Title: Croslin v. Enerex, Inc.

State: oklahoma

Issuer: Oklahoma Supreme Court

Document:

CROSLIN v. ENERLEX, INC.2013 OK 34Case Number: 109786Decided: 05/28/2013THE SUPREME COURT OF THE STATE OF OKLAHOMA
NOTICE: THIS OPINION HAS NOT BEEN RELEASED FOR PUBLICATION IN 
THE PERMANENT LAW REPORTS. UNTIL RELEASED, IT IS SUBJECT TO REVISION OR 
WITHDRAWAL. 

CHARLES D. CROSLIN, GLENN CROSLIN, and IRMA JEAN GOWIN, 
Plaintiffs/Appellees,v.ENERLEX, INC., Defendant/Appellant.
ON WRIT OF CERTIORARI TO THECOURT OF CIVIL APPEALS, DIVISION 
III
¶0 Defendant/appellant offered to purchase plaintiffs'/appellees' mineral 
interest in Seminole County. At the time, plaintiffs/appellees did not know that 
they had inherited the mineral interest, that the mineral interest was included 
in a pooling order, or that proceeds had accrued under the pooling order. 
Defendant/appellant admitted it knew about the pooling order and the accrued 
proceeds but did not disclose these facts in making the offer. 
Plaintiffs/appellees signed the mineral deeds which defendant/appellant 
provided, and subsequently, they discovered the pooling order and the accrued 
proceeds. Plaintiffs/appellees filed suit against defendant/appellant in 
Seminole County for rescission and damages, alleging misrepresentation, deceit 
and fraud. The trial court, the Honorable Timothy Olsen, District Judge, 
presiding, entered summary judgment in favor of plaintiffs/appellees. The Court 
of Civil Appeals reversed the summary judgment. We previously granted certiorari 
review. 
OPINION OF THE COURT OF CIVIL APPEALS VACATED;SUMMARY 
JUDGMENT OF THE TRIAL COURT AFFIRMED.
John L. Randolph, Jr., Tulsa, Oklahoma, for defendant/appellant.Matthew 
H. McBee, Poteau, Oklahoma, for plaintiffs/appellees.
TAYLOR, J.
¶1 Charles D. Croslin,1 Glenn Croslin, and Irma Jean Gowin (plaintiffs) sued 
Enerlex, Inc. (defendant) seeking rescission of mineral deeds and tort damages. 
The dispositive issues on certiorari are: 1) whether the summary judgment record 
on appeal establishes that defendant owed the plaintiffs a duty to disclose the 
pooling order and the accrued mineral proceeds when it made an unsolicited offer 
to purchase their undivided mineral interest in Seminole County and provided the 
mineral deeds to be executed, and if so, 2) whether rescission of the mineral 
deeds is a remedy for defendant's breach of the disclosure duty. We hold the 
defendant owed a duty to disclose the accrued mineral proceeds to the plaintiffs 
when it offered to purchase the mineral interest and provided the mineral deeds 
conveying the mineral interest and assigning the accrued mineral proceeds, if 
any. We further hold rescission is an appropriate remedy in this case for the 
breach of defendant's disclosure duty.
I. Facts and Procedural Background
¶2 The following facts are undisputed. W. M. Croslin owned a four net acre 
mineral interest in Seminole County, Oklahoma. W. M. Croslin died on September 
24, 1994, survived by his wife, Goldie A. Croslin, and his children, the 
plaintiffs. W. M. Croslin's unleased mineral interest was included in an 
Oklahoma Corporation Commission pooling order in Cause CD No. 200002499-T, Order 
No. 442715, dated July 11, 2000. Goldie A. Croslin died on November 30, 2005, 
survived by her children, the plaintiffs. In early 2008, nearly $10,000.00 had 
accrued from the production of the unleased mineral interest under the pooling 
order and had been reported and transmitted to the State of Oklahoma for the 
benefit of W. M. Croslin pursuant to the statutory custodial taking of proceeds 
from pooled mineral interests owned by unknown or unlocated persons. 
52 O.S.2001, §§ 551, et seq. The plaintiffs 
are the heirs of W. M. Croslin, deceased, and Goldie A. Croslin, deceased.
¶3 Defendant is in the business of buying mineral interests. In March of 
2008, defendant made unsolicited offers to the plaintiffs to buy their Seminole 
County mineral interest. When it made the offers, defendant knew that the 
mineral interest was included in an Oklahoma Corporation Commission pooling 
order; that the pooling order listed W. M. Croslin as a party with an unknown 
address; that the pooling order allowed W. M. Croslin a $75.00 per acre bonus 
and a 1/8th royalty; and that $9,961.71 had been reported and transmitted for 
the benefit of W. M. Croslin to the Oklahoma Corporation Commission pursuant to 
the pooling order and 52 O.S.2001, § 552.2
¶4 Defendant sent an offer letter to each plaintiff dated March 21, 2008, 
advising that it was "purchasing mineral interests in Seminole County, Oklahoma" 
and that "we believe you own" a mineral interest in Seminole County. The letter 
also advised that two bank drafts totaling $1,350.00,3 a mineral deed, and a 
self-addressed envelope were enclosed; that "when the Mineral Deed has been 
received by our office, we will begin our title examination"; and that the 
drafts will "be paid upon completion of the title examination." In making the 
offers, defendant did not disclose to any of the plaintiffs the existence of the 
pooling order or the accrued mineral proceeds held by the State Treasurer. 
¶5 The granting clause in defendant's mineral deed conveyed, transferred, 
assigned, and delivered the "interest in and to all of the Oil, Gas, and any 
other classification of valuable substance . . . in and under and that may be 
produced from the following described lands. . . ." (Bold added.) The 
language that followed the granting clause explained its meaning:
it being understood and agreed that this transfer and assignment covers and 
includes that the grantee shall have, receive, and enjoy the herein 
granted undivided interests in and to all royalties, accruals and other 
benefits, if any, from all Oil and Gas heretofore or hereafter run, whether 
they be held therefore by any purchaser or other legal entity, or hereafter 
produced, sold and paid to the Grantee. The Grantor hereby irrevocably appoints 
and constitutes the Grantee as agent and attorney-in-fact for the limited 
purpose only of executing division and transfer orders and all other instruments 
necessary to make fully effective this assignment and conveyance so that the 
Grantee may act in Grantor's place and stead for such purpose.(Bold 
added.)
Without knowledge of the pooling order or the accrued mineral proceeds held 
by the State Treasurer for the benefit of W. M. Croslin, plaintiffs executed 
defendant's mineral deeds on March 31, 2008.4
¶6 Subsequently, plaintiffs discovered the pooling order and the accrued 
mineral proceeds, and on October 23, 2009, they filed suit against defendant. In 
addition to the above undisputed facts, plaintiffs alleged that defendant had a 
duty to inform them of the pooling order, the accrued mineral proceeds, and the 
production; that defendant's failure to inform them constituted constructive 
fraud; and that defendant's deceitful and fraudulent actions amount to fraud and 
justifies rescission, consequential damages, actual damages, and punitive 
damages. Defendant answered and counter-claimed that it was the rightful owner 
of the mineral interests and that the plaintiffs filed suit in bad faith and 
slandered the title of the mineral interest.
¶7 Plaintiffs moved for summary judgment. The trial court granted partial 
summary judgment in favor of plaintiffs on the false representation claim and 
ordered an accounting of royalty proceeds paid to defendant, leaving other 
issues unresolved. The parties agreed to the accounting and waived all other 
claims and issues for purposes of summary judgment, and the trial court entered 
the summary judgment order on appeal. The trial court concluded that: 1) a 
mineral interest purchaser has the duty to disclose production and failure to do 
so is a false representation, citing Deardorf v. Rosenbusch, 
1949 OK 117, 206 P.2d 996; 2) a seller's constructive knowledge of 
production is not a defense to fraudulent misrepresentation, citing Uptegraft 
v. Dome Petroleum Corp., 1988 OK 129, 764 P.2d 1350; and 3) the unclaimed property statutes 
and regulations place additional notice requirements upon one who claims funds 
in the Mineral Owners Escrow Fund based upon the transfer of a mineral interest. 
The trial court granted plaintiffs' claim for rescission and cancelled the 
mineral deeds, declared plaintiffs to be the rightful owners of the mineral 
interest, and directed plaintiffs to return the purchase money defendant paid 
them less any royalty proceeds that may have been paid to defendant.
¶8 Defendant appealed. The Court of Civil Appeals reversed the summary 
judgment finding that defendant made no factual inducement, representation or 
misrepresentation that gave rise to a duty to disclose the pooled mineral 
interest or production and that defendant had no duty to disclose the pooled 
mineral interest and accrued mineral proceeds to the plaintiffs under the 
unclaimed property statutes or the pooled mineral interests statutes. We 
previously granted plaintiffs' petition for certiorari review to resolve the 
conflict between the Court of Civil Appeals opinion herein and two other 
opinions by the Court of Civil Appeals.5
II. Standard of Review
¶9 Plaintiffs based their equitable claim of constructive fraud and 
rescission of the mineral deeds and their tort claim of deceit and fraud and 
damages on one set of undisputed facts. Plaintiffs contended the undisputed 
facts clearly showed the defendant misrepresented material facts, the 
misrepresentation gave rise to a legal obligation to disclose all material facts 
about the mineral interest, and defendant's failure to disclose all material 
facts constituted deceit and fraud and constructive fraud. At issue is the trial 
court's legal conclusion drawn from the undisputed facts that the mineral 
interest purchaser had a duty to disclose production to the mineral interest 
owners. This question as to the legal effect of the undisputed facts challenges 
plaintiffs' entitlement to summary judgment as a matter of law on the 
constructive fraud claim. D-Mil Production, Inc. v. DKMT, Co., 
2011 OK 55, ¶12, 260 P.3d 1262, 1267. The summary judgment resolved 
questions of law which we review de novo, without deference to the trial 
court. Young v. Macy, 2001 OK 4, ¶9, 21 P.3d 44, 47.
¶10 The trial court's grant of plaintiffs' claim for rescission and 
cancellation of the mineral deed is governed by principles of equity. Goldsby 
v. Juricek, 1965 OK 403 P.2d 454, 456. Equity will cancel a deed where it 
is clear that an alleged false representation deceived the complainant and 
caused injury. Mobil Oil Corporation v. Flag-Redfern Oil Co., 
1973 OK CIV APP 5, 522 P.2d 651 (Approved for publication by the Supreme 
Court). On appellate review, the decision of a court in equity will not be 
reversed unless it is clearly against the weight of the evidence. Smith v. 
Marshall Oil Corp., 2004 OK 10, 85 P.3d 830.
III. Fraud and the Disclosure Duty
¶11 This Court has often said that fraud is a generic term embracing the 
multifarious means which human ingenuity can devise so one can get advantage 
over another by false suggestion or suppression of the truth. Morris v. 
McLendon, 1933 OK 
619, ¶8, 27 P.2d 811, 812; Johnson v. McDonald, 1934 OK 743, 39 P.2d 150; Singleton v. LePak, 
1967 OK 37, ¶13, 425 P.2d 974, 978. When fraud is alleged, every fact or 
circumstance from which a legal inference of fraud may be drawn is admissible. 
Berry v. Stevens, 1934 OK 167, ¶16, 31 P.2d 950, 955; Silk v. Phillips Petroleum 
Co., 1988 OK 
93, ¶33, 760 P.2d 174, 179.
¶12 Actual fraud6 is the intentional misrepresentation or concealment of 
a material fact, with an intent to deceive, which substantially affects another 
person, while constructive fraud7 is a breach of a legal or equitable duty to the 
detriment of another, which does not necessarily involve any moral guilt, intent 
to deceive, or actual dishonesty of purpose. Morris v. McLendon, 
1933 OK 619, 27 P.2d 811; Faulkenberry v. Kansas City Southern 
Ry. Co., 1979 OK 
142, ¶4, 602 P.2d 203, 206. The issue of fraud is generally an question of fact. Morris v. 
McLendon, 1933 OK 
619 at ¶10, 27 P.2d  at 812. Although actual fraud must be proved at law,8 in equity it suffices to 
show facts and circumstances from which it may be inferred. Bloch v. 
Morgan, 1926 OK 
163, 244 P. 176; Singleton v. LePak, 1967 OK 37 at ¶13, 425 P.2d  at 978. Constructive 
fraud has the same legal consequence as actual fraud. Faulkenberry v. Kansas 
City Southern Ry. Co., 1979 OK 142 at ¶4, 602 P.2d  at 206. Constructive fraud 
1) may be based on a negligent misrepresentation or an innocent 
misrepresentation where there is an underlying right to be correctly informed of 
the facts, 2) may be based on the silence by one who has a duty to speak, or 3) 
may be invoked to prevent harm or to extend protection to recognized public 
interests. Id. at ¶4 and n. 6.
¶13 Here, the trial court determined defendant was guilty of constructive 
fraud when it granted plaintiffs' plea for rescission and canceled the mineral 
deeds based on its legal conclusion that defendant owed plaintiffs a duty to 
disclose production and the failure to do so was a false misrepresentation, 
citing Deardorf v. Rosenbusch, 1949 OK 117, 206 P.2d 996. Plaintiffs' petition for writ of 
certiorari argued that the Court of Civil Appeals failed to follow 
Deardorf.
¶14 In Deardorf, Ms. Rosenbusch, residing in the Washington D.C. area, 
invested $350.00 in a non-producing one mineral acre in Oklahoma in 1934. In 
1944 there was a producing well on the premises and Deardorf made an unsolicited 
written offer to buy Rosenbusch's mineral interest for $10.00. Deardorf's offer 
explained that he was trying to clear title to the farm for a client. Deardorf 
knew there was production but did not disclose that fact to Rosenbusch. 
Rosenbusch, eighty years of age and with little oil and gas experience, 
responded to Deardorf that the offer was so little for her $350.00 investment; 
however, she signed the quitclaim deed that Deardorf sent her and returned it 
for the $10.00 offer. Subsequently, a remote grantee sued Rosenbusch in a quiet 
title action. Rosenbusch filed a cross petition against Deardorf alleging fraud 
and seeking recovery of the reasonable value of the mineral interest. 
¶15 The Deardorf opinion found that the offer to buy the mineral 
interest, as a whole, was fraudulent because it created a false impression that 
there was no production of minerals from the land:
In the opinion of this court, to confirm as true another's false impression 
concerning a material fact is no less a false representation of such fact than 
if made directly in order to create the false impression. The fact that there 
was production was the moving cause of defendant's seeking the conveyance. The 
absence of plaintiff's knowledge of the production was relied on as an 
inducement to plaintiff's executing the conveyance for a nominal consideration. 
There is no need to weigh the value of each of the several statements in the 
letter when it is manifest that the letter as a whole is expressive of a scheme 
to capitalize on the ignorance of another.
1949 OK 117 at ¶6, 206 P.2d  at 998. 
Guided by Berry v. Stevens, 1934 OK 167, 31 P.2d 950, Deardorf determined that 
defendant's duty to disclose the truth arose at the beginning of the 
negotiations and that defendant failed to disclose the truth.
Instead of disclosing the truth of there being production the same was sought 
to be concealed from the plaintiff by indirectly if not directly creating the 
belief if it did not exist, or confirming as true, if it did exist, plaintiff's 
belief that the land was nonproductive. The holding of the trial court that the 
deed was obtained by fraud finds full support in the 
evidence.
1949 OK 117 at ¶9, 206 P.2d  at 
998.
¶16 The principles set out in the Deardorf opinion are: 1) where there 
is no duty to speak, if a person undertakes to speak, he or she must disclose 
all known facts; 2) where the speaker is under a duty to say nothing or to tell 
the whole truth, a duty to tell the whole truth may arise from partial 
disclosure; and 3) one conveying a false impression by disclosing some facts and 
concealing others is guilty of fraud, even though the statement is true as far 
as it goes, the concealment is in effect a false representation that what is 
disclosed is the whole truth. 1949 OK 117, 206 P.2d 996, Syllabus by the Court.
¶17 The Deardorf principles had been pronounced in earlier 
jurisprudence. Although a party may keep absolute silence and violate no rule of 
law or equity, and yet, if he or she volunteers to speak and to convey 
information which may influence the conduct of the other party, he or she is 
bound to disclose the whole truth. Berry v. Stevens, 1934 OK 167, 31 P.2d 950, Syllabus, No. 6. Although a party 
has no duty to speak, if he or she undertakes to speak, he or she must tell the 
truth and not suppress known facts as half truths calculated to deceive and 
representations literally true but used to create a false impression are false 
representations. Id. at Syllabus, No.7. A fiduciary relationship 
imposes an absolute duty to fully disclose all material facts, Barry v. 
Orahood, 1942 OK 
419, ¶14, 132 P.2d 645, 647; and, where there is no fiduciary relationship, a legal or 
equitable duty to disclose all material facts may arise out of the situation of 
the parties, the nature of the subject matter of the contract, or the particular 
circumstances surrounding the transaction. Id. at ¶10, 132 P.2d  at 647. 
Where the peculiar circumstances give rise to a duty on the part of one of the 
parties to a contract to disclose material facts and the party remains silent to 
his or her benefit and to the other party's detriment, the failure to speak 
constitutes fraud. Morris v. McLendon, 1933 OK 619, 27 P.2d 811, Syllabus, No. 2.
¶18 A review of the facts and circumstances in a few of this Court's 
constructive fraud cases involving production of minerals demonstrates the great 
variety of facts that may give rise to a duty to disclose material facts. In the 
Berry v. Stevens case, Berry owned an undivided 2/5 interest in 190 acres 
of land in Caddo County. Berry moved to Craig County and asked Stevens, a real 
estate agent in Caddo County, to help him sell his Caddo County property for 
$2,500.00. Berry knew there was production in the vicinity of his Caddo County 
land, but, having moved to Craig County two years earlier, he did not know of a 
recent deep well that was producing 1,000 barrels per day. Stevens and his 
son-in-law, who posed as a prospective buyer of real estate in Craig County, 
visited Berry in Craig County. Berry agreed to sell his Caddo County land 
interest for $2,200.00 but did not know that Stevens and two others were the 
purchasers until Stevens presented the deed to Berry. Berry signed the deed and 
two days later he learned of the new deep well and filed suit to rescind and 
cancel the deed. Concluding that half truths calculated to deceive and 
representations literally true but used to create false impressions are 
actionable, the Berry opinion reversed the trial court's order refusing 
to rescind and cancel the deed and remanded the case for new trial.
¶19 In another case, Varn v. Maloney, 1973 OK 133, 516 P.2d 1328, the operator exaggerated the mineral 
production to the operating agreement participants. After quoting the principle 
that a duty to speak may arise from partial disclosure from the Deardorf 
opinion, the Varn opinion concluded:
After a careful consideration of the entire record before us, we are forced 
to the conclusion that Varn's unqualified statements that "We are working . . . 
on a sandbar development that has already proven its merit" and that "Risk is 
minimal * * *" were false statements of material facts which, under the 
circumstances, amounted to fraud as defined above. We also conclude that his 
failure to mention the gas cap and the possible necessity of filling it with 
water before flood effect would occur, as indicated by the "experience record of 
Shell" which was common knowledge in the area and the failure to mention the 
unplugged wells in the immediate area which permitted loss of water and 
pressure, amounted to a concealment of material facts, which he was bound under 
the circumstances to disclose. . . .
1973 OK 133 at ¶19, 516 P.2d  at 
1332.
¶20 In another case involving several leases, Uptegraft v. Dome Petroleum 
Co., 1988 OK 
129, 764 P.2d 1350, the plaintiffs sought rescission of a farmout agreement and lease 
assignments and an accounting of production. After two wells were completed, 
Dome Petroleum sent a letter to the plaintiffs seeking their acquiescence to a 
farmout agreement. The letter read in part:
Dome has recently agreed to a checkerboard Farmout to Atlas Drilling Company. 
A copy of the Farmout Agreement is enclosed for your review.
Advantages to Dome, and our various partners are, evaluation of production in 
those units Atlas drills, and protection of leases which would have expired 
before we could have drilled in this area.
To indicate inclusion of your working interest in the Farmout Agreement 
please execute two (2) copies of this letter and return them to the undersigned. 
. . .
Id., 1988 OK 
129 at ¶7, 764 P.2d  at 1352.
¶21 The Uptegraft opinion found the letter to be fraudulent, 
stating:
This communication is immutably misleading by reason of failure to inform of 
current production, while stating an advantage of the arrangement is evaluation 
of the leases by drilling. The leases had already been evaluated by drilling. 
Further the leases were already perpetuated by production prior to the time the 
farmout had been mailed to plaintiffs.
Id.
And, in rejecting constructive knowledge as a defense to constructive fraud, 
the Uptegraft opinion quoted an early Kansas opinion: 
"The policy of the courts, is on the one hand to suppress fraud, and, on the 
other, not to encourage negligence and inattention to one's own interests. The 
rule of law is one of policy. Is it better to encourage negligence in the 
foolish, or fraud in the deceitful? Either course has obvious dangers. But 
judicial experience exemplifies that the former is the less objectionable, and 
hampers less the administration of pure justice. The law is not designed to 
protect the vigilant, or tolerably vigilant, alone, although it rather favors 
them, but is intended as a protection to even the foolishly credulous, as 
against the machinations of the designedly wicked. . . 
."
1988 OK 129 at ¶13, 764 P.2d  at 1354, 
quoting International Harvester Co. V. Franklin County Hardware Co., 101 
Kan. 488, 167 P. 1057 (1917). Uptegraft concluded that Dome Petroleum was 
liable for its constructive fraudulent failure to fully disclose the production. 
The trial court judgment in favor of Dome Petroleum was reversed and the case 
was remanded to the trial court.
¶22 From the above review of Oklahoma's rich body of law dealing with mineral 
interests9 and the disclosure duty underlying constructive fraud, 
it is clear that the principles articulated in Deardorf v. Rosenbusch, 
1949 OK 117, 206 P.2d 996, are instructive here. The trial court 
properly followed the precedential authority of Deardorf.
IV. The Purpose of the Statutory Custodial Taking of 
Proceedsfrom Pooled Mineral Interests Owned by Unknown or Unlocated 
Persons
¶23 In 1983, the Legislature provided for the safekeeping and the custodial 
taking of royalty, bonus payments, and other monies directed to be paid to 
unknown or unlocated owners under a pooling order. 1983 Okla.Sess.Laws, ch. 320, 
now codified at 52 O.S.2011, §§ 551-558. The person holding such monies during 
the first year after the date of the pooling order must place the monies in an 
escrow account. Id. at § 552. At the end of the first year, the monies 
must be reported and transmitted to the Oklahoma Corporation Commission (OCC). 
Id. The OCC must place such monies in its Mineral Owners Escrow Account 
for deposit in the Mineral Owner's Fund in the State Treasury. Id. at § 
553. On claims against the Mineral Owner's Fund, the State Treasurer must make 
payment to the rightful owners or the heirs, assigns, or devisees of the 
rightful owners from the Unclaimed Property Fund. Id. at § 554. Each 
calendar quarter, the State Treasurer must reimburse the Unclaimed Property Fund 
from the Mineral Owner's Fund. Id.
¶24 The underlying purposes of the above statutory scheme are clear: It 
assures that mineral proceeds of unknown and unlocated property owners will be 
safeguarded by the oil and gas lessees, operators, purchasers, and others who 
hold proceeds from production, and it requires the State Treasurer to attempt to 
locate the rightful owners through the unclaimed property mechanisms. This Court 
determined in TXO Production Corp. v. Oklahoma Corp. Comm'n, 
1992 OK 39, ¶8, 829 P.2d 964, 969, that the statutes providing for the 
custodial taking of undistributed proceeds from pooled mineral interests clearly 
express legislative intent "to regulate the disposition of unclaimed proceeds 
from forced pooled oil and gas interests where the owners cannot be 
located."
¶25 TXO Production Corp. also concluded that the three acts dealing 
with custodial taking of intangible property must be construed together - 
52 O.S. 1991, §§ 551 et seq., the so-called 
Unclaimed Pooled Monies Act (UPMA); 60 O.S.1981, §§ 651 et seq., the Uniform 
Disposition of Unclaimed Property Act; and 60 O.S.Supp.1984, §§ 658.2 - 658.8, 1984 amendments 
to the Uniform Act.
Unless legislative intent would be violated, these three acts must be 
construed together to effectuate the purpose of providing for the custodial 
taking of unclaimed intangible property. . . .
TXO Production Corp.,1992 OK 39 at ¶10, 829 P.2d  at 970. 
The legislature . . . intended to allow Oklahoma to seize unclaimed monies 
belonging to (a) owners of forced pooled oil and gas interests with a last known 
address in Oklahoma, (b) owners with no known address where the holder is 
domiciled in Oklahoma, or (c) owners whose last known address is in a state with 
no custodial taking or escheat provisions and the holder's domicile is Oklahoma. 
Section 556 of the UPMA must be interpreted as allowing these monies to be 
subject to the provisions of both the Uniform Act and the 1984 Act 

Id., 1992 OK 
39 
at ¶11, 829 P.2d  at 970-971. The opinion explained the custodial taking under 
these three statutory schemes: 
The UPMA and Uniform Act are not escheat statutes. They are "custodial taking 
laws" which make the State custodian of proceeds from forced pooled mineral 
interests whose owners are unknown or cannot be located, subject to the claims 
of those who prove ownership or a prior right to possession. These proceeds are 
ultimately placed in the Unclaimed Property Fund in the state treasury in trust 
for the rightful owner. By taking temporary custody of the unclaimed proceeds 
from a private holder, Oklahoma does not divest any state with a constitutional 
priority claim of custody or title to the funds. The public policy supporting 
custodial taking by a State is superior to any claim that a private holder may 
assert to any unclaimed proceeds. Under today's construction proceeds from 
forced pooled mineral interests are brought into the custody of the State 
Treasurer where mechanisms are available through the Uniform Act (a) for 
locating the rightful owners and allowing them to assert their claim 
administratively as well as in our courts, and (b) for exchanging information 
with other states needed to enable another state to audit or otherwise determine 
the unclaimed proceeds which it may be entitled to subject to a claim of 
custody. (Footnotes omitted.)
Id.,1992 OK 
39 
at ¶15, 829 P.2d  at 971-972.
¶26 The trial court concluded that the unclaimed property law placed notice 
requirements upon one who claims funds in the Mineral Owner's Fund in the State 
Treasury based upon the transfer of a mineral interest. Although defendant's 
claim against the State Treasurer is not before us, the policy underlying the 
custodial taking of proceeds from pooled mineral interests owned by unknown or 
unlocated persons provides a backdrop for our consideration of the parties 
arguments.
V. The Summary Judgment Arguments
¶27 This appeal is governed by the accelerated procedure in Rule 1.36. 
Okla.Sup.Ct.R., 12 O.S.2011, ch. 15, app. 1. Our review is confined to the 
record and the briefs and arguments actually presented to the trial court. 
Defendant responded to plaintiffs' motion for summary judgment specifically 
admitting the material facts and circumstances related to the plaintiffs mineral 
deeds. Defendant set forth two additional undisputed facts that: 1) defendant 
did not make any representation about the subject matter other than what was 
contained in the offer letter and the mineral deed; and 2) defendant obtained a 
quiet title judgment on March 11, 2009, in Seminole County, No. CV-2008-378, 
vesting it with the rights of W. M. Croslin and Goldie Croslin in and to the 
subject oil and gas interest.10
¶28 In admitting the material facts on summary judgment, defendant took the 
position that plaintiffs had constructive knowledge of the mineral interest, the 
pooling order, production, and the custodial taking of the mineral proceeds and 
that plaintiffs should have investigated the mineral interest. The policy of the 
courts to favor the unwary rather than the crafty as expressed in Uptegraft 
v. Dome Petroleum, 1988 OK 129 at ¶13, 764 P.2d  at 1354, remains intact. 
Plaintiffs and the trial court correctly relied on Uptegraft for the 
proposition that constructive knowledge is not a defense to false 
representation. As to defendant's additional undisputed facts, plaintiffs' 
constructive fraud claim was grounded in the defendant's letter and defendant's 
mineral deeds, specifically the "if any" language in the deeds, and defendant 
waived the collateral attack argument.
¶29 For their first proposition in support of their motion for summary 
judgment, plaintiffs argued that the letter and the "bonus assignment" language 
in the mineral deed expressed a scheme to capitalize on their ignorance and that 
defendant intended to gain both the mineral interest and the mineral proceeds 
for about half the value of the accrued mineral proceeds. Plaintiffs relied on 
both Deardorf v. Rosenbusch and Berry v. Stevens. In response, 
defendant urged that a mineral interest purchaser has no legal duty to disclose 
all that it may know about the mineral interest and that fraud will not be 
presumed but must be established by clear and unequivocal evidence. Defendant 
argued that it made no representation to plaintiffs regarding the mineral 
interest and had no duty to speak under Uptegraft v. Dome Petroleum Co., 
and that Deardorf v. Rosenbusch and Berry v. Stevens are totally 
inapplicable because a mere offer is not a material misrepresentation.11
¶30 The teachings of Berry v. Stevens, Deardorf v. Rosenbusch, 
and Uptegraft v. Dome Petroleum Co., set out above, are all applicable 
here. Similar to the production in Deardorf, the accrued mineral proceeds 
undoubtedly motivated defendant's unsolicited offers to purchase the mineral 
interest. Although defendant's letter referred to "mineral interest" and did not 
mention accrued mineral proceeds, defendant's mineral deed conveyed the "mineral 
interest" and also made a representation about the accrued mineral proceeds. It 
provided that the grant of the mineral interest was intended to grant defendant 
the right to "all royalties, accruals and other benefits, if any, from all 
Oil and Gas heretofore or hereafter run." (Bold added). Instead of 
disclosing the nearly $10,000.00 of accrued mineral proceeds to the plaintiffs, 
defendant remained silent, and, with the "if any" language in the mineral deed, 
indirectly if not directly, created a false impression that defendant did not 
know of any production or any accruals from all oil and gas heretofore run. 
Plaintiffs relied, to their detriment, on the false impression created by the 
"if any" language. The "if any" language in the mineral deeds discouraged, 
rather than encouraged, the plaintiffs to make an independent investigation into 
the mineral interest.
¶31 Further, defendant discouraged plaintiffs from doubting defendant's 
truthfulness through the false impression that defendant had not investigated 
the ownership of the mineral interest. The false impression was created by the 
language in defendant's offer letter that "when the Mineral Deed has been 
received by our office, we will begin our title examination" and that the drafts 
will "be paid upon completion of the title examination."
¶32 The language in defendant's mineral deed assigning the accruals of 
royalties, if any, from heretofore runs gave rise to a duty on the part of 
defendant to disclose the whole truth, including all material facts about the 
accrual of the mineral proceeds. Deardorf expressed the principles 
governing defendant's duty - where defendant is under a duty to say nothing or 
to tell the whole truth, defendant's duty to tell the whole truth may arise from 
partial disclosure and defendant conveying a false impression by disclosing some 
facts and concealing others is guilty of fraud in that the concealment is in 
effect a false representation that what is disclosed is the whole truth. 
Plaintiffs were entitled to summary judgment on the legal issue of defendant's 
disclosure duty as a matter of law.
¶33 For their second proposition, plaintiffs contended that defendant 
violated the state's public policy expressed in the pooled mineral interests 
statutes, 52 O.S.2001, §§ 
551, et seq., and the unclaimed property statutes, 60 O.S.2001, §§ 651, et seq. Defendant 
responded that neither the pooled mineral interests statutes nor the unclaimed 
property statutes expressed a public policy requiring defendant to disclose the 
accrued mineral proceeds in offering to purchase plaintiffs' mineral interest 
and urged that this Court should refrain from creating public policy. Defendant 
argued that the statutory scheme for the custodial taking of undistributed 
proceeds from pooled mineral interests and the statutory scheme for custodial 
taking of unclaimed property were absolutely separate until the 2010 amendment 
to the unclaimed property statutes.12
¶34 Three decades ago, the Oklahoma Legislature expressed a public policy 
that the State will protect undistributed proceeds from forced pooled mineral 
interests for the rightful owners. The false impression created by the "if any" 
language in defendant's mineral deed cannot be ignored in light of this strong 
statutory policy.13 Guided by TXO Production Corp., we reject 
defendant's argument that the statutes providing for the custodial taking of 
undistributed forced pooled mineral proceeds and the unclaimed property statutes 
were absolutely separate until 2010.
¶35 For their final proposition on summary judgment, plaintiffs asserted they 
were entitled to rescission under 15 O.S.2001, § 233. Defendant argued that 
rescission is not available where, as here, "the contents of the Mineral Deed 
merely described that which Enerlex [defendant] wanted to buy and the amount 
Enerlex wanted to pay." Defendant made an offer to purchase the undivided 
mineral interest for a total of $4,100.00. Defendant's offer did not mention 
accrued mineral proceeds, and defendant's mineral deeds did not describe the 
amount defendant offered to pay for the accrued mineral proceeds. A clear 
inference arises from the "if any" language in the mineral deeds that defendant 
wanted to obtain the nearly $10,000.00 mineral proceeds without disclosing the 
existence of the mineral proceeds to plaintiffs. 
¶36 Before allowing defendant to benefit from the mineral deeds, equity can 
and will, under the circumstances of this case, cause to be done what defendant 
was obligated to do. Defendant was obligated to disclose to the Croslin siblings 
that they were assigning $9,961.71 held in trust by the State Treasurer over to 
defendant as part of the conveyance of the mineral interest. The statutes14 allow plaintiffs, upon discovering defendant's 
suppression of the truth, to rescind the mineral deeds induced by defendant's 
false representation.
VI. Summary
¶37 In summary, defendant wanted to spend a total of $4,100.00 in cash and 
get nearly $10,000.00 in cash plus four mineral acres and future income. To 
accomplish its goal, defendant offered to purchase the four mineral acres from 
plaintiffs for a total of $4,100.00, and relying on plaintiffs' ignorance of the 
nearly $10,000.00 of accrued mineral proceeds, defendant provided plaintiffs 
mineral deeds transferring both the four mineral acres and the accrued mineral 
proceeds. Defendant obtained the mineral deeds from plaintiff by false 
representation and suppression of the whole truth. Defendant is liable to 
plaintiffs for constructive fraud. Fraud in the procurement of a written 
instrument vitiates it in the hands of one seeking its benefit. Berry v. 
Stevens, 1934 OK 
167 at ¶9, 31 P.2d  at 954, First National Bank in Durant v. Honey Creek 
Entertainment Corp., 2002 OK 11, ¶12, 54 P.3d 100, 104. Under the circumstances here, 
rescission is an appropriate remedy for defendant's misrepresentation and 
constructive fraud.
OPINION OF THE COURT OF CIVIL APPEALS VACATED;SUMMARY 
JUDGMENT OF THE TRIAL COURT AFFIRMED.
Colbert, C.J., Reif, V.C.J., and Kauger, Watt, Edmondson, Taylor, Combs, and 
Gurich, JJ., concur.
Winchester, J., concurs in result. 
FOOTNOTES
1 According to the 
Suggestion of Death filed November 1, 2010 in the district court, Charles D. 
Croslin died on September 1, 2010, during the pendency of this action. 
2 Pursuant to 52 O.S.2001, § 552, the undistributed 
mineral interest proceeds were reported and transmitted to the Oklahoma 
Corporation Commission, deposited in the Mineral Owner's Escrow Fund, and then, 
pursuant to 52 O.S.Supp.2003, § 
554, the funds were transferred to the Mineral Owner's Fund in the State 
Treasury. 
3 Defendant sent a bank draft in the amount of $250.00 
marked "CONSIDERATION FOR: Signature Fees" and a bank draft in the amount of 
$1,100.00 offered to each of the plaintiffs as the purchase price of the 
undivided mineral interest. 
4 In 2008, the plaintiffs' ages were 69, 70, and 77 
years. Two of the plaintiffs executed the mineral deeds in Oklahoma County, 
Oklahoma, and one plaintiff executed the mineral deed in Bowie County, Texas. 
Two plaintiffs signed affidavits stating they would not have signed the mineral 
deeds if they had knowledge of the production and accrued mineral proceeds. 
5 The Court of Civil Appeals opinions in Harbour 
Mineral Properties v. Pence, No. 108,822, and Livingston, et al. v. 
TOP,LLC, No. 108,425, are in conflict with the Court of Civil Appeals 
opinion in this case. The controversies in Harbour Mineral and 
Livingston arose out of circumstances similar to the circumstances in 
this case. The buyers made unsolicited offers to buy mineral interests in Coal 
County knowing that the mineral interests were subject to pooling orders, that 
mineral proceeds had accrued under the pooling orders, that the proceeds had 
been transmitted to the State, and that the sellers were unaware of these 
material facts; and the sellers testified that they would not have sold their 
mineral interests had they been aware of the material facts. Both opinions 
concluded that Deardorf v. Rosenbusch imposed a duty upon the buyers to 
disclose material facts regarding production and accrued mineral proceeds when 
making the offers to purchase the mineral interests. The Harbor Minerals 
and Livingston opinions are consistent with today's opinion. 
6 15 O.S.2001, § 58, now 15 O.S.2011, § 58, defines actual 
fraud:
Actual fraud, within the meaning of this chapter, consists in any of the 
following acts, committed by a party to the contract, or with his connivance, 
with intent to deceive another party thereto, or to induce him to enter into the 
contract:1. The suggestion, as a fact, of that which is not true, by one who 
does not believe it to be true.2. The positive assertion in a manner not 
warranted by the information of the person making it, of that which is not true, 
though he believe it to be true.3. The suppression of that which is true, by 
one having knowledge or belief of the fact.4. A promise made without any 
intention of performing it; or,5. Any other act fitted to deceive. 
7 15 O.S.2001, § 59, now 15 O.S.2011, § 59, defines constructive 
fraud:
Constructive fraud consists:1. In any breach of duty which, without an 
actually fraudulent intent, gains an advantage to the person in fault, or any 
one claiming under him, by misleading another to his prejudice, or to the 
prejudice of any one claiming under him; or,2. In any such act or omission 
as the law specially declares to be fraudulent, without respect to actual fraud. 

8 15 O.S.2001, § 60, now 15 O.S.2011, § 60 provides: "Actual fraud 
is always a question of fact." 
9 The production of oil and gas in Oklahoma predates 
statehood (oil was first produced in Oklahoma in 1859, Oklahoma Historical 
Society's Chronicles of Oklahoma, vol. 4, p. 322, Dec. 4, 1926), and mineral 
interests in Oklahoma are often severed from the title to the land. 
10 On summary judgment, defendant argued that this suit is 
an impermissible collateral attack on the quiet title judgment in case No. 
CV-2008-378 in Seminole County. However, defendant later waived this defense or 
issue, and it is not before us today. Even so, we note that the quiet title 
judgment recites that the petition in CV-2008-378 was filed October 24, 2008, 
against the "The Unknown Heirs, Executors, Administrators, Devisees, Trustees, 
and Assigns of W. M. Croslin, Now Deceased, and Goldie Arlice Croslin, Now 
Deceased, and the State of Oklahoma, ex rel the Oklahoma Tax Commission" and 
that service was accomplished by publication. Apparently, defendant did not name 
plaintiffs herein as parties and did not cause service of process upon them even 
though defendant knew the identities and whereabouts of the plaintiffs herein 
when it filed the quiet title action. Notwithstanding, the quiet title judgment 
finds that plaintiffs herein are the only children of W. M. Croslin and Goldie 
Arlice Croslin and the sole and only heirs who inherited the four mineral acres 
in Seminole County. The judgment also finds that the plaintiffs herein executed 
mineral deeds conveying the mineral interest and assigning all monies attributed 
to the mineral interest to defendant herein and vests title to the four mineral 
acres and the royalty proceeds held in the State Treasury in defendant herein. 
An inference arises from defendant's not naming plaintiffs herein as parties to 
the quiet title action that defendant did not want plaintiffs herein to know 
about the accrued mineral proceeds. 
11 Defendant argued that an offer speaks only to what a 
buyer is willing to pay and that it is not a representation of material fact 
under Bowman v. Presley, 2009 OK 48, 212 P.3d 1210. Apparently persuaded by this argument, 
the Court of Civil Appeals found the defendant did not make any factual 
inducement, representation, or misrepresentation, citing ¶29 in the 
Bowman opinion. Bowman is factually inapposite and ¶29 in the 
Bowman opinion dealt with the doctrine of caveat emptor. The 
issues in Bowman arose out of a real estate listing by a real estate 
agent that knowingly erroneously overstated the square footage of a residential 
property. Bowman, 2009 OK 48 at ¶29, 212 P.3d  at 1222-1223, recognized 
that the doctrine of caveat emptor may serve as a defense to a claim of 
fraudulent misrepresentation where a buyer has unjustifiably relied on a 
self-serving seller's representation of value, and at note 39, recognized that a 
seller's representation as to value is considered to be mere opinion, citing 
Nowata v. West, 1919 OK 367, 186 P. 220. See also, Steiner v. Hughes, 
1935 OK 335, 44 P.2d 857, 861 (mere statement of value or cost or 
profit alone is not sufficient to prove fraud on part of a seller). In this 
case, we are not concerned with a self-serving seller or the market-place 
principle of "let the buyer beware." 
12 In 2010, the Oklahoma Legislature amended § 675 of 
Title 60 in the Uniform Unclaimed Property Act adding a new subsection D that 
provides: "Claims against the Mineral Owner's Fund shall be subject to the same 
statutory requirements and administrative rules as are applicable to claims 
under the Uniform Unclaimed Property Act." 2010 Okla.Sess.Laws, ch. 241, § 5. 

13 For their third proposition, plaintiffs asserted that 
the heir finder statute, 60 O.S.2001, § 674.1, applied to defendant 
which we do not address in light of the public policy underlying the custodial 
taking of undistributed proceeds from forced pooled mineral interests. 
14 15 O.S.2001, § 233, now 15 O.S.2011, § 233, provides in 
part:
A party to a contract may rescind the same in the following cases only: 
1. If the consent of the party rescinding, or of any party jointly 
contracting with him, was given by mistake, or obtained through duress, menace, 
fraud, or undue influence, exercised by or with the connivance of the party as 
to whom he rescinds, or of any other party to the contract jointly interested 
with such party.