Petroleum Exchange v. Poynter

• Citation: 64 N.W.2d 718
• Decision Date: 26 May 1954
• Docket Number: No. 7396,7396
• Parties: PETROLEUM EXCHANGE Inc. v. POYNTER.
• Court: North Dakota Supreme Court

Page 718

64 N.W.2d 718

PETROLEUM EXCHANGE Inc. v. POYNTER.

No. 7396.

Supreme Court of North Dakota.

May 26, 1954.

Syllabus by the Court.

1. An oil, gas or mineral lease, or an assignment thereof is a transfer of an interest in real estate under the provisions of Subdivision 4 of Section 9-0604 NDRC 1943.

2. An agreement for leasing of an oil, gas and mineral lease, or for an assignment thereof, is invalid unless such agreement or some note or memorandum thereof be in writing, subscribed by the party to be charged or by his agent, and such agreement, if made by an agent, is invalid unless the authority of the agent be in writing, subscribed by the party sought to be charged.

3. The words 'party to be charged' as used in Subsection 4 of Section 9-0604 NDRC 1943 relating to agreements for leasing or sale of real property or of an interest therein, means the party against whom the agreement is sought to be enforced, whether vendor or vendee.

4. The delivery of an assignment of an oil, gas and mineral lease and a draft drawn on the alleged assignee signed only by assignee's agent is not sufficient under Section 9-0604 where the agent of the assignee had no written authority to accept such assignment.

5. Section 47-1001 NDRC 1943 has reference only to the party disposing of an estate in real property as therein defined, is not in conflict with, nor is it a limitation upon the language of Section 9-0604.

J. K. Murray, Bismarck, for appellant and defendant.

William R. Mills, Bismarck, for plaintiff and respondent.

SATHRE, Judge.

The plaintiff corporation brought this action against the defendant A. M. Poynter for damages for breach of an alleged agreement to accept from the plaintiff assignments of two oil and gas leases covering lands in Emmons County, North Dakota.

The complaint sets forth two causes of action. The first cause alleges that on the 16th day of April 1952 plaintiff and the defendant through his agent W. M. Berger, entered into a contract whereby plaintiff agreed to assign to defendant one oil and gas lease covering 1,042 acres of land in Emmons County, North Dakota and that defendant agreed to pay plaintiff the sum of $2,605 on or before 30 days from the presentment of the draft issued by the said W. M. Berger by and on behalf of the defendant. The second cause of action alleges that on the same date an identical agreement was made as to 481.81 acres of land in Emmons County and that the defendant agreed to pay $1,204.50 on or before 30 days from the presentment of the draft issued by said Berger as agent of the defendant. The complaint then alleges that the plaintiff was at all times ready and able to perform the contracts and that the defendant refused to perform the same. Judgment is demanded for the sum of $1,042.00 and $712.70.

The defendant answered by general denial, except that it admitted the corporate existence of the plaintiff, and as a further defense he denied specifically that W. M. Berger was his agent or that he ever ratified or approved said assignments and that he never honored or accepted the drafts, or that he personally or through an agent or agents entered into any contract relations with the plaintiff for the acceptance of assignment of the leases referred to in the complaint.

The plaintiff corporation and defendant are both engaged in the purchase, sale and assignment of gas, oil and mineral leases in the State of North Dakota. The plaintiff contends that on or about April 12, 1952 it negotiated with one W. M. Berger, an agent of the defendant for assignment to the defendant of two oil and gas leases covering land in Emmons County, North Dakota. These leases were obtained by the plaintiff from the owners of the land involved on or about the 11th day of March 1952. W. M. Berger testifying for the plaintiff stated that he was a salesman for Sears Roebuck and that occasionally he contacted land owners and obtained oil and gas leases from them and subsequently sold or assigned them at a profit. He contacted the defendant A. M. Poynter and inquired whether he was interested in taking assignments of gas and oil leases. Poynter advised him that he was interested in taking such leases and he handed Mr. Berger some of his contract or assignment forms and also some of his sight draft forms. The draft forms carried Poynter's printed name thereon. Thereafter W. M. Berger secured from the plaintiff two assignments in which he inserted defendant's name as assignee, and Mr. Berger drew two sight drafts signed by himself on the First National Bank of Bismarck, payable in 15 days upon approval of title, and then delivered the assignments to one Mr. Locke who thereafter forwarded them to the defendant A. M. Poynter at his place of business at Shreveport, Louisiana. The defendant refused to accept the assignments and the drafts and the assignments were returned to plaintiff's manager Mr. Mills, and were retained by him. One of the assignments was thereafter reassigned by plaintiff to a third party. Plaintiff then brought his action against the defendant to recover the full purchase price of one assignment and the difference in the price obtained for the second assignment and the price fixed by the terms of the assignment.

The case was tried in the district court of Burleigh County, North Dakota, before the Honorable Geo. Thom Jr., district judge and a jury. The jury returned a verdict in the sum of $1,016 and judgment was entered and the defendant appealed.

When both parties had rested the defendant made a motion for a directed verdict in his favor upon the grounds that the leases were agreements for leasing or assignment of an interest in real property and under the provisions of Section 9-0604 NDRC 1943, Subdivision 4, were required to be in writing; that there is no proof in the record of any contract in writing by the defendant to purchase the assignments; that the said leases or assignments were in violation of the Statute of Frauds of this State in that the amount involved exceeded $500; that neither the defendant or any person or agent in his behalf had ever signed any memorandum in writing accepting the said assignments; that the defendant had at no time accepted the assignments but rejected the same and refused to accept the same on the ground that the plaintiff did not have good title to said leases. The motion was denied and the issues were submitted to the jury and the jury returned a verdict for the plaintiff for $1,016. Thereafter in due time the defendant made a motion for judgment notwithstanding the verdict which motion was denied. The defendant appealed from the judgment and from the order denying his motion for judgment notwithstanding the verdict.

There is a conflict in the evidence as to whether or not Berger was the ostensible agent of the defendant Poynter and if this were the only issue in the case it was properly submitted to the jury and the jury having returned a verdict for the plaintiff it should not be disturbed. There is however, no evidence in the record that W. M. Berger had written authority from the defendant as his agent to purchase and accept the oil and gas leases and assignments involved in this action.

The defendant contends that plaintiff brought this action to enforce an agreement for acceptance of transfers of interests in real property and since Berger, alleged agent of defendant, was not authorized in writing to make such acceptance, plaintiff's action was barred by the statute of frauds, section 9-0604 NDRC 1943, Subdivision 4.

The real issue on this appeal is therefore whether under the provisions of said Section, Berger was authorized as the agent of the defendant to accept the assignments in question and to bind him to their terms. Section 9-0604 provides:

'The following contracts are invalid, unless the same or some note or memorandum thereof is in writing and subscribed by the party to be charged, or by his agent:

* * *

* * *

'An agreement for the leasing for a longer period than one year, or for the sale, of real property, or of an interest therein. Such agreement, if made by an agent of the party sought to be charged, is invalid unless the authority of the agent is in writing subscribed by the party sought to be charged.'

The first question presented is whether under the statute quoted an oil, gas and mineral lease or an assignment thereof in the form of the leases and assignments involved in the instant case is an interest in real property. While this question has not been considered by this court it has been held by the courts in most of the oil producing states that oil, gas and mineral leases are transfers of interests in real property. In the case of Piney Oil & Gas Co. v. Allen, 235 Ky. 767, 32 S.W.2d 325, 326, the Supreme Court of Kentucky had under consideration an oil and gas lease similar in form and language to the leases involved in the case at bar, and it was there held that such lease creates an interest in real estate. We quote from the opinion:

'It is also settled that an oil and gas lease creates an interest in real estate, and is governed by the principles of law applicable to land. Wolfe County v. Beckett, 127 Ky. 252, 105 S.W. 447, 32 Ky.Law Rep. 167, 17 L.R.A., N.S., 688; Beckett-Iseman [Oil] Co. v. Backer, 165 Ky. 818, 178 S.W. 1084; Rader v. Shaffer, 186 Ky. 802, 218 S.W. 292; Kash v. United Star Oil Co., 192 Ky. 422, 233 S.W. 898'.

In the case of Standard Oil Co. of Louisiana v. Oil Well Salvage Co., 170 Ark. 729, 281 S.W. 360, 363, the plaintiff and defendant were holders of oil, gas and mineral leases covering the same lands executed by the landowners as lessors. The lease of the Oil Well Salvage Company was subsequent to the lease of the Standard Oil Co. The Salvage Company brought action against the Standard Company alleging that the latter had appropriated oil from the former's reservoir and dam, claimed damages and prayed for judgment enjoining the Standard Company from taking oil...