Saunders v. Busch-Everett Co.

• Decision Date: 04 November 1914
• Docket Number: 20367
• Citation: 138 La. 1049,71 So. 153
• Court: Louisiana Supreme Court
• Parties: SAUNDERS v. BUSCH-EVERETT CO

71 So. 153

138 La. 1049

SAUNDERS v. BUSCH-EVERETT CO

No. 20367

Supreme Court of Louisiana

November 4, 1914

On the Merits, February 21, 1916

SYLLABUS

(Syllabus by the Court.)

A contract whereby the owner of land grants to another, in consideration of payments, made and to be made, of certain agreed sums of money and other considerations which are to arise in a certain contingency, his right, or option, to drill for oil or gas within a year, and to extend the time thus granted, quarter by quarter, until it reaches a limit of 5 years, contains no potestative condition by reason of its failure to impose upon the grantee any obligation to drill since it is not within the contemplation of the contract that he should drill, unless he so elects. The purpose is to confer the right to drill without imposing the obligation and there is nothing in that purpose or in the nature of the contract with contravenes any law of this state.

Where, as a consideration for an option to drill for oil and gas upon lands in improved territory, the grantee pays, cash in advance, an amount equal to 3 per cent. on the market value of the lands for one year's time within which to exercise his option, and a like amount, in quarterly payments, in advance, during four years for quarterly extensions of the time, it cannot be said, either that the price (if the transaction be considered a sale) is not 'serious' or that it is 'out of all proportion to the value of the thing,' within the meaning of Civ. Code, art. 2464. Whether it is adequate or inadequate is a question with which the courts have no concern, where neither error nor fraud are alleged and shown.

Scarborough & Carver, of Natchitoches, and Hall & Jack, of Shreveport, for appellant.

Alexander & Wilkinson and Hampden Story, all of Shreveport, for appellee.

Thigpen & Herold, of Shreveport, amici curiae.

On Motion to Dismiss.

OPINION

PROVOSTY, J.

This being a suit to annul an oil and mineral lease made by the plaintiff to the defendant, the Busch-Everett Company, to a large tract of land, and plaintiff having appealed from an adverse judgment, motion is made to dismiss the appeal on the ground that plaintiff has acquiesced in the judgment. This acquiescence is sought to be deduced from the fact that subsequently to the rendition of the judgment plaintiff sold to a third party an undivided half of the oil and minerals in and under a part of said land by a notarial act duly recorded, containing the following clause:

'And, whereas, said land is now leased to the Busch-Everett Company, and by the Busch-Everett Company assigned to the Pasadena Petroleum Company, for development for oil and gas, as shown by lease recorded in the records of De Soto parish, this sale is made subject to said lease, and this sale covers and includes an undivided one-half interest in all royalties and rentals that may be due under the terms of said lease.'

It is argued that by this clause plaintiff admitted the validity of the lease as to the part of the land embraced in the sale, and that, the lease being indivisible -- not susceptible of being valid in part and invalid in part -- the recognition of its validity as to a part of the land was a recognition of its validity as to the whole; and, ergo, was an admission of the correctness of the said judgment, and an acquiescence therein. That it was either this, or it was a fraudulent attempt on the part of plaintiff to defraud said third person by depriving him of 'an undivided interest in all the royalties and rentals that may be due under said lease.'

This argument impresses us not at all. Even if plaintiff had made an express admission of the validity of the lease and of the correctness of the judgment appealed from, this would not have furnished ground for dismissal. While the admission of the correctness of a judgment may furnish the best of grounds for affirming the judgment on appeal, it furnishes no ground whatever for dismissing the appeal on the ground of acquiescence; acquiescence implies consent; admission does not. A candid person admits a thing, not because he wants to do so, but because truth compels him to do so; whereas, it is the element of consent in acquiescence that furnishes the ground for dismissing an appeal. What we here say with regard to an admission not forming a basis for dismissal is illustrated by the fact that an admission furnishes no ground for estoppel until it has been acted on to the prejudice of the person to whom it was made. 16 Cyc. 755. But, putting all this aside, as savoring, perhaps, more or less of refinement, what are the plain facts of the matter? The lease was duly recorded, and therefore any sale made by plaintiff of the oils and minerals embraced in it was necessarily subject to it. This condition of things was an existing, stubborn fact, which plaintiff did not have the power to change. The concealment, or attempted concealment, of it by plaintiff from his vendee would have constituted -- what the defendant intimates the mention of it was -- a fraud upon the said vendee. In common honesty it had to be mentioned. So that, all that plaintiff could do was to do exactly what he did do, namely, mention the fact of the existence of the lease and of the property passing subject to it, and, at the same time, convey all the rights he had under it. By this means the vendee was placed exactly in plaintiff's shoes with reference to the oils and minerals proposed to be sold; in other words, the object of the sale was fully accomplished.

To argue from this, that plaintiff intended to ratify the judgment from which he was appealing, and abandon his appeal, appears to us to be far-fetched in the extreme. Nothing shows that he intended anything of the kind. He had to either do as he did, or else not make the sale; and, unquestionably, he was at perfect liberty to make the sale. Perhaps, for his own greater safety, he might have gone further and mentioned the fact of the pendency of the present suit; but his not having done so is a matter which in no way, shape, or form concerns the defendant.

It is argued, further, that if this sale had been made prior to the institution of the present suit, it would 'indubitably' have operated as an estoppel to it, and that therefore it is an acquiescence in the judgment.

We fail entirely to see the force of this reasoning. An admission not acted upon cannot serve as a basis for estoppel. Defendant has never acted on this so-called admission; so that, even if it has been made prior to this suit, the defendant could not have invoked it as a basis for estoppel. Moreover, nothing is more fundamental in the law of estoppel than that strangers to a deed cannot avail themselves of an estoppel arising from it. 16 Cyc. 710. True, if, in the present case, plaintiff's vendee should prefer that the lease should not be annulled, but should continue in existence, so that he might reap the advantages under it, he might set up this sale of all the plaintiff's right under the lease as an estoppel to the further prosecution by plaintiff of the present suit to annul said lease; but this is no business of the defendant. And, besides, we have little doubt that plaintiff's said vendee is as desirous to have said lease annulled as plaintiff himself is, and for the same reasons.

In the said act of the plaintiff and appellant we fail to discover even the slightest evidence of acquiescence, whereas to take away the right of appeal there must be an unconditional, voluntary, and absolute acquiescence in the judgment on the part of the appellant, who must have intended to acquiesce and abandon his right of appeal. Sims v. Jeter, 129 La. 263, 55 So. 877, and authorities there cited.

The motion to dismiss is therefore overruled.

On the Merits.

MONROE C. J.

Plaintiff seeks to annul two contracts, relating to oil and gas, made by him with defendant on March 10 and March 13, 1909, respectively; the one, concerning the rights to the oil and gas to be found beneath the surface of certain tracts of land aggregating 1,745 acres, and the other, concerning those minerals to be found beneath the surface of a tract of 100 acres, both of which contracts, he alleges, are void for want of mutuality, in that neither of them binds the defendant to bore any well or explore the land, and that both of them reserve to defendant the right to remove its fixtures, machinery, and improvements at its pleasure.

Another ground of attack, alleged in a supplemental petition, was, that the contracts had not been signed by defendant, but, as that ground is not here insisted upon, we need not consider it. The defense is, in effect, that plaintiff received, by cash paid in advance, an adequate consideration for the privilege accorded defendant of delaying the attempt to develop the land and cannot be heard to attack the contracts before the expiration of the periods covered by that privilege, and whilst still retaining the consideration, and, the less so, as defendant was engaged, when served with citation herein and before the expiration of such periods, in drilling a well.

The contracts contain provisions which are practically identical (and will be fully stated hereafter); the consideration, paid and to be paid, for the right to delay operation during the maximum term of 5 years, aggregating $ 267.72 per annum, or about 15 cents per acre; the whole amount due for the first year's delay having been paid upon the signing of the contracts, after which there were quarterly payments in advance, as will hereafter appear.

We find from the evidence that the territory (in the parish of De Soto) in which plaintiff's lands are situated was unproven and untried as an oil and gas field in 1909 (when the contracts were entered into), and...