Serena v. Rubin

• Decision Date: 06 November 1937
• Docket Number: 33443.
• Citation: 72 P.2d 995,146 Kan. 603
• Parties: SERENA et ux. v. RUBIN.
• Court: Kansas Supreme Court

72 P.2d 995

146 Kan. 603

SERENA et ux. v. RUBIN.

No. 33443.

Supreme Court of Kansas

November 6, 1937

Syllabus by the Court.

An order overruling demurrer to evidence is not reviewable if appeal therefrom is not taken within 6 months.

While mere inadequacy of price may afford no ground to set aside contract of sale, where gross inadequacy of consideration for oil and gas leases and deeds is shown, and also weakness of mind, illiteracy, and inexperience of grantors, and where misrepresentations have been made by grantee, equity court may grant relief by rescission or cancellation.

A "royalty" paid to lessor refers not to oil and gas in place, but to share in oil and gas produced and paid as compensation for right to drill and produce, and does not include perpetual interest in oil and gas in the ground.

A deed bearing title in large type "sale of oil and gas royalty," and which contained language "granted sold, conveyed, assigned and delivered, *** undivided one-half interest in and to all of the oil, gas and other minerals," effected severance of oil and gas in place and created fee in oil and gas in place, and did not constitute assignment of "royalty."

Grantors were entitled to cancellation of oil and gas leases and deeds which were called "royalty" deeds, and to recover for so much as had passed into hands of innocent purchasers under evidence disclosing that grantors were induced by grantee's false representations to execute such instruments in belief that grantors were merely conveying a royalty interest.

1. While mere inadequacy of price may afford no ground to set aside a contract of sale, yet where a gross inadequacy of consideration is shown, and also weakness of mind illiteracy, and inexperience of the grantors, and where misrepresentations have been made by the grantee, courts of equity may properly grant relief by rescission or cancellation.

2. The contents of the conveyance executed by the plaintiffs in this case, entitled "sale of oil and gas royalty," examined, and held to be a severance of title to oil and gas in place in line with the holding in the case of Richards v. Shearer, 145 Kan. 88, 64 P.2d 56.

3. The definition of "royalty," given in Bellport v Harrison, 123 Kan. 310, 255 P. 52, and followed in Burden v. Gypsy Oil Co., 141 Kan. 147, 40 P.2d 463, adhered to and followed.

Appeal from District Court, Graham County; W. K. Skinner, Judge.

Action by L. Serena and his wife against L. Rubin. From a judgment for plaintiffs, defendant appeals.

Clarence R. Sowers, of Wichita, for appellant.

W. L. Sayers and Wendell P. Sayers, both of Hill City, for appellees.

HUTCHISON Justice

This was an action to cancel two oil and gas leases and two oil and gas deeds, called royalty deeds, on land in Graham county, given by plaintiffs on January 19, 1935, to the defendant, and in the alternative to recover from the defendant the value thereof; the plaintiffs alleging that they are husband and wife, being 82 and 66 years of age, respectively; the husband being an Italian and with a very limited knowledge and understanding of the English language, and the wife with no experience in business matters, and especially as to oil and gas matters and conveyances; that they signed and executed such deeds and leases without knowing or understanding the nature and extent thereof because of the solicitation of the defendant and his companion, Williams, and their representations that the instruments they were asked to sign would not interfere with their right to lease the land for oil and gas, and that the money rentals would go to the plaintiffs. Plaintiffs allege that all of such statements and representations made by the defendant and his companion, Williams, were false and untrue, and fraudulently made to deceive the plaintiffs so as to induce them to sign and execute said instruments for the inadequate consideration of $200, which sum plaintiffs tendered into court in their amended petition.

The answer of the defendant was a general denial, except a disclaimer as to conveyances and assignments made by defendant to the Phillips Petroleum Company prior to the commencement of this action.

After the introduction of the evidence of the plaintiffs, the defendant demurred thereto, which demurrer was overruled by the trial court, and after the close of the evidence of the defendant the court made findings of fact and conclusions of law, which were in favor of the plaintiffs, and after the overruling of the motion for a new trial the defendant appealed, assigning as errors the overruling of the demurrer to the evidence of the plaintiffs, the rendering of judgment for plaintiffs and against the defendant, the overruling of the motion for new trial, and error in the making of findings of fact and conclusions of law.

The record shows the demurrer to the evidence of the plaintiffs was overruled more than six months prior to the time the notice of appeal was served, and in line with the holding in the case of Greiner v. Greiner, 130 Kan. 333, 286 P. 219, this is not a reviewable error. It was there held: "An order overruling a demurrer to the evidence of a party is not open to review, if an appeal therefrom is not taken within the six months' limitation." Syl. par. 1.

See, also, to the same general effect as to appeals taken from orders sustaining demurrers to the evidence, White v. Railway Co., 74 Kan. 778, 88 P. 54, 11 Ann.Cas. 550; Schubach v. Hammer, 117 Kan. 615, 232 P. 1041; and Security Finance Co. v. Hoyt, 143 Kan. 11, 53 P.2d 802.

The remaining assignments of error can well be considered together, and the findings of fact made by the trial court are of vital importance in doing so. The trial court found substantially the handicaps alleged in the petition as to the plaintiffs in the way of not fully understanding and comprehending important business transactions of this kind at the time they executed the deeds and leases, which was on January 19, 1935, and in the same connection found that shortly prior to this transaction the plaintiffs had executed an oil and gas lease on a quarter section of land to the Empire Company and had received a bonus of $160; that several years prior thereto plaintiffs had signed a mineral deed on a quarter section of land, placing it in a pool, named the Farmers Union Royalty Company; that the defendant was a dealer in oil leases and royalties as was also his companion Williams, who was associated with defendant under an agreement to receive one-third share in the profits of the transaction; that the defendant and his companion solicited the plaintiffs to sell royalties, stating that they did not want to buy leases but wanted royalties, and "that the sale of royalties did not cut any figure with the right to lease, and *** that Rubin would only get a share of the oil produced." The first part of the third finding is as follows: "Notwithstanding the fact that no mention was made of a mineral deed in any of the negotiations, nothing was said suggesting that Rubin expected to purchase anything beyond a mere royalty or interest in the oil and gas produced on the land. That the defendants prepared mineral deeds for Serena and wife to sign, one deed conveying to L. Rubin an...