Clough v. Jackson

Decision Date08 January 1971
Docket NumberNo. 11862,11862
Citation156 Mont. 272,28 St.Rep. 38,479 P.2d 266
PartiesDella Verne CLOUGH, Plaintiff and Appellant, v. B. Pete JACKSON, Defendant and Respondent.
CourtMontana Supreme Court

Habedank, Cumming & Best, Otto T. Habedank, argued, Sidney, for plaintiff and appellant.

Anderson, Symmes, Forbes, Peete & Brown, Raymond K. Peete, argued, Billings, for defendant and respondent.

HASWELL, Justice.

Suit by plaintiff seeking rescission of her mineral deed to defendant on the grounds of fraud, misrepresentation, and undue influence. Defendant counterclaimed to quiet title to the mineral interest in himself on the basis of the mineral deed. From the final judgment of the district court of Richland County in favor of defendant, plaintiff appeals.

The issue on appeal is whether the record before the trial court proves that the mineral deed given by plaintiff to defendant was induced by defendant's fraud, misrepresentation, or undue influence thereby entitling plaintiff to rescind it.

The participants in the transaction culminating in the mineral deed were plaintiff Della Verne Clough; defendant B. Pete Jackson; and defendant's agent, Harold L. Rowland.

Plaintiff is an 80 year old spinster who retired from teaching in 1953. She has resided in Alhambra, California since 1924, and has never engaged in any business activity other than teaching. Plaintiff testified she was unfamiliar generally with the oil industry and its terminology. In which is the subject of the mineral deed which is the subject of the minreal deed involved in the present controversy. This land is a tract of 160 acres located in Richland County, Montana. Plaintiff had previously leased this land to Interstate Oil and Gas Company who, in turn, had made a farmout agreement of their interest in oil and gas leases in the general area to Consolidated Oil and Gas Company; additionally plaintiff had granted an easement for a pipeline through her property. The lease, farmout agreement, and easement were in effect at the time of the mineral deed involved in the instant case.

Plaintiff had seen her land in Richland County three times prior to execution of the mineral deed in question; once in the 1930's, once in 1944, and once in 1952. She testified she had no information concerning any oil production near her land prior to the conversations involved in the instant controversy.

Defendant B. Pete Jackson is a geologist engaged in independent oil activity who resides in Billings, Montana. He was not only familiar with the oil industry and terminology, but was knowledgeable concerning oil activity, production and production potential in the vicinity of plaintiff's land in Richland County.

Harold L. Rowland, although not a party in the instant suit, was the person directly involved in the conversations with plaintiff concerning her mineral lands and the person who procured the mineral deed from plaintiff. Rowland was the admitted agent of defendant Jackson and at all times acted in his behalf. Rowland is a financially independent graduate geologist, a licensed broker, and the operator of a business concerned with oil and gas exploration for major oil companies. He operates and resides in the Los Angeles area where plaintiff lives. Although familiar with the oil and gas industry and its terminology, he had no personal knowledge of oil activity and production in the vicinity of plaintiff's land and simply imparted to plaintiff what defendant Jackson had told him. Rowland and defendant Jackson had never met.

The mineral deed involved here is a conveyance by plaintiff of a 1/4 interest in the minerals in her 160 acre tract of land to defendant. Plaintiff still retains ownership of the remaining 3/4 interest in the minerals which is not involved in the present controversy.

On October 30, 1968 defendant Jackson made a telephone call from Billings, Montana to plaintiff's home in Alhambra, California for the purpose of determining whether she would sell any of her mineral interests. Although there are many conflicts in the respective parties' versions of that conversation, it is clear that defendant Jackson made no representations to her at that time and no understanding was reached concerning any sale by plaintiff of any mineral interests in her land.

The following morning, November 1, 1968, defendant Jackson phoned Rowland in Los Angeles. He asked Rowland if the latter could help him in his efforts to acquire some of the minerals under plaintiff's property by contacting her, explaining the situation, answering any questions she might have, and determining whether she was willing to sell all or any part of the minerals under her land for a price of $25.00 per mineral acre, which was shown to be the highest price he paid for like acreage in the area. There is a conflict in the testimony of defendant Jackson and Rowland as to just what the former told him with respect to the closest oil production to plaintiff's property being 20 miles; Rowland states that defendant told him this, while defendant contends that he was referring to the distance between two producing fields between which plaintiff's land lies. In any event Rowland undertook the requested assignment.

Rowland first contacted plaintiff by telephone late in the afternoon of November 1st and arranged to visit her at her home that evening. He arrived at her home in the early evening and found her alone. Rowland discussed with her the pros and cons of selling all or a portion of her minerals, according to him; according to plaintiff, she understood the discussion to concern the sale of all or a part of her oil and gas rights under the existing lease to Interstate Oil and Gas Company with farmout agreement to Consolidated Oil and Gas Company. When plaintiff indicated her willingness to sell part of her interest, Rowland put in a telephone call to defendant Jackson in Billings in the presence of plaintiff. His purpose was to establish that there existed a meeting of minds of the parties to the transaction and to determine how defendant Jackson wanted the details of the transaction handled, specifically how payment was to be made.

Defendant Jackson advised Rowland that he wanted the matter of payment handled by a draft on his account in the Midland National Bank in Billings. Upon completion of this call, Rowland typed a conveyance of plaintiff's 1/4 mineral interest in her land to defendant Jackson and a draft in payment therefor. He was not satisfied with the form of draft, so he made arrangements to see her again on Sunday morning, two days hence, and complete the transaction.

In the meantime Rowland had another telephone conversation with defendant Jackson. At that time defendant Jackson advised Rowland that he had checked plaintiff's title and there was no question about it; accordingly payment of the $1,000 could be made without the necessity of a draft. Rowland agreed to pay the $1,000 to plaintiff from his own funds for which defendant Jackson was to reimburse him.

Rowland arrived at plaintiff's house at 8:00 a. m., Sunday, November 3rd, as previously agreed. Plaintiff signed the mineral deed conveying a 1/4 mineral interest in her land to defendant Jackson. Rowland delivered to her his check for $1,000 as consideration for the deed.

The deed was transmitted to defendant Jackson and recorded by him. Defendant Jackson reimbursed Rowland for the $1,000, reimbursed him for his mileage, and paid him $100 for his services.

In the meantime after signing the mineral deed, plaintiff went to church, was otherwise occupied the balance of the day, and left for a holiday in Ensenada early the following morning. On her return three days later she looked over the deed, didn't like what she saw, and contacted a Los Angeles attorney.

Under date of November 15, 1968, her attorney wrote defendant Jackson stating that 'the transaction is at best a contract entered into by mistake' and offered and requested that it be rescinded. The letter also indicated that Rowland had indicated to plaintiff that a well had been drilled previously approximately 20 miles away but did not disclose 'a very recent well which had been drilled or is now being drilled at a distance of 1/2 mile to 1 mile from Miss Clough's property.' The letter concluded by requesting acceptance of plaintiff's rescission offer.

There followed under date of November 26 a letter from plaintiff to defendant Jackson. In it she indicated dissatisfaction and misunderstanding concerning the transaction.

Defendant Jackson refused to rescind and so advised plaintiff's attorney. Plaintiff commenced an action on December 10, 1968 in the district court of Richland County seeking rescission of the mineral deed on the grounds of fraud, misrepresentation, and undue influence, naming defendant Jackson as sole defendant. Defendant answered by general denial and counterclaimed by requesting the court to quiet his title to the mineral interest conveyed by the mineral deed. Plaintiff replied to the counterclaim by general denial.

The trial was held on September 10, 1969 before the Hon. L. C. Gulbrandson, district judge, sitting without a jury. On March 4, 1970 findings of fact and conclusions of law were entered by the district court. In substance they found that neither defendant Jackson nor Rowland fraudulently misrepresented any facts to plaintiff in regard to the mineral transaction; that neither exercised undue influence over her; that she was not incompetent or mentally incapable of consummating the transaction; that plaintiff did not rely on the statements of either to her detriment; that the principal reason she attempted to rescind was her mistaken belief that she had granted defendant the right to drill for oil and gas notwithstanding the existing lease with Consolidated; that she intended to convey a 1/4 interest in her royalty rights which she did in fact convey; and that defendant is the owner of the mineral rights...

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9 cases
  • Schulz v. Peake
    • United States
    • Montana Supreme Court
    • August 24, 1978
    ...proves he relied on the truth of the representations made to him. Dunlap v. Nelson, 165 Mont. 291, 296, 529 P.2d 1394; Clough v. Jackson, 156 Mont. 272, 279, 479 P.2d 266; Young v. Handrow, 151 Mont. 310, 315, 443 P.2d 9. The district court found that Wallers relied on their own investigati......
  • Anderson v. Applebury
    • United States
    • Montana Supreme Court
    • August 15, 1977
    ...misrepresentation, and reliance upon the truth of such misrepresentation. Dunlap v. Nelson, 165 Mont. 291, 529 P.2d 1394; Clough v. Jackson, 156 Mont. 272, 479 P.2d 266; Young v. Handrow, 151 Mont. 310, 443 P.2d In the instant case the question is the making of material misrepresentations a......
  • Van Ettinger v. Pappin
    • United States
    • Montana Supreme Court
    • December 18, 1978
    ...458, 461, 33 St.Rep. 1256, 1259; Cowan v. Westlund Realty (1973), 162 Mont. 379, 383, 512 P.2d 714, 716; and Clough v. Jackson (1971), 156 Mont. 272, 279-80, 479 P.2d 266, 270: 1. A 2. Falsity of the representation; 3. Materiality of the representation; 4. Speaker's knowledge of the falsity......
  • Brown v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 81-293
    • United States
    • Montana Supreme Court
    • February 11, 1982
    ...truth; (8) the right of the hearer to rely thereon; and (9) the hearer's consequent and proximate injury or damage. Clough v. Jackson (1971), 156 Mont. 272, 479 P.2d 266. The plaintiffs contend that they have made out a prima facie case and that there are genuine issues of material fact tha......
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