686 F.2d 1096 (5th Cir. 1982), 81-4048, Mills v. Damson Oil Corp.

Docket Nº:81-4048.
Citation:686 F.2d 1096
Party Name:Henry G. MILLS, et al., Plaintiffs-Counterdefendants-Appellees, v. DAMSON OIL CORPORATION, et al., Defendants-Cross Defendants-Appellees, J. S. Wheless, Jr., et al., Defendants-Counterplaintiffs-Cross Plaintiffs- Appellants.
Case Date:September 14, 1982
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

Page 1096

686 F.2d 1096 (5th Cir. 1982)

Henry G. MILLS, et al., Plaintiffs-Counterdefendants-Appellees,

v.

DAMSON OIL CORPORATION, et al., Defendants-Cross Defendants-Appellees,

J. S. Wheless, Jr., et al.,

Defendants-Counterplaintiffs-Cross Plaintiffs- Appellants.

No. 81-4048.

United States Court of Appeals, Fifth Circuit

September 14, 1982

Rehearing Denied Nov. 2, 1982.

See 691 F.2d 715.

Page 1097

[Copyrighted Material Omitted]

Page 1098

Charles G. Copeland, Harry E. Neblett, Jr., Jackson, Miss., for J. S. Wheless, Jr.

Stanford Young, Waynesboro, Miss., for Henry G. Mills.

Ed Brunini, Jr., Jackson, Miss., for Damson Oil Corp.

Matthew Harper, Jr., Laurel, Miss., for Southeastern Oil Co.

Appeal from the United States District Court for the Southern District of Mississippi.

Before GOLDBERG, WILLIAMS and GARWOOD, Circuit Judges.

GARWOOD, Circuit Judge:

This is an appeal from a judgment for appellees cancelling appellants' title claims to minerals. Because the disposition of this appeal raises important unresolved questions concerning the Mississippi real property law of constructive notice to bona fide purchasers and the doctrine of after-acquired title, we have decided to certify these questions to the Supreme Court of Mississippi pursuant to that court's certification procedure, Miss.Sup.Ct.R. 46. 1

I.

FACTS

The Federal Land Bank of New Orleans owned the surface and all of the minerals under a tract of land in Wayne County, Mississippi. On September 22, 1936, the Land Bank conveyed the surface estate and 1/2 of the mineral estate to Claude Mills. On October 16, 1940, Claude and his wife, Sue Bettie Mills, conveyed a 1/4 mineral interest in the tract to Lurline Daws, this being all of their mineral interest in the tract less a 1/4 interest they had previously conveyed to C. R. Ridgway, which is not at issue in this lawsuit. The mineral deed to Lurline Daws (the "Daws Deed") was filed for recordation on October 23, 1940. The acknowledgment of Claude and Sue Bettie Mills was taken by Lurline Daws's husband, S. B. Daws, who was Deputy Chancery Clerk of Wayne County.

On October 17, 1940, one day after the conveyance to Lurline Daws, Claude and Sue Bettie Mills conveyed a 3/16 mineral interest in the same tract to appellant J. S. Wheless, Jr. ("Wheless") by a mineral deed (the "Wheless Deed"). This conveyance was procured through the efforts of Wheless's agent, Byron Glasco. 2 The Wheless

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Deed was filed for recordation on October 25, 1940.

On October 9, 1943, Lurline Daws conveyed her 1/4 mineral interest in the tract to S. B. Daws. On July 20, 1959, S. B. Daws conveyed a 1/16 interest in the minerals to Charles Ray Mills, who, on October 21, 1960, conveyed his interest to Sue Bettie Mills.

Appellees 3 derive their title claims to the minerals through the Daws Deed; appellants 4 derive their title claims through the Wheless Deed. The conveyances which comprise the parties' chains of title are set forth in Appendix A.

In 1977, those appellees who are the heirs of Sue Bettie Mills (the "Mills appellees") brought suit against appellants and appellees Damson Oil Co., C. F. Brown & Co., Ballard & Cordell Corp., and James A. Patterson (the "Damson appellees") in the Chancery Court of Wayne County, Mississippi, to cancel, as a cloud upon their title, the claims of appellants and the Damson appellees to the 1/16 interest in the minerals acquired by Sue Bettie Mills in 1960.

There being complete diversity, appellants and the Damson appellees removed the action to federal district court, and appellants then counterclaimed against the Mills appellees and the rest of the appellees who derived a title claim under the Daws Deed. Appellants also cross-claimed against the Damson appellees. Appellants asked the district court to confirm in them title to a 3/16 interest in the minerals as successors in title to Wheless, or alternatively, to confirm their title claim to the 1/16 interest acquired by Sue Bettie Mills in 1960, which they assert passed to them by the doctrine of after-acquired title.

After a bench trial, the district court rendered judgment cancelling the appellants' claim to a 3/16 interest in the minerals. Although the court found that the Daws Deed was defectively acknowledged, because the acknowledgment was taken by Lurline Daws's husband, S. B. Daws, and that it did not impart constructive notice to appellants, the court held that the defect in the acknowledgment was cured by a curative statute passed by the Mississippi Legislature in 1954. The court also found that Wheless, through his agent, Glasco, and the remaining appellants 5 had actual notice of the Daws Deed, and that appellants failed

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to establish themselves as bona fide purchasers. 6 Finally, the district court rejected appellants' claim that they acquired a 1/16 mineral interest in the property through the doctrine of after-acquired title as a result of Sue Bettie Mills's joinder in the Wheless Deed and her subsequent acquisition of a 1/16 interest in 1960.

II.

BONA FIDE PURCHASER STATUS

For appellants to be entitled to an aggregate 3/16 mineral interest in the tract derived through the Wheless Deed, each appellant must have proved in the court below that either he or one of his predecessors in title was a bona fide purchaser, that is, a purchaser for a valuable consideration without actual or constructive notice of the Daws Deed. Woodruff v. Bates, 210 Miss. 894, 50 So.2d 559 (1951); Equitable Sureties Co. v. Sheppard, 78 Miss. 217, 28 So. 842 (1900).

  1. Valuable Consideration

    In Mississippi, a purchaser of land, in order to protect himself from an outstanding unrecorded title, as a bona fide purchaser, must have paid a valuable consideration. Doss v. Armstrong, 7 Miss. 258, 260 (1842). A valuable consideration is paid by one who, at the time of his purchase, advances a new consideration, surrenders some security, or does some other act which, if his purchase were set aside, would leave him in a worse position than that which he occupied before the purchase. Boon v. Barnes, 23 Miss. 136, 139 (1851); Newell v. Crider, 50 Miss. 539, 544 (1874).

    The district court found that the appellants failed to introduce any testimony that they paid a valuable consideration for the minerals. We disagree.

    Appellants introduced into evidence the deeds which comprised their chains of title. The deeds which comprise the chains of title of appellants Wheless, Cocke, Mortimer, and Harrell all recite payment or exchange of valuable consideration for the mineral interest conveyed. 7 The conveyances from Wheless to appellant Trotter, however, do not import a valuable consideration. The conveyance to appellant Trotter, as Trustee of the Joseph Sydney Wheless, Jr. 1974 Trust indicates a donative intent on Wheless's part. 8 The conveyance to appellant Trotter, as Independent Executor of the Estate of Ada Nance Wheless, indicates a voluntary recognition on Wheless's part of his deceased wife's community property interest in the mineral interest concerned. 9 Since the conveyance from Claude and Sue Bettie Mills to Wheless himself, however, recites a valuable consideration, appellant Trotter, both as Trustee of the Wheless Trust and as Independent Executor of Mrs. Wheless's estate, may take advantage of the recitals of valuable consideration in the Wheless Deed.

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    Other than the recitals of consideration in the deeds, there is no evidence of the payment of any consideration by any of the grantees therein. In Mississippi, however, a conveyance that acknowledges payment or receipt of valuable consideration is prima facie evidence that the grantee therein was a purchaser for a valuable consideration without notice, and places the burden of going forward to establish notice or the falsity of the recital of consideration on the party attacking the deed. Hiller v. Jones, 66 Miss. 636, 6 So. 465 (1889); Atkinson v. Greaves, 70 Miss. 42, 11 So. 688 (1892); Burks v. Moody, 141 Miss. 370, 106 So. 528, suggestion of error overruled, 141 Miss. 370, 107 So. 279 (1926); Rollings v. Rosenbaum, 166 Miss. 499, 148 So. 384 (1933).

    Appellees failed to discharge their burden of producing any evidence tending to show the falsity of the recitals of consideration in the appellants' chains of title. Thus, the recitals of consideration in appellants' chains of title, except for those in the conveyances from Wheless to Trotter, were sufficient evidence of payment of a valuable consideration. We hold that the district court's finding that appellants failed to show payment of a valuable consideration is clearly erroneous. All appellants therefore established that either they or one of their predecessors in title paid a valuable consideration for the minerals.

  2. Actual Notice

    Under Mississippi law, a prior deed, whether recorded or unrecorded, is good against a subsequent purchaser with actual notice of it. Dixon v. Lacoste, 9 Miss. 70, 107 (1843); Claiborne v. Holmes, 51 Miss. 146 (1875); Henderson v. Cameron, 73 Miss. 843, 20 So. 2 (1896); Ladnier v. Stewart, 38 So. 748 (Miss.1905).

    It is undisputed that the Daws Deed was made before the Wheless Deed. The district court found that all appellants had actual notice of the Daws Deed when they acquired their interest in the minerals. Appellants, however, contend that these findings are clearly erroneous.

    At trial, S. B. Daws testified that Wheless's agent, Glasco, came to the Chancery Clerk's office, where Daws was employed as Deputy Clerk, sometime on or after October 22, 1940, the day the Daws Deed was filed for recordation, and before October 25, 1940, the day the Wheless Deed was filed for recordation. Glasco had the Wheless Deed...

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