Greer v. Carter Oil Co.

• Decision Date: 21 February 1940
• Docket Number: No. 25388.,25388.
• Citation: Greer v. Carter Oil Co., 373 Ill. 168, 25 N.E.2d 805 (Ill. 1940)
• Parties: GREER et al. v. CARTER OIL CO. et al.
• Court: Illinois Supreme Court

373 Ill. 168

25 N.E.2d 805

GREER et al.

v.CARTER OIL CO. et al.

No. 25388.

Supreme Court of Illinois.

Feb. 21, 1940.

Action by Mark Greer and J. G. Burnside against the Carter Oil Company and C. R. Bennett for partition and removal of clouds on 144 acres of land. From an adverse decree, the plaintiffs appeal.

Decree affirmed in part, reversed in part, and cause remanded for amendment and modification of the decree.Appeal from Circuit Court, Fayette County; Wm. B. Wright, judge.

Will M. Albert and Robert G. Burnside, both of Vandalia, for appellants.

Walter Davison and Craig & Craig, all of Mattoon, W. F. Schuermeyer, of Tulsa, Okl., and W. F. Sonnemann, of Vandalia (L. G. Owen, of Tulsa, Okl., of counsel), for appellees.

GUNN, Justice.

Appellants, Mark Greer and J. G. Burnside, filed a complaint in the circuit court of Fayette county against the Carter Oil Company and C. R. Bennett, for partition and removal of clouds upon 144 acres of land. The issue involved is the validity of a certain oil and gas lease to the Carter Oil Company and a mineral deed to C. R. Bennett, there being no controversy about the right to partition the surface of the land. The circuit court found the oil lease and mineral deed valid and, the three year term of the oil lease having expired, the court by its decree provided additional time should be given to drill a well. Appellants appeal directly to this court because a freehold is involved.

The controversy grows out of the validity of an oil and gas lease given by Bennie Irey Shaw to the Carter Oil Company on May 28, 1936, and recorded on June 24, 1936, and the deed to one-half of the minerals, made by Bennie Irey Shaw to C. R. Bennett on September 28, 1936, and recorded on the same day. On these dates, Mark Greer was the owner of said land, subject to the life estate of Bennie Irey Shaw, and the tenant rights of appellee Anderson, but his deed was not on record. The pertinent facts are as follows: April 16, 1919, Bennie Irey Shaw was the owner of the premises. She was having trouble with her husband who had moved to Iowa. She went to him and procured his signature to a deed, blank as to grantee. She brought this deed home and went to the office of one Charles Kanatzar and filled in his name as grantee and talked about what she wanted done with the property when she died, but took the deed away with her. In 1933, Mrs. Shaw wanted to give the property to the Southern Illinois Conference of the Methodist Church and asked Kanatzar to make a deed to them but because of certain conditions in the deed the grant was refused by the church and Mrs. Shaw retained possession of that instrument. On November 13, 1933, at the request of Mrs. Shaw, Kanatzar and his wife made a quitclaim deed of the premises to J. G. Burnside and delivered it back to Mrs. Shaw. On November 15, 1933, Bennie Irey Shaw executed a quitclaim deed to Mark Greer for the use of the Mark Greer Hospital, retaining a life estate in the land, and at that time turned over to Burnside the deed made to Kanatzar in 1919 and the deed made from Kanatzar to Burnside in 1933, and had them turned over to Mark Greer at the same time her deed was delivered to Mark Greer. None of these deeds were recorded until about two years after the oil lease and mineral deed. On July 8, 1938, J. G. Burnside and wife made a quitclaim deed to Mark Greer and on September 29, 1938, Mark Greer and wife and Bennie Irey Shaw conveyed a 1/28 undivided interest to J. G. Burnside. On October 18, 1938, the suit was filed.

The complaint alleges that on November 15, 1933, when Mrs. Shaw's deed was made to Mark Greer, she was the owner of the lands and, from 1933 to 1937, taxes were assessed against the land in her name.

The oil and gas lease was for a period of three years and, by its terms, it expired May 28, 1939, and the mineral deed was for a period of twenty-five years. It is admitted that Charles L. Kanatzar was the agent of the Carter Oil Company in procuring the oil and gas lease. Appellants claim that he was the agent of Bennett in procuring the mineral deed but this is denied, appellees claiming he was a broker.

The substantial points urged by appellants for reversal are: First, that the Carter Oil Company was not an innocent purchaser for value because it was charged with notice of a defective title through its agent, Kanatzar; second, that the Carter Oil Company is not an innocent purchaser for value because the full consideration agreed to be paid was not paid at the time this suit was instituted; third, that the circuit court had no authority to extend the period of the lease beyond May 28, 1939, and fourth, that the mineral deed to C. R. Bennett is invalid because it was procured through an agent who had not only constructive but actual notice of appellants' title.

In arguing the first point appellants have assumed that Mrs. Shaw was not the holder of the legal title because of the deed made in 1919 to Kanatzar, possession of which she retained. They contend that notice to Kanatzar of the undelivered deed to him and the unaccepted deed from him to the board of the Methodist church and the quitclaim deed from Kanatzar to Burnside, are sufficient to put appellee, the Carter Oil Company, on notice of Mark Greer's title on November 15 by a direct deed from Mrs. Shaw. It is not claimed that Kanatzar ever knew about this deed and he denies that he ever had knowledge of its execution. Appellees say that if these facts amounted to notice they are not material because the information was acquired before he became the agent of the Carter Oil Company. The law on this subject is well stated in Snyder v. Partridge, 138 Ill. 173, 29 N.E. 851,32 Am.St.Rep. 130, where it is held to be the general rule that information acquired before the commencement of an agency will not be charged to the principal unless it is clear that the information obtained by the agent in a former transaction was so precise and definite that it is or must be present to his mind and memory while engaged in the second transaction. Ordinarily, it is presumed to have been forgotten. We think, however, the evidence clearly shows Kanatzar knew and remembered his transactions with Mrs. Shaw but the serious question is whether they are material in any way to the present situation.

When Kanatzar's name was inserted in the deed of 1919, Mrs. Shaw retained possession, and it is elementary that no title passes unless a deed is delivered. Fourteen years later, in 1933, when Mrs. Shaw was sick and wanted to convey to the church, she called upon Kanatzar to make a deed which was not accepted and was returned to her. Shortly afterwards, in the same year, she requested Kanatzar to make a deed to J. G. Burnside which he did, and delivered the same to her, and when Mrs. Shaw decided to convey to Mark Greer in 1933 she executed the deed, herself, and handed to Burnside the other deeds to and from Kanatzar, possession of which she had retained. It is from these transactions that notice of Mrs. Shaw's conveyance is supposed to have been obtained. From the beginning of the transaction it is obvious Mrs. Shaw did not consider Kanatzar an owner and he did not consider himself one. Appellant Burnside was in no position to complain because he conveyed to Mark Greer after the oil and gas lease was recorded and derived his title from Mark Greer and Mrs. Shaw. If the transactions with Kanatzar were inoperative and he had no knowledge of Mrs. Shaw's conveyance, the Carter Oil Company, through him, had no notice of anything that would show the rights of Mark Greer in 1936, when his deed was not recorded. Knowledge of the acts of strangers to the title is not notice of the rights of one claiming under an unrecorded deed. The law only charges purchasers with notice of conveyances in the direct line of title. Miller v. Larned, 103 Ill. 562;Bittner v. Field, 354 Ill. 215, 188 N.E. 342.

The next contention is that the Carter Oil Company is not a bona fide purchaser for value because, it is claimed, all of the consideration provided in the oil and gas lease to be paid had not been paid at the time the deeds to Greer and Burnside were recorded. It seems to be settled that where land is purchased from one not owning it and the purchaser claims to be a bona fide purchaser for value without notice, it is incumbent upon such purchaser to show not only that he had a conveyance for the land but that he actually paid for it. It is not sufficient that he may have secured the payment of the purchase price. McGuire v. Gilbert, 270 Ill. 160, 110 N.E. 377;Moshier v. Knox College, 32 Ill. 155. Appellants claim that this principle is applicable here because the real consideration is a covenant to drill for oil, which requires an examination of the lease. This instrument provides as follows: That the lessor in consideration of one dollar, receipt of which is acknowledged, leases the land for the sole purpose of mining for oil and gas; the period is to be for three years or as long as oil and gas is produced; the lessor is to get certain proportions of the oil and gas saved; if no well is produced within a year the lease shall determine, but an option is granted to extend the period for one more year by the payment of ten cents an acre, and a second option, for a like purpose and like period for the same consideration. The lease contains this covenant: ‘And it is understood and agreed that the consideration first recited herein, the down payment, covers not only the privilege granted to the date when said first rental is payable as aforesaid but also the lessee's option of extending that period as aforesaid and any and all other rights conferred.’

The instrument is under seal and is a present grant for a certain purpose together with an option for the same consideration of extending the period. This court has repeatedly held that similar leases grant a freehold estate. Watford Oil & Gas Co. v. Shipman, 233 Ill. 9, 84...