Elkhorn Coal Corporation v. Hite

• Decision Date: 12 October 1928
• Citation: 225 Ky. 735
• Parties: Elkhorn Coal Corporation v. Hite, et al.
• Court: United States State Supreme Court — District of Kentucky

Page 735

225 Ky. 735

Elkhorn Coal Corporation v. Hite, et al.

Court of Appeals of Kentucky.

Decided October 12, 1928.

1. Records. — Filing of deed for record with county court clerk furnished constructive notice thereof, where recording fees were paid and acknowledging certificate was signed by clerk, though his name was omitted from record by oversight or mistake in transcribing certificate.

2. Limitation of Actions. — To sustain action for relief against fraud or mistake, brought after five years and within ten years from commission thereof, so as to be within provisions of Ky. Stats., sec. 2519, extending five-year period allowed by section 2515, petition must allege, and proof show, that plaintiff did not, and could not by reasonable diligence, discover fraud or mistake until within five years before commencement of action.

3. Limitation of Actions. — Where facts constituting or showing fraud appear from public records, required by law to be kept and open to defrauded party's inspection, his ignorance of fraud will not postpone operation of five-year statute of limitations (Ky. Stats., sec. 2515), under section 2516, and record of deed is within rule, where facts constituting fraud appear on face of recorded deed.

4. Limitation of Actions. — Parties to suit for division of minerals under certain tracts of land between joint owners being chargeable with notice of defendant corporation's title to minerals under tract alloted to it by agreed judgment and of conveyance of oil and gas thereunder to it by division deed, plaintiffs' right to sue for reformation of court's orders and deed by expunging references to defendant's ownership, or such conveyance, of oil and gas, was barred within five years thereafter, under Ky. Stats., sec. 2515, and they were not entitled to extension of time under section 2519 on ground that they did not actually discover alleged mistake until within two years before filing action.

Appeal from Floyd Circuit Court.

E.C. O'REAR, J. WOODFORD HOWARD and W.P. MAYO for appellant.

B.F. COMBS and COMBS & COMBS for appellees.

OPINION OF THE COURT BY JUDGE THOMAS.

Reversing.

Prior to June 25, 1901, Walter S. Harkins owned all the minerals of every kind and description, including oil and gas, in, to, and under a tract of land in Floyd county, described in deeds as containing 665 acres, but actually containing more than 800 acres. On that date he sold and properly conveyed one-half undivided interest in such minerals under that tract to one J.P. Morse, who later died intestate and the owner of the mineral interest thereby conveyed. His heirs who inherited that interest conveyed it to the appellee and plaintiff below, W.F. Hite, who had some kind of secret trust arrangements with the other plaintiff and appellee, James Salisbury, whereby the latter became jointly and equally interested as vendee with Hite in the deed executed by the Morse heirs; but that interest was not attempted to be adjusted between those two, who were plaintiffs below in this action, until during or after the division suit hereinafter referred to.

The deed executed to Morse by Harkins in 1901 was at once lodged with the county court clerk of Floyd county for record, and it was recorded within a short time after it was lodged for that purpose; but in transcribing the certificate of the clerk who took the acknowledgment thereto his name was omitted from the record by oversight or mistake, thus making it appear from the record that the deed was not acknowledged by any officer, nor was its execution witnessed and attested as required by our statute. So that it is doubtful if the record alone, as so made in the office of the county clerk, would be sufficient to furnish constructive notice, but that insufficiency was supplied by the filing of the deed for record in the clerk's office and payment of the recording fees as required by law, provided the original acknowledging certificate to the deed was actually signed by the officer taking the acknowledgment. The original deed in this case was so filed for record, with the payment of the recording fees, and the acknowledging certificate of the Floyd county court. Therefore, under the doctrine of the cases of Webb v. Austin, 58 S.W. 808, 22 Ky. Law Rep. 764, and Great Western Petroleum Corporation v. Samson, 192 Ky. 814, 234 S.W. 727, constructive notice was furnished by the filing of that deed for record with the county court clerk of Floyd county.

On May 5, 1903, Harkins and wife, who still owned one undivided half of all of the minerals under the tract, attempted to convey all of them (ignoring the prior conveyance of half thereof to Morse) to the Kentucky Coal Land Company. But in the deed to that company Harkins expressly reserved from the conveyance the oil and gas under the tract; the effect of both conveyances being to convey to Morse a one-half undivided interest in all the minerals under the tract, including oil and gas, and a one-half undivided interest in all the minerals in the other half to Kentucky Coal Land Company, except oil and gas. Morse and the Kentucky Coal Land Company thereby became the equal joint owners of all the minerals under the entire tract, except the oil and gas, which was jointly and equally owned by Morse and Harkins. The appellant and defendant below, Elkhorn Coal Corporation, by mesne conveyances became the owner of all the mineral interest conveyed by the second deed of Harkins executed by him to the Kentucky Coal Land Company, and in May, 1919, plaintiff Hite was the owner of a half undivided interest of all the minerals under the tract and defendant, Elkhorn Coal Corporation, was the owner of the other half, except the oil and gas, the half undivided interest to which was owned by the heirs of Harkins, who in the meantime had died intestate.

On May 13, 1919, Hite filed his equity petition in the Floyd circuit court against defendant, Elkhorn Coal Corporation, in which he alleged that he and defendant were the joint owners of all the minerals in, under, and to three separate described tracts of land, including the one involved in the instant case, and prayed for a division according to surface of all three of the tracts. He, of course, alleged that he was the owner of an undivided half interest in and to all the minerals in all three of the described tracts, but defendant, by its answer in that division suit, denied plaintiff's title to any of the minerals, upon the ground that its remote vendee was an innocent purchaser of the whole of the minerals without notice of the deed to Morse under which Hite claimed, upon the theory that the failure of the clerk in recording the Morse deed to transcribe the name of the acknowledging officer to the certificate attached thereto made that instrument an unrecordable one, so that its actual record furnished no constructive notice.

After the pleadings were completed in that division suit, the parties agreed to a surface division of the minerals in all three of the tracts, and the attorney representing both parties drew a judgment in accordance with the agreement. A special commissioner to make the conveyance was agreed upon, and she executed deeds in accordance therewith, and which were prepared by the same attorney, and in them plaintiff Hite, in this suit, and also in that one, was conveyed all of the minerals in and to the portion allotted to him, while defendant in that, and also this, suit, was conveyed all the minerals in and to the portion of the land allotted to it. After such deeds were acknowledged and filed, that division suit went off the docket.

On January 6, 1926, appellees and plaintiffs below W.F. Hite and James Salisbury filed this equity action against appellant and defendant below, Elkhorn Coal Corporation, in the Floyd circuit court, in which they alleged substantially the foregoing facts, including those manifesting the interest of Salisbury and how he acquired it, and in which they averred as cause of action that the judgment, the order appointing the commissioner, and the deed executed to defendant in the division suit whereby it was adjudged, and defendant was conveyed, a half undivided interest in and to any of the oil and gas under the 665-acre tract, was and is erroneous and brought about by the mutual mistake of the parties, and plaintiffs prayed that the complained of orders and the commissioner's deed to defendant be corrected and reformed by expunging therefrom any reference to the ownership or conveyance to defendant of any of the oil and gas under that tract, because of the fact that it was never the owner of any such minerals, and that the division deed, as well as the orders in the division suit preceding it whereby defendant was adjudged and conveyed a half interest in and to the oil and gas under that tract, was a mistake, participated in by all the parties to the division action, and that plaintiffs did not discover such mistake until about two years before the filing of this action, and could not have done so by the exercise of ordinary diligence.

Some amended petitions were filed in which plaintiffs alternately prayed that, if the reformations asked for could not be made, it then be adjudged that plaintiffs were entitled to all of the oil and gas under the portion of the tract allotted to...