Empire Gas & Fuel Co. v. Stern
Decision Date | 13 October 1926 |
Docket Number | No. 7195.,7195. |
Parties | EMPIRE GAS & FUEL CO. v. STERN. |
Court | U.S. Court of Appeals — Eighth Circuit |
Warren T. Spies, of Bartlesville, Okl., and Leslie J. Lyons, of Kansas City, Mo., for plaintiff in error.
Paul R. Stinson, of Kansas City, Mo. (Isaac P. Ryland, Frank A. Boys, Arthur Mag, Robert K. Ryland, and William H. Wilson, all of Kansas City, Mo., on the brief), for defendant in error.
Before LEWIS, Circuit Judge, and FARIS and PHILLIPS, District Judges.
This is a writ of error from a judgment recovered by Sigmund Stern against the Empire Gas & Fuel Company.
On September 9, 1922, Sigmund Stern and Sybil C. Stern, his wife, executed an oil and gas lease running to the Empire Gas & Fuel Company. On September 11, 1922, C. J. Shortess, as the agent of the Empire Company, executed the following instrument:
Shortess prepared the following draft to be forwarded with the lease:
of Land and Leasehold Department "By C. J. Shortess.
On September 11, 1922, Sigmund Stern, by his agent, Morris Stern, delivered the draft and lease to the Farmers' State Bank of Leon, Kan., with instructions to forward them to the Union National Bank of Bartlesville, Okl. On the same day the Farmers' State Bank forwarded the documents to the Union National Bank, accompanying them with the following letter:
* * * * * * *
Morris Stern, a witness for Sigmund Stern, detailed the preliminary negotiations which led up to the contract. He testified that Shortess requested an abstract; that he advised Shortess that there was a loan on the property, the abstract was deposited with the loan, and it would take two or three weeks to get the abstract; and that the Empire Company had recently purchased a lease on the adjoining eighty acres in the same chain of title. He testified further as follows: " (Italics ours.) He further testified that Shortess stated he would have to get the consent of his company to handle the matter by examining the records; that Shortess left for the purpose of telephoning the home office of the Empire Company at Bartlesville, and shortly thereafter returned and stated, "Very well, we can waive that." In response to the following question: "What, if anything, did Mr. Shortess say to you about the manner that the Empire Company would follow in the examination of the title?" — Morris Stern answered, "He stated that he would have one of their attorneys look over the records in Eldorado."
The Empire Company employed Judge Benson, of Eldorado, to examine the records.
On September 14, 1922, Judge Benson gave a written opinion to J. C. Kennedy, superintendent of the land department of the Empire Company, based upon an examination of the records. The opinion stated that the records disclosed an oil and gas lease dated September 7, 1920, running from Sigmund Stern and wife to W. M. Hastie; that on January 17, 1921, Hastie assigned this lease to Ferdinand Palma, trustee under a declaration of trust dated December 6, 1920; that on January 31, 1922, Palma executed a release of this lease to Sigmund Stern and wife; that there was nothing of record to show that Palma had authority as such trustee to execute the release. The opinion further stated that a suit for specific performance of an alleged contract for an oil and gas lease involving the land had been brought by W. C. Allen and Ed Naus against Sigmund Stern, Max Stern, and Henry Stern, and that such suit was pending; that Charles W. Stieger, attorney for plaintiffs, in the Allen-Naus suit, had stated that, while he had not seen his clients, he understood the suit had been settled, or that the plaintiffs had decided to dismiss it, and he would not object to a dismissal of the suit.
Stieger testified at the trial of the instant case that he brought the suit in good faith, believing that Allen and Naus had a good cause of action, and that the same was not dismissed until October 6, 1922.
Kennedy received Judge Benson's written opinion about four o'clock p. m., September 15, 1922. He submitted the opinion to Mr. H. O. Castor, chief counsel, and Mr. Hayes McCoy, assistant chief counsel, of the Empire Company. About noon, Saturday, September 16th, they advised Kennedy that the title was not merchantable and that they would not approve the same. Thereupon Kennedy wrote and delivered the following letter to the Union National Bank:
The Union National Bank returned the draft and lease to the Farmers' Bank, advising it that they were returning them because the title was defective.
On Monday, September 18th, the Farmers' Bank notified Morris Stern that the papers had been returned, and he forthwith advised Sigmund Stern of that fact.
Sigmund Stern testified that on September 18th, after receipt of advice that the papers had been returned, he talked to Mr. Straight, general manager of the Empire Company, over the telephone; that in the course of the conversation he stated to Mr. Straight that the Empire Company had rejected the lease on account of the title; that the title was good, and apparently some mistake had been made; and that Mr. Straight stated that, if the title was good, the Empire Company would take the lease.
On the same day, Sigmund Stern wrote a letter to the Empire Company, which, in part, read as follows:
"As your counsel has obviously made a mistake, as we know the title is good, we would like for you to advise us to send this lease to you again with sight draft attached, and that you will honor same without any further delay."
On September 19, 1922, Kennedy wrote the following letter to Sigmund Stern:
Sigmund Stern further testified that on or about September 20th he talked to Mr. Kennedy over the telephone concerning the matter; that he told Mr. Kennedy that the Hastie lease had expired by its own terms, that no well had been commenced, and no rentals paid as provided in the lease; that Mr. Kennedy stated that it would be sufficient to take care of the defect caused by the Hastie lease to secure affidavits from Hastie and one McSmith that no well had been commenced, and that no rentals had been paid as provided in the lease.
Sigmund Stern further testified that he discussed the matter again over the telephone with Kennedy on October 3d; that he advised Kennedy he was experiencing some difficulty in obtaining the affidavits, but would continue to try to obtain them; that Kennedy stated that, if the affidavits could not be secured, it would be necessary to secure a decree quieting the title.
Sigmund Stern failed to obtain the affidavits, and thereupon brought...
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