Phillips v. Ball

• Decision Date: 07 June 1960
• Docket Number: No. 37554,37554
• Citation: 1960 OK 145,358 P.2d 193
• Parties: Vivian PHILLIPS, Betty Austin, nee Smith, Wayne Smith and Cities Service Oil Company, Plaintiffs in Error, v. Merry X. BALL, Defendant in Error.
• Court: Oklahoma Supreme Court

Page 193

358 P.2d 193

1960 OK 145

Vivian PHILLIPS, Betty Austin, nee Smith, Wayne Smith and Cities Service Oil Company, Plaintiffs in Error, v. Merry X. BALL, Defendant in Error.

No. 37554.

Supreme Court of Oklahoma.

June 7, 1960.

Rehearing Denied Dec. 27, 1960.

Application for Petition to File Second Petition for

Rehearing Denied Jan. 17, 1961.

Syllabus by the Court.

1. Constructive fraud practiced by person instrumental in probating an estate does not serve to vitiate the proceedings and render same subject to attack after lapse of time within which proceedings can be modified, vacated or set aside under statutes.

2. An heir who is unjustly enriched by taking an undisclosed heir's interest in an estate will be compelled to account to the undisclosed heir and will be held to hold that unjustly taken, together with accruals in trust for undisclosed heir, who will be held to have a lien on that unjustly taken together with accruals.

3. Knowledge of attorney for agent of lessee of oil and gas lease will not, under facts shown in this opinion, be imputed to lessee.

4. Under facts shown in this opinion, knowledge of plaintiff's claim as missing heir of person appearing in chain of title is not under doctrine of caveat emptor imputable to lessee purchasing oil and gas lease at guardianship sale.

5. In cases of fraud the statute of limitations begins to run only from the time of discovery of the fraud, or from such time as the defrauded party, be exercise of ordinary diligence, might have discovered such fraud.

Appeal from the District Court of Cotton County; Toby Morris, Judge.

District Court action by a previously 'missing heir' against the other heirs of her intestate father's estate, and parties holding oil and gas leases on tracts of land inherited from him, to recover her interest free of the leases and for an accounting of the income and profits therefrom. After judgment for plaintiff against the other heirs and one of the leaseholders, they appealed. Affirmed in part and reversed in part.

Walter Hubbell, Walters, Luther B. Eubanks, Lawton, Ivy, Ivy & Ivy, Waurika, of counsel, for plaintiffs in error, Vivian Phillips, Betty Austin, nee Smith, and Wayne Smith.

Gentry Lee, F. H. Bacon, L. L. Corn, Bartlesville, for plaintiff in error, Cities Service Oil Co.

Walter L. Kimmel, Tulsa, O. C. Essman, Robert D. Hudson, Tulsa, of counsel, for defendant in error.

BERRY, Justice.

The defendant in error, Merry X. Ball, hereafter referred to as 'plaintiff', instituted this action on December 7, 1953, against the plaintiffs in error, hereafter referred to as 'defendants' or by name, to recover an undivided 2/9ths interest in the estate of Dewey W. Smith, her deceased father who died intestate in 1942 a resident of Cotton County, Oklahoma, and for an accounting in connection with said interest and other equitable relief.

From order overruling defendants' motion for new trial filed following judgment in plaintiff's favor, defendants perfected this appeal.

Plaintiff, who was born in 1924 is the daughter of Dewey W. Smith hereafter referred to as 'Smith', and Clara Glass Smith, now Eaglin, hereafter referred to as 'Clara'. This marriage was terminated in 1925 by divorce obtained on petition of Smith filed in the District Court of Oklahoma County, Oklahoma. After the termination of the marriage and shortly before Christmas in 1925, Clara left plaintiff at a boarding home for children in Oklahoma City and never returned for her. Clara failed to reveal her identity or the identity of the child and the Home was therefore unable to return plaintiff to her family or friends. Plaintiff was delivered by the person operating the Home to an organization in Oklahoma City known as the 'Oklahoma Children's Home Society'. She was subsequently adopted by Gordon and Mollie King. In the decree of adoption it was stated that plaintiff's name should be changed from 'Unknown' to 'Merry X. King'. In 1942 plaintiff married C. C. Ball, Jr. Plaintiff did not learn who her father was until about 60 days before this action was filed.

In 1933 Smith married the defendant, Vivian Phillips, who is hereafter referred to as 'Vivian'. Of this marriage the defendants, Betty Austin, nee Smith, and Wayne Smith, hereafter referred to as 'Betty' and 'Wayne' were born. In 1927 Clara remarried.

In August, 1942, Vivian instituted proceedings in the County Court of Cotton County to probate Smith's estate. In said proceeding she sought to be and was appointed administratix of the estate. Vivian successfully represented that she and Betty and Wayne were the sole and only heirs-at-law of Smith. Plaintiff was neither mentioned directly nor indirectly in said proceedings. Vivian did, however, advise the attorney, (Mr. P.), handling said proceedings that there was a rumor to the effect that Smith had a child by a former marriage, which information was given the County Judge. In fact, an unsuccessful effort was made to locate Clara, and the probate proceeding was left open for several months because of the 'missing-child rumor'. However, and irrespective of the rumor, a 'Final Decree' was promulgated in the probate proceedings on May 10, 1943, which decree was unappealed from. The decree reads in part as follows:

'It further appearing to the court that the following persons are the sole and surviving heirs at law of said decedent and are entitled to share in said estate in the following proportions, to-wit:

'Vivian Smith, widow, one-third, Betty Smith, daughter, one-third, Wayne Smith, son, one-third.

'It is therefore ordered, adjudged and decreed by the court that Vivian Smith, widow, Betty Smith, daughter, and Wayne Smith, son, are the sole and only heirs of Dewey W. Smith, deceased, and that an equal undivided one-third interest in and to the real estate and personal property above described be and the same is hereby transferred, vested, and assigned and conveyed to said widow and children forever.'

On July 27, 1943, Vivian instituted proceedings in the County Court of Cotton County for the purpose of being appointed guardian of the estate of her children, Betty and Wayne. She was subsequently appointed guardian of the estate of said children and as guardian effected the sale of an oil and gas lease to Cities Service Oil Company, hereafter referred to as 'Cities Service', covering the undivided two-thirds interest on the children in certain minerals that formed a part of the Smith estate. The minerals underlying the real estate described in the oil and gas lease subsequently proved to be productive of oil and gas and at the time this action was filed more than one million dollars worth of oil had been produced and sold from the real estate. Vivian also leased her interest in said minerals to Cities Service.

The proceedings to probate Smith's estate and the guardianship proceedings by virtue of which an oil and gas lease covering Betty's and Wayne's mineral interests was granted to Cities Service are regular on their face, and long ago became 'final' in the generally-accepted sense of the quoted word as understood by the Bench and Bar.

The plaintiff contends that Vivian's failure to disclose the existence of plaintiff in the probate and guardianship proceedings constituted extrinsic fraud on her part and served to vitiate said proceedings in so far as the interest of plaintiff in her father's estate is concerned; that Cities Service had knowledge that Smith was survived by a child who was not named in the probate proceedings at the time it acquired the oil and gas lease and, therefore, cannot be considered as a purchaser for value without knowledge of plaintiff's claim; that the caveat emptor doctrine applied to the guardianship sale and if Cities Service had made inquiry it would have learned of plaintiff's claim. The defendants contend that the probate proceedings in the Smith case are regular on their face and the final decree being unappealed from is final and under the doctrine of res judicata serves as a bar to plaintiff's action; that plaintiff's action is barred by limitations; that Cities Service was a bona fide purchaser for value without notice at the guardianship sale of the oil and gas lease and as such should be protected.

Following an extended trial, the trial court found that plaintiff was a daughter of Smith and Clara and as such an heir to and entitled to take a stated portion of his estate; that she was entitled to an accounting from the other defendants because of her said ownership; that while Vivian was not guilty of intentional fraud, her acts constituted 'resulting fraud' which served to vitiate in part the probate proceedings in controversy; that Cities Service was not an innocent purchaser of plaintiff's undivided interest in the minerals underlying the real estate referred to in the oil and gas lease from Vivian as guardian of the estate of Betty and Wayne and that plaintiff's interest is free of said lease.

On the fraud issue the trial court made these specific findings of fact:

'* * * The Court further finds that Vivian Smith Phillips, the widow of Dewey W. Smith, and her attorney, William Powell, of Walters, Oklahoma, advised the County Court in the probate proceedings in the Estate of Dewey W. Smith, deceased, that there was a rumor that Dewey W. Smith had been married before his marriage to the defendant, Vivian Smith Phillips, and that there was a rumor that there was a child born of that marriage, but after search, they were unable to find such child. The Court further finds that this was a very strong rumor, and was well known by relatives of Dewey W. Smith and other persons, in and near Walters, Oklahoma, and that the defendant, Vivian Smith Phillips, was familiar with this rumor. The Court finds that while efforts were made on behalf of Vivian Smith Phillips to locate the child, that her acts in administering the Estate of Dewey W. Smith, without providing for this plaintiff, constituted resulting frand,...