Sautbine v. Keller

• Decision Date: 25 October 1966
• Docket Number: No. 40719,40719
• Citation: 423 P.2d 447,1966 OK 209
• Parties: Willis G. SAUTBINE, C. D. Sautbine, the Unknow Successors, Trustees and Assigns of Willis G. Sautbine, Inc., the Unknown Heirs, Executors, Administrators, Devisees, Legatees, Trustees and Assigns of L. J. Milburn, deceased, and Willis G. Sautbine, Inc., a corporation, Plaintiffs in Error, v. Jesse M. KELLER, Isie Keller, Emery A. Oakes, Frankie Oakes, R. M. Oakes,Ethel Oakes, and Federal Life Insurance Company, a corporation, Defendants inError.
• Court: Oklahoma Supreme Court

Page 447

423 P.2d 447

1966 OK 209

Willis G. SAUTBINE, C. D. Sautbine, the Unknow Successors Trustees and Assigns of Willis G. Sautbine, Inc., the Unknown Heirs, Executors, Administrators, Devisees Legatees, Trustees and Assigns of L. J. Milburn, deceased and Willis G. Sautbine, Inc., a corporation, Plaintiffs in Error, v. Jesse M. KELLER, Isie Keller, Emery A. Oakes, Frankie Oakes R. M. Oakes,Ethel Oakes, and Federal Life Insurance Company, a corporation, Defendants inError.

No. 40719.

Supreme Court of Oklahoma.

Oct. 25, 1966.

Rehearing Denied Jan. 31, 1967.

Syllabus by the court

1. A person holding a deed to land, which he has placed upon record, is not ordinarily bound to disclose his title to persons contemplating purchasing said land, unless his silence be deceptive and is misleading, or is accompanied by intention to defraud.

2. A corporation is a legal entity, separate and distinct from its stockholders even in so-called family corporations where one person owns a great majority of the stock, and does not establish identity between the stockholder and the corporation so as to permit his acts to be binding upon the corporation in absence of showing that the corporate entity was used (to defeat public convenience, justify wrong, perpetrate fraud whether actual or implied, or defend crime) to subserve the ends of justice.

3. Sale of real estate under order of sale issued in a mortgage foreclosure action is a 'sale upon execution' within the meaning of 12 O.S.1961, § 93(1).

4. A corporation which acquired mineral interest in land separate from surface, subject to an existing mortgage as shown by public records, a subsequent foreclosure action which failed to make such mineral owner a party to the action did not foreclose the corporation's interest in the severed minerals.

5. Where trial court's judgment in equity case is against clear weight of evidence or contrary to applicable law, the Supreme Court will reverse and cause to be rendered such judgment as trial court should have rendered.

Appeal from District Court of Dewey County; Tom R. Blaine, Judge.

Action by plaintiffs against successors in interest of dissolved corporation to quiet title to mineral interests in certain land. From judgment of trial court quieting plaintiff's title, defendants appeal. Reversed and remanded with directions.

Robert D. Crowe, Oklahoma City, for plaintiffs in error.

Tom J. Ruble, Taloga, Sparks, Boatman & Rizley, Woodward, for defendants in error, Jesse M. Keller, Isie Keller, Emery A. Oakes, Frankie Oakes, R. M. Oakes and Ethel Oakes.

Ben L. Burdick and Paul R. McDaniel, of Crowe, Boxley, Dunlevy, Thweatt, Swinford & Johnson, Oklahoma City, for defendant in error, Federal Life Ins. Co., a corporation.

BERRY, Justice.

This appeal involves the correctness of the trial court's judgment quieting the plaintiffs' title to an undivided one-half mineral interest under 1240 acres of land in Dewey County, Oklahoma. Originally separate actions were filed by three different plaintiffs but, since each involved the identical facts and issues, they were consolidated for hearing, determination and appeal.

Prior to the transactions culminating in this appeal, all the land involved was owned by one Ralls who, joined by his wife, had mortgaged the land to the Fidelity Land & Credit Company. This mortgage was assigned to the Federal Life Insurance Company, herein called 'Federal', one of the defendants in error in this appeal. On June 27, 1926, the Ralls conveyed the land to Lyn R. Sautbine, subject to Federal's mortgage. By mineral deed recorded July 30, 1926, Sautbine conveyed an undivided onehalf mineral interest to Willis G. Sautbine, Inc., which we shall refer to as the defendant. Thereafter Sautbine sold and conveyed the land to one Merrill, subject to the mortgage and excepting the prior mineral grant.

This defendant had been incorporated in Oklahoma on January 13, 1925, and was organized for the stated purpose, among others, of buying and acquiring oil and gas leases and engaging in development and production of oil, gas and other minerals. The incorporators were L. J. Milburn, C. D. Sautbine and Willis G. Sautbine, who owned 98% Of the corporate stock. The incorporators became the directors with Willis G. Sautbine as president and C. D. Sautbine as secretary-treasurer. The corporation was active until December 15, 1930, when the corporation charter was canceled for non-payment of license fees.

On May 26, 1927, Federal filed Case No. 2218 in Dewey County seeking foreclosure of the Ralls' mortgage. The petition named Lyn R. Sautbine and Willis G. Sautbine individually as parties defendant, but the corporation was not mentioned at any point in the proceedings. Summons issued and was served and returned against Willis G. Sautbine personally, and service by publication was had upon Lyn R. Sautbine. No service of process was sought or attempted against the corporate defendant. Upon advice of their attorney the Sautbines individually disclaimed any interest in the property under foreclosure.

The case culminated in a judgment foreclosing the mortgage and purportedly confirming the fee title in Federal. Pursuant to an order of sale in the foreclosure decree a sheriff's sale was had, and on July 31, 1928, the trial court entered order confirming such sale. Thereafter a sheriff's deed was executed to Federal, which was recorded August 13, 1928. Federal then conveyed by warranty deeds to Charles O. Oakes and Jesse M. Keller, who then reconveyed one-fourth of the mineral interest back to Federal. The plaintiffs in each of the mentioned actions derived their interests from Oakes and Keller and no issue was raised concerning plaintiff' ownership, other than the Sautbine mineral interest.

The petition deraigned plaintiff's title as noted, and alleged the foreclosure proceedings canceled the mineral interest of the corporate defendant; that under the sheriff's deed, based upon the foreclosure, plaintiffs had held open, notorious, continuous and exclusive possession of the land since August 10, 1938, and that their title was valid as against any claim by defendants, and asked judgment quieting their title.

By answer defendants Sautbine alleged matters above recited upon which their claim to the mineral interest was based; affirmatively alleged W. B. Sautbine, Inc. was not a party to the foreclosure action; denied plaintiffs' claim of ownership of one-half the minerals by reason of mortgage foreclosure, or by adverse possession; asked that defendants be adjudged owners and to have title to their mineral interest quieted as against plaintiffs.

An amended petition was filed and Federal was brought into the case and placed upon notice to defend the warranty of title for benefit of plaintiffs. Plaintiffs also sued Federal for damages for breach of warranty but such issues are not involved herein. Federal then answered admitting matters asserted in the petition, pleaded its own ownership of one-fourth of the minerals and alleged any mineral interest claimed by the corporate defendant had been foreclosed and canceled in the foreclosure proceeding because: (1) the corporate defendant was the alter ago of Willis Sautbine as an individual and a conduit for his business affairs; (2) the defendant was merely Sautbine's agent in the transaction; (3) the qualifying stock was held for his benefit and Sautbine was the sole owner of the corporation and acted as an agent in filing the disclaimer; the judgment rendered against Sautbine in the foreclosure suit was binding on the corporate defendant; (4) being the sole shareholder and corporate president, summons upon Sautbine was notice to the corporation and he also had personal knowledge which constituted notice to the corporation; (5) corporate defendant's failure to assert any interest for a long period estopped corporation from claiming interest since plaintiffs had relied thereon; (6) defendant was guilty of laches for failure to assert its interest after notice; defendant was barred from claiming any interest because of plaintiffs' adverse possession.

Plaintiffs' reply and answer to defendants' cross-petition asserted the above mentioned defenses against defendants, and also alleged Sautbine, individually, was the real party in interest in the foreclosure action, which judgment rendered against him personally likewise foreclosed the corporate defendant. Defendants replied denying that the corporate defendant was Sautbine's alter ago, or that laches or statute of limitations applied.

The issues were tried to the court, who took the matter under advisement upon briefs submitted by the parties. Thereafter the court entered judgment generally for plaintiffs, quieting their title to an entire fee simple estate in the land, except for the undivided one-fourth mineral interest originally retained by Federal. Motion for new trial was overruled and defendant perfected this appeal.

The trial court's judgment, here presented for review, simply was a general finding for plaintiffs, quieting their title as against defendants' claim of ownership of the undivided mineral interest. Being a general finding, the judgment does not disclose the theory upon which trial court predicated his conclusions. Examination of the record, including the trial court's remarks during trial, reflects that plaintiffs principally relied upon the theory, advanced in the first instance by Federal, that the interests of Sautbine, individually, and the corporate defendant were so closely related that the defendant was only his alter ego. Thus defendant was precluded from asserting any interest in the land since his individual disclaimer filed in the foreclosure action must be considered as that of the corporation. Upon this basis plaintiffs argue that this is an equity case wherein the judgment cannot be disturbed unless against the clear weight of the evidence, and that there was competent evidence upon which to base...