Hodgkiss v. Northland Petroleum Consol.

• Decision Date: 31 March 1937
• Docket Number: 7610.
• Parties: HODGKISS v. NORTHLAND PETROLEUM CONSOL. et al.
• Court: Montana Supreme Court

67 P.2d 811

104 Mont. 328

HODGKISS v. NORTHLAND PETROLEUM CONSOL. et al.

No. 7610.

Supreme Court of Montana

March 31, 1937

Appeal from District Court, Glacier County; R. M. Hattersley, Judge.

Action by Edwin Hodgkiss against the Northland Petroleum Consolidated, a common-law trust, and others. From a judgment for defendants, plaintiff appeals.

Affirmed.

SANDS C.J., and MORRIS, J., dissenting.

S. J Rigney, of Cut Bank, for appellant.

Lew L Callaway, of Helena, for respondents.

ANDERSON Justice.

This action was brought to quiet title to a tract of land in Glacier county. On June 28, 1921, plaintiff and his wife executed an oil and gas lease to the defendant trust. The lease was in the usual form and was to continue for five years, with the right to further prolong its existence by the payment each year of $1.00 as rental unless commercial production was encountered before that time. The lease recited $1.00 as the consideration and reserved to the grantors 12 1/2 per cent. of the oil and gas produced and saved from the land. At the same time the plaintiff and his wife executed a mineral deed granting a one-quarter interest "in and to all of the oil, gas and other minerals in the lands" described in the complaint. On demand of Hodgkiss in the year 1931 the lease was released of record.

The complaint was in the usual short form in an action to quiet title. The answer denied all of the allegations found in the complaint, except the allegations with reference to the trust, which were admitted, and admitted that the defendants claimed title to one-fourth of all the oil and gas and minerals in the lands involved. Defendants affirmatively alleged their claim of paramount title under the mineral deed, laches, and estoppel, and that the action is barred by the provisions of section 9015, Revised Codes.

Reply was filed to all of the affirmative defenses, alleging that the deed was void in that the grantee named was neither a natural nor artificial person, and therefore no grantee. It is further alleged that the deed was void "because it was not given for value or any consideration whatever, and that at the time the said lease and mineral deed were made and executed, it was agreed and understood by and between the said parties that the defendants would at once proceed to explore and drill either on the land herein described or on some other lands on which the defendants held oil and gas leases and that continuous development would be had and taken to the end that the said defendants would validate their leases and do all that would be necessary to secure to the members of the defendants association property rights in said leases that might thereafter become of value."

It is then alleged that the defendants failed to validate the oil and gas lease and never validated, directly or indirectly, any oil and gas leases by them received; that the oil and gas lease and the mineral deed were part of the same transaction, and that plaintiff believed the release of the oil and gas lease operated as a cancellation of the mineral deed; that the defendants obtained the mineral deed under the misrepresentation of the facts alleged, which we have either summarized or quoted at length; that all of the oil and gas leases obtained by the defendants were canceled by them or have been barred by the lapse of time. It is further alleged that the mineral deed is void "for the reason that it was acquired by fraud and misrepresentation as theretofore alleged"; that the defendants have released certain deeds and assignments of royalty identical with the mineral deed, and that these releases were made without consideration and without the consent of the beneficial owners of units in the defendant association or trust.

The cause was tried before the court without a jury. The trial court made special findings of fact, all of which are in favor of the defendants and against the plaintiff. Judgment was entered in conformity with the findings. The appeal is from the judgment. Error is assigned in the making of numerous of the findings of fact and one of the conclusions of law, and also in the making and entering of the judgment.

The court by its findings found that the mineral deed was good and valid and had been given for a good consideration. This finding and many others are challenged by specifications of error, but we think it unnecessary to notice the other specifications, as all of counsel's argument is directed in the main to this one finding, and in view of our conclusion it is unnecessary to discuss the other specifications.

It is first contended that the mineral deed was void in that the grantee was a fictitious person and therefore incapable of taking title to real estate. The only grantee named was the "Northland Petroleum Consolidated." Plaintiff, as an exhibit to his reply, set forth an agreement or declaration of trust between certain parties, wherein they adopted or designated the name of the grantee in the mineral deed as the name of this trust created by the agreement and declaration. Trustees were appointed under the trust agreement, but their names do not appear in this conveyance.

The rule with reference to contracts so far as individuals are concerned, entering into agreements under an assumed name, is very well stated in 19 R.C.L. 1333, as follows: "Again, a contract or obligation may be entered into by a person by any name he may choose to assume. All that the law looks to is the identity of the individual, and, when that is ascertained and clearly established, the act will be binding on him and on others." This rule appears to be universal and is illustrated by the note setting forth many cases in L.R.A.1915D, 983. We concede the rule that a conveyance to a fictitious person is void for want of proper parties. Where, however, a contract is made with an identified individual under an assumed name, all are bound by the contract. This distinction was recognized in the cases of Scanlan v. Grimmer, 71 Minn. 351, 74 N.W. 146, 70 Am.St.Rep. 326, and Wilson v. White, 84 Cal. 239, 24 P. 114, wherein many authorities holding in accord with this view are reviewed at length. There appears to be no dissent among the adjudicated cases from this rule. It would appear to follow logically that if an individual may contract under an assumed name, no sound reason exists why a group should not likewise so enter into contracts. In Sears on Trust Estates & Business Companies (2d Ed.) 374, it is said: "Strictly speaking, it may be said that a trust cannot adopt a name. It has no power to do anything implying either volition or dissent. It is merely property with a characteristic attached to or inhering in it. But trustees, who represent it, are individuals sui juris, and they may adopt a name or names for transacting business, executing contracts, or suing and being sued." See, also, Pease v. Pease, 35 Conn. 131, 148, 95 Am.Dec. 225; Carlisle v. People's Bank, 122 Ala. 446, 26 So. 115. A deed is sufficient if the grantee can be identified by extrinsic evidence. York v. Stone, 178 Wash. 280, 34 P.2d 911. The trustees of the defendant trust were all parties to the trust agreement. They were identified persons. Accordingly, we hold that the mineral deed was not void for want of a proper grantee.

Next it is urged that the deed was either without consideration or that the consideration for it failed. The defendants offered the deed in evidence. The deed was in writing, and therefore presumptive evidence of a consideration. Section 7512, Rev.Codes. The burden of showing a want of consideration sufficient to support an instrument lies with the party seeking to invalidate or avoid it (section 7513; Lee v. Laughery, 55 Mont. 238, 175 P. 873; Bielenberg v. Higgins, 85 Mont. 69, 277 P. 636), and that presumption, if uncontradicted, is satisfactory. Dackich v. Barich, 37 Mont. 490, 97 P. 931.

This rule is not changed when applied to the facts of this case by reason of the provisions of section 7895, Revised Codes, relating to transactions between trustees and beneficiaries. That section by its express terms applies after the relation of trustee and beneficiary has been created. Here the transactions under consideration were those whereby the relation of trustee and beneficiary was created.

The rule is that inadequacy of consideration, standing alone, is not a sufficient ground for refusing to enforce an agreement. Pederson v. Thoeny, 88 Mont. 569, 295 P. 250.

The plaintiff testified that he received nothing for the execution of the oil and gas lease and the mineral deed. In his testimony, however, he later admitted that it was agreed at the time of their execution that he was to receive a certificate of interest of one unit in the trust. He also admitted receiving a memorandum stating that he was entitled to receive such a unit. He admitted that he had never made demand for the certificate of interest or unit, and that it was offered to him at the time he secured the release when he refused to accept it; it was also tendered to him in court. Evidence also appears in the record that the certificate was offered to him at an earlier date. The declaration of trust discloses that one thousand units might be issued at a par value of $100. The record is silent as to how many of these units or certificates of interest were ever issued.

It apparently was the theory of the pleader in the reply filed by plaintiff that the major consideration for these documents was the prospecting and development of the lands on which the defendants had oil and gas leases. It was recited in the declaration of trust at that time that the trust owned numerous other tracts of land under assignments of leases either in whole or in part, and that therefore, by reason of their...