Rathbun v. State

• Decision Date: 06 June 1938
• Docket Number: No. 146.,146.
• Parties: RATHBUN v. STATE et al.
• Court: Michigan Supreme Court

284 Mich. 521

280 N.W. 35

RATHBUN

v.STATE et al.

No. 146.

Supreme Court of Michigan.

June 6, 1938.

Bill in equity by Lena L. Rathbun against the State of Michigan and others for an injunction to restrain the assignees of an oil lease executed by the state from further drilling operations and from removing or storing gas or minerals produced from plaintiff's property, and to decree that the oil and gas lease executed by the Department of Conservation to be null and void. From an order denying plaintiff's motion to dismiss defendants' motions to dismiss the bill of complaint and granting defendants' motions to dismiss, plaintiff appeals.

Affirmed.Appeal from Circuit Court, Gladwin County, in Chancery; Neil E. Reid, judge.

Argued before the Entire Bench.

Yeo & Bilitzke, of West Branch, for appellant.

A. W. Penny of Muskegon, for appellees Rex Oil & Gas Co., Naph-Sol Refining Co., and H. M. McClure.

Clark, Klein, Brucker & Waples, of Detroit (Robert C. Winter, of Detroit, of counsel), for appellee J. V. Wicklund Development Co.

Floyd A. Calvert and Lowell Jones, both of Saginaw, for appellee Pure Oil Co.

Raymond W. Starr, Atty. Gen., and Edmund E. Shepherd, Asst. Atty. Gen., for the State.

McALLISTER, Justice.

On September 24, 1921, J. F. Rathbun made application to the department of conservation for a homestead certificate for 80 acres of land in Buckeye Township, Gladwin County. These lands had, on February 17, 1921, been deeded by the auditor general to the State of Michigan because of delinquent taxes, under Section 127 of Act No. 206, Pub.Acts 1893. In his application Rathbun recited that he would accept the certificate and deed with reservation of mineral, oil and gas to the State of Michigan. On October 25, 1921, the department of conservation issued to the said Rathbun a tax homestead certificate reserving to the State all mineral, coal, oil and gas rights. On January 31, 1922, Rathbun filed with the department an affidavit entitled ‘Proof of Settlement’, to the effect that he was an actual resident upon and in possession and occupancy of the land described in the certificate. Having lived on said land for a period of five years as required by law relating to title by homestead, Rathbun, on December 1, 1926, filed with the department his ‘Oath of Homestead’ together with supporting affidavits, and on January 4, 1927, ‘a homestead tax deed’ was executed by the department of conservation to J. F. Rathbun in which the mineral, coal, oil and gas rights previously referred to in the application and certificate were reserved to the State. This deed was recorded November 10, 1927, in the office of the register of deeds of Gladwin county.

On October 17, 1929, Rathbun executed an oil and gas lease to the Pure Oil Company which was discharged December 31, 1931, and the discharge was recorded January 8, 1932. On March 3, 1934, Rathbun executed another such lease to one G. M. Smith which was recorded June 8, 1936.

On February 6, 1936, the department of conservation executed an oil and gas lease to J. V. Wicklund which was recorded January 5, 1937, and which in turn was assigned to J. V. Wicklund Development Company. Other assignments were made to various parties named in this case. These assignees developed the property and at the present time have eight producing wells situated on the land in question.

On December 30, 1936, J. F. Rathbun executed and delivered a warranty deed with no reservations of any kind to Lena L. Rathbun, plaintiff herein, which deed was recorded March 9, 1937.

On September 28, 1937, Lena L. Rathbun filed a bill in equity praying for a temporary injunction restraining the assignees of the oil lease executed by the State from further drilling operations and from extracting, removing or storing gas, oil and minerals produced from plaintiff's property. Plaintiff further asked the court to decree that the oil and gas lease executed by the department of conservation be null and void; that the reservations made in the deed from the department to J. F. Rathbun be decreed to be of no force and effect; that defendants account to plaintiff for all gas, oil and minerals theretofore obtained or removed from the property; that the State refund to plaintiff any sums received by virtue of its oil lease on account of oil, gas and minerals extracted from the property; and for a permanent injunction restraining defendants from going upon or removing any minerals, coal, oil and gas from plaintiff's land.

Defendants moved to dismiss the bill of complaint, and plaintiff thereafter moved to dismiss defendants' motions to dismiss the bill. On the hearing of the motions, the circuit court denied plaintiff's motion to dismiss the defendants' motions to dismiss the bill of complaint and granted defendants' motions; and accordingly entered an order dismissing the bill of complaint, from which plaintiff appeals.

The bill of complaint alleges that J. F. Rathbun received his deed as a homesteader from the State without reservations as to oil, coal, gas and mineral rights. It is claimed that Section 131 (Act No. 206, Pub.Acts 1893), as amended by the Act of 1915 (Act No. 208), and in force at the time J. F. Rathbun made his application for homestead certificate on September 24, 1921, provided for the conveyance by the State of an absolute title in fee to the homesteader, and that the fee was to the entire interest owned by the State in the lands in question without any severance of the mineral rights; that the statute as it then existed did not permit a reservation of oil and gas rights to the State.

Plaintiff further claims that the homesteader, J. F. Rathbun, having complied with all the requirements of the State respecting the homesteading of the 80 acres in question, and the State having determined his compliance in the manner provided by law, and he, having paid the statutory fee of ten cents an acre on account thereof, and having received conveyance from the State, became and was entitled, by a reason of the provisions of Act No. 206, Pub.Acts 1893, as amended, to an absolute deed from the State in fee simple, and that plaintiff, his daughter-in-law, the grantee of his interest in the lands in question, is similarly entitled now to be treated and considered as though she were the grantee from the State of the absolute ownership of all of the title of the State in the lands, including both surface and mineral rights.

Plaintiff further claims that it was fraudulent and illegal on the part of the State officials to require of J. F. Rathbun, in order to obtain the homestead certificate, that he subscribe to an application containing the reservation in question; that it was fraudulent and illegal to issue to J. F. Rathbun the homesteader's certificate containing such recital and that it was fraudulent and illegal for such officials representing the State to issue to J. F. Rathbun the deed containing such reservations to the State.

Defendants contend that Section 131 of Act No. 206, Pub.Acts 1893, as amended, in effect, provided that the purchaser should acquire, and the State should protect the purchaser in the ownership in fee of what was granted by the State to the grantee or purchaser; that an absolute fee can be conveyed at the same time reserving mineral rights; that under Section 8 of Act No. 280, Pub.Acts 1909, as amended, the State through its duly constituted agency was required to reserve oil, coal, gas and mineral rights to the State on sales of public-owned land. It is further claimed by defendants that the application for homestead certificate by J. F. Rathbun, his payment of money to the State, and the deed from the State to said Rathbun, constituted the only contract which the State made; that Rathbun never applied to the State for anything except the surface rights of the land, that these were what he accepted; that so far as the State is concerned, this was everything that the State ever intended he should receive and that, accordingly, the State has completely discharged its obligation and fulfilled its contract. It is also urged that the deed from the State to Rathbun was either entirely good or entirely void, and that the grantee therein cannot accept benefits under a part of the deed, and, in part, reject it. There are other defenses, including laches, estoppel, and that plaintiff has no claim for fraud as such claim was personal to her grantor and does not pass to the grantee by an assignment of the lands.

Section 8 of Act No. 280, Pub.Acts 1909, was made a part of the contract. This section became, successively, Section 12, Act No. 294, Pub.Acts 1911; then Section 12, Act No. 333, Pub.Acts 1913; then Section 12, Act No. 262, Pub.Acts 1917. However, the provisions relative to this case remained the same.

Plaintiff, in effect, admits that Act No. 280, Pub.Acts 1909, as amended, directs the State to reserve the rights in question on sales of State-owned land, but contends that Rathbun did not receive the land by sale but by virtue of homestead entry; that such rights of homestead are governed by the general tax laws of the State, included in Act No. 206, Pub.Acts 1893, as amended, and that if Act No. 280, Pub.Acts 1909, as amended, be construed as amendatory to the general tax laws without special recital setting forth that the said tax laws are so amended, such act is unconstitutional and void.

Section 131 of Act No. 206, Pub.Acts 1893, as amended, and in effect at the time of the transaction in this case, provided:

‘Such deed shall convey an absolute title to the lands sold * * *.’

It is further provided ‘That any person who has purchased and entered into possession of any lands as a homestead’ shall receive a deed under certain conditions.

The legislature having chosen to use the words, ‘purchased’ and ‘lands sold,’ with reference to homestead lands, it is unnecessary to search for the legislative intent outside the provisions of the statute for assistance in construing the act as...