Preston v. Shields

• Decision Date: 10 March 1945
• Docket Number: 36297.
• Parties: PRESTON v. SHIELDS.
• Court: Kansas Supreme Court

156 P.2d 543

159 Kan. 575

PRESTON v. SHIELDS.

No. 36297.

Supreme Court of Kansas

March 10, 1945

Appeal from District Court, Russell County; C. A. Spencer, Judge.

Appeal from District Court, Russell County; C. A. Spencer, Judge.

Action by Ben Preston against R. H. Shields to quiet title to an oil and gas lease and for other relief. From a ruling sustaining defendant's demurrer to plaintiff's petition plaintiff appeals.

Syllabus by the Court.

1. It is the duty of the pleader to state the premises in clear and concise language and the province of the court to declare the conclusions.

2. Where a party sets forth fully and in detail the specific facts upon which he predicated his title, an additional general allegation of title and ownership is surplusage and constitutes a conclusion of the pleader which is not admitted on demurrer.

3. Rights under a written contract for the delivery of oil and gas leases upon the occurrence of a specified event must be asserted not later than five years from the date of its breach. (G.S.1935, 60-306, First.)

4. An action predicated upon fraud must be commenced within two years from the discovery thereof. (G.S.1935, 60-306, Third.)

5. An action for the wrongful conversion of personal property or its value must be commenced within two years from the date of its conversion. (G.S.1935, 60-306, Third.)

6. An action to have property impressed with a trust and for an accounting of oil and gas produced therefrom lies in equity and the cause of action accrues on the repudiation of the trust.

7. What constitutes reasonable time within which a person may assert his claim depends upon the circumstances in the particular case.

8. 'One may not sit idly by for any considerable time without asserting claim to property of highly speculative nature, to await outcome of others' efforts to develop and prove such property, and, when such efforts are successful, come in and claim fruits thereof.'

9. In order to excuse delay in instituting necessary action to enforce a claim to property because of pending litigation, it must appear such litigation actually prevents assertion of claim in a court of competent jurisdiction.

10. Where a petition on its face discloses that a party seeking equitable relief is not in equity and good conscience entitled thereto a demurrer to the petition on the ground it fails to state a cause of action is properly sustained.

Albert L. Orr, of Medicine Lodge (Jerry E. Driscoll, of Russell, and O. B. Martin, of Oklahoma City, Okl., on the brief), for appellant.

Oscar Ostrum, of Russell, for appellee.

WEDELL Justice.

This was an action to quiet the title to an oil and gas lease, for possession and an accounting of oil and gas produced. Defendant's demurrer to plaintiff's petition was sustained on the grounds the petition failed to state a cause of action and that the action was barred. From that ruling plaintiff appeals.

The suit is between the assignees of two separate oil and gas leases executed approximately thirteen years apart on the same quarter section of land and by the same landowners, John Letsch and his wife. The petition is voluminous. Various instruments attached thereto will not be analyzed in detail in making a summary of material allegations but will receive such attention later as a decision requires. The first lease was executed on June 25, 1921, to the Focks Drilling & Manufacturing Corporation and will be referred to as the Focks' or as the first lease. It was one of a block of leases made to Focks. The block comprised an area of approximately six miles by ten miles in Russell county. The leases were deposited in the Bunker Hill State Bank together with an escrow agreement which was signed by that bank and the lessee and was orally agreed to by the Letsches and other landowners in the block. We shall refer to the escrow holder as the bank. The primary term of the Focks' lease was five years and by its terms was made subject to the escrow agreement. A pertinent provision of the lease required the drilling of a test well within one year on the lease presently involved or on other lands in the community of that lease and within a radius of ten miles. The escrow provided:

'Whereas, party of the first part [Focks] desires to obtain leases on a block of acreage situated in Russell County, Kansas, Townships 13 and 14, Ranges 12 and 13, for the purpose of drilling a test well for oil and gas, party of the first part agrees to begin drilling operations for test well within ninety days from time block is completed, and continue operations until well is completed, unavoidable accidents excepted.

'Party of the second part [bank] agrees to keep possession of leases taken until party of the first part has erected derrick, places machinery and spudded in test well. Party of the second part will then deliver all leases to party of the first part.'

The escrow was recorded December 17, 1923. There was some delay in acquiring the leases on the entire block and the lessee obtained an extension from the Letsches on September 21, 1922, which reads:

'This is to certify that we the undersigned landowners of Russel County, Kansas, do hereby grant and extend the time for the commencement of a well on the block of which our leases are a part for a term of two years from date; this refers to the leases held in escrow by the Bunker Hill State Bank under contract between the undersigned parties and the Focks Drilling & Manufacturing Corporation.

'In consideration of the above stipulations, the Focks Drilling & Mfg. Corp. agrees to undertake the completing of said leasing of said block, and if successful, agrees to commence a test well on said block within the time herein provided.

'The undersigned landowners hereby further agree to deliver said leases to the order of the Focks Drilling & Mfg. Corp. immediately when test is spudded.

'If no well is commenced on said block of leases on or before September 21st, 1924, this contract shall become null and void, otherwise it shall remain in full force and effect as per former contract.'

That agreement was deposited with the bank. March 4, 1924, Focks assigned to plaintiff, appellant, all rights in and to the escrow agreement. The assignment was recorded July 23, 1926. March 14, 1924, appellant drilled a well to the depth of approximately 600 feet on land within the block and within a radius of ten miles from Letsches' land. Appellant made demand upon the cashier of the bank for the delivery of the leases covering the block of acreage. The demand was refused. Appellant set casing to a depth of 600 feet and made demand for the leases. The demand was refused.

In addition to the foregoing allegations the petition, in substance, further alleged:

M. K. Mathews, cashier of the bank, was the agent of the landowners, including the Letsches; Mathews fraudulently endeavored to obtain the leases in his own name or to otherwise acquire an interest in the mineral rights involved and in furtherance of his scheme wrote letters on October 2 and 29, both in 1922, evidencing his fraudulent intent (copies of the letters were attached to the petition); in each of the years from 1925 to 1929, inclusive, plaintiff sent his various agents to the landowners within the entire block and demanded delivery of the leases; every demand was refused by all of them including the Letsches (expenditures incurred in some of these efforts were detailed); in 1940 plaintiff, through his attorney, made written demand for the delivery of the leases on all lessors including the Letsches; the demand was refused; by reason of such refusal to deliver the leases as provided in the escrow and extension thereof plaintiff was unable to proceed with the completion of the well; the landowners accepted a return of their leases from the bank; March 10, 1934, the Letsches and certain other royalty owners executed and delivered to J. E. Missimer an oil and gas lease covering the land in question; by a chain of assignments defendant by July 30, 1937, acquired the interest in and to this second lease on the Letsch land which he now claims; the refusal of the landowners, including the Letsches and their agent, M. K. Mathews, to deliver the leases to plaintiff in compliance with his demands and the subsequent delivery of leases to others constituted a breach of contract on the part of the lessors.

The petition, in substance, further alleged:

Prior to the date defendant began drilling operations plaintiff, by registered letter which defendant received May 5, 1937, advised defendant that he claimed this particular tract of land under an escrow agreement, which agreement had been recorded and defendant had actual knowledge of plaintiff's claim by reason of the notice; plaintiff was prevented from completing his well by reason of litigation which clouded his title and equitable ownership of the lease (the petition set forth the title of seventeen actions, sixteen of which were filed in Russell county between the dates of March 21, 1924, and November 8, 1940, and one action in the district court of the United States for the district of Kansas, first division).

The petition then states: 'The issues presented in the case at bar have never been tried or determined upon the merits. That in none of the litigation hereinabove referred to has there been a judicial determination affecting adversely the right, title, interest and claim of the plaintiff herein in and to the oil and gas leasehold estate claimed and owned by him on any of the property located within the block of acreage, including the property involved in this action. In a few instances, the plaintiff herein has executed releases of his interest in the oil and gas rights on certain tracts of land,...