McNamer Realty Co. v. Sunburst Oil & Gas Co.
| Decision Date | 25 May 1926 |
| Docket Number | 5925. |
| Citation | 247 P. 166,76 Mont. 332 |
| Parties | McNAMER REALTY CO. v. SUNBURST OIL & GAS CO. |
| Court | Montana Supreme Court |
Appeal from District Court, Toole County; Wm. E. Carroll, Judge.
Action by the McNamer Realty Company against the Sunburst Oil & Gas Company. Judgment for plaintiff, and defendant appeals. Affirmed.
Homer G. Murphy and Hurd, Rhoades, Hall & McCabe, all of Great Falls, for appellant.
Louis P. Donovan, of Shelby, for respondent.
On July 6, 1923, the McNamer Realty Company, a corporation maintaining offices at Shelby, in Toole county, commenced an action against the Sunburst Oil & Gas Company, a corporation with offices at Great Falls, in Cascade county, to have a certain recorded instrument, under which the defendant had theretofore been granted certain rights and privileges in an oil and gas lease from one Bertha Zachor to the plaintiff on lands in Toole county, declared "void, terminated, and forfeited," and "for such other and further relief as to the court may seem equitable and just."
The complaint alleged that the defendant failed to either commence a well upon the lands described in the instrument or to make the payment in lieu thereof on or before May 16 1923, and that, under the terms of its contract, all its rights thereupon terminated. The complaint then alleged that the plaintiff made written demand upon defendant for the release of record of said instrument and that the defendant refused to comply with such demand.
By answer the defendant denied that it was in default on May 16 1923, and affirmatively alleged full compliance with the terms and conditions of its contract in accordance with the mutual understanding of the parties, but that by mutual mistake the contract was not drafted to express the intention of the parties. It further alleged that, under the facts and circumstances set out in the answer, plaintiff was not, in equity and good conscience, entitled to a forfeiture. It prayed for a reformation of the contract and that, if it was found to be in default, it be relieved from the forfeiture. Issue was joined by reply.
The cause was tried to the court without a jury upon the theory that it was an action in equity. The trial was commenced in February, 1925. On July 17, 1925, the court made and filed findings of fact in favor of plaintiff and against defendant on every issue presented, and, on these findings and the court conclusions drawn therefrom, judgment was duly entered on October 29, 1925. From this judgment defendant has appealed.
Counsel for defendant make 24 assignments of error, which, however are not separately argued or presented, but in lieu thereof counsel contend that the judgment is erroneous, by argument and authorities presented under the following heads: (1) Nature of the action; (2) relationship of the parties; (3) liability of the parties; (4) intention of the parties; (5) payment by defendant; (6) equity should not allow a forfeiture. The questions thus presented will later be taken up in the order above set out, but before doing so it will be necessary to briefly detail the facts and circumstances leading up to, and culminating in, the acquisition of title by the defendant and what thereafter transpired, as shown by the evidence adduced on the trial.
This lease expressly granted the privilege of assignment in whole or in part, and provided that-
In case of a part assignment and the failure of the assignee to pay its "proportionate part of the rents due from him or them, such default shall not operate to defeat or affect this lease in so far as it covers a part or parts of said lands upon which the said lessee or any assignee thereof shall make the payments of said rentals."
This lease was duly recorded. No well was commenced upon the lands during the first year, but the lessee duly deferred the time for commencement by payment of the required rental on or before May 26, 1922.
At some time prior to July, 1922, the plaintiff assigned the lease to Lucie B. McNamer, who was the secretary of the corporation and the wife of Bruce R. McNamer, its president. Thereafter one P. W. Murray was advised by Bruce R. McNamer, as agent for Lucie B. McNamer, that the lease, or a part thereof, was for sale and was assured that if he (Murray) could secure a purchaser for the lease on three of the four 40-acre subdivisions, with certain reservations, among which was a 2 1/2 per cent. overriding royalty, he could retain for his services all that he received over the sum of $5,000, and that Mrs. McNamer would assign to him one-half of one per cent. of the overriding royalty thus reserved.
On July 5, 1922, after talking with McNamer over the telephone, Murray wired McNamer at Shelby from Great Falls, as follows: "Assign lease direct to me send royalty assignment rush abstract." In response to this message McNamer, within the next few days, placed in escrow with the First National Bank of Great Falls an instrument denominated an "assignment" from Lucie B. McNamer to Murray, which recited that she thereby sold, assigned, and transferred "all her right, title, and interest in and to" the three 40-acre subdivisions mentioned, but reserved to Lucie B. McNamer the overriding 2 1/2 per cent. royalty in all oil and gas produced from these lands, and shortened the expiration date of the lease on these lands from May 26, 1926, to May 26, 1925, thus shortening the lessee's term, in the absence of production, one year and 10 days.
In addition to this instrument McNamer placed in escrow with the bank the original lease, a receipt for the 1922 rental, and an abstract of title. By letter accompanying the papers, McNamer advised the bank that Murray "had a deal on to sell" the lease for Lucie B. McNamer and that Murray, or his representatives, should be permitted to examine the papers so deposited and receive the same on payment to the credit of Lucie B. McNamer, of $5,000. McNamer also wrote Murray, making it clear that no exclusive option or right to sell was granted, but that he reserved the right to dispose of the lease himself, and suggested that he had knowledge of prospective purchasers.
This so-called assignment to Murray provided, in language similar to that of the original lease, that, if a well was not commenced on or before May 16, 1923, the rights of Murray should terminate, unless on or before that date he should pay or tender to Lucie B. McNamer, or to her credit in the First National Bank of Shelby, the sum of $120, with like provision for further deferring drilling a well from year to year.
Thus armed with authority, Murray sought to sell the rights thus offered to the defendant company, and to this end interviewed C. L. Stevenson, its president, on the 11th day of July, 1922, but asked more than the defendant cared to pay. He returned to the office of the defendant on the 12th and was then somewhat disconcerted to find Bruce R. McNamer in the office. Fearing that McNamer, to whom he had not communicated the name of his proposing purchaser, was there for the purpose of selling to defendant, he sought out Stevenson, and offered to assign his rights for $6,000. To this offer Stevenson finally agreed and caused defendant's check for that amount to be deposited in the First National Bank to await final closing.
Stevenson testified that, while in consultation with Murray, Murray would first talk with him and then with McNamer, and that, in his opinion, McNamer took part in closing the deal, though he did not hear what was said between McNamer and Murray. Murray's recollection was very hazy as to what took place between himself and McNamer at that time, though he was inclined to the belief that they talked over the deal. McNamer, however, denied that he had any conversation with Murray in defendant's office concerning the matter and testified that he did not know at that time that Murray was attempting to sell to defendant, and that he visited the office in connection with another matter.
Having agreed to purchase, Stevenson turned Murray over to Homer G Murphy, defendant's general counsel, with instructions to Murphy to satisfy himself as to the title and to draw the necessary papers for the transfer. Murphy testified that, at that time, he was introduced to McNamer by Murray, and discussed with him the details of the deal, and that McNamer advised him that the delay rental might be paid either to him or direct to Bertha Zachor, and that, if the latter course was followed, the defendant might pay the full amount due from the original lessor, or $160, and that, in such event, the plaintiff would reimburse the defendant for the difference, or $40;...
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