Melcher v. Camp
| Decision Date | 28 November 1967 |
| Docket Number | No. 41506,41506 |
| Citation | 1967 OK 239,435 P.2d 107 |
| Parties | Doris Day MELCHER et al., Plaintiffs in Error, v. Beulah CAMP et al., Defendants in Error. |
| Court | Oklahoma Supreme Court |
Syllabus by the Court
1. 60 O.S.1961, § 175.47 relates to and regulates only the suspension of the absolute power of alienation of trust property and trust provisions; and insofar as 60 O.S.1961, § 31 referred to or regulated trust property and trust provisions prior to enactment of the Oklahoma Trust Act of 1941, 60 O.S.1961, § 175.1 et seq., which includes 60 O.S.1961, § 175.47, to that extent 60 O.S.1961, § 31 is repealed or superseded by 60 O.S.1961, § 175.47.
2. 60 O.S.1961, § 31 relates to and includes only interests and estates in real property.
3. Article 2, § 32 of the Oklahoma Constitution is an enactment of the Common Law Rule Against Perpetuities.
4. The Rule Against Perpetuities is not a rule of construction, but is a positive mandate of law, to be obeyed irrespective of the question of intention; and, apart from resort to lives in being (plus the possible period of gestation) as the standard for measuring the period of time for postponement of the vesting of a future estate, the only definite period permitted by the Rule Against Perpetuities is a term not exceeding 21 years.
5. The Rule Against Perpetuities is a rule of property only and is applicable alike to real and personal property, including leases for term of years and chattel interests, and to both legal and equitable interests therein, however created.
6. An ordinary option or a preemptive option or right to acquire an interest in property creates a sufficient interest in the res to subject the option or preemptive option or right to application of the Rule Against Perpetuities.
7. Any provision creating a present right to an interest in property which may arise or vest beyond the permissible period under the rule, is void, unless the particular provision is within some exception to the rule recognizable in this State.
Appeals from the District Court of Stephens County; Arthur J. Marmaduke, Judge.
Action by Beulah Camp, et al., against Doris Day Melcher, et al., to quiet title to oil and gas and other minerals. Judgment for plaintiffs and two of the defendants appeal. Affirmed.
H. B. Watson, Jr., Tulsa, for plaintiffs in error.
Goins & Smith, by Jack H. Smith, Ardmore, for defendants in error.
The controversy in this appeal is between the lessors and two of the fractional assignees of the original lessee of an oil and gas mining lease covering the upper 5500 feet of certain described property in Stephens County. A provision in the lease makes it subject to the terms and provisions of a separate agreement between the parties to the lease. The period of the lease was for one year and 'so long thereafter as oil and gas, or either of them is produced from said land by the lessee.' The evidence shows that oil was being produced from the land at the time of the trial. No question is raised as to the rights of the original lessee under the separate agreement inuring to the benefit of the assignee defendants who have appealed.
The separate agreement between the parties to the lease granted to the lessee (2nd party) all rights of the ordinary lessee under an oil and gas lease covering all the mineral rights under the property described to the depth of 5500 feet. It provided for exploration and development, for time limits therefor, and for conditions of termination and surrender, of the property leased. It further provided for reservation to the lessors of the oil, gas and other minerals and mineral rights below 5500 feet with the rights of ingress and egress for drilling and producing the formations thereunder. The last provision of the separate agreement is as follows:
'The parties further mutually agree that in the event first parties shall at any time have an opportunity to lease the oil, gas and other minerals and mineral rights below 5500 feet, second party is to be given a five day option of acquiring such lease himself on the same terms and conditions offered to first parties.'
The only provision for avoiding the contract in question appears to be upon the drilling of a dry hole as the first test well on the premises above the 5500 feet depth, and since no question of the operation of that provision is raised, it is presumed the contingency is past.
The effect and application of the above quoted provision are determinative of this appeal.
The four plaintiffs filed an action to quiet their undivided fractional interests in the title to oil, gas and other minerals in formations more than 5500 feet below the surface of the described land. They alleged the existence of, and subsequently introduced, the lease and separate agreement referred to above, and alleged the existence of some claim of right, title, interest or estate in and to the subject property by each of the named defendants. Specific allegations were made that the above quoted provision of the agreement was violative of the statutes of Oklahoma, specifically 60 O.S.1961, § 175.47, and that the claims of the defendants were, therefore, of no force and effect. They, also, alleged that the claims of the defendants constitute a cloud upon plaintiffs' title to the property. The trial court sustained plaintiffs' position and quieted their title to the property. Defendants have appealed.
Before we can properly consider the effect of the appropriate rule of law upon the provision above quoted, we must analyze the agreement itself. It relates to the exploration of formations below 5500 feet. The only connections of the lease between the parties to the upper 5500 feet to the lease contemplated below 5500 feet are that the premises are vertically contiguous and each requires use of a portion of the surface for exploration. The contemplated lease, if and when it shall become extant, will not be a renewal of the one which is now in force and effect. It will be another lease for exploration of different premises.
The provision gives to the second party (defendants' assignor) the right to a five day option to acquire a lease on the area involved upon terms and conditions presently unknown, and which may never be ascertained, at a time which may never occur. The right of defendants to receipt of the option contemplated by the provision will be current only 'in the event * * *' of a contingency which may never occur. In that the option is in futuro and contemplates its grant to, and an opportunity of exercise by second party prior to conveyance of a lease to any other party, it constitutes a condition precedent.
It should be noted that if the provision involved is valid, any conveyance by first parties to a lessee other than second party would be subject to avoidance. Notice to any possible lessee of the prior right of second party is made to appear by the recording of the separate agreement in Stephens County.
By the terms of the provision first parties fettered their right to sell the lease to whomever they might choose by the agreement to permit second party first to accept a lease upon terms which might be offered by another. The necessity of making an offer to second party creates a condition precedent to a valid conveyance and to that extent the provision involved differs from the terms of an ordinary option to purchase which does not prevent or fetter conveyance by the owner subject to it. A conveyance by first parties of an oil and gas lease in the face of this provision would, ipso facto, breach its terms.
This type 'option' has been classified as a right of preemption, and has been considered by many courts.
The parties and the trial court treated plaintiffs' allegation of the invalidity of the questioned provision in the separate agreement as controlled by 60 O.S.1961, § 175.47. The parties on appeal have referred only to that section of our statutes in their briefs, but each has characterized the section as being declarative of the common law rule against perpetuities. Although we do not accept such premise as a precise statement of the law, we shall consider the question raised in light of the applicable law relating to perpetuities.
In addition to 60 O.S.1961, § 175.47, § 31 of the same title and Art. 2, § 32, of the Oklahoma Constitution bear upon the general law of perpetuities. Those provisions are as follows:
'The absolute power of alienation of real and personal property, or either of them, shall not be suspended by any limitations or conditions whatever for a longer period than during the continuance of a life or lives of the beneficiaries in being at the creation of the estate and twenty-one years thereafter, except when property is given, granted, bequeathed, or devised to a charitable use or to literary, educational, scientific, religious, or charitable corporations for their sole use and benefit, or to any cemetery corporation, society or association, nor shall this Section apply to gifts, grants, devises, or bequests absolute, limited, or in trust, for the advancement of medical science to an incorporated state society of physicians and surgeons.'
'The absolute power of alienation cannot be suspended, by any limitation or condition whatever, for a longer period than during the continuance of the lives of persons in being at the creation of the limitation or condition, except as provided in section 6608.'
Article 2, § 32, Oklahoma Constitution:
'Perpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed, nor shall the law of primogeniture or entailments ever be in force in this State.'
That section 175.47, above, relates to trusts only seems obvious upon analysis. First, it is contained in, and was enacted as a part of, the Oklahoma Trust Act of 1941, 60 O.S.1961, § 175.1 et seq. Secondly, the life or lives in being referred to in the section as the standard for...
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