Court Opinion

ID: 9569963
Source: CourtListenerOpinion
Date Created: 2023-08-21 20:18:57.970894+00
Date Added: 2024-06-11T12:04:27.179569
License: Public Domain

OPALA, Chief Justice,
with whom SIMMS and SUMMERS, Justices, join, concurring in reversing summary judgment for the defendants and dissenting from directing summary judgment for the plaintiff.
I concur in today’s pronouncement only insofar as it concludes that summary judgment for both defendants (seller and lawyer) cannot stand; I dissent from the opinion’s direction that upon remand summary judgment be given to the buyer. The buyer rests its rescission claim on purely equitable theories. The law requires that they be established by clear and convincing evidence. There is no warrant in the evidentiary material for directing summary judgment for the buyer. I would hence remand the cause for a bench trial.
I
ANATOMY OF LITIGATION
French Energy, Inc. [buyer] purchased an oil and gas lease from the defendant estate at judicial sale. After learning of a recorded 1971 leasehold that was being held by production on an adjoining section, the buyer sought (a) rescission of the lease with actual and punitive damages for actual and constructive fraud, or in the alternative (b) rescission and restitution on equitable grounds of mutual mistake and unjust enrichment.
Judicial sales are generally governed by the “buyer beware” (caveat emptor) doctrine.1 The seller pressed for summary judgment in reliance on that doctrine. The trial court gave summary judgment to the seller and denied buyer’s quest for like relief (a) on constructive fraud or (b) on the equitable theory of seller’s unjust enrichment from mutual mistake or (c) for total failure of consideration.
II
RESCISSION IS AN EQUITABLE CONCEPT THAT IS PARTLY CODIFIED IN STATUTORY LAW
Upon proof of compelling equities, chancery will relieve a party of an ex contractu duty toward another.2 Equitable relief by rescission stands partly codified in 15 O.S.1981 § 233.3 The two equitable grounds for rescinding the contract, pressed by the buyer here and below, are *1241mistake4 and total failure of consideration.5 Other compelling equitable grounds for relief, not codified in the cited statute, are accident6 and inadvertence.7 The ;party seeking a contract’s rescission in chancery must itself be free from negligence in the making of the agreement.8
Ill
THE CLEAR AND CONVINCING STANDARD OF PERSUASION THAT GOVERNS EQUITABLE RESCISSION CLAIMS
Although equity follows the law and enforces a legal duty,9 it will interpose itself upon cognizable equitable grounds to grant relief from performance.10 The party who seeks to rescind a contract for mistake or failure of consideration must bear the burden of persuasion by clear and convincing evidence.11
*1242The summary judgment process applies in a like manner to legal and equitable actions.12 Where undisputed facts that are relied upon tend to support conflicting inferences, the issue presented is for the trier and not one for summary disposition.13
If this case were tendering a dispute governed only by rigor juris14 — i.e., solely by the question whether caveat emptor precludes the buyer’s recovery — the seller would doubtless be entitled to summary judgment. Were it not for the buyer’s interposition of equities — i.e., rights cognizable in chancery — the buyer’s claim could not be saved from defeat by summary disposition in favor of the seller. Although far from tendering pure issues of law by undisputed facts supporting a single inference, the evidentiary material in the record shows the presence of unresolved grounds for equitable relief — mutual mistake and unjust enrichment from total failure of consideration. Summary judgment to the seller was hence clearly an error. For the very same reason summary judgment may not be directed for the buyer. An appellate court will not undertake to exercise first-instance equity jurisdiction by resolving fact disputes which the nisi pri-us court failed to reach.15
IV
ON THE SUMMARY JUDGMENT RECORD BEFORE US JUDGMENT CANNOT BE DIRECTED FOR THE BUYER
The buyer’s mutual mistake claim is not without some support in the record. The seller’s nisi prius brief in support of summary judgment quest states that when the buyer inquired about the mineral interest, “Billy Clift [the estate’s personal representative] told the Plaintiff that the Estate’s interest was still available for leasing and directed that the ... [buyer] contact the Estate’s lawyer.” 16 According to both the estate’s lawyer17 and its personal repre*1243sentative,18 neither defendant was aware of an extant oil and gas lease covering the mineral interest in question.19 In its petition below the buyer plead that it was “without knowledge of a prior lease holding the subject lands by production.”20 The buyer’s title examiner had checked the deed records but apparently overlooked the 1971 oil and gas lease.21
Based on these undisputed facts the seller asserts, as it did below, that (a) the buyer is charged with notice that the 1971 lease constitutes in law a prior burden on the mineral estate; (b) but for the admitted negligence of buyer’s title examiner the 1971 lease would have been discovered; and (c) upon further inquiry, the 1971 lease could have been readily identified as producing and hence superior. The buyer, on the other hand, claims (a) that it was not put on notice of the recorded encumbrance because the primary term of the prior lease had expired in. 1981; (b) a lease being held past its primary term is not a matter of public record; and (c) the circumstances surrounding the transaction support the buyer’s claim for rescission on mutual mistake or for total failure of consideration.22
Mutual mistake plainly calls for support in evidence that would tend to excuse, on some equitable ground, the buyer’s failure (a) to discover the 1971 recorded lease and (b) to then inquire whether there was production — either from the demised or from some other premises — which would hold the lease beyond its primary term. That evidentiary foundation is conspicuously absent from the record. This court’s direction of summary judgment for the buyer is hence unwarranted.
Because the evidentiary material does not fully unveil the surrounding circumstances of the transaction, but leaves a trail of unresolved fact issues material to the buyer’s equitable claim, and the undisputed facts in the record do not permit but a single inference that would favor only *1244the buyer, I would remand this cause for a bench trial.

. Hammert v. McKnight, 132 Okl. 14, 269 P. 289, 290 (1928); Selement v. Gibson, 171 Okl. 513, 43 P.2d 759, 760 (1935).

. Pomeroy's Equity Jurisprudence, §§ 823 et seq. (accident), §§ 839-840 (mistake-introductory) and §§ 852 et seq. (mistakes of fact) (5th Ed.1941).

. The terms of 15 O.S.1981 § 233 are:
"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.
2. If through the fault of the party as to whom he rescinds, the consideration for his obligation fails in whole or in part.
3. If such consideration becomes entirely void from any cause.
4. If such consideration, before it is rendered to him, fails in a material respect, from any cause; ■ or,
5. By consent of all the other parties." (Emphasis added.)

. See the provisions of 15 O.S.1981 § 233, supra note 3. Mistakes of fact and of law that will justify cancellation of a contract are defined by 15 O.S.1981 §§ 63, 64, infra.
The terms of 15 O.S.1981 § 63 provide:
“Mistake of fact is a mistake not caused by the neglect of a legal duty on the part of the person making the mistake, and consisting in:
1. An unconscious ignorance or forgetfulness of a fact past or present, material to the contract; or,
2. Belief in the present existence of a thing material to the contract, which does not exist, or in the past existence of such a thing, which has not existed.” (Emphasis added.)
The provisions of 15 O.S.1981 § 64 are:
"Mistakes of law constitute a mistake within the meaning of this article only when it arises from:
1. A misapprehension of the law by all parties, all supposing that they knew and understood it, and all making substantially the same mistake as to the law; or,
2. A misapprehension of the law by one party, of which the others are aware at the time of contracting, but which they do not rectify.”
See also Watkins v. Grady County Soil and Water Con. Dist., Okl., 438 P.2d 491, 494 (1968).

. Wright v. Fenstermacher, Okl., 270 P.2d 625, 627 (1954); Davis v. Hastings, Okl., 261 P.2d 193, 195 (1953). In Douglass v. Douglass, 199 Okl. 519, 188 P.2d 221, 223 (1947), the court discussed the meaning of the term "failure of consideration”. Quoting Black’s Law Dictionary, 3d Ed., the court stated that “the term implies that a consideration, originally existing and good, has since become worthless or has ceased to exist or been extinguished, partially or entirely." (Emphasis added.)

. In Pomeroy’s Equity Jurisprudence, supra note 2, § 823 at 260-261 the author states: "The following expresses, I think, the true meaning given by equity to the term as an occasion for the exercise of jurisdiction: Accident is an unforeseen and unexpected event, occurring external to the party affected by it, and of which his own agency is not the proximate cause, whereby, contrary to his own intention and wish, he loses some legal right or becomes subjected to some legal liability, and another person acquires a corresponding legal right, which it would be a violation of good conscience for the latter person, under the circumstances, to retain.” In § 828 at 265 it is stated that the “jurisdiction [equity power to grant relief] will not be exercised on behalf of a party when the accident is the result of his own culpable negligence or fault." (Emphasis added.)

. In Murphy v. Fox, Okl., 278 P.2d 820, 821 (syllabus 2) (1955), the court held the mortgagor may be relieved of the effect of an acceleration clause in a note secured by the mortgage where the "default was not wilful but was due to mistake or inadvertence, and was not injurious to the mortgagee_” (Emphasis added.) The court observed that other jurisdictions have refused to accelerate an obligation when the default of payment was caused by an accident.

. See supra note 4 for the pertinent provisions of 15 O.S.1981 § 63; Ware v. City of Tulsa, Okl., 312 P.2d 946 syllabus 2 (1957).

. “It is a [long-recognized] maxim of equity uniformly adhered to by the courts that 'equity follows the law.’ ” Æquitas sequitur legem. York v. Trigg, 87 Okl. 214, 209 P. 417, 425 (1922); Phelan v. Roberts, 182 Okl. 202, 77 P.2d 9, 12 (1938); Roberts v. Canning, Okl., 455 P.2d 302 syllabus 3 (1969).

. In York v. Trigg, supra note 9, 209 P. at 425, the court applied the maxim JEquitas sequitur legem (equity follows the law), but observed that a court of equity can change the terms of a contract upon equitable grounds of fraud, accident or mistake.

. In Ware v. City of Tulsa, supra note 8 at 950, the court stated that the “weight of the evidence required to strike down a written contract is the same whether the relief sought be rescission or reformation if the same allegations are relied on.” The court further noted at 947 in syllabus 2 that “to justify the rescission or reformation [of a written contract of sale] on the ground of mutual mistake or unilateral mistake known to the other party, the evidence must be clear, satisfactory and free from doubt and show that the party who seeks reformation or rescission was himself free from negligence in the making of the agreement.” (Emphasis added.) In Pomeroy’s Equity Jurisprudence, supra note 2, § 859a at 353-355, the author notes that ”[c]ourts of equity do not grant the high remedy of reformation upon a probability, nor even upon a mere preponderance of evidence, but only
*1242upon a certainty of the error. The courts have used a variety of expressions in characterizing the sufficiency of evidence to establish mistake. ... [I]t has been said that the evidence or the inferences to be drawn from the evidence must be clear, clear and satisfactory, clear and convincing, clear, convincing and unequivocal, full, clear, and decisive, strong and most satisfactory, and the like.” (Emphasis added.)

. For application of summary relief, Rule 13, Rules for District Courts of Oklahoma, 12 O.S.Supp.1985, Ch. 2, App., (eff. Nov. 1, 1984), whose terms govern summary judgment process, makes no distinction between legal and equitable actions. Other jurisdictions, much like Oklahoma, do not differentiate for summary judgment purposes between equity and common-law actions. See Slezak v. Ousdigian, 260 Minn. 303, 110 N.W.2d 1, 8 (1961); Cloverlanes Bowl, Inc. v. Gordon, 46 Mich.App. 518, 208 N.W.2d 598, 602 (1973); Spencer v. Leone, 420 S.W.2d 685, 687 (Ky.App.1967); Fisher v. Hargrave, 318 Ill.App. 510, 48 N.E.2d 966, 970 (1943).

. Hulsey v. Mid-America Preferred Ins. Co., Okl., 777 P.2d 932, 936 n. 14 (1989); Schmoldt Importing v. Pan Am. W. Airways, Okl., 767 P.2d 411, 414 n. 11 (1989); Mick v. Crouch, Okl., 434 P.2d 256, 262 (1967); Runyon v. Reid, Okl., 510 P.2d 943, 946 (1973); Anderson v. Northwestern Elec. Co-op., Okl., 760 P.2d 188, 192 (1988); Hargrave v. Canadian Valley Elec. Co-op., Okl., 792 P.2d 50, 55 (1990); Roach v. Atlas Life Ins. Co., Okl., 769 P.2d 158, 163 (1989). Where there is room for a reasonable difference of opinion as to the proper inference to be drawn from the known and undisputed facts, the issue must be submitted to the jury. Morain v. Lollis, Okl., 371 P.2d 473, syllabus 3 (1962); see also Sex-smith v. Union Pacific Railroad Company, 209 Kan. 99, 495 P.2d 930, 933-934 (1972).

. Rigor juris means the strictly rigid normative regime of the common law, unaffected by judicial discretion or by principles of equity jurisprudence. See also Black's Law Dictionary, 5th Ed., at 1191.

. When necessary fact findings are absent from the record, the case must be remanded with directions that they be made after remand. Davis v. Gwaltney, Okl., 291 P.2d 820, 824 (1955); Matter of Estate of Bartlett, Okl., 680 P.2d 369, 377 (1984); Sandpiper North Apartments v. Am. Nat. Bank, Okl., 680 P.2d 983, 993 (1984); American Ins. Ass’n v. Indus. Com’n, Okl., 745 P.2d 737, 740 (1987); Robert L. Wheeler, Inc. v. Scott, Okl., 777 P.2d 394, 399 (1989); Matter of Estate of Pope, Okl., 808 P.2d 640, 642 (1990).

. Seller's brief in support of summary judgment motion [Record at 138]; see also Buyer’s answer brief [Record at 149].

. Seller’s brief in support of summary judgment motion [Record at 139]. Estate lawyer's deposition at 40-41 [Record at 120-121]: "Q. Did you have any information concerning any *1243prior leases that might have been executed by H.E. Clift and his wife before the lease was given to French Energy? A. No." Estate lawyer’s deposition at 25-26 [Record at 172-173]: “Q. Is it your testimony that you were unaware that there was an existing oil and gas lease covering any of those properties that we have just referred to? A. I know that there was production from both properties. I assumed there was a lease because it was production. Q. So, the estate had received some revenue checks, had they, from a purchaser, to your knowledge? A. I believe there may have been some, yes_ Q. As an attorney, would that not have been sufficient information to cause you to believe that there must be an existing oil and gas lease covering both Section 17 and 18? A. If you are asking me if that’s sufficient notice that they were both on the same lease, no.”

.Deposition of Billy Clift at 14: "Q. Are you saying then that you were not aware that there was a lease that covered both sections, the interest that your dad owned in both Section 17 and Section 18? A. I'm not aware of what? Q. Were you not aware of that old lease that was executed in ’71? A. No, I don’t know nothing about it. Q. Then when one of these individuals that called you asked you if you knew if the minerals were held by production, do you have any idea why a well in Section 17 would hold the lease in Section 18? A. No, I don’t know. I thought it was against the law. I didn't know you could do it.”

. In the brief on motion for summary judgment the seller denied "that prior to the sale of the lease [to the buyer] they had any information with regard to the encumbrances...." [Record at 140].

. Buyer’s petition [Record at 2],

. Deposition of Sharon G. Wigley at 13-14 [Record at 129-130]: "Q. .. .when you conducted your examination of the records in the Roger Mills County clerk's office, at that time did you determine that there was any leasehold information that ought to have been noted? A. From what this, the way this appears, it shows open. I neglected to pick up the last oil and gas lease which was producing_ Q. Do you have any explanation or rationale for how it came to be overlooked? A. No.” Whether the examiner’s failure to discover the recorded lease was negligence or excusable in this scenario is clearly a matter to be resolved by the fact trier from all the circumstances adduced.

. The interposed ground of total failure of consideration that would result in unjust enrichment to the seller calls for proof that the "top lease” acquired by the buyer — a lease to commence after an expiration of the existing lease— was worthless. Because the buyer has yet to adduce that and other evidence in support of its equity claim for rescission, the summary judgment directed by the court in this decision is unwarranted.