Hoffer v. Crawford

• Decision Date: 20 August 1954
• Docket Number: No. 7448,7448
• Citation: 65 N.W.2d 625
• Parties: HOFFER et ux. v. CRAWFORD et al.
• Court: North Dakota Supreme Court

Page 625

65 N.W.2d 625

HOFFER et ux. v. CRAWFORD et al.

No. 7448.

Supreme Court of North Dakota.

Aug. 20, 1954.

Syllabus by the Court.

1. A mineral deed obtained by fraud is either void or voidable depending on the facts and circumstances under which it was procured.

2. A conveyance of a mineral estate in homestead property cannot be conveyed unless the instrument is executed and acknowledged by both husband and wife, and where the husband and wife did not in fact execute and acknowledge the instrument before a notary, it is void between the original parties and all subsequent grantees.

3. A certificate of acknowledgment regular on its face is presumed to state the truth.

4. In an equity case, before the court will declare a mineral deed void as against the rights of innocent purchasers on the ground of fraud, the fraud must go to the execution rather than the inducement, and the proof of fraud must be clear, unequivocal, and its force undiminished by negligence on the part of the grantors if mentally competent.

5. When one of two innocent persons must suffer by the acts of a third, he by whose negligence it happened must be the sufferer; a loss resulting to parties ignorant of and innocent of fraud perpetrated by a third party, must fall on the one whose lack of care made fraud possible rather than upon one wholly unconnected with the fraudulent transaction.

6. Held, for reasons stated in the opinion, that the judgment of the trial court is affirmed as to the homestead property of the plaintiffs and reversed as to the other real property owned by them.

Cox, Cox, Pearce & Engebretson, Bismarck, for appellants.

Lanier, Lanier & Knox, Fargo, for respondents.

JOHNSON, Judge.

On May 28, 1952, the plaintiffs commenced an action against the defendants to determine adverse claims and quiet title to 720 acres described as: 'Section 34-138-69 and the SW 1/4 NW 1/4, Lot 4, Section 2-137-69.' The actual purpose of the action is to set aside and have declared void a mineral deed given by the plaintiffs to defendant D. W. Crawford to an undivided one-fourth interest in and to all of the oil, gas and other minerals in and under the above described land and that may be produced therefrom.

The transaction resulting in the mineral deed to D. W. Crawford took place at the farm of the plaintiffs on May 18, 1950. On the same day the plaintiffs executed a gas, oil and mineral lease to B. E. Winder of Fort Worth, Texas, and another mineral deed to D. W. Crawford covering one-half of the oil, gas and other minerals in and under and produced from the following described land: SE 1/4 NE 1/4, Lot 1, Section 2-137-69. The oil, gas, and mineral lease and the mineral deed covering the eighty acres are not involved in this action.

The defendants are the grantees of the minerals obtained by the defendant D. W. Crawford, or James H. White and W. C. Duncan, who purchased a part of the minerals granted to D. W. Crawford and in turn sold them to the other parties. The plaintiffs claim that the mineral deed for the 720 acres was obtained by fraud. D. W. Crawford answers and denies the allegation of fraud and states that he obtained the mineral deed for value; that thereafter he transferred a 1/9 interest to James H. White and W. C. Duncan, a 1/9 interest to John R. Bowker and a 1/36 interest to R. C. Moss. The other defendants answer that they are innocent bona fide purchasers for value.

The case was tried to the court and resulted in judgment for the plaintiffs. The defendants appealed and demanded a trial de novo.

There are two issues for determination. The first and primary issue, is whether or not the mineral deed covering the 720 acres was obtained from the plaintiffs by fraud and misrepresentation so as to render it void, and second, whether or not John R. Bowker, R. C. Moss, and James H. White and W. C. Duncan and their grantees are innocent purchasers for value, and take the minerals deeded to them free from fraud, if any was involved.

The plaintiffs purchased the 720 acres involved in this action from the Federal Land Bank of St. Paul. It had reserved fifty per cent of all oil, gas and minerals in and under said land. The plaintiffs owned the other fifty per cent. The plaintiffs owned one hundred per cent of the minerals in and under the 80 acre tract which is not involved in this action.

D. W. Crawford of Gainesville, Texas, was in the business of obtaining oil, gas and mineral leases and buying minerals. He was assisted in his operations by his two sons, D. B. Crawford and P. E. Crawford. On May 18, 1950, Robert Mayer, a neighbor, introduced these two men to the plaintiffs. As a result of the meeting between these men and the plaintiffs, the oil, gas and mineral lease and the two mineral deeds were executed to D. W. Crawford.

The oil, gas and mineral lease and the two mineral deeds given by the plaintiffs to D. W. Crawford were filed for record in Stutsman County on the 23rd day of May, 1950.

After acquiring one-fourth of the minerals in the 720 acre tract from the plaintiffs, D. W. Crawford, on May 23, 1950, made, executed and delivered a mineral deed to John R. Bowker for an undivided 1/9 interest in and to all of the oil, gas and minerals in said tract. On June 1, 1950, D. W. Crawford made, executed and delivered a mineral deed to an undivided 1/36 interest covering the same tract of land to R. C. Moss. On June 2, 1950, D. W. Crawford made, executed and delivered a mineral deed covering an undivided 1/9 interest in and under the same property to James H. White and W. C. Duncan. All these mineral deeds were filed for record in Stutsman County a few days after they were executed and delivered.

It thus appears that by June 2, 1950, D. W. Crawford had conveyed his entire one-fourth interest of the oil, gas and other minerals that he had obtained from the plaintiffs.

The evidence discloses that D. W. Crawford did not buy these minerals as an agent for any of the parties defendant. He was buying them for himself.

On July 11, 1950, James H. White and W. C. Duncan made and executed a mineral deed covering an undivided 1/108 interest in and to all the oil, gas and other minerals in and under the land covered by the original mineral deed from the plaintiffs to D. W. Crawford, to C. W. Cahoon; on August the 2nd, 1950, they executed a deed to 1/108 interest in the minerals covering the same property to E. M. Solow; on August 8, they executed another mineral deed to an undivided 1/216 interest in the same property to J. F. Hyman; and on June 25, 1951, they executed a mineral deed to an undivided 19/216 interest covering the same property to Eloise Munson.

By June 25, 1951, White and Duncan had conveyed all the minerals that they had obtained from D. W. Crawford. These deeds were all filed and recorded in Stutsman County prior to te institution of this action.

It is admitted that the plaintiffs did not appear before a notary public. The mineral deed covering the 720 acre tract was notarized by John L. Graf, a notary public at Streeter, North Dakota. He is a banker and knew the signatures of the plaintiffs and attached his acknowledgment to the mineral deed. The certificate of acknowledgment is in proper form.

The home of the plaintiffs is located on the SE 1/4, Section 34-138-69. It has been their homestead since 1941. It is conceded by the appellants that the mineral deed describing the 720 acres obtained by D. W. Crawford is not effective as to the homestead property. NDRC 1943, 47-1805; Dixon v. Kaufman, N.D., 58 N.W.2d 797. The mineral deed to the homestead was void. No title to the minerals in or under the homestead passed to D. W. Crawford or any of his grantees or the grantees of his grantees.

Assuming that fraud was involved in the procurement of the mineral deed by D. W. Crawford, the question for determination is whether or not the mineral deed covering the balance of the property vested title in the grantees of D. W. Crawford and the grantees of his grantees as innocent purchasers for value without notice. For a determination of that question it is necessary to examine the facts closely to ascertain whether the original mineral deed to D. W. Crawford was executed under such circumstances as to make it void or merely voidable.

The main dispute on the facts centers around the claim of the plaintiffs that at the time of their talk with the Crawford brothers no mention was made of a mineral deed. There is also a conflict in the testimony as to the manner in which the lease and two mineral deeds were executed.

The facts disclose some discussion as to the mineral interests of the plaintiffs in the land as the Crawfords ascertained that they owned one-half of the minerals in the 720 acre tract acquired from the Federal Land Bank and one hundred per cent of the minerals in the 80 acre tract acquired by them from another source. The lease covers 800 acres.

The plaintiffs assert that the Crawfords offered 25cents an acre for an oil, gas and mineral lease. The Crawfords contend that they offered 25cents per acre for an oil and gas lease and one-half of the minerals owned by the plaintiffs. The evidence discloses that Robert Mayer, who introduced the Crawfords to these plaintiffs, had entered into an oil, gas and mineral lease with D. W. Crawford, and had sold him one-half of his minerals. Mr. Graf, the notary, had also executed an oil, gas and mineral lease and sold minerals in a 960 acre tract at the same price. The evidence does not disclose that the plaintiffs knew of these transactions with Mayer or Graf. They are merely mentioned for the purpose of showing that other persons had entered into similar transactions as the plaintiffs.

Both the plaintiffs testified that D. B. Crawford and they were the only persons present at the time of the execution of the oil, gas and mineral lease and the two mineral deeds. They did not remember that they had executed three instruments. They contended that the...