Meagher v. Uintah Gas Co.

• Decision Date: 11 February 1953
• Docket Number: No. 7723,7723
• Citation: 123 Utah 123,255 P.2d 989
• Parties: MEAGHER, v. UINTAH GAS CO. et al.
• Court: Utah Supreme Court

Page 989

255 P.2d 989

123 Utah 123

MEAGHER, v. UINTAH GAS CO. et al.

No. 7723.

Supreme Court of Utah.

Feb. 11, 1953.

Gustin, Richards & Mattsson and Ray, Rawlins, Jones & Henderson, Salt Lake City, Oliver W. Steadman, Cody, Wyo., for appellant.

Herbert Van Dam, Jr., Salt Lake City, Gilbert C. Wheat, San Francisco, Cal., for respondent.

HENRIOD, Justice.

Again this case is here on appeal after we reversed a quiet title decision wherein a modified oil and gas lease was adjudged terminated. 1947, 112 Utah 149, 185 P.2d 747. We held the lease still in force, remanding the case for further proceedings. We affirm the lower court in this present appeal, except that portion awarding operating rights in the North 40, which we order awarded to defendant Ashley Valley Oil, and except that portion awarding a 2% (oil, not gas) royalty to Meagher, which we order reduced to 1 1/3%, remanding with instructions to modify the conclusions of law and judgment to conform to this decision, each party to bear its own costs on appeal.

Our former opinion outlined the facts prior thereto, and we refer to them. Since then, fee owner Meagher, by quitclaim delivered and recorded during pendency of mandamus proceedings designed to clarify the remanding portion of our former decision, has transferred his interest, reserving a royalty. Defendant Juhan has transferred his interest in the operating rights to Equity Oil, and it to Weber Oil, neither litigants here. Both companies joined in a working agreement with Stock and Juhan to drill. As a result oil was discovered in September 1948, producing $672,000 gross to trial time.

Since our former decision, three claims were allowed to be brought into the case: 1) Meagher's, by amendment, to assert an oil royalty assigned in 1930 to Stock and Phebus, calling for reconveyance on condition broken; 2) Stock's, by counterclaim, to assert a one-half interest in operating rights in 440 acres, in opposition to Meagher's identical claim; and 3) Meagher's, by amended reply, to claim ownership of such interest by transfer from Stock. Working rights in the 440 spring from a 1924 oil and gas lease, modified in 1927. By mesne conveyance, Stock and Phebus each became owner of a half interest therein. Meagher claims nothing through Phebus, but claims a one-half interest through Stock's 'release', principal subject of this suit, which, eliminating non-essentials, reads:

'Whereas, a certain oil and gas lease dated the 4th day of June, 1924, given by James Wash Sheridan * * * to R. C. Hill, lessee * * * was recorded on the 25th day of July, 1924 * * * and

'Whereas the lessee and his assigns agreed that upon failure to fulfill the terms of the lease, 'The lessee hereby agrees to relinquish, cancel and surrender the same to the lessors and to clear the record title of said lands from the lien or burden of said lease by making, executing, acknowledging and delivering a proper conveyance or release thereof and causing the same to be recorded' * * *

'Whereas, Paul Stock derived his interests by virtue of an assignment of the rights under this original lease;

'Whereas, the said lease and all rights thereto or incidental thereto are now owned by N. J. Meagher by virtue of cancellation of the lease by termination of production of oil and gas in accordance with the terms of the lease;

'Now, therefore, know all men by these presents, that Paul Stock does hereby cancel, release, relinquish and surrender to N. J. Meagher, his heirs and assigns, all of his right, title and interest in and to the said oil and gas lease, and all of his right, title and interest in and to the said oil and gas lease in so far as it conveys the lands above described.

/signed/ Paul Stock.'

The lower court, on the evidence, held this instrument transferred Stock's interest to Meagher. We affirm such holding.

Appellants Stock, Phebus and Juhan claim error 1) in allowing Meagher to amend his reply to assert title acquired from Stock four days after action brought; 2) in holding Meagher the real party in interest; 3) in adjudging Meagher free from laches and 4) fraud; 5) in concluding the Release was supported by consideration; 6) in negativing mistake justifying rescission; 7) in failing to hold the Release abortive as a surrender or 8) a transfer; and 9) in allowing Meagher to litigate 2/3 of 1% royalty interest in this action. We agree only as to 9).

Appellant Ashley Valley asserts error in awarding operating rights in 40 acres (North 40) to Meagher instead of to Ashley Valley, with which contention we agree.

Mindful of principles heretofore enunciated that the trial court's findings will not be disturbed unless manifestly against the weight of the evidence, ¹ appellants' objections are met in the order named.

1. Meagher, by amendment, properly was permitted to attack Stock's alleged interest by pleading title acquired four days after commencement of the action. This action and most of the pleadings were filed before we adopted the new rules. Without discussing what impact, if any, the rules would have, had the action been brought after their adoption, we can say generally that an entirely new and different cause may not be pleaded by reply. ² Nor could a plaintiff in a quiet title action assert title acquired after its commencement. ³ But there are exceptions. Such title acquired after action begun, but before defendant pleads adversely, man be pleaded and proved in derogation of the defendant's adverse claim. ⁴ We cannot view Meagher's claim of one-half interest alleged in his amended reply as a new or different cause. After reversal by this court, he conceded only half ownership in the originally pleaded whole. Meagher's action persists on the same theory,--one to quiet title. One may allege a greater and prove a lesser title, as is held generally ⁵ and by this court, ⁶ and we see no reason to disturb the rule because the lesser is pleaded by reply. Appellants' authorities seem confined to cases of clear departure, and not, as here, to cases where the theory persists but the quantum fo estate is reduced by amendment.

2. We think Meagher's transfer of interest during pendency of the action does not deny him a continued role as plaintiff, nor does that role do violence to former Title 104-3-19, U.C.A.1943, or Rule 25(c), U.R.C.P., both of which allow prosecution of an action in the name of either grantor or grantee. ⁷

3. Appellants' claim of laches by Meagher is not borne out in the record. Over the years Meagher pursued and acquired the fee, a landowner's royalty and the Release from Stock. He named Stock defendant, wrote him requesting a release to clear the record, and received the same 4 days after action filed, promptly recording it. He pursued his action against Stock no further, but complained to him by letter about a recorded quitclaim to the same property given to another. ⁸ Stock never answered this correspondence, asserted no claim, nor did his grantee, until nearly 5 years after Meagher brought action, 2 years after we validated the lease, and nearly 1 year after oil discovery. When he did appear by voluntary counterclaim, Meagher promptly resisted, pleaded title through Stock and without unreasonable delay pressed for trial. Under such circumstances we cannot say the trial court erred in exonerating Meagher from suspicion of laches.

4. As to the claim that Meagher was fraudulent by inserting recitals of forfeiture in the Release which he prepared for Stock's signature, and in correspondence with the latter, the simple answer lies in the facts that Stock admitted he had merely glanced at the Release and accompanying letter, thought he was signing a royalty transfer, and obviously was indifferent to and uninfluenced by such recitals and statements. All this predated our validation of the lease after lessee's 15 years of inactivity, all of which not unreasonably may have led a person to believe apparently as did Meagher, the trial court, and a dissenting Justice of this court, that forfeiture by abandonment had occurred, justifying the recitals. The fact that Stock did not rely on the recitals mentioned precludes rescission for fraud, since actionable fraud will not lie where one is induced to change his position, not because of any practiced deceit, but because of his own mistake. ⁹ The record further seems to reflect that Stock was an oil man with a wealth of experience in oil matters involving large sums, an unlikely target for deception. His testimony at the trial contradicted his pleading that he relied on such recitals, since he stated he believed he was transferring oil royalties and that to date he had not read the counterclaim filed on his behalf.

5. The Release was supported by sufficient consideration. Meagher's acceptance and recordation thereof relieved Stock of leasehold obligations, including a duty to match any offer of development by others, and the duty to drill if neighbors struck oil. Such relief from obligation will support a transfer. ¹⁰

6. That the Release was given by mistake warranting rescission could have merit if the record disclosed clear and convincing evidence of the mistake which Stock pleaded in his complaint, and a diligence on his part promptly to rectify it. The record does not show clearly such mistake, and a five-year lapse in taking affirmative action to rectify hardly seems the type to satisfy the rule. Stock's admitted mistake was a belief he signed an oil royalty transfer, not a belief that he signed an instrument to clear the record because of forfeiture. On such facts, it does not seem unreasonable that the trial court concluded there was no mistake warranting rescission. ¹¹

7. Since we conclude that Stock's interest passed, we need not discuss the Release as a surrender.

8. Since Stock did not heed the recitals in the Release, they did not induce him to sign. Therefore, the authorities cited reflecting that intention to convey or not to convey may be interpreted...