Mccully v. Mccully

• Decision Date: 24 January 1939
• Docket Number: Case Number: 27979
• Citation: 1939 OK 43,86 P.2d 786,184 Okla. 264
• Parties: McCULLY et al. v. McCULLY et al.
• Court: Oklahoma Supreme Court

1939 OK 43

86 P.2d 786

184 Okla. 264

McCULLY et al. v. McCULLY et al.

Case Number: 27979

Supreme Court of Oklahoma

Decided: January 24, 1939

Syllabus

¶0 1. OIL AND GAS--"ROYALTY" DEFINED--When Personal and When Real Property.

Royalty arising under an ordinary oil and gas mining lease is profit issuing out of the land. Accrued royalty is personal property. Unaccrued royalty or royalty to accrue is a part of the estate remaining in the lessor and is real property.

2. VENUE--Venue of Action to Enforce Provision of Note for Payment From Proceeds of Unaccrued Oil and Gas Royalty and to Set Aside Conveyance of Royalty Held to Be in County Where Land Is Located.

An action seeking to enforce a written promise attached to and made part of a promissory note to apply the proceeds from unaccrued royalty to the payment of such note, and to set aside a conveyance of such royalty to a grantee with notice in so far as such conveyance would affect the rights of the holder of such note, is an action for the determination of an interest in real property, and the venue is in the county wherein the land is located.

3. PAYMENT--Mere Recital in Note of Maker's Intention to Pay Same From Special Source Held not Contract Confining Payment to Such Source.

A mere recital in a note or agreement that the maker desires to pay said note out of a special fund or from a special source, coupled with a promise so to do, without a promise or agreement on the part of the payee to look to and take his pay from such special fund or special source, is not a contract confining payment to such special fund or source so as to relieve the maker from personal liability.

Appeal from District Court, Logan County; Henry W. Hoel, Judge.

Action by Emma G. McCully against Eli McCully and others. Judgment for plaintiff, and certain defendants appeal. Affirmed.

R. F. Shutler and C. Everett Murphy, for plaintiffs in error.

E. S. Lowther and Henry S. Johnston, for defendants in error.

RILEY, J.

¶1 This is an appeal from a judgment of the district court of Logan county. The position of the parties here is the reverse of that which they occupied in the trial court. As a matter of convenience we will hereafter refer to them in the same order as they appeared in the trial court.

¶2 The action was first brought by Ernma G. McCully, as plaintiff, against Eli McCully, as defendant, to recover a money judgment on a promissory note. Service had upon the aforesaid defendant was quashed. The plaintiff then amended her petition so as to make Stella M. McCully, Urmell S. McCully, and Shell Petroleum Corporation additional defendants in the action, and in addition to a money judgment against Eli McCully sought to establish an equitable trust in certain oil royalty interest in certain land in Logan county and to have the interest of Urmell S. McCully, which he had acquired from his codefendants under a mineral deed to said lands, to be decreed subordinate to said trust. The plaintiff based her right to maintain the action upon a note which reads as follows:

"Hennessey, Okla.

"Dec. 29, 1932--$7500.00.

"Ten years after date, I, we, or either one, for value received as principal, jointly and severally, promise to pay to the order of Emma G. McCully, Seventy-five hundred dollars at the Farmers & Merchants National Bank, with interest at the rate of 5 per cent per annum from date payable annually. An Attorney's fee of 10 per cent of the principal of this note to be paid if collected by an attorney. Eli McCully."

¶3 And certain articles of agreement which read as follows:

"These articles of agreement made this 29th day of December by and between, Eli McCully, party of the first part, and his mother, Emma G. McCully, party of the second part, witnesseth:-

"That whereas, party of the first part has this day executed a promissory note for the principal sum of $7,500, due in ton years from date, with interest at live per cent from date, for value received, and payable to second party, and

"Whereas. first party desires to pay this note out of the proceeds of his share of oil and gas royalty obtained from the S. E. 1/4 Sec. 30, township 19 N., range 4, W. I. M.

"Therefore, it is hereby agreed by and between both parties to this contract. that first party shall hereafter pay to second party the one-half 1/2 of all such proceeds for oil and gas royalty, that he may hereafter receive. and such payments shall continue until the entire debt is liquidated. It being specially agreed and understood that if note has not been fully paid and discharged on or before ten years from this date, that such proceeds of the royalty shall continue to be paid to second party or her administrators or assigns until such debt has been fully paid and satisfied.

"This agreement it is hereby agreed shall be attached to and become a part of the above said note, and is fully binding on the heirs, administrators and assigns of both parties hereto.

"In witness whereof we have hereunto placed our hands and seals this 29th day of December, 1932, Eli B. McCully, first party, Emma G. McCully, second party, Charles McCully."

¶4 The defendants to the action were all nonresidents of Logan county. The individual defendants were residents of Kingfisher county. Summonses issued out of Logan county were served upon them in the county of their residence. The corporate defendant was a foreign corporation and summons was served upon its service agent in Oklahoma county. The individual defendants appeared specially and challenged the jurisdiction of the district court of Logan county over their persons for the reason that the action was a transitory one and therefore could be maintained only either in the county of the residence of said defendants or in some county in which they might be lawfully summoned, and they specifically advised the court that they bad not been so summoned. When the special appearance and motion to quash of said defendants was overruled, they saved an exception to the action of the court and thereafter defended the action without seeking any affirmative relief. The Shell Petroleum Corporation filed an answer in the action in the nature of a bill of interpleader admitting that it was the owner of an oil and gas lease on the S. E. 1/4 of section 30, township 19 north, range 4 west, in Logan county, and that it had paid certain royalties in connection with the operation of said lease to the defendant Eli McCully, and that it was holding certain other small sums to the credit of said defendant and his codefendant, Urmell S. McCully, which it stood ready to pay to whomsoever the court should direct. Trial was had to the court without the intervention of a jury. The parties omitted to introduce any testimony, and in effect submitted the matter to the court in the same manner as if the parties had each moved for judgment on the pleadings. Upon the record thus made, the court found that the interest on the note was payable annually, and that the agreement between Eli McCully and Emma G. McCully had created a trust in favor of the said Emma G. McCully to the one-half of the royalty and payments arising from oil and gas operations in the S. E. 1/4 of section 30, township 19 N., range 4 W., and that the mineral deed which had been executed in favor of Urmell S. McCully, while valid between the parties, was subordinate to the trust found to exist in favor of the plaintiff, and thereupon gave the plaintiff a personal judgment against Eli McCully for the sum of $466.94, with interest thereon at 6 per cent. per annum from December 29, 1934, and impressed the proceeds from the one-half royalty with an equitable lien until the entire indebtedness evidenced by the note should be paid. The defendants Eli McCully, Stella M. McCully, and Urmell S. McCully appeal, and assign a number of specifications of error which they present and discuss under several propositions. As we view the record, however, the vital question presented is whether action of the plaintiff was one in personam or one in rem. It will be noted that the plaintiff based her right to recovery on the above-mentioned note and articles of agreement. It appears that these instruments were executed at the same time and as a part and parcel of the same transaction. They are therefore to be construed together as one contract. Graves v. Nichlos, 151 Okla. 27, 1 P.2d 708; Mesick v. Johnson, 167 Okla....