Court Opinion

ID: 7811582
Source: CourtListenerOpinion
Date Created: 2022-09-07 17:13:27.178459+00
Date Added: 2024-06-11T16:30:29.226253
License: Public Domain

McCulloch, C. J., (dissenting). All of us agree in the conclusion that the evidence is sufficient to support the findings of the chancellor to the effect that the purchase of the oil lease by appellees and others, and the placing of the title in the name of Wade, as trustee, was for the purpose of holding the lease for their benefit, that Wade had no authority to transfer the lease without the consent of the beneficiaries, and that his assignment of the lease was wrongful and in violation of the trust. It is clear that the rights of Clark are not involved in this controversy, and no act or conduct of appellees should be held to bar their right to seek, as against the appellants, a cancellation of the assignment of the lease because of the fact that Clark was an innocent purchaser in accepting a drilling contract from the corporation. The contract with Clark was wrongful, so far as the corporation itself is concerned, and the corporation should not be permitted to shield itself behind the rights of Clark as an innocent contractor. The extent of the interest of appellees in the original lease is about twenty-four per centum of the whole, which leaves an interest in excess of a sufficiency to protect the interest of Clark, and since the corporation was a participant in the wrongdoing, the interests of appellants ought not to be affected by the rights of Clark, who, as before stated, can be protected out of the other interests. This leaves for consideration only the question of estoppel. The majority have concluded, in the first place, that appellees are estopped to object to the assignment of the lease for the reason that they failed to protest against the organization of the corporation and the sale of stock therein for the purpose of purchasing and developing this lease. It is not shown that any of the appellees did any affirmative act towards encouraging the sale or purchase of stock in the corporation. All that is shown is that the corporation was organized, and that its plan for the purchase and development of this lease was advertised and stock was sold on the faith of it. The mere failure of appellees to hunt up and make protest to prospective purchasers of stock, or to publicly advertise their objections to the organization of the corporation for the purchase of the lease, did not constitute such silence or acquiescence as would amount to an estoppel. I understand the established principles of equity to be merely that silence where one is called on to speak may work an estoppel, but before one is called on to speak there must be something done in his immediate presence which calls for action. Surely it cannot be within the principles of equity that a person is bound to run down and .protest against every assertion of claim to his property made by persons not in his immediate presence. A person is not called on to speak unless he is confronted by the assertion of an adverse claim in the presence of some one who is misled by his silence in the acquisition of such claim. In a similar case where it was sought to charge certain persons with estoppel by conduct similar to the circumstances in the present case, the Supreme Court of the United States said: “Before holding that defendants are liable by reason of their silence, it ought to be made to appear what action they could have taken to prevent the perpetration of the fraud embodied in the prospectus and maps. If they had actually participated in it by circulating these documents, or representing them to be true, the case would have been different; but if they be held at all it must be by reason of their silence and inaction, when it is not even shown that they were cognizant of the statements contained in them. * * * But, conceding that they were fully apprised of their contents, what action were they hound to have taken? They could not give notice to the hundreds of thousands to whom the prospectuses were sent, since they were not even apprised of their names or addresses. A notice to the company not to send out these propectuses- would have been equally futile, in case the directors chose to disregard it, since they could not control their action, nor could they have sustained a bill for injunction, since they could have shown no personal injury to themselves by reason of the action of the promoters.” Wiser v. Lawler, 189 U. S. 260. In discussing the same principle this court, in the case of Bramble v. Kingsbury, 39 Ark. 131, said: “If not already estopped, it would, perhaps, not have been required of appellant, upon being informed of the negotiations with Crapp, that he should seek him out and advise him of the encroachment. All that equity requires is, that a person shall do no act, nor be guilty of any misleading reticence, or apparent acquiescence, by. which another may be entrapped into a transaction which he would have entered upon, if he had been advised of the objection. For instance, if one stands by, when he should assert his claim, and by that induces a purchaser to believe he has none, he will be estopped. But a mere knowledge that a third person is about to purchase does not of itself impose upon the owner of an equity the duty of seeking him out, and advising him against it.” The same rule has been announced in other decisions of this court. Waits v. Moore, 89 Ark. 19; Westmoreland v. Plant, 89 Ark. 147; Davis v. Neal, 100 Ark. 399; Brownfield v. Brookout, 147 Ark. 555; Imboden v. Talley, 150 Ark. 567. Appellants had a right to organize a corporation for the purpose of taking over this particular lease or any other property, and to sell stock in the corporation upon representation of the intention to do so, but the mere fact that it advertised the intention of acquiring the lease does not estop appellees from disputing the authority of Wade to assign the lease merely because they failed to take any action to prevent the consummation of this plan. They had no notice that Wade intended to assign the lease without obtaining their consent, and were given no opportunity to assent or dissent. It is nest insisted that appellees were estopped by accepting stock in the corporation. The answer to this is that they refused to accept the stock. The majority conclude, finally, that appellees were also estopped by remaining inactive too long after the assignment of the lease by Wade before instituting the present action. It is remembered that the lease was transferred by Wade to the corporation on March 21, 1921, and two days later the corporation entered into the drilling contract with Clark. Some of the appellees were absent from El Dorado at that time, and one of them, Center, did not reside there at all. It was several days thereafter before they ascertained, or could have ascertained, that the lease had been wrongfully assigned by Wade to the corporation, and they at once began negotiations with the officers of the corporation looking to an adjustment of the controversy. The suit was instituted on April 22, 1921, so there was a delay of about three weeks in the commencement of the the action after it could have been commenced. In the meantime, the proof shows that there were negotiations pending between the parties for an adjustment of the controversy. There was not the slightest change in the attitude of any party to this controversy between the time of the assignment of the lease by Wade and the commencement of this action. There is no proof that a single dollar’s worth of stock was- sold during that time, nor did any of. the appellees change their attitude in any respect whatever. Mere delay in the assertion of a right never operates as an estoppel, but it is only unreasonable delay which works a disadvantage to some other person that can be pleaded in bar of the assertion of a right. This principle has been announced here so often that it is scarcely necessary to cite authorities in support of it, and only a few of the cases on that subject need be mentioned. Fox v. Drewry, 62 Ark. 316; Rhodes v. Cissel, 82 Ark. 367; Jett v. Crittenden, 89 Ark. 349; Frazer v. State Bank of Decatur, 101 Ark. 135; Cook v. St. L. I. M. & So. Ry. Co., 103 Ark. 326. It must be conceded that the business of prospecting for oil is highly speculative, and that things move very rapidly in the oil game, but it seems to me that it is carrying the doctrine of estoppel too far to say that a. group of individuals against whom a wrongful act has been committed in the unauthorized assignment of an oil lease should be estopped by a delay of three weeks from the assertion of a remedy against such wrongful act, there being no change whatever in the attitude of any of the parties during the period of the delay, and there being negotiations, or, at least, efforts, pending for the adjustment of the controversy without a lawsuit. It seems to me that the court has made a misapplication in the present case of the just and wholesome doctrine of estoppel, and my conclusion is that the decision of the chancellor is correct and that it ought to be affirmed. I am authorized to say that Mr. Justice Humphreys concurs in the views which I have expressed.