Investors' Guaranty Corp. v. Thomson

• Decision Date: 29 April 1924
• Docket Number: 1114
• Citation: 31 Wyo. 264,225 P. 590
• Parties: INVESTORS' GUARANTY CORP. v. THOMSON
• Court: Wyoming Supreme Court

225 P. 590

31 Wyo. 264

INVESTORS' GUARANTY CORP. v. THOMSON

No. 1114

Supreme Court of Wyoming

April 29, 1924

ERROR to District Court, Fremont County; CYRUS O. BROWN, Judge.

Action by Eugene Thomson against the Investors' Guaranty Corporation for the cancellation of a lease for breach of covenant and condition prohibiting an assignment thereof. There was a judgment for plaintiff and defendant brings error. See also 31 Wyo. 260, 225 P. 596.

Judgment affirmed.

Bryant S. Cromer and E. H. Fourt for plaintiff in error.

The lease covered Indian lands and was not forfeitable without the approval of the Secretary of the Interior; the reversionary clause is in legal effect a "possibility of reverter", Wagner v. County, 76 Ore. 453, 148 P. 1140; 23 R. C. L. 103; grantors or lessors waived rights under this clause; lessee mortgaged the leasehold for improvement funds mortgage was foreclosed and Moorehead became the purchaser the Indians approved the action of the court and requested ratification by the Department which was granted; grantors waived right of re-entry long prior to plaintiff's purchase; grantor thus waived right of re-entry against grantee; re-entry was a personal privilege existing in favor of grantors or their heirs, Wagner v. County supra; Statute of 32 Henry VIII c. 35 modifying the common law rule applies Sheets v. Selden, 2 Wall 177, 17 L. ed. 822; acceptance of land after assignment is a waiver, Murray v. Harway, 55 N.Y. 337; Randal v. Tatum, 33 P. 433; Chipman v. Emeric, 5 Cal. 49; Dakin v. Seward, 17 Wend. 447, citing Dumpor's case from Coke 119; Bank v. Gollman, 102 P. 932; Chilson v. Cavangh, 160 P. 601; Jones v. Moncrief Co., 108 P. 403; Holman v. Co., 47 P. 708; Blessing v. Fetters, 181 P. 108; Co. v. Robertson, 131 P. 327; D'Ambrosio v. Nardome, 129 P. 1092; breach of condition against assignment without consent renders lease voidable, but if consent of lessor is subsequently obtained title passes to assignee, Garcia v. Gunn, 51 P. 684; covenant against assignment will not prevent sub-letting, nor will a covenant against sub-letting preclude an assignment of the whole interest, Tiffany L. & T. 921-922; Burnes v. Dufresne, 121 P. 46; West v. Backus, 189 P. 645; Andrews v. Campbell, 135 Ga. 336, 69 S.E. 548; plaintiff had notice of the assignment and is estopped, Acer v. Wescott, 46 N.Y. 384; recognition of the lease by Secretary of the Interior binds plaintiff, Graff v. Castleman, 5 Rand. 195; a purchaser is bound by recitals in instruments through which he deraigns title, Childs v. Clark, 49 Am. D. 164; Garner v. Byard, 23 Ga. 289; a lease may be terminated by agreement without relieving lessee from liability for its breach, Marshall v. Rugg supra; Frank v. Handcock, 13 Wyo. 37; a guarantor of rent for premises occupied by a saloon held liable after cancellation of tenant's license, Hecht v. Co., 19 Wyo. 10, 113 P. 788, 117 P. 132.

O. N. Gibson for defendant in error.

The mortgaging of an Indian agricultural lease without lessor's consent or departmental approval is a breach of covenant against assignment, Reese v. Sheets, 82 P. 487, 24 Cyc. 973; consent of one joint lessor to assignment is insufficient to warrant approval, 35 Cyc. 104; consent of Indian lessors without departmental approval does not constitute a waiver or estoppel, O'Brien v. Bugbee, (Kan.) 26 P. 428; Miller v. Fryer, (Okla.) 128 P. 713; Guffey v. Guffey, (Okla.) 175 P. 816; Carr v. U.S. 98 U.S. 433; Power Co. v. U. S. 240 U.S. 389; Causay v. U.S. 240 U.S. 399; having failed to approve assignment before patent, Secretary of the Interior was without power to grant approval after patent, Coleman v. Feder, 100 S.E. 400; Carpenter v. Co., (Mass.) 61 N.E. 816; one cannot be deprived of substantial right without notice, Bush v. Caldwell, 6 Wyo. 342; Dallas v. Bank, 7 Wyo. 66; proof of loss or destruction of an instrument, its contents, proper execution and genuineness are required as a basis for secondary evidence, 22 C. J. 1044-1052; consent of the owner of the reversion must be obtained to each successive assignment where a covenant against assignment exists, 24 Cyc. 963; 16 R. C. L. 839; in England it was established by an early case that an express license to assign extinguished the condition against assignment without consent, Dumpor's case 4 Coke 119; this rule has been subjected to severe criticism over a long period, Brummel v. McPherson, 14 Ves Jr. 173; Doe v. Bliss, 4 Taunt 736; William's Real Property 4th ed. 262; 1st Smith's L. C. 11th ed. 32; 1 Tiffany L. & T. 944; the rule was abolished by statute in England, 22 and 23 Vic. c. 35; 23 and 24 Vic. c. 28; it was early held in England that the rule should be restricted to express license, as distinguished from implied waiver, Doe v. Bliss, supra; Doe v. Pritchard, 5 B. & A. 765; Farr v. Kenyon, 34 A. 241; Seaver v. Coburn, 64 Mass. 324; as thus restricted the rule is inapplicable to the case at bar; a lease providing for readjustment for rentals, but lacking in means for carrying it out will receive adjustment by courts of equity, Stose v. Heissler, 120 Ill. 432; Tobey Co. v. Rowe, 18 Ill.App. 293; Kelso v. Kelley, (N. Y.) 1 Daly 419; Stromiaher v. Seppenfeld, 3 Mo. 429; Springer v. Borden, 154 Ill. 668; Ressler v. Stose, 131 Ill. 393; Viani v. Ferren, 54 Barb. 529; Cole v. Peck, 96 Ind. 333; Durham v. Bradford, L. R. 5 Ch. App. 518; Lowe v. Brown, 22 O. S. 463; Phippen v. Stickney, 3 Metc. 384; Hood v. Aarchor, 160 Mass. 120; if failure to readjust is not fault of lessor, lessee is liable for reasonable value of the premises, 24 Cyc. 1169; of the assignments essential to establish plaintiff's title, the existence of but one was established; the lease was within the statute of frauds, 4719 C. S., 27 C. J. 214; the original instrument was not admissable without proof of execution, 22 C. J. 1044-1056; consent to first assignment was not shown; consent of one tenant in common is insufficient without subsequent ratification, 36 Cyc. 104; sale of premises with reference to existing lease should be regarded as a declaration of forfeiture, Frank v. Handcock, 13 Wyo. 37; the Indian department was without power to ratify after patent; nor deprive a party of substantial rights without notice, Bush v. Caldwell, supra; Dallas v. Bank, supra, a covenant against assignment is construed as a personal one, unless the contrary clearly appears; but where made to lessor, his executors, administrators and assigns it binds successive assigns, and the consent of the reversioner is essential to each successive assignment, 24 Cyc 963, 16 R. C. L. 839; the breach of covenant for readjustment of rentals was uncontroverted and alone sufficient to support a forfeiture.

BLUME Justice. Potter, Ch. J., and District Judge Riner, the latter sitting in place of Kimball, J., concur.

OPINION

BLUME, Justice.

This is an action brought by Eugene T. Thomson, as plaintiff, present owner of the reversion, against Investors Guaranty Corporation, to cancel a lease for violation of the covenant and condition prohibiting assignment thereof. The lease is for the south east quarter of the north east quarter, and the north east quarter of the south east quarter of section 14 T. 1 S. R. 3 east of Wind River Meridian, in Fremont County. It is dated October 14, 1908, and runs for 20 years. It is made by the heirs of Flies on Top, an Indian, with the approval of the Department of the Interior of the United States, to the Arapahoe Trading Company, lessee and party of the second part, and its executors, administrators and assigns. The lease contains a covenant against assignment and a provision for re-entry in case of violation. The covenants and conditions of the lease are made binding upon the lessee, his executors, administrators and assigns. On December 16th, 1912, said lessee the Arapahoe Trading Company mortgaged said leasehold interest to G. P. Moorhead. This mortgage was foreclosed in the district court of Fremont County. An order of sale was issued out of said court, pursuant to which the leasehold interest was sold to said G. P. Moorhead and a sheriff's deed was issued to him on December 29, 1916. Moorhead transferred his interest to L. C. Nelson on October 19, 1917. Nelson transferred his interest to William Wilk on January 25, 1918, and the latter in turn transferred his interest to Investors Guaranty Company, defendant herein, sometime during 1919, before the commencement of this action. No consent to any of these transfers, on the part of the lessors, was obtained before the sale of the land to the plaintiff. Two out of the three Indian lessors had given their consent to the transfer to Moorhead, but they were incompetent and their consent gave no validity to the assignment. An application was made to the Secretary of the Interior some time during 1917 to obtain his consent also. This application was not acted on until November 9, 1920, at which time it was approved. In the meantime and on May 23, 1918, the plaintiff duly bought the land in question from the Government of the United States. The sale was not made subject to the lease, but plaintiff had knowledge of the existence thereof, although not of the fact that any assignment thereof had been made. The above mentioned proceedings before the Secretary of the Interior were had without knowledge of, or notice to, the plaintiff. Some time during the fall of 1918, plaintiff learned that William Wilk held the lease and he entered into negotiations with him as to the adjustment of the rental under the lease pursuant to the terms thereof. Wilk, however, refused to make any adjustment, and, presumably, soon thereafter, without plaintiff's knowledge or consent, transferred his interest, as before stated, to the defendant corporation, against which this action was...