Flitch v. Boyle

• Decision Date: 09 April 1938
• Docket Number: 33777.
• Parties: FLITCH v. BOYLE et al. [*]
• Court: Kansas Supreme Court

78 P.2d 9

147 Kan. 600

FLITCH v. BOYLE et al. ^[*]

No. 33777.

Supreme Court of Kansas

April 9, 1938

Syllabus by the Court.

The respective interests of joint adventurers in oil and gas royalties are essentially the same as those of partners, and their agreements pertaining thereto need not be in writing.

The statute of limitations does not begin to run against an action for breach of trust until trust is repudiated and beneficiary has notice or knowledge of facts which would or should apprise him of the breach.

Allegations that plaintiff entered into agreement with joint adventurer to procure oil and gas leases and royalty interests and that title to royalty interests was taken in name of plaintiff's joint adventurer, who, without consideration transferred title to his brother, who knew of plaintiff's interest, were sufficient to state a cause of action for adjudication of plaintiff's interest in the royalties and of his right to an accounting thereof, and was not demurrable.

One who acquires title to property from one joint adventurer, with knowledge of other joint adventurer's interest therein takes property subject to other joint adventurer's interests, and can be compelled to account to him therefor.

1. Where two joint adventurers acquired a royalty interest in an oil and gas property, the title to which was taken by agreement in the name of one of them, and the title holder for his own convenience and without consideration transferred the title to his brother, defendant herein, who was fully apprised of the interest of the plaintiff, plaintiff's petition, alleging the facts summarized as above, stated a cause of action against the defendant title holder for an adjudication of his interest in the property and of his right to an accounting thereof, which could not be met by a demurrer thereto.

2. The respective interests of joint adventurers in oil and gas royalties are essentially the same as that of partners, and their agreements pertaining thereto are not required to be in writing.

3. The statute of limitations does not begin to run against an action for breach of trust until the trust is repudiated, nor even then unless and until the beneficiary had notice or knowledge of facts which would or should apprise him of such breach.

4. One who acquires title to property with knowledge of a third party's interest therein takes it subject to such third party's interest, and he can be compelled to account to him therefor.

Appeal from District Court, Ellis County; C. A. Spencer, Judge.

Action by Karl F. Flitch against E. E. Boyle and others, for an adjudication of plaintiff's alleged partnership rights in certain oil and gas properties. From a judgment sustaining demurrer to the petition, the plaintiff appeals.

Judgment reversed and cause remanded, with instructions.

E. C Flood, and Clayton S. Flood, both of Hays, and Robert C Foulston, George Siefkin, Sidney L. Foulston, Lester L. Morris, George B. Powers, Carl T. Smith, C. H. Morris, and John F. Eberhardt, all of Wichita, for appellant.

Delmas Haney, J. H. Jenson, and Paul Ward, all of Hays, for the appellees.

DAWSON Chief Justice.

This is an appeal from a judgment sustaining a demurrer to a petition in an action wherein plaintiff sought an adjudication of his alleged partnership rights in certain oil and gas property, the legal title to which is now held by defendant.

Plaintiff's petition alleged that in 1928 plaintiff and one E. E. Boyle agreed to embark on a joint adventure whose purpose was to procure oil and gas leases and royalty interests in Ellis and other western Kansas counties and to hold and later dispose of them at a profit for their mutual advantage. Plaintiff's contribution to this joint adventure was to be that of locating and procuring such oil and gas interests, and Boyle's contribution was to be that of advancing the requisite funds to pay for them. Boyle was to take title in his own name, and, when any property so acquired should be sold at a profit, Boyle was to be recouped for his cash outlay and the net profit divided between them.

On November 17, 1928, pursuant to this agreement, plaintiff found a 200-acre tract of land in Ellis county on which one Scanlon held both the lease and royalty rights. Scanlon was willing to sell one-fourth of the royalty interest for $1,000, and also to sell the lease itself for $160. Plaintiff submitted Scanlon's offer to Boyle, and a contract for the acquisition of these interests was closed, and Boyle furnished the money according to the oral arrangement between him and plaintiff. Scanlon executed a conveyance of the royalty interest on November 17, 1928, to Boyle, and the same was recorded on December 3, 1928. The petition further alleged that some two months later, on January 24, 1929, Boyle executed to his brother, L. S. Boyle, defendant herein, a deed conveying to him the royalty interest which had been acquired by the joint adventurers as set out above.

The petition continued:

"Eighth: That the conveyance as aforesaid from the defendant, E. E. Boyle, to his co-defendant, L. S. Boyle, was made without any consideration whatsoever, was purely for the purpose of convenience, was not intended to convey anything except the naked legal title to said property to the said defendant, L. S. Boyle, and the said defendant, E. E. Boyle so advised the plaintiff herein.

"That the defendant, L. S. Boyle, received title to said royalty above described as trustee for his brother, E. E. Boyle, well knowing and intending to hold as trustee only, and well knowing that the plaintiff herein had an interest in any profits which might be realized from the same, as more particularly set out in the oral contract above set forth, and that he received said conveyance and has held title to the same since the date of receipt thereof, as trustee for the co-defendant, E. E. Boyle, as above set out."

The petition further alleged that oil and gas development in Ellis county has progressed since the acquisition of the aforesaid royalty interest; that it has eventually become of value far in excess of the purchase price; that plaintiff is entitled to half the profits thereof; but that defendant has refused to sell or authorize its sale, and has refused to account to plaintiff for his share thereof.

Plaintiff prayed for an adjudication of his interest, and for judgment that defendant holds the legal title for his benefit and that of E. E. Boyle; that the joint adventure between plaintiff and E. E. Boyle be dissolved; and that the property be sold and the net profits be divided as agreed between plaintiff and E. E. Boyle. Plaintiff also prayed for whatever other equitable relief may be appropriate under the allegations of his petition.

Against plaintiff's petition, summarized as above, defendant L. S. Boyle lodged a demurrer on two grounds: First, that it failed to state facts sufficient to entitle plaintiff to relief against him; and, second, that the cause of action was barred by the statute of limitations.

The demurrer was sustained and the cause comes before us for review.

At the outset it should be observed that as against a d...