Home-Stake Royalty Corp. v. Mcclish

• Court: Oklahoma Supreme Court
• Writing for the Court: DANNER, J.
• Citation: Home-Stake Royalty Corp. v. Mcclish, 187 Okla. 352, 103 P.2d 72, 1940 OK 289 (Okla. 1940)
• Decision Date: 28 May 1940
• Docket Number: Case Number: 28783
• Parties: HOME-STAKE ROYALTY CORP. et al. v. McCLISH et al.

1940 OK 289

103 P.2d 72

187 Okla. 352

HOME-STAKE ROYALTY CORP. et al. v. McCLISH et al.

Case Number: 28783

Supreme Court of Oklahoma

Decided: May 28, 1940

Syllabus

¶0 1. ESCROWS-- Deed in escrow delivered to grantee without performance of conditions and without grantor's knowledge is void.

Where a deed is placed in escrow and is delivered to the grantee by the escrow holder without the performance of the conditions for delivery, and without the knowledge of the grantor, such deed is void.

2. SAME-- Bona fide purchaser from grantee who wrongfully obtained possession of deed in escrow and of property acquired no title as against first grantor.

Where a grantee in such deed obtains possession thereof without the knowledge or consent of the grantor, and also obtains possession of the property without the knowledge or consent of the grantor, and transfers the property to a third person for value without notice, such purchaser obtains no title thereto as against the first grantor.

3. EQUITY--"Laches" not mere delay but delay that works disadvantage to another.

Laches, in legal significance, is not mere delay, but delay that works disadvantage to another.

4. ESCROWS-- Deed in escrow wrongfully delivered to grantee and subsequent conveyances by him and his grantees held void.

Under the record presented, held, that the conveyances were void and that no title to the property passed to the purchasers.

Appeal from District Court, Carter County; J. I. Goins, Judge.

Action by Buster McClish and another against Grady Wallace, Home-Stake Oil & Gas Company, a corporation, HomeStake Royalty Corporation, B. Fleeger, Selden Henry, and the Stanolind Oil & Gas Company, a corporation, to cancel conveyances of mineral rights and to quiet title. From a judgment in favor of the plaintiffs, the defendants, except Grady Wallace, appeal. Judgment affirmed.

Marvin T. Johnson, of Tulsa, for plaintiffs in error Home-Stake Oil & Gas Company, Home-Stake Royalty Corporation, and B. Fleeger.

Joseph A. Gill, Jr., Charles R. Fellows, and Ray S. Fellows, all of Tulsa, for plaintiff in error Stanolind Oil & Gas Company.

Stephen A. George and John Clark Caldwell, both of Ardmore, for defendants in error.

DANNER, J.

¶1 Buster McClish and Ernest W. Tate brought suit against the defendants, Grady Wallace, Home-Stake Oil & Gas Corporation, Home-Stake Royalty Corporation, B. Fleeger, and Selden Henry to cancel a mineral deed executed April 3, 1936, by the plaintiff Buster McClish wherein he purported to convey to Grady Wallace a 2/7ths interest in the mineral royalty rights in 210 acres of land in Carter county, Okla. They also sought cancellation of subsequent mineral deeds executed to other defendants involving the above mineral interests and deraigned through the Wallace deed.

¶2 The plaintiffs alleged that on the 10th day of September, 1935, Buster McClish was owner of an undivided one-half interest in the land herein involved, that on said date he entered into a written escrow agreement with Grady Wallace by the terms of which a mineral deed executed contemporaneously with said escrow agreement would be placed in escrow in the National Bank of Tulsa, Okla., until such time as the defendant Grady Wallace should pay to the said bank for the use of Buster McClish the sum of $6,000. That this escrow agreement was filed in the office of the county clerk of Carter county on the 11th day of December, 1935; that on the 3rd day of April, 1936, the said McClish was induced to sign a written instrument withdrawing the original mineral grant referred to from escrow with the National Bank of Tulsa, Okla., and McClish was induced to execute a second mineral deed or grant to Grady Wallace covering an undivided 2/7ths interest in the oil, gas, and other minerals which might be produced from the property in controversy. McClish alleged that there was a verbal understanding and agreement between Buster McClish, Grady Wallace, and Tom Wallace that said mineral deed should be held by Tom Wallace until Grady Wallace should pay Buster McClish the sum of $6,000 in cash. McClish further alleged that said Tom Wallace delivered said purported mineral grant to the said Grady Wallace, who placed same of record in the office of the county clerk of Carter county, Okla., on the 4th day of April, 1936. McClish further alleged that the delivery of said deed was wrongful and illegal and without his knowledge or consent and that the recording of said deed was not discovered until five or six days prior to the filing of this action in the district court of Carter county, Okla.

¶3 The plaintiffs contended that in obtaining possession of said purported deed and placing the same of record the defendant Grady Wallace and his grantees did not acquire title, interest, equity, or estate in the said property or any part thereof. The defendants denied the allegations of the petition; denied the existence of any escrow agreement between the plaintiffs and Grady Wallace, denied the existence of fraud in the transaction, and asserted that they were innocent purchasers for value of the mineral rights acquired under the conveyances from the defendant Grady Wallace. Plaintiffs in error further contend that the plaintiffs ratified the conveyances and by their acts are estopped from asserting invalidity of the conveyances, and also are guilty of laches.

¶4 The cause was tried to the court, which made findings of fact and conclusions of law.

¶5 The conveyances are as follows: On the 5th day of May, 1936, Grady Wallace purported to convey to the HomeStake Oil & Gas Company, a corporation, and the Home-Stake Royalty Corporation an undivided 2/21st interest in and to the mineral rights and substance in the property herein involved.

¶6 On May 5, 1936, Grady Wallace purported to convey to B. Fleeger an undivided 2/21st interest in the mineral rights and substance in the property herein involved.

¶7 On February 3, 1937, Grady Wallace purported to convey to Selden Henry a 2/21st interest in and to the mineral rights and substance in the property herein involved.

¶8 On February 5, 1937, the defendant Selden Henry purported to convey to the Stanolind Oil & Gas Company an undivided 2/21st interest in and to the mineral rights and substance in the property.

¶9 From a judgment in favor of the plaintiffs canceling the above conveyances and quieting title in the plaintiffs, the defendants Home-Stake Royalty Corporation, Home-Stake Oil & Gas Company, B. Fleeger, and Stanolind Oil & Gas Company appeal on the grounds: First, that the evidence does not establish an escrow between plaintiff Buster McClish and the defendant Grady Wallace; second, insufficiency of evidence to sustain the judgment; third, that Tom Wallace was an improper person to act as escrow agent so as to constitute a valid escrow; fourth, that the cancellation of the conveyances required a return of the consideration paid; and fifth, that the plaintiffs are estopped by laches.

¶10 As heretofore noted, the court made findings of fact and conclusions of law. That part relating to the escrow agreement was as follows:

"The substance of the escrow agreement of April 3, 1936, was that Grady Wallace promised and agreed to pay the sum of $6,000 for the mineral interest under this particular sixty acres of land in controversy, and that the deed was to be left in the possession of Tom Wallace, an attorney, as an escrow holder until the money was paid, and upon payment of the $6,000 the deed was to be delivered to Grady Wallace. It was understood and agreed between the parties at the time that the money would be forthcoming within a few days.

"The court finds as a matter of fact that immediately after the execution of said deed on April 3, 1936, that it was delivered to Grady Wallace without the knowledge and consent of Buster McClish, and that the same was placed on record in the office of the County Clerk of Carter County, Oklahoma, the following day, which was April 4, 1936. No part of the consideration was ever paid Buster McClish.

"The court finds that Buster McClish went to the office of Tom Wallace on various occasions during the next three weeks following the execution of the deed and the escrow agreement, inquiring as to whether or not the money had been paid. Upon the third and last trip to the office of Tom Wallace the plaintiff, Buster McClish, was advised that the deal was all off and that the deed had been lost, and that Tom Wallace informed Buster McClish he was unable to find it. * * *

"The court finds as a matter of fact that there was a parol escrow agreement entered into by and between Buster McClish and Grady Wallace on the 3rd day of April, 1936; that said agreement was broken and that a delivery was made in violation of the escrow agreement without the knowledge or consent and against the will of Buster McClish and prior to the payment of any money in consideration therefor."

¶11 Adverting to the question of escrow. Generally the question is one of fact to be determined from the evidence in each particular case. 10 R.C.L. 623. The term is defined in Ballentine's Law Dictionary, page 445, as follows:

"A written instrument which by its terms imports a legal obligation, and which is deposited by the grantor, promisor, or obligor, or his agent, with a stranger or third party, to be kept by the depositary until the performance of a condition or the happening of a certain event, and then to be delivered over to the grantee, promisee, or obligee."

See, also, 10 R.C.L. 621.

¶12 In Eason v. Walter et ux., 118 Okla. 37, 246 P. 865, we approved the rule announced by the Supreme Court of Minnesota in Thoraldsen v. Hatch, 91 N.W. 467, wherein it was held:

"Where a deed is deposited with a person other than the grantee, upon an agreement to deliver it upon the performance of certain conditions, it is an escrow, and it is not necessary that the terms authorizing its delivery be expressed in writing, but may be declared orally at the time of the deposit."

¶13 In...