Malone v. Young

• Decision Date: 09 July 1938
• Docket Number: 33842.
• Citation: 81 P.2d 23,148 Kan. 250
• Parties: MALONE et al. v. YOUNG et al.
• Court: Kansas Supreme Court

81 P.2d 23

148 Kan. 250

MALONE et al. v. YOUNG et al.

No. 33842.

Supreme Court of Kansas

July 9, 1938

Syllabus by the Court.

A cotenant of oil and gas in place, to protect his interest which was acquired by his cotenant's purchase at sheriff's sale in mortgage foreclosure action on the land, was required to offer to contribute to the purchase price within a reasonable time.

A reasonable time within which a cotenant of oil and gas in place, whose interest has been acquired by his cotenant's purchase at sheriff's sale in a mortgage foreclosure action on the land, must offer to contribute to the purchase price to protect his interest, depends on the circumstances in each particular case.

Where property rights involved are of a speculative or highly fluctuating character, such as oil and gas rights, more than ordinary promptness to offer to contribute to purchase price is required of a cotenant of oil and gas in place to protect his interest acquired by his cotenant's purchase at sheriff's sale in mortgage foreclosure action on the land.

Where cotenants of oil and gas in place slumbered for a period of over 5 years and 9 months over question of whether they would elect to let a cotenant who purchased at sheriff's sale hold onto his purchase, or whether they would offer to contribute and insist on receiving the benefits of the purchase, and the property had meanwhile become very valuable, the delay was unreasonable and the complaining cotenants were thereafter not in equity entitled to their former interest.

Laches is not excused by courts of equity on mere ground of ignorance of the facts, but the test is rather what plaintiff might have known by the use of information within his reach had he exercised diligence required of him by law.

Where cotenants of oil and gas in place were made parties to mortgage foreclosure action, and one of the cotenants purchased the property at sale, so that the rights of the other cotenants, except right of redemption, were barred, and the purchasing cotenant conveyed his interest in the land and executed an oil and gas lease, and those conveyances were recorded, the public records were sufficient constructive notice of purchasing cotenant's alleged fraud to set in motion the statute of limitations requiring an action for relief on the ground of fraud to be brought within 2 years. Gen.St.1935, 60-306, cl. 3.

In action to recover interest in oil and gas in place on theory of fraud, the statute of limitations requiring an action for relief on ground of fraud to be brought within 2 years after its discovery was applicable, rather than statute of limitations permitting an action to be brought within 15 years for the recovery of an interest in realty. Gen.St.1935 60-304; cl. 4; 60-306, cl. 3.

Fraud is deemed to have been discovered within meaning of statute of limitations requiring that action for relief on ground of fraud be brought within 2 years after its discovery whenever, in the exercise of reasonable diligence, it might have been discovered. Gen.St.1935, 60-306, cl. 3.

Both laches and the statute of limitations as defenses are applicable to implied trusts. Gen.St.1935, 60-306, cl. 3.

1. In order for a cotenant of oil and gas in place to protect his interest acquired by his cotenant's purchase at sheriff's sale in a mortgage foreclosure action on the land, such first cotenant must offer to contribute to the purchase price within a reasonable time.

2. What constitutes reasonable time within which a cotenant must offer to contribute to the purchase price of his interest depends upon the circumstances in each particular case. Where property rights involved are of a speculative or highly fluctuating character, such as oil and gas rights, more than ordinary promptness to offer to contribute is required of a cotenant who would insist upon the benefit of the purchase by his cotenant.

3. Laches is not excused by courts of equity upon the mere ground of ignorance of the facts. The test is not what the plaintiff actually knows but rather what he might have known by the use of information within his reach, had he exercised the diligence the law requires of him.

4. Where cotenants have slumbered for a period of over five years and nine months over the question of whether they would elect to let a purchasing cotenant at sheriff's sale hold on to his purchase or whether they would offer to contribute and insist upon receiving the benefits of the purchase, and the property in the interim has greatly appreciated in value by reason of large expenditures of money and the industry and the risks assumed by the purchasing cotenant and his successors in title, it is held, the delay was unreasonable and the complaining cotenants were thereafter not in equity entitled to their former interest in the developed property.

5. Where cotenants are parties to a mortgage foreclosure action in which their claimed interest in oil and gas rights is set forth and in the foreclosure action it is sought to bar their right, title, equity and interest, and one of such cotenants purchases at mortgage foreclosure sale and in conformity with the judgment of foreclosure, and the judgment of confirmation, the rights of other cotenants to oil and gas in place are barred, except as to their right of redemption, and the purchasing cotenant conveys his interest in the land and executes an oil and gas lease, and such conveyances are recorded, it is held, the public records are sufficient constructive notice of the alleged fraud of the purchasing cotenant to set in motion the statute of limitations.

6. Fraud is deemed to have been discovered whenever in the exercise of reasonable diligence it might have been discovered, and in such a case reasonable diligence requires an examination of the records, which would necessarily have disclosed the alleged fraud.

7. In an action to recover an interest in oil and gas in place on the theory of fraud, the applicable statute of limitation is G.S. 1935, 60-306, Third, which requires the action for relief on the ground of fraud to be brought within two years after its discovery and not the fifteen-year statute of limitations, G.S.1935, 60-304, Fourth, which permits an action to be brought within fifteen years for the recovery of an interest in real property.

8. The separate petitions of plaintiff and intervenor in an action to determine their right to oil and gas in place and to oil and gas produced after the purchase of the land by a cotenant at mortgage foreclosure sale, examined and held, the various demurrers thereto were properly sustained by reason of laches and the statutes of limitation, whether the petitions be construed to allege a breach of the fiduciary relation of cotenancy or to constitute an action for the relief on the ground of fraud.

Appeal from District Court, Sumner County; Wendell Ready, Judge.

Action by Harold H. Malone against R. H. Young and others, to determine the rights of the plaintiff to an interest in and to oil and gas under certain lands, and to oil and gas which had been produced therefrom, wherein M. P. Sanderson intervened, claiming a like interest with the plaintiff. From an order sustaining a demurrer to the plaintiff's petition and to the petition of the intervener, the plaintiff and intervener appeal.

L. P. Brooks, Vincent F. Hiebsch, and William J. Wertz, all of Wichita, and Harold H. Malone, pro se, for appellants.

Robert C. Foulston, George Siefkin, Sidney L. Foulston, Lester L. Morris, George B. Powers, Carl T. Smith, C. H. Morris, and John F. Eberhardt, all of Wichita, and John Bradley, H. W. Goodwin, and W. H. Schwinn, all of Wellington, for appellees.

WEDELL Justice.

This is an action to determine the rights of the plaintiff, Harold H. Malone, and of the intervenor, M. P. Sanderson, to an interest in and to oil and gas under certain lands in Sumner county, and to oil and gas which had been produced therefrom by the defendant, R. H. Young, a purchaser at a mortgage foreclosure sale, and by his record successors in title. Plaintiff and intervenor claimed respectively an equal undivided 1/16th and 1/20th interest. No question is here presented concerning the exact fractional interest of each. The real issue is whether either of them was entitled to any interest under the facts pleaded. Demurrers of various defendants were sustained to the amended petition of plaintiff, and to the intervening petition of Sanderson. From those rulings they have appealed.

The demurrers against plaintiff's amended petition were as follows:

"Plaintiff's amended petition fails to state a cause of action in favor of plaintiff as against these defendants and that said amended petition shows on its face that plaintiff's alleged claim, if as a matter of fact plaintiff ever had a legitimate equitable claim, is now barred by plaintiff's laches, lack of diligence, waiver, and the applicable statute of limitations of the State of Kansas."

The demurrers to the intervening petition were upon the same grounds.

The alleged rights of the plaintiff and the intervenor are based primarily on theories of cotenancy with respect to oil and gas in place which rights they and the principal defendant R. H. Young and others, had acquired by separate deeds, and on the legal effect of the acquisition of a sheriff's deed by R. H. Young at the mortgage foreclosure sale. Other theories are also urged, all of which will be noted in the course of the opinion. We shall first consider the ruling sustaining the demurrer to plaintiff's amended petition. The amended petition will be referred to as the petition. It is rather voluminous and before stating the facts pleaded and in order to assist the reader in more readily understanding the general situation as therein set...