Morgan v. Board of State Lands

• Decision Date: 05 May 1976
• Docket Number: No. 14115,14115
• Citation: 549 P.2d 695
• Parties: John H. MORGAN, Sr., et al., Plaintiffs and Appellants, v. BOARD OF STATE LANDS of the State of Utah et al., Defendants and Respondents.
• Court: Utah Supreme Court

Page 695

549 P.2d 695

John H. MORGAN, Sr., et al., Plaintiffs and Appellants, v. BOARD OF STATE LANDS of the State of Utah et al., Defendants and Respondents.

No. 14115.

Supreme Court of Utah.

May 5, 1976.

Frank J. Allen, Clyde & Pratt, Salt Lake City, for plaintiffs and appellants.

Vernon B. Romney, Atty. Gen., Paul E. Reimann, Asst. Atty. Gen., Salt Lake City, for defendants and respondents.

CROCKETT, Justice:

Plaintiffs, original lessees under several oil shale leases from the defendant Board of State Lands, and their assignee, Husky Oil Co., brought this action to have it determined that their ten-year leases on certain State lands had been extended for an additional ten years. From the granting of defendants' motion for summary judgment plaintiffs appeal, contending (1) that the defendant Land Board should be deemed to have agreed by implied contract to extend the leases, or, alternatively, (2) that it should be estopped from denying that the leases had been extended.

In 1963 the Land Board issued to the plaintiffs (predecessors) leases covering 625 acres of State-owned land containing oil shale deposits in Uintah County for a term of ten years, to expire on December 31, 1973. These were assigned to the plaintiff Husky Oil Co. in 1964, but the Morgans remained lessees of record. On September 29, 1965, the Board caused notices to be sent out to all oil shale lessees that they could convert their ten-year leases into 20-year leases by following the procedure explained in the letter. This required submission of an application, together with a $2 filing fee and a fee of 6 cents per acre. Under the new lease, the rent would be 50 cents per acre per year, the same as under the old leases, for the first ten years, and $1.50 per acre per year for the last ten years. Plaintiffs do not deny that they received this letter, nor that they failed to take any action concerning it for over eight years.

On December 15, 1973, the Board caused statements to be sent from its office to all lessees for the rent to become due for the following year, 1974. By mistake the plaintiffs were included among those to whom such a notice was sent, not taking account of the fact that their leases would by their terms expire on December 31, 1973. Without taking any of the procedures required by the letter as stated above, the plaintiffs, on December 29, 1973, sent in a check for the amount that would have been due for the 1974 rent. In March 1974 the Board's office discovered the error, and returned the payment to the plaintiffs, explaining the error and that because the leases had expired on December 31, 1973, the rent was not payable nor acceptable.

In arguing that the court should find that there was an implied contract to extend the leases, plaintiffs postulate that the sending out of the erroneous notice of rent due in December 1973 constituted an offer to extend the leases which the plaintiffs accepted by tendering payment. This proposition is untenable for two reasons. First, it is elementary that in order to find any contract, including an implied contract, it is essential that it appear there was an express or implied meeting of the minds of the parties on the agreement. ¹

In this situation the interest of the State (and the public) was represented by the Land Board. In performing its responsibility as imposed by law its action is comparable to that of the board of directors of a corporation; and any action of such consequence as the leasing of lands must be authorized by action of the board. It is undisputed here that the Board did not act upon any application or request of the plaintiff to extend their leases for another ten years. There was thus the absence of any official action thereon. From this fact, considered in conjunction with the other circumstances shown, including that it is undisputed that the notice of rent to become due was sent out by mistake, it is clear that there never was any intent to enter into any such contract with the plaintiffs. Second, our law requires that leases and contracts entered into by the Board be in writing and approved by the Attorney General. ² It is obvious that these statutory requirements were not complied with and that therefore there could be no contract binding upon the Board, or upon the State, whom it represents.

In their argument that the Board should be estopped to deny that it had extended the leases the plaintiffs aver: that they were justified in relying on the notice of rent for the next year, 1974, and in tendering payment of the rent in response thereto; that they were thus deluded into acting to their detriment; and that therefore the Board cannot properly change its position and deny the existence of the lease. They combine with this the assertion that the Board never published its regulations as to the procedure as stated in the September 1965 letter for converting the leases to 20-year terms, whereas the Board is required by law to publish such regulations.

Estoppel is a doctrine of equity purposed to rescue from loss a party who has, without fault, been deluded into a course of action by the wrong or neglect of another. The measure we apply to plaintiffs' claim of estoppel is an adaptation to this case of the standard heretofore approved by this court: Estoppel arises when a party (defendant Board) by his acts, representations, or admissions, or by his silence when he ought to speak, intentionally or through culpable negligence, induces another (plaintiffs) to believe certain facts to exist and that such other (plaintiffs) acting with reasonable prudence and diligence, relies and acts thereon so that he will suffer an injustice if the former (Land Board) is permitted to deny the existence of such facts. ³

That doctrine provides no relief to plaintiff under the facts here. The fact that the Board did not publish its regulations as to the procedure for extending the leases does not redound to their advantage. They had the actual notice of what was required to be done in the September 1965 letter referred to; and under such circumstances, the failure to also publish the regulations had no effect upon what the plaintiffs did or should have done. Moreover, it plainly appears that the plaintiffs exercised neither prudence nor diligence about obtaining an extension of their leases. ⁴ If they had had any intention to do so and had been planning to follow the required procedure, and the defendant Board had done something to delude or dissuade them from doing so, there may have been an equitable estoppel. But nothing of that character is represented to be the fact here.

All the Board did was to send out an erroneous notice of rent due; and the plaintiffs, in full awareness of what must be done to extend the leases, neither took any such action, nor were they dissuaded from doing so. They continue in their failure to do anything about extending their leases; and attempted to take advantage of what they knew or should have known was simply a mistake in sending them notice of rent which would have been due the following year under a properly extended lease.

In summary, the controlling and important fact is that the plaintiffs, with knowledge of what was required in the filing of an application to extend their leases for another ten years and pay the requisite fees therefor, failed to take any such action for over eight years; and when they received a notice which they knew, or should have known, was sent by mistake, without making any inquiry or taking any other action with respect thereto, attempted to take advantage of the mistake and claim on extension of their leases. We are not persuaded that the trial court was in error in rejecting their contentions and dismissing their complaint.

Affirmed. No costs awarded.

ELLETT, J., concurs.

HENRIOD, Chief Justice (concurring with following observations):

I somewhat reluctantly concur in the result, since the plaintiffs and their predecessors, with due diligence, apparently complied with the lease, subject of this legislation, for ten years,--but I cannot overlook the record that really does not reflect either an express or implied contract.

Furthermore, the urgence of the plaintiffs that the State is estopped is not supported by the record, in my opinion, because there is no significant evidence that there was any false representation or concealment of material facts attributable to the State that were not easily determinable and that should have been in the knowledge of plaintiffs, experienced oil land developers, accompanied by any intent on the part of the State that plaintiffs would act upon, and that the latter acted on and was induced to do so to their detriment. ¹

An estoppel in pais, like, for example, the case of a criminal offense, generally requires some kind of motive, which appears to be significant by its absence here.

In addition, it seems that the plaintiffs weaken their prayer for invoking the office of equity, with a confrontation by a similarly strong counterequitable defense of laches for eight years before asserting any rights of renewal of the lease. If excused in equity under such circumstances, a highly contentious problem might be apt to prevail where similar interests well might complain, about the use of equity as a crutch to justify an advantage to support an appreciation in oil land values that some erstwhile ready, able and willing prospective bidders have been denied, in a highly competitive, sensitive and mushrooming energy demand, and to which they would claim a vigorous right to denounce and prevent.

The bona fides of the parties are unquestioned, but perhaps because of unintended neglect, misunderstanding or indisposition to act of some sort, the cement has not been poured upon which to build a contractual edifice, free from legal objection.

MAUGHAN, Justice (dissenting):

On appeal is a summary judgment of the trial court holding that certain leases, in which plaintiffs...