Adams v. Little Missouri Minerals Ass'n

Citation143 N.W.2d 659
Decision Date20 April 1966
Docket NumberNo. 8258,8258
PartiesBlue Sky L. Rep. P 70,726 Lyle H. ADAMS et al., Plaintiffs and Respondents, v. LITTLE MISSOURI MINERALS ASSOCIATION, Inc., a corporation, and Kye Trout, Jr., Defendants, Little Missouri Minerals Association, Inc., a corporation, Defendant andAppellant.
CourtUnited States State Supreme Court of North Dakota

Syllabus by the Court

1. Laches does not arise from mere delay or lapse of time. In addition to the time element, the party against whom laches is sought to be invoked must be actually or presumptively aware of his rights and fail to assert them against a party who has in good faith permitted his position to become so changed that he cannot be restored to his former state.

2. No fixed rule can be laid down as to the time within which a person may rescind a contract, as what may be prompt rescission in one case would not always be so under the facts of another.

3. Landowners who act promptly when they become aware of their rights to rescind conveyances fraudulently induced are not barred by laches from maintaining their action.

4. Every sale or contract for sale made in violation of any of the provisions of Chapter 10-04, N.D.C.C., shall be voidable at the election of the purchaser, provided that no action shall be brought under § 10-04-07 for the recovery of the purchase price after three years from the date of such sale or contract for sale nor more than one year after the purchaser has received information as to matter or matters upon which the proposed recovery is based.

5. Nothing in Chapter 10-04, N.D.C.C., shall limit any statutory or common law right of any person in any court for any act involved in the sale of securities.

6. Section 10-04-17, N.D.C.C., does not prohibit a purchaser of securities from bringing an action based on fraud or contract apart from the remedies of the Securities Act.

7. A grant cannot be delivered to the grantee conditionally. Delivery to him or to his agent as such is necessarily absolute and the instrument takes effect thereupon, discharged of any condition on which the delivery was made. § 47-09-07, N.D.C.C.

8. If the grantor makes a manual delivery to the grantee of a deed absolute in form, intending to part with all authority and dominion over the instrument, he makes an absolute delivery and title passes immediately in accordance with the terms of the deed notwithstanding any intention or understanding that its operation be delayed until the happening of a contingency.

9. For reasons stated in the opinion it is held that title to the minerals in the instant case was transferred to the grantee as of the date of the manual delivery by the grantor and manual acceptance by the grantee of the mineral deeds.

10. A grant is presumed to have been delivered at its date. § 47-09-06, N.D.C.C.

11. Evidence to overcome the presumption that a deed in the possession of grantee was delivered to and accepted by the grantee must be clear and convincing.

12. Evidence to overcome the presumption that a mineral deed was delivered on the date it bears, rather than on the date it was acknowledged, must be clear and convincing.

13. Generally, to make a transfer of real property by a deed valid as between the grantor and the grantee, it is not necessary that the instrument be acknowledged.

14. The mere fact that a deed was acknowledged on a date subsequent to the date of the deed does not rebut the presumption that the deed was delivered on its date.

15. Except when it is declared otherwise, the provisions of the North Dakota Century Code in respect to the rights and obligations of parties to contracts are subordinate to the intention of the parties, when ascertained in the manner prescribed by the chapter on the interpretation of contracts. The benefit thereof may be waived by any party entitled thereto, unless such waiver would be against public policy. § 1-02-28, N.D.C.C.

16. In view of the language of § 47-09-07, N.D.C.C., which provides that an instrument takes effect on delivery to the grantee discharged of any condition on which the delivery was made, no condition remains after delivery.

17. Under our statutes fraud is either actual or constructive. § 9-03-07, N.D.C.C.

18. The suppression of that which is true by one having knowledge or belief of a fact by a party to a contract, with intent to deceive another party thereto or to induce him to enter into the contract constitutes actual fraud. § 9-03-08, N.D.C.C.

19. For reasons stated in the opinion it is held that the corporation in the instant case committed actual fraud when it suppressed the truth with knowledge of the facts.

20. Inducement and reliance may be inferred when the representation made by nondisclosure is material.

21. Actions for specific performance or rescission are governed by Rules 20 and 21, N.D.R.Civ.P.

22. Where the conveyance of minerals to a corporation was secured by fraud, on rescission the defrauded parties are entitled to recover in addition to the minerals the rentals (with interest) which the minerals earned while in the defrauding corporation's name.

Conmy, Conmy, Rosenberg & Lucas, Bismarck, for defendant and appellant. William S. Murray, Bismarck, of counsel.

Mackoff, Kellogg, Kirby & Kloster, Dickinson, for plaintiffs and respondents.

ERICKSTAD, Judge.

This is an appeal from a judgment entered in October 1964 by the District Court of Golden Valley County in favor of Lyle H. Adams and 40 other plaintiffs against Little Missouri Minerals Association, Inc., a corporation. The appeal 'is taken from the whole of said judgment, except insofar as the judgment in said action dismissed the plaintiffs' complaint against the defendant Kye Trout, Jr., individually.' A trial de novo is demanded.

The plaintiffs' complaint consists of five separate counts.

Count 1 asked that title to certain real estate be quieted.

Count 2 alleged that the defendants entered into transactions with the plaintiffs whereby the plaintiffs conveyed certain interests in minerals to the corporate defendant in consideration of the issuance of Class A common stock and promissory notes of the corporate defendant, and that said conveyances were obtained by fraud and misrepresentation made by the defendants to the plaintiffs.

Count 3 alleged that prior to the commencement of the action and at various times the plaintiffs entered into agreements and transactions with the defendants wherein certain mineral interests were conveyed to the corporate defendant in exchange for certain shares of Class 'A' common stock of the corporate defendants and of its promissory notes, and upon the promise and agreement of the defendants that in the event the corporate defendant had not acquired 30,000 acres of minerals on or before January 1, 1958, the said minerals so obtained from the plaintiffs would be reconveyed to them; that such reconveyance would be made without costs or expense to the plaintiffs; and that said 30,000 acres of minerals were not acquired by the corporate defendant on or before the aforesaid date.

It further alleged that plaintiffs complied with all of the things required to be done by them under said agreement, and demanded the reconveyance to them of said minerals, but that the defendants failed and refused and still fail and refuse to convey the same; and that, although not required to do so by said agreement, the plaintiffs tendered and offered to return and restore everything of value received by them from the defendants in connection with such transactions, and still offer to deliver and pay into court for the defendants everything of value received by the plaintiffs in connection with such transactions.

Count 4 alleged that the defendants have received income from the property in issue, that this income is properly the property and income of the plaintiffs, that the defendants have failed to render an accounting thereof, and that the plaintiffs are entitled to an accounting thereof.

Count 5 alleged 'that the notes given in part payment of the afore-described mineral interests are unpaid and that if rescission or specific performance of the agreements aforesaid is not decreed by the Court, or if it is not decreed that the defendants have no right, title or interest in said premises; that Plaintiffs are then entitled to a lien upon their individual minerals conveyed to corporate defendant for the amount of their individual notes and interest and are entitled to foreclosure thereof and do hereby claim such lien.'

The plaintiffs concluded their complaint as follows:

WHEREFORE, Plaintiffs demand judgment as follows:

1. That Defendants be required to set forth all their adverse claims to the above described property; that the validity, superiority and priority thereof be determined; that the same be adjudged null and void and that Defendants be deemed to have no estate or interest or lien or encumbrance on said property and that the title of each individual Plaintiff in and to said property be quieted as to Defendants' claims and that they be forever debarred and enjoined from further asserting the same; or in the alternative

2. That the aforesaid transactions wherein minerals were conveyed to corporate defendant be rescinded in equity and that Plaintiffs have judgment for rescission thereof and that said mineral conveyances be delivered up and cancelled subject to restoration to Defendants of all notes, shares of stock and any other thing of value to which Defendants may be entitled upon rescission after making adjustment for any rental income upon the premises received by Defendants and to which Plaintiffs may be entitled; all as determined by the Court; or in the alternative

3. That the Defendants be required to specifically perform their agreements to reconvey said minerals to Plaintiffs and to execute and deliver to Plaintiffs legally sufficient conveyances thereof, upon payment and delivery to Defendants of all shares of stock, notes...

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52 cases
  • Gajewski v. Bratcher, 8886
    • United States
    • United States State Supreme Court of North Dakota
    • 27 Junio 1974
    ...the delivery was made.' Section 47--09--07, N.D.C.C. Arhart v. Thompson, 75 N.D. 189, 26 N.W.2d 523 (1947); Adams v. Little Missouri Minerals Association, 143 N.W.2d 659 (N.D.1966). 6. 'Every grant of an estate in real property is conclusive against the grantor and every one subsequently cl......
  • Counts v. Gen. Motors, LLC, Case No. 16–cv–12541
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    ...and/or omitted information would have been material to the members" in making their decision); Adams v. Little Missouri Minerals Ass'n , 143 N.W.2d 659, 683 (N.D. 1966) (inferring inducement and reliance on the fraudulent nondisclosures from the circumstances); Vasquez v. Superior Court , 4......
  • Varacallo v. Mass. Mut. Life Ins. Co., A-1257-99T5
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    ...proper to presume reliance where the omission of material fact is common to the class); Adams v. Little Missouri Minerals Ass'n, 143 N.W.2d 659, 684-85 (N.D.1966)(inference of reliance is necessary where material facts are suppressed). The Supreme Court of California has broadened this conc......
  • Cope v. Metro. Life Ins. Co., 97-567
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    ...supra, 158 F.R.D. at 176-177; Murray, supra, 156 F.R.D. at 249, fn. 11; Heastie, supra, 125 F.R.D. at 678; Adams v. Little Missouri Minerals Assn. (N.D.1966), 143 N.W.2d 659, 683; 37 American Jurisprudence 2d (1968) 305, Fraud and Deceit, Section 228. See, also, Skalbania, supra, 443 N.E.2d......
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  • CHAPTER 11 UNQUIET TITLES: Practical Solutions to Common Oil, Gas and Coal Title Problems
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    ...runs only ten years from date of death. [4] See, e.g. §47-19-07 (N. D. Cent. Code) and Adams v. Little Missouri Minerals Association, 143 N.W.2d 659 (N. D. 1966). But compare Silbernagle v. Silbernagle, 55 N.W.2d 713 (N. D. 1952). [5] As to the limitations inherent in the use of such affida......

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