Court Opinion

ID: 9443547
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:24:39.802932+00
Date Added: 2024-06-11T17:29:32.197440
License: Public Domain

MURRAH, Circuit Judge
(dissenting).
I agree that Grisso is not an indispensable party when the suit is judged on the issue as defined by the trial court to obviate indispensability; thus defined however, I would apply the five-year statute of limitations. In deciding the question of indispensability, the trial court treated the suit as- one for an accounting for a breach of the lease contract, under which Carter agreed to pay Crude for a fractional interest of the oil produced from the leased premises. As we have seen, the lease contract created no fiducial relationship, and no obligation other than to pay the stipulated royalty. Failure to dp so rendered Carter liable for a breach of the lease contract. Viewed in this light, the suit is not grounded in equity, and the allegations of fraud are relevant only as a defense to the anticipated plea of the statutory bar.
After treating the suit as one in law for breach of a contract for purposes of indispensability, the trial court then treated it as in equity, based upon fraud for purposes of liability. And, having found Gris-so and Carter guilty of a conspiracy to defraud Gast and his successors, the trial court of course had no difficulty rejecting the plea of laches. My brethren have chosen to treat the case as in equity for .purposes of indispensability and liability. They have completely exonerated Carter of any. act of fraud or corrupt motive. They have, however, sustained the trial court’s findings of fraud on the part of Grisso, not as a conspirator with Carter, but as an unfaithful trustee of his cotenant. Having convicted Grisso, who is not on trial, they proceed to fasten his fraud on Carter by charging it with knowledge of .Grisso’s misappropriation. They apparently do so on what to me is a fallacious theory that Carter was under some duty to reveal to Crude the provisions and legal effect of Carter’s lease. At the same time, they agreed that Cinde had constructive notice of the' terms and conditions of the lease and the duty to diligently improve its knowledge concerning all of the information it disclosed. In short Carter is charged with having failed to reveal to Crude that for which Crude had constructive notice and the consequent duty to discover.
Of course equity will not bar a claim against one who has been guilty of inequitable conduct with respect to the subject matter of the claim. Indeed, equity will not bar a claim unless it is equitable to do so. Oldland v. Gray, 10 Cir., 179 F.2d *553408. But, the rule presupposes fraud on the part of one who imposes laches as a defense, and it also presupposes excusable ignorance on the part of one who would avoid the bar of laches. Holmberg v. Armbrecht, 327 U.S. 392, 66 S.Ct. 582, 90 L.Ed. 743. The claimants were justifiably ignorant of the fraud in Humble Oil & Refining Co. v. Campbell, 5 Cir., 69 F.2d 667, relied upon by the majority. And, it is also significant that the trustee was a party to the suit in that case.
To me, it is wholly inconsistent with equity and good conscience to try and convict one for innocently contributing to the fraud of one who is not on trial. Certainly Grisso is an indispensable party to the suit wherein Carter is tried for merely failing to reveal a fraud to which it is admittedly not a party. If the suit is one in contract, and I think it is, Grisso is not an indispensable party and the five-year statute of limitations is clearly applicable. If, however, the suit is in equity for fraud, and fraud is the basis for recovery, the party who is said to be guilty of fraud is an indispensable party. In either event, I would reverse the case.