New Domain Oil & Gas Co. v. McKinney

• Decision Date: 13 February 1920
• Citation: 221 S.W. 245,188 Ky. 183
• Parties: NEW DOMAIN OIL & GAS CO. v. MCKINNEY ET AL.
• Court: Kentucky Court of Appeals

221 S.W. 245

188 Ky. 183

NEW DOMAIN OIL & GAS CO. v. MCKINNEY ET AL.

Court of Appeals of Kentucky.

February 13, 1920

Rehearing Denied June 4, 1920.

Appeal from Circuit Court, Estill County.

Action by Mattie L. McKinney against the New Domain Oil & Gas Company and another. From the judgment, defendant named appeals. Judgment as to plaintiff and defendant McKinney reversed, and trial court directed to take steps and hear proof necessary to enable it to render judgment in accordance with opinion.

Byrd &amp Vaughn, of Lexington, for appellant.

Beverly R. Jouett, of Winchester, and Clarence Miller, of Irvine, for appellee Mattie L. McKinney.

Hugh Riddell, of Irvine, for appellee Jesse F. McKinney.

THOMAS J.

The uncontradicted facts in this case are:

Appellee and plaintiff below, Mattie L. Stacy (née McKinney), was on August 28, 1915, just past 18 years of age and living with her mother and sisters at Dayton, Ohio. to which place she and her mother had moved from Estill county, Ky. some years before, shortly after the death of her father. Appellee was born and reared on the tract of land in controversy in this suit, which consisted of about 200 acres, lying in Estill county. On the day above mentioned she, her mother, and her sisters executed to appellee and defendant below, Jesse F. McKinney, her brother, a deed to the tract of land in Estill county inherited from their father, Richard McKinney, by which they each conveyed to him their supposed one-seventh undivided interest therein. On October 20, 1915, J. F. McKinney executed a lease to the appellant and defendant below, the New Domain Oil & Gas Company (hereinafter referred to as the Oil Company), by which, in consideration of $400 cash in hand paid to him by the Oil Company, and the agreement by it to deliver to him one-eighth of all the oil produced on the land, he conveyed to it the privilege of extracting all the oil under the land, and soon thereafter the Oil Company began operations under its lease, and when this suit was filed on November 9, 1916, it had drilled about 25 producing wells thereon.

After the execution of her deed to her brother, J. F. McKinney, the plaintiff married one Stacy, and by her statutory guardian she brought this suit against the Oil Company and her brother, seeking against the latter a cancellation of the deed which she executed to him for her one-seventh interest in the land, and an accounting against the Oil Company for one-seventh of all of the oil which it had taken from the land, and for a like quantity of the oil which it might take therefrom in the future. She prayed for other ancillary relief, such as an injunction, the appointment of a receiver, etc., none of which is material to the disposition of this case. She bottomed her right to the relief which she sought upon the fact that at the time she executed the deed to her brother she was an infant under the age of 21 years, and with her petition she tendered to him the note for $75 which he had executed to her in consideration of the conveyance. The brother seems to have conceded the right of plaintiff to the relief, for soon after filing the suit he and his wife executed a deed to plaintiff, reconveying to her a one-seventh interest in the land.

The first paragraph of the answer of the Oil Company was a denial of the allegations of the petition. The second paragraph alleged the good faith of the Oil Company in its development of the lease, under the belief that it was the sole owner thereof. The third paragraph alleged that plaintiff was a citizen and resident of the state of Ohio at the time she executed the deed to her brother, and that under the statutory law of that state a female is sui juris after the age of 18 years, and that plaintiff was above that age at the time of making the deed, and she was therefore not entitled to disaffirm it, although the land covered by the deed was situated in Kentucky, and by the statutory law of this state she would not be sui juris until she arrived at the age of 21 years. The fourth paragraph relied upon an estoppel by conduct, in that it was alleged that plaintiff, after the execution of the deed, knew of the drilling operations by the Oil Company and made no objection or protest, nor did she reveal to it any purpose to disaffirm her deed. The fifth paragraph was a contention that plaintiff, if all her rights in the premises be conceded, could not disaffirm her deed until she became 21 years of age. The sixth paragraph denied the right of plaintiff to an accounting, further than to receive her proportionate part of the oil agreed to be paid as a royalty to defendant's lessor, J. F. McKinney; i. e., a one-seventh of one-eighth of the oil produced. The seventh paragraph as amended was a crosspetition against J. F. McKinney, seeking a recovery against him for whatever sum plaintiff obtained (a) because of fraud practiced by him in executing the lease, whereby he transferred to the Oil Company the entire interest, in the leased premises, knowing that he owned only six-sevenths interest; and because (b) his lease contained an implied warranty of title, as well as one for quiet enjoyment, which would be broken if plaintiff succeeded in her suit.

The court sustained the demurrer filed by plaintiff to the third, fifth, and sixth para graphs of the answer, and overruled her demurrer to the second and fourth paragraphs thereof. However, in the preparation of the case, proof was taken upon the issues made by all the paragraphs, and the court in its judgment seems to have determined them, and disallowed what we might term the obstructive pleas contained in the answer, and upon the main question (that of accounting between plaintiff and the Oil Company) adjudged that plaintiff was entitled to one-seventh of all of the oil obtained from the land, both before and after the filing of the suit by plaintiff, less expenses incurred in obtaining it, including fixed or overhead expenses, but denied the right of the Oil Company to deduct one-seventh of the expenses after November 1, 1917 (being the date when plaintiff was ordered to turn over one-seventh of the gross oil produced to a trustee, subject to be disposed of by the future orders of the court), unless plaintiff or her representative be thereafter permitted to have a voice in the management of the oil producing operations on the leased land. The court further gave judgment in favor of the Oil Company against J. F. McKinney for one-seventh of the $400 bonus paid to him, and for one-seventh of the one-eighth of the oil delivered to him as royalty, and directed that the company in the future pay to him in satisfaction of his royalty six-sevenths of the one-eighth of the oil agreed to be paid to him, and from that judgment the Oil Company prosecutes this appeal. There was also an appeal prayed by and granted to both plaintiff and J. F. McKinney, neither of whom has taken any steps in this court to complete it.

In disposing of the case we will consider only such questions as we deem material, the first of which is, whether the legal capacity of plaintiff to execute the deed to her brother is to be determined by the laws of the state of Ohio, where it was actually executed, or by the laws of the state of Kentucky, where the land conveyed thereunder lies. The general rule governing the validity of contracts is that the law of the place of performance of the contract applies, and that in the absence of a showing to the contrary the place of performance will be presumed to be the place where the contract is made, and when made by one having a regular domicile, it will be presumed that the law of the place of his domicile shall govern the validity of the contract, as well as its construction, although he may have been temporarily absent from his domicile at the time the contract was executed. With reference to infants, their domicile is that of their parent having them in charge, and unless their domicile has been changed by such parent in some of the modes pointed out by the law, their once-acquired domicile will continue, since the infant is incapable of changing its domicile by its independent act or conduct. Munday v. Baldwin, 79 Ky. 121.

While the above general rules ordinarily apply in the case of contracts, there is a well-established exception in cases where the property or thing to which the contract relates has a fixed situs, as is true of real estate. In that case all of the authorities, so far as we are aware (and no case to the contrary has been cited), hold that all matters concerning the title to and disposition of real estate are to be governed by the lex loci rei sitæ, and not by the lex loci contractus. Thus in 5 R.C.L. 925, in stating the rule, the text says:

"All real or immovable property is exclusively subject to the laws of the country within which it is situated, and no interference with it by any other sovereignty can be permitted. It therefore follows that all matters concerning the title and disposition of real property are determined by what is known as the lex loci sitæ, which can alone prescribe the mode by which a title to it can pass from one person to another," etc.

See, also, pages 952 and 953 same volume.

39 Cyc. 1182, states the rule thus:

"The requisites and validity of a contract for the sale of land are governed by the law of the place where the land is situated."

As applicable to contracts executed by infants, the text in 14 R.C.L. 232, says:

"If the question is one of the title of land, it [the legal capacity of the infant] will be determined by the law of the state where the land lies."

Other cases and authorities in point are Story on Conflict of Laws § 424; Freeman v. Falconer, 201 F. 785, 120 C.C.A. 32; Thos. J. Baird Inv. Co. v....