United States for the Eastern District of Oklahoma. After removal, it was held that venue was lacking as to the second cause of action and it was dismissed. No appeal was taken from the order of dismissal. The trial court .found the facts substantially as hereinbefore stated, except the facts with respect to the payment of rental,
The sole contention presented on this appeal is that prior to the entry of the judgment on November 12, 1941, the lease expired on November 13, 1940, due to the failure of Whitchurch to pay the delay rental for the period from November 13, 1940, to November 13, 1941.
Although appellants have denied the validity of the Whitchurch lease continuously since November, 1935, they now demand a forfeiture thereof on account of Whit-church’s failure to pay delay rental from and after November 13, 1940.
Where a lessee under an “unless” oil and gas lease is ready, able, and willing either to develop the premises or to pay rentals, an attack upon the lessee’s title by the lessor will relieve the lessee of the duty either to proceed with drilling operations or pay the delay rental specified in the lease during the continuance of the challenge to his title.
Where the lessee in an “unless” lease in good faith manifests his intention to continue the lease by undertaking to pay such rental, through the method and means customarily used in such transactions, in ample time for the payment to reach the lessor or the agreed depository on or before the due date, but due to accident or mistake such payment fails to reach the lessor in time, the lease is not because of such failure automatically terminated. This is true because the acts of the lessee manifest an intention not to terminate the lease.
We conclude that the lease should not be forfeited for failure to pay rentals.
The judgment should have required Whitchurch to pay the delay rentals for the period of one year from November 13, 1940, and for the subsequent periods within a reasonable time to be fixed by the court.
The cause is reversed, with instructions to the trial court to modify the judgment accordingly.
The costs will be assessed against the appellants.
On January 21, 1935, Twyford and Smith wrote Statler in part as follows:
“We herewith enclose Mineral Deeds, one to us and one to B. B. Davis. The latter is drawn in this form at the request of Walter L. Hart. Please execute these deeds and either mail them to us or send them to Ed King to be delivered to us as soon as the advertisement is withdrawn. We will not record these until the land has been redeemed and your lease has been delivered to the purchaser and recorded.”
On February 2, 1935, Hart wrote Statler in part as follows:
“They all realize that we are not foolish enough to record our royalty deeds ahead of the lease for the reason that would not only blow the deal up, but the deeds themselves would be of no value until redemption is had.
“They all understand this and agree that our deed should be delivered now for fear that something might happen, death or otherwise.”
Hereinafter called the State Bank.
Hereinafter referred to collectively as the appellants.
Hereinafter called the Case Bank.
The court made no finding with respect to the payment of rentals.
Hudspeth v. Schmelzer, 182 Okl. 416, 77 P.2d 1123, 1126; Simons v. McDaniel, 154 Okl. 168, 7 P.2d 419, 420, 421; Chapman v. Bowers, 180 Okl. 49, 67 P.2d 788, 789; McCallister v. Texas Company, Tex.Civ.App., 223 S.W. 859, 862.
In Hudspeth v. Schmelzer, supra, the court said: “Such a declaration of forfeiture is an attack upon the title of the
Gloyd v. Midwest Refining Co., 10 Cir., 62 F.2d 483, 486, 487; Oldfield v. Gypsy Oil Co., 123 Okl. 293, 253 P. 298, 299; Brazell v. Soucek, 130 Okl. 204, 266 P. 442; Brunson v. Carter Oil Co., D.C.Okl., 259 F. 656; Brunson v. Carter Oil Co., D.C.Okl., 263 F. 935; Harvey v. Benmo Oil Co., D.C.Okl., 272 F. 475. The last three cases were cited with approval in Oldfield v. Gypsy Oil Co., supra.
Brewster v. Lanyon Zinc Co., 8 Cir., 140 F. 801, 819; Liddle v. Cook, 8 Cir., 209 F. 182, 187; Lindeke v. Associates Realty Co., 8 Cir., 146 F. 630, 640; Gloyd v. Midwest Refining Co., 10 Cir., 62 F.2d 483, 486; 30 C.J.S., Equity, § 57, pp. 398, 399.