Lawson v. Haynes

• Decision Date: 15 November 1948
• Docket Number: No. 3665.,3665.
• Citation: 170 F.2d 741
• Parties: LAWSON et al. v. HAYNES.
• Court: U.S. Court of Appeals — Tenth Circuit

170 F.2d 741 (1948)

LAWSON et al. v. HAYNES.

No. 3665.

United States Court of Appeals Tenth Circuit.

November 15, 1948.

Roy F. Ford, of Oklahoma City, Okl. (Leo J. Williams and Charles D. Crandall of Williams, Ford & Crandall, both of Oklahoma City, Okl., on the brief), for appellants.

Jim Gowdy, of Lindsay, Okl. (O. B. Moody, of Lindsay, Okl., on the brief), for appellee.

Before PHILLIPS, Chief Judge, and BRATTON and MURRAH, Circuit Judges.

MURRAH, Circuit Judge.

Appellants, husband and wife, brought this suit in equity against the appellee to cancel a mineral deed to 20 acres of oil royalty in McClain County, Oklahoma, and for an accounting of the rents and profits derived therefrom. Jurisdiction is based upon diversity of citizenship and requisite amount in controversy, and the suit is grounded upon the alleged breach of a confidential relationship which, it is contended, voided the transaction. At the conclusion of the plaintiffs' case, the court sustained a motion to dismiss, and entered judgment for the defendant on the grounds that the evidence failed to show an actionable confidential relationship, and if so, the resulting cause of action was barred by the statute of limitations.

In support of the allegations in the complaint, the appellants developed substantially the following facts. They were uneducated farmers living near Lindsay, Oklahoma, on the wife's Indian allotment, on which there was a mortgage of about $2,800.00. The husband could read and write very little. The wife was a Chickasaw Indian of three-eights blood. She reached the eighth grade, but had no business experience. Some time in April 1930, a man named Wood approached the appellants to purchase part of the royalty under the Indian allotment of 210 acres. This resulted in an agreement to purchase 45 acres of royalty for $2,850.00, an amount sufficient to retire the mortgage. The agreement was executed and Wood later had it acknowledged and placed of record.

The appellee was cashier of the Exchange Bank of Lindsay, where the appellants had done business for many years. Later in 1930, the banker contacted the appellant husband, telling him that this instrument was of record against his land, and that it constituted a cloud on his title which prevented him from receiving his oil and gas lease rentals, or from selling or leasing, or otherwise disposing of it. He told him that he could get this instrument released of record for 10 acres of his royalty, and that he would have to give Wood a part of it. After talking it over, appellants decided that they should follow appellee's advice, and when the husband called at the Bank to tell him of their decision, appellee informed them that it would take more royalty than he thought, and that he had accordingly drawn up a deed for 20 acres of royalty instead of 10 acres. After some hesitation, appellants executed the deed to the 20 acres of royalty in the early part of 1931, and it was placed of record.

Soon thereafter, and on January 28, 1931, the appellee caused to be filed a suit to quiet title against Wood, but no service of summons was had, nor did the appellants have any knowledge that the suit was filed in their names, or for that matter that a suit was ever filed. On the same date that the suit was filed, Wood executed and delivered to the Collection Department of the American National Bank at Lindsay, of which appellee was cashier, a quit claim deed to the appellants, with a sight draft in the amount of $35.53, which the appellee paid, and he filed the deed of record. Appellee admits that he gave Wood no royalty for the quit claim deed, and there is no evidence that he gave him any consideration other than $35.53.

The appellants knew nothing of these transactions, but continued to receive their lease rentals until the early part of 1947, when appellant was talking to a lawyer in Oklahoma City concerning the amount of royalty he owned under the land, and what disposition he had made of it. This led to an investigation and the filing of this suit.

A confidential relationship is never presumed, and the burden of proving it is upon the party asserting it. Furrow v. First National Bank, 133 Okl. 137, 271 P. 632. Once, however, it is established between parties to a transaction, and the party in whom the confidence is reposed obtains an apparent advantage over the other, the transaction is presumed to be void, and the burden is upon the person in the position of confidence to show by clear proof that he took no advantage of his influence, and that the transaction was fair and conscientious. Mattingly v. Sisler, 198 Okl. 107, 175 P.2d 796; Owens v. Musselman, 190 Okl. 199, 121 P.2d 998; Fipps v. Stidham, 174 Okl. 473, 50 P.2d 680; Lewis v. Schafer, 163 Okl. 94, 20 P.2d 1048; McDaniel v. Schroeder, 128 Okl. 91, 261 P. 224; Weitz v. Moulden, 109 Okl. 119, 234 P. 583; Derdyn v. Low, 94 Okl. 41, 220 P. 945; 2 Pomeroy on Equity, 4th Ed., Sec. 948. Cf. Thomas v. Wilson, Okl.Sup., 185 P.2d 473.

Where a party obtains the legal title to property through the violation of confidence or fiducial relations, or any other unconscientious manner, equity will impress a constructive trust upon it in favor of the one who is in good conscious entitled to it. Lewis v. Schafer, supra; Hayden v. Dannenberg, 42 Okl. 776, 143 P. 859, Ann. Cas.1916D, 1191.

The undisputed evidence shows that the appellee was a small town banker — the appellants were ignorant farmers, and it is clear that they looked upon the banker as their personal and business advisor. He undoubtedly exerted very great influence over their business affairs — he admitted that they trusted him. Upon his solicitation, he undertook to represent...