Riffel v. Dieter

• Decision Date: 07 April 1945
• Docket Number: 36269.
• Citation: 157 P.2d 831,159 Kan. 628
• Parties: RIFFEL et al. v. DIETER et al.
• Court: Kansas Supreme Court

157 P.2d 831

159 Kan. 628

RIFFEL et al. v. DIETER et al.

No. 36269.

Supreme Court of Kansas

April 7, 1945

Appeal from District Court, Marion County; James P. Coleman, Judge.

Appeal from District Court, Marion County; James P. Coleman, Judge.

Action by Maria Elizabeth Riffel, the Derby Oil Company and E. K Carey against Frank H. Dieter, Anna Ruth Dieter, and others to quiet title to real estate as against an oil and gas lease. From a judgment quieting the title of the last two named plaintiffs, but refusing to quiet the title of the first named plaintiff, the first named plaintiff appeals, and the named defendants cross-appeal.

Judgment affirmed in part and reversed in part, with directions to quiet the named plaintiffs' title against all of the defendants.

Syllabus by the Court.

1. Oil and gas 'royalty' is the share of oil and gas produced and paid by the lessee for the right to drill and produce.

2. A sale or assignment of oil and gas royalty does not convey and interest in the oil and gas in place.

3. The rights of the lessee under an oil and gas lease are ordinarily fixed as of the date of the execution of the lease, and are not adversely affected by knowledge thereafter acquired of a prior but unrecorded lease, even though such knowledge was acquired before he had started development under his lease.

4. The recital of consideration in a written contract or conveyance otherwise valid, is prima facie evidence of such consideration.

5. An oil and gas lease is within the purview of section 16-107 G.S.1935, which provides that 'all contracts in writing, signed by the party bound thereby, or his authorized agent or attorney, shall import a consideration.'

6. A contract to execute an oil and gas lease is within that provision of the statute of frauds (section 33-106, G.S.1935) relating to 'the sale of lands, tenements, or hereditaments, or any interest in or concerning them.'

7. If an original contract must be in writing and signed in order to be enforceable, any substantial modification of the contract must likewise be in writing and signed by the party to be charged therewith.

8. A writing, unenforceable under the statute of frauds because unsigned, cannot be made enforceable by reference therein to a signed writing.

9. The general rule is that payment alone, under a contract, does not constitute performance sufficient to avoid the statute of frauds.

10. Record examined in an action to quiet title to real estate as against defendants claiming as holders of an oil and gas lease, and held:

1. The recorded instrument upon which defendants in part rely (a) was a sale of an interest in royalty and conveyed no interest in oil and gas in place; (b) vested in defendants no rights to a lease which had not expired prior to the execution of the lease relied upon by plaintiffs; (c) constituted no notice to plaintiffs of adverse claim to lease rights on the part of defendants.

2. An unrecorded instrument, signed by one of the defendants and by the plaintiff's husband (since deceased), record holder of title to the real estate involved and now construed by defendant as vesting in him a continuing and exclusive right to an oil and gas lease on the land, is unenforceable under the statute of frauds as against the wife who did not sign the instrument.

Harvey C. Osborne, of Wichita (Chas. G. Yankey, John G. Sears, Jr., and Verne M. Laing, all of Wichita, on the brief), for appellant and cross-appellee Derby Oil Co.

Lester L. Morris, of Wichita, for cross-appellee E. K. Carey.

W. M. Beall, of Clay Center, and Matt Guilfoyle, of Abilene (John H. Lehman, of Abilene, and D. M. Ward, of Peabody, on the brief), for appellees and cross-appellants.

HOCH Justice.

This was an action by three plaintiffs to quiet title to real estate as against a certain oil and gas lease. One of the plaintiffs appeals and one of the several defendants cross-appeals. Statement of the issues presented can best be made after further recital.

Clarity may be promoted by first identifying the parties and stating their relation to this appeal. Maria Riffel, plaintiff, and her husband, John Riffel, now deceased, were owners of the land involved. The trial court refused to quiet her title and she appeals. Derby Oil Company and Carey, the other plaintiffs, are assignees of an oil and gas lease executed in 1943 by Maria Riffel and are producing under the lease. Their title was quieted. Dieter, the principal defendant, claimed to have a lease under an alleged contract made with the Riffels about fifteen years prior to the Derby and Carey lease. He asked that his lease be quieted as against all the plaintiffs and that if his lease be held invalid Maria Riffel be ordered to execute a lease to him. Also, by way of alternative relief, he asked judgment against Maria Riffel for $15,000. The trial court having held against him, in part, he cross-appeals against all three plaintiff. The Hoffmans and Loomis, also party defendants and holders of certain royalty interests, had a controversy as to division of royalty which was adjudicated and no appeal taken. They have no direct interest in this appeal, as their royalty interests are not disputed either by appellant or cross-appellant.

The trial court made findings of fact and conclusions of law, presently to be quoted in part. For the sake of brevity we first summarize from the findings some of the facts that are not disputed. He word lease, as hereinafter used, means an oil and gas lease.

In 1908 John Riffel acquired title to the south half of section 10, township 17 South, Range 4 East of sixth P.M. in Marion county.

On September 26, 1926, Riffel and wife executed a lease to one Skow covering the southwest quarter of said section 10. This lease was for five years and expired by its own terms on September 27, 1931, no production having been secured on that quarter.

On January 18, 1927, Riffel and wife gave a five-year lease to one Frank covering the south half of the southeast quarter of section 10. There was production under this lease during the primary term which has since continued.

On January 21, 1927, John Riffel deeded both quarters to his wife but this deed was not recorded until October 28, 1936.

On September 14, 1927, John Riffel and wife executed to Dieter an instrument designated 'Sale of Oil and Gas Royalty'--which we will call Contract A. This instrument was recorded on September 30, 1927.

On September 15, 1927, John Riffel and Dieter signed an instrument which we will call Contract B. This instrument was not signed by Mrs. Riffel and was not recorded. The controversy here centers largely around the construction and the effect of these two instruments. Both Contracts A and B related to all of the southwest quarter and all but forty acres of the southeast quarter. No drilling operations have been conducted under either of these contracts.

On January 21, 1943, Maria Riffel--her husband having died--executed to one Reed a lease on the southwest quarter, the only part of the land here involved. It was for a term of one-half year and as long as oil or gas should be produced. Reed assigned this lease to Derby and Carey on May 3, 1943, and under it three wells have been drilled by the lessees, two of them being producers.

On May 11, 1943, the Hoffmans, the Dieters, and Loomis, claiming the right to do so under Contracts A and B, made a lease to Dieter. Thereafter, and upon November 30, 1943, this action was brought by Riffel, Derby and Carey to cancel the Dieter pretended lease and to quiet title to all lease rights as against the defendants.

We first dispose of some matters incident to the main issues. The trial court found (Finding No. 11) that Derby and Carey and their assignor Reed did not know of the execution on Contract B at the time Reed took the lease or when he assigned it. This finding is amply supported by evidence and we shall treat it as an established fact. The trial court found (Finding No. 6) that at the time Contract A--signed by Riffel and wife and Dieter--was executed, Contract B 'was executed simultaneously and for the same consideration and after full negotiation with both Maria Elizabeth Riffel and John Riffel, which contract was executed by John Riffel and Frank H. Dieter', and was 'delivered simultaneously and as a part of the same consideration' for Contract A. We think this finding is also well supported by the evidence and shall treat it accordingly.

In the same class is the trial court's finding (No. 22) that Dieter made no demand upon Maria Riffel for a lease until after she executed the lease to Reed in 1943. The court also found (Finding No. 13) the market value of the lease on the land involved was $15,000 at the time Reed got the lease from Maria Riffel and assigned it to Derby and Carey. We reserve comment as to that finding. Many of the other findings of fact relate to disputes as to royalties with need not be noted, as they are not involved in this appeal.

Before giving the trial court's conclusions of law it is well to set out Contracts A and B (omitting parts not here material) around which the issues largely turn.

Contract A, designated 'Sale of Oil and Gas Royalty', executed September 14 and recorded September 30, 1927, provided:

'It is expressly agreed and understood in this conveyance that all oil and gas reserved or any money received for oil or gas by said Grantor, heirs or assigns, under said present lease, or under any other lease or leases on said land, shall be called Royalty.

'Now therefore, in consideration of the sum of One dollar ($1.00) and other valuable considerations, the receipt of which is hereby acknowledged, the said grantor does hereby grant, bargain, sell and convey unto the said grantee a 1/2

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