Fetters v. Wittmer Oil & Gas Props.

• Decision Date: 04 April 1932
• Docket Number: No. 199.,199.
• Citation: 258 Mich. 310,242 N.W. 301
• Court: Michigan Supreme Court
• Parties: FETTERS et al. v. WITTMER OIL & GAS PROPERTIES et al.

258 Mich. 310

242 N.W. 301

FETTERS et al.

v.WITTMER OIL & GAS PROPERTIES et al.

No. 199.

Supreme Court of Michigan.

April 4, 1932.

Appeal from Circuit Court, Isabella County, in Chancery; Ray Hart, Judge.

Suit by Mary Fetters and others against the Wittmer Oil & Gas Properties and others. From a decree for plaintiffs, defendants appeal.

Bill of complaint dismissed.

Argued before BUTZEL, C. J., and WIEST, CLARK, McDONALD, POTTER, SHARPE, NORTH, and FEAD, JJ.

CLARK, C. J., and FEAD, J., dissenting.F. H. Dodds and James E. Ryan, both of Mt. Pleasant, and Carl H. Reynolds, of Lansing, for appellants.

O'Keefe & O'Keefe, of Saginaw, for appellees.

SHARPE, J.

On June 25, 1929, the plaintiff Mary Fetters entered into a written oil and gas lease with the defendant Wittmer Oil & Gas Properties of 40 acres of land in the county of Isabella. It provided for the delivery to her of a stated amount of the product, if found upon the premises and the payment of a fixed quarterly rental until operations for a well were begun. On October 8, 1930, the bill of complaint was filed for the cancellation of this lease. We quote from the answer of the defendants thereto:

‘Further answering said bill of complaint, these defendants allege, on information and belief, that this litigation has been instigated and is being maintained and financed by one Edmund E. Johnston, who, these defendants are informed, has entered into a contract with plaintiffs, under the conditions of which plaintiffs have conveyed, or have agreed to convey to the said Johnston, certain interests in the oil, gas and minerals on the property described in said bill of complaint, in consideration of the services of the said Johnston in instigating, maintaining and financing this litigation.

‘In this connection, defendants further show to the court, that said Johnston is not a licensed attorney-practicing in the state of Michigan; and that this suit is but one of many that had been instigated and is being maintained and financed by the said Johnston.

‘Defendants further show to the court, in this connection, that they claim that the above mentioned contract-between said plaintiffs and said Johnston-is champertous, and is void under the laws of this state, and, that plaintiffs should not be permitted the aid of this court of equity to carry out the provisions of such contract.’

The proof submitted by the plaintiffs tended to establish their claim that the lessee was a common-law trust in the state of Pennsylvania, and had failed to comply with our law to entitle it to do business in this state, and that the lease was therefore unenforceable and void. The trial court so found, and entered a decree accordingly, from which the defendants have appealed.

The defendants sought to introduce proof tending to establish the allegations in their answer above quoted. The trial court held that it was not admissible, but permitted the evidence relating thereto to be taken under the provision in section 14159, 3 Comp. Laws 1929, and it appears in the record under the heading ‘Segregated Testimony.’ It is undisputed, and discloses the following facts: That on July 29, 1930, the plaintiff Mary Fetters, the lessor in said lease, entered into a written agreement with one Edmund E. Johnston, of the city of Saginaw, which, after reciting that such lease had been given, and that it had been ‘obtained from the party by trickery, deceit and misrepresentation,’ and was in fact and in law ‘null and void,’ and that she did ‘not feel justified in using her own means to engage in litigation necessary to move said lease as a cloud upon the said property and is wholly inexperienced in such matters,’ and that Johnston ‘has the means to engage in said litigation and is experienced therein, and is desirous of canceling and annulling said lease and the record thereof,’ provided that Mrs. Fetters, in consideration of the payment to her of $1 and ‘the mutual covenants and agreements hereinafter set forth,’ agrees that, upon performance by Johnston of his ‘covenants and agreements hereinafter set forth,’ she ‘will forthwith execute and deliver’ to him ‘the lease, Exhibit A, hereunto attached and made a part hereof.’ She further agreed to assist him ‘by all reasonable and lawful methods' in clearing the title to the land, ‘but at his expense and without any cost whatsoever to her,’ and she authorizes him to retain attorneys and commence a suit and ‘to do any and all things necessary and proper in the conduct of such litigation, and to prosecute saie litigation to a successful termination, but without cost to her.’She further agreed that: ‘In the event any commercial well shall be drilled contiguous to the land heretofore described, party of the first part agrees to execute and deliver on demand of second party the lease, Exhibit A, and grant him the right to enter upon said land and, if party of the second part desires, and at his own expense, to drill an offset well or wells, thereto in accordance with good oil field practice; and in the event the litigation contemplated by this contract to annul said lease is unsuccessful, then, and in that event, party of the first part agrees to reimburse party of the second part for all costs and expenses he is put to connected with said litigation, and for the cost and expenses of drilling said well, and all costs and expenses including the placing of pipes and tanks and other necessary equipment for the saving of oil, anything in this contract to the contrary notwithstanding.’

In consideration of her promises, Johnston agreed to ‘take all necessary and proper action’ in court to ‘proceed with all diligence at his own expense’ to have the lease to the defendant Wittmer Oil & Gas Properties ‘set aside, canceled and annulled,’ but in the event of an adverse decision in the trial court he would be under no obligation to appeal the case unless on the recommendation of his attorneys and, if so taken, he would bear the expense of the same.

It was further provided: ‘The parties hereto agree that all statements, representations and agreements made by the parties in negotiating this contract are merged herein, and that no forfeiture of this contract shall be allowed unless party of the second part shall have had reasonable written notice of the cause and fails to comply within a reasonable time thereafter, but this shall not be construed as giving a right of forfeiture where none exists under the contract.’

The evidence discloses that this contract was entered into at the solicitation of Johnston, and that he had procured like contracts from a number of others who had entered into similar leases with the Wittmer Oil & Gas Properties. Mrs. Fetters testified that she was then living with a daughter who had also given such a lease; that Johnston ‘had been there a couple of times, I think, before we made up our minds that we would sign.’ (She afterwards qualified this by saying that he had been there as many as five times.) That she knew that several of her neighbors had entered into such an agreement; that she had received the rentals provides for in the lease until she signed the bill of complaint, and thereafter refused to accept the checks therefor because instructed by Johnston to do so.

In answer to the question: ‘Let me ask you this, Mrs. Fetters, up until the time that you met this man Johnston you had never had any complaint in the world about you lease, had you?’ she said, ‘No, sir.’

In our opinion, this evidence was admissible, and should be considered in its bearing upon the right to maintain this suit in a court of equity.

We may take judicial notice of the fact that Johnston's activities in this respect were not confined to leases to the defendant company. He secured similar contracts from other lessors in the same territory, and suits in which they were involved have been presented to this court. See, Sheahan v. Athens Gas Corporation (Mich.) 242 N. W. 299;Wild v. Pure Oil Co. (Mich.) 242 N. W. 307;Flood v. Johnston (Mich.) 242 N. W. 308. It is apparent that, when unable to obtain leases from landowners, he deliberately set about to find some reason for the cancellation of those in existence, and, if found, to secure contracts from the lessors similar to that in question.

At the common law, champerty was regarded as an offense of a high grade, as malum in se, and all contracts tainted with it were held to be void. This court applied that rule in the early case of Backus v. Byron, 4 Mich. 535. Many definitions of the term will be there found. We quote but one: ‘The unlawful maintenance of a suit in consideration of an agreement to have part of the thing in dispute, or some profit out of it.’ It is also said to be the intermeddling in a suit by a stranger having no interest therein under an agreement with one of the parties by which the intermeddler is to secure a part of the thing in dispute, and differs from maintenance, which is the offense of intermeddling where there is no agreement to share the proceeds. Stotsenburg v. Marks, 79 Ind. 193, 196. In 1 Bouv. Law Dict. 453, after defining champerty as ‘A bargain with a plaintiff or defendant in a suit, for a portion of the land or other matter sued for, in case of a successful termination of the suit which the champertor undertakes to carry on at his own expense,’ it is said: ‘The tendency of modern decisions is, while departing from the unnecessary severity of the old law, at the same time to preserve the principle which defeats the mischief to which the old law was directed. It has been the disposition of courts to look not so much to technical distinctions, and by treating statutes on the subject as declaratory of the common law, to deal with the subject with more flexibility, keeping in view the real object of the policy to restrain what was defined by Knight Bruce, L. J., to be ‘the traffic of merchandizing in quarrels, of huckstering in litigious discord;’ 1 D. M. & G. 680, 686. In this...