Court Opinion

ID: 9831490
Source: CourtListenerOpinion
Date Created: 2023-09-01 21:08:30.993129+00
Date Added: 2024-06-11T07:43:19.668230
License: Public Domain

On Motion for Rehearing.
In his motion for rehearing, appellee assumes that this court was influenced in its opinion by an erasure of certain assignments originally -appearing in appellants’ brief, and by a suggestion in appellee’s brief that there was no index in appellants’ brief. The suggestion mentioned made no impression whatever upon this court, and the erasure in appellants’ brief served only to relieve us of considering the assignments erased, and ap-pellee’s replies thereto. No significance whatever was given either circumstance.
*1074Appellee also complains of the statement in the original opinion that—
“Appellee in effect concedes that the findings of fact (that the lessees failed to mine and operate for oil and gas on the land in good faith or with ordinary diligence) do not warrant cancellation upon this ground.”
Appellee has misconstrued the purpose of that statement, and this is no doubt due to the inapt language in which it was expressed, which is the fault of the writer. By this statement it was intended to say that appel-lee in effect concedes that the evidence and findings of fact do not warrant cancellation of the lease on account of a breach of the express or implied contractual obligation of appellants to develop the land in controversy, for the reasons given in the concluding paragraph of the original opinion, and in accordance with our interpretation of the Grubbs v. McAfee Case.
Appellee complains somewhat bitterly of the holding in the original opinion that the alleged fraudulent representations of appellants’ agent, Lane, as to the financial ability of appellants, and as to their purpose to devote that ability to the development of the .land, were not shown to be of such nature as to warrant cancellation on that account. In reiterating our holding, we deem it proper to quote the testimony of appellee Urbahn and his agent and attorney, Cogley, who in Urbahn’s behalf negotiated the contract with appellant. Cogley testified with reference to Lane’s representations:
“He (Lane) stated that they (Lane’s associates) were not desirous of subleasing the property, that his associates had recently sold their holdings in Oklahoma for something like $34,-000,000. He claimed that there was no desire to — that it would not be necessary for them to sublease, as his people had ample funds to go oh with this development. * * * X conveyed to Judge Lane Mr. Urbahn’s attitude with reference to giving a lease on this land to parties who were not capable of in good faith developing it, or I would not have submitted it. to Mr. Urbahn, unless he had given me an assurance that they only wanted the lease to develop the land. When Judge Lane made these representations to me as to their ability and intention to develop the land, I, in good faith, believed that he was associated with such people and who had such intentions. I would not have submitted this lease to Mr. Urbahn if I had doubted Judge Lane’s statements in that regard. * * * If Judge Lane had told me before he procured this lease from Mr. Urbahn that he was playing the oil game of the kind that he told me afterwards that he had, I would not have submitted it to Mr.' Urbahn. * * * I conveyed to Mr. Urbahn those statements of Judge Lane with reference to his ability or the ability of Ms company to develop the land. It was the basis on which the proposition was submitted to Mr. Urbahn.”
Appellant Urbahn’s testimony upon this point was that—
“With reference to how I conversed with Mr. Lane and how I negotiated with him before I signed this lease, I would say, knowing that Mr. Lane was in search of leases for development, I told him I was willing to lease to responsible parties with sufficient capital to develop, and that I would noi leáse to any parties who were not financially capable of developing the tract, and he stated that the parties behind Mm were millionaires who had sold out their interests for many millions — over $34,000,000, he stated, in the state of Oklahoma — and they were fully able to carry out the development of that tract. * * * I told Mr. Lane that I would not make leases on my land to parties who were not financially capable of in good faith developing it. In response to that, Mr. Lane said that his backers were millionaires who had disposed of their interest in Oklahoma for over $34,000,000. Pri- or to the execution of the lease, other than talking to Mr. Lane, I talked with Mr. Cog-ley, my attorfiey, with reference to these matters, and Mr. Cogley told me things that Mr. Lane had said. As to whether I had formed any opinion in my mind before executing this contract with reference to the good-faith statements of Mr. Lane as to the financial ability of his concern to develop my land, I would say I saw no reason to doubt his statements. I was favorably impressed with his appearance. If I had not believed that Mr. Lane and his associates or his concern were capable of financing the land, I would not have given him the lease contract. As I stated to him and to others at the time, I would give no lease to any one who was not financially capable of developing the land. ⅝ * * 'Well, when the inquiry began in this section about the prospects of oil and people began to lease, I was willing to lease provided I could find proper responsible parties, and I stated to • Judge Lane, who talked to me about the Santo Tomas lease, that the lease money of $5,000— at 10 cents an acre was not the consideration —was the least consideration, in transferring the lease. That 10 cents an acre was nothing to induce me to enter into a lease contract, but that it was the development of the land, and that I would only give- it to financially responsible parties who intended to drill for oil. In response to that, Mr. Lane said that his backers were fully able to develop the land. * * * I had given the lease on the assertion of Judge Lane that the parties behind it were strong and were going to drill and develop that land. * ⅜ ⅜ ”
The maximum effect that may be given the representations shown in the foregoing testimony to have been made by Lane is that his associates were at that time financially able to exploit the oil and gas underlying ap-pellee’s lands, and that they intended to so develop the lands. There was no agreement as to how much money would be required in the proposed development, nor was there any agreement or intimation from either party as to what development was contemplated or was necessary to exploit the land. While it was understood, of course, that if the lease was made it involved development of the land, the extent of such development was not *1075discussed, but was left for determination in tbe subsequent written contract. Representations, in order to constitue fraud and deceit warranting tbe cancellation or .rescission of a solemn written contract, must be definite and explicit, and clearly proven. Certainly tbe false representations of Lane, as shown by tbe quoted testimony, do not meet tbis test. He represented tbat bis associates at tbat time were financially able to develop appellant’s land, and intended to so develop it. Tbe nature and extent of tbis development was very clearly fixed in tbe contract.
Appellee in no sense met tbe burden imposed upon bim of showing tbat appellants were not originally, or are not now, financially able to prosecute tbe development so provided for. Appellee complains .that tbe record does not support tbe statement in the original opinion tbat tbe highest estimate of the probable cost of tbe first well was $100,-000. Tbis statement was based upon tbe testimony of the principal promoter of tbe development that as much as $100,000 should be set aside for use in drilling tbe first well, in order to be on tbe safe side. No other estimate seems to have been made for tbis purpose. If tbe proof of tbis fact was uncertain, tbe uncertainty militated against ap-pellee, upon whom tbe burden rested to clearly show tbe elements of fraud upon which be relied for rescission. So, if tbe proof of tbe probable cost of tbe first well, or of tbe total cost of development, was lacking or was uncertain, appellee is not in a position to complain, as tbe burden of tbat proof rested upon bim.
Appellee also complains of tbe bolding in tbe original opinion tbat tbe provision in tbe lease contract tbat the lessee was authorized to assign the lease, in whole or in part, superseded any representations or agreement concerning tbe privilege of tbe lessee to assign. We reiterate tbat bolding, and in doing so quote tbe testimony of appellee and bis "agent, Cogley, upon that phase of tbe case, in which they show their conversation and understandings with Lane, appellant’s agent. Cogley testified:
“He (Lane) stated that they (Lane’s associates) were not desirous of subleasing tbe property; that his associates had recently sold their holdings in Oklahoma for something like $34,000,000. He claimed that there was no desire to — that it would not be necessary for them to — sublease, as his people had ample funds to go on with this development, and it struck me as in line with Mr. Urbahn’s idea on which he wanted to lease, and it was on that I submitted it to Mr. Urbahn. The consideration was small and was the least proportion of the proposition made by Judge Lane for the lease on the land. The form of lease which he submitted for signature, and which I referred to Mr. Urbahn, was not sufficiently full, and I think you will find that there is a clause in Judge Lane’s own handwriting there which was added to the lease, because he wishes to use this regular form which I think is the form approved — this is not a printed form, but was copied from it (referring to copy of the lease used in evidence handed witness by counsel), and the wording of this is in line with Mr. Urbahn’s instructions te me, and practically dictated by me, but written by Judge Lane, and is intended simply tp cover the portion of the form of lease which gives them a right to sublease, and in speaking of subleasing I only had in mind the subleasing of the whole, and Mr. Urbahn said they might sublease and not assume the obligation to develop, which was the main object in making the lease. I certainly did explain that to Judge Lane, and he said he had no objection to adding this and took my pen and wrote this on my desk at my dictation. Judge Lane wrote that at my dictation, that if they did sublease that those lessees would carry on the development just as be agreed to. * * * The second lease was executed with the addition which I mentioned, for the purpose of making it satisfactory to Mr. Urbahn.”
Appellant Urbahn testified:
“The original contract and the one that was executed in May are identical with the exception of this penned paragraph additional here. I will state how I happened to have this second contract with that pen addition put on it. This article of the contract which followed the usual form, I believe, of what they called the Texas contract, ‘If the estate of either party hereto is assigned, and the privilege of assigning in whole or in part is expressly allowed, the covenants hereof shall extend to their heirs, executors, administrators, successors or assigns,’ but that does not state that the grantee in this lease would be responsible for the companies to which they were transferred and knowing that the oil business was not only full of ups and downs, but of people who were up to all sorts of manipulation, I thought it would be better to protect myself by adding this, ‘But it is expressly stipulated and understood that the lessee herein guarantees on the part of its assigns the full and faithful compliance of all the covenants and obligations imposed on the original lessee herein,’ believing that these grantees were the millionaires that Lane asserted were behind them, and therefore fully capable of guaranteeing their assigns — guaranteeing that their assigns would develop it. * * * If Mr. Lane had told me that the company was going to peddle leases to people who were not oil people or capable of developing, I certainly would not have given him a lease with an assignment clause in ⅛ because that very fact would show that they were not financially able to develop this except on receipts from peddled leases. Long after-wards, or shortly afterwards, he said that he' was trying to interest friends, strong friends financially able to help develop the tract. I was perfectly willing to have him do it, because the more wells the better for me. ⅝ * * I executed two leases, but it was practically only one; the first was February 24 and the other May 22, 1919. Those are the only two instruments I executed. In both of those instruments I knew that the company with whom I was dealing had a right to assign leases, but I make that distinction. At that time Mr. Lane did not make the promise *1076that they would only he assigned to people with ability to develop, but it was afterwards that he told me that he would like to get friends who were financially strong and responsible to join him in developing the land, which of course I conceded. At the time he made the lease nothing was said to me about that, but it was afterwards that he told me about it. I executed both of these leases before he made that statement to me.”
It will be seen from the foregoing testimony of both appellee and his agent who negotiated the lease that Lane made no affirmative inducing representations to appellee about the purpose of the lessees to assign, while to Cogley, appellee’s agent, he stated . that his associates “were not desirous of subleasing the property,” that “there was no desire to — that it is would not be necessary for them to — sublease, as his people had ample funds to go on with this development.” It is extremely doubtful if these statements were sufficiently definite or affirmative to warrant rescission based upon the falsity thereof; but whether they were so or not, appellee, in order to clearly fix the obligations, rights, and privileges of the lessees with reference - to the unqualified right of assignment provided for in the form of contract presented to him, dictated the terms of the supplemental clause appended to the contract, thereby expressing in his own language his interpretation of the restrictions he intended to place upon appellant’s right to assign.
The motion for rehearing will be overruled.