Court Opinion

ID: 7996385
Source: CourtListenerOpinion
Date Created: 2022-09-09 01:43:00.972964+00
Date Added: 2024-06-11T16:35:33.411803
License: Public Domain

Kyle, J.,
dissenting.
I am unable to concur in the majority opinion rendered by the Court in this case.
Daws and Stanley had been put in possession of the Eddie Gr. Creagh land for the purpose of commencing drilling operations under the assignment obtained from Whitten. The lease that Whitten assigned to Daws and Stanley purported to cover the entire mineral interest in the 107-1/2 acres of land, and the drilling’ operations were begun by Daws and Stanley immediately after receipt of the assignment. The cash consideration paid for the assignment was $10. The real consideration for the assignment was Daws’ and Stanley’s implied promise to commence drilling operations within ninety days and the payment of the overriding royalty of 1/16th of 7/8ths of all oil, gas and other minerals produced and saved under the lease, if production resulted. By executing the assignment of the lease to Daws and Stanley, Whit-*105ten placed it out of Ms power to drill for oil and gas on the 107-1/2-acre tract. The exclusive right to do that was vested in Daws and Stanley, provided they commenced drilling operations within ninety days. The assignment was in effect an executory contract. Daws and Stanley obtained possession of the leased premises for oil and gas development by virtue of the assignment, and good faith required that they do nothing that would impair WMtten’s right to the overriding royalty reserved by him under the assignment.
In Trice v. Comstock, 121 Fed. 620, 61 A.L.R. 176, 57 C.C.A. 646, the Court said: “WTterever one person is placed in such a relation to another by the act or consent of that other, or by the act of a third person, or of the law, that he becomes interested for him, or interested with him, in any subject of property or business, he is in such a fiducuary relation with him that he is prohibited from acquiring rights in that subject antagonistic to the person with whose interests he has become associated. ” See also 4 Pom. Eq. Jur. 5th Ed. p. 117, par. 1052; Probst v. Hughes, 143 Okla. 11, 286 P. 875, 69 A.L.R. 929; Clements v. Cates, 49 Ark. 242, 4 S.W. 777; Oldland v. Gray (Colo. 1950), 179 F. 2d 408; Wells v. Cline, 19 Ohio 165.
“The general rule is that a purchaser in possession under an executory contract cannot purchase an outstanding private title and then assert such title against his vendor while he remains in possession. His only right is to set off against the purchase price the money expended in acquiring the outstanding title. He cannot, by acquiring an outstanding title, avail himself of it so as to defeat his vendor’s right to the purchase money.” 55 Am. Jur. 805, Vendor and Purchaser, par. 381.
In the case of Hardeman v. Cowan, 10 Smedes & M. 485, this Court held that it is a well-established general rule, that where a purchaser has been put in possession, he cannot afterwards acquire an outstanding title and *106set it up in. opposition to the vendor; and if he extinguish an encumbrance, or buy in an outstanding title, all he can ask or require is, the repayment of the money he had so laid out. In the case of Harkreader v. Clayton, 56 Miss. 383, the Court held that the obligees in possession under a bond for title, as purchasers of land, cannot acquire a tax title thereto and set it up as an adverse and paramount to that of the obligor in the bond for title under which they entered.
Whitten had owned the lease on the Eddie Gr. Creagh land for a number of years. The lease according to its terms would expire on March 23, 1954, unless drilling operations were begun before that date. Whitten was anxious to have drilling operations begun without further delay. Daws and his associates were interested in drilling a test well in the vicinity of the Eddie Gr. Creagh farm, and the 40-acre tract which appeared to offer the most favorable prospect for a test well constituted a part of the 147-1/2 acre tract embraced in Whitten’s lease. Whitten agreed to assign to Daws and Stanley the mineral lease interest in a part of the 147-1/2 acre tract, including the 40 acres on which the test well was to be drilled, upon the express condition that drilling operations should be commenced within ninety days, and with the reservation to himself of the above mentioned overriding royalty. As stated above, no substantial cash payment was made to Whitten for the assignment. Both Whitten and Daws were interested in the drilling operation about to be undertaken. That operation was in its nature a joint undertaking, Whitten furnishing the lease, and Daws and Stanley and their associates furnishing the capital to drill the well.
None of the parties knew at the time Whitten assigned the lease to Daws and Stanley that Keathen Woodward had an interest in the land. Woodward had signed the deed to Eddie Gr. Creagh in 1943 when Creagh purchased *107the interests of the other cotenants. Creagh claimed to own the land in fee simple and warranted the title when he and his wife executed the oil, gas and mineral lease to Dwight Sanford as lessee in 1944. It was not until after the drilling operations had been begun by Daws and Stanley under the Whitten assignment that Daws and Stanley learned that Keathen Woodward had repudiated the deed executed by him to Eddie G-. Creagh in 1943. It is admitted that Whitten was not notified of the Woodward interest, and that Daws sent Eddie Gr. Creagh along with W. H. Potts to Chicago to negotiate for the Woodward lease, that they contacted Woodward with reference to the matter, and that Daws secured the lease from Woodward.
Courts will go far to find a trust in order to protect a party from the inequitable conduct of an assignee or grantee, and even in the absence of a tenancy in common or joint adventure the relationship of the parties may be such as to require the court to impress a trust. Kennedy v. Seaboard Oil Company, 99 F. Supp. 730.
It seems clear to me that, under the rule laid down in Trice v. Comstock, supra, when Daws acquired in his own name the mineral lease covering the outstanding interest of Keathen Woodward in the land embraced and included in the Whitten assignment, Daws acquired that lease for the benefit of Whitten as well as liimself, and the rights thus acquired became impressed with a trust in favor of Whitten to the extent of the overriding royalty reserved in Whitten’s assignment; and Whitten had a right to enforce that trust upon repayment to Daws of the amount of money actually expended by him in acquiring the lease covering the Keathen Woodward interest.
McOehee, Chief Justice, and Arrington, Justice, Concur in this dissent.