Smith v. Grubb

• Decision Date: 15 March 1949
• Docket Number: No. 30753.,30753.
• Citation: 84 N.E.2d 421,402 Ill. 451
• Parties: SMITH v. GRUBB et al.
• Court: Illinois Supreme Court

402 Ill. 451

84 N.E.2d 421

SMITH

v.GRUBB et al.

No. 30753.

Supreme Court of Illinois.

Jan. 19, 1949.

As Modified on Denial of Rehearing March 15, 1949.

Appeal from Circuit Court, Richland County; Charles T. Randolph, judge.

Action by Clarence T. Smith, syndicate trustee, against Oakie Grubb and others for the construction of a deed, wherein Frank J. Piper intervened. From an adverse decree, defendants appeal.

Modified and affirmed.

R. E. Boley, of Olney, and Mills, Umfleet & Mayberry, of Fairfield, for appellants.

Donovan D. McCarthy, of Olney, and Sumner & Lewis, of Lawrenceville, for appellee.

WILSON, Justice.

The circuit court of Richland County construed a deed, dated June 4, 1936, from John W. Grubb, now deceased, to Clarence T. Smith, Syndicate Trustee. From a decree adverse to them, Oakie Grubb and his three codefendants prosecute this appeal. A freehold is directly involved.

On April 15, 1936, John W. Grubb owned eighty acres of land, in Richland County, in fee simple. On the day named, Grubb executed an oil-and-gas mining lease to R. Z. McGowan, reserving to himself, the lessor, a one-eighth part of all oil and gas produced as a landowner's royalty. This deed was caused to be recorded on May 9, 1936. McGowan assigned the lease to the Pure Oil Company. On June 4, 1936, Grubb executed the deed in controversy to Clarence T. Smith, described as Syndicate Trustee. The deed recites a consideration of $100 paid by Smith to whom Grubb conveyed ‘an undivided one half of one eighth interest in all of the oil and gas now, or at any time hereafter lying in or under the following described tract of land, * * *.’ Following the legal description, the deed recites, ‘It is hereby expressly declared that Whereas, the land particularly described in this conveyance is understood to be subject to an oil and gas mining lease in favor of R. Z. McGowan, his heirs, executors, administrators and assigns, it is intended that said outstanding lease is fully embraced in general terms of this conveyance so as to pass to and vest in the said Clarence T. Smith, Syndicate Trustee, one half of one eighth interest, not only in oil and gas, but also of royalties therein reserved to the lessor, precisely as if the said Clarence T. Smith, Syndicate Trustee, had been at the date of making of said lease the owner in fee of an undivided one-half interest in and to the lands described and hence one of the Lessors therein.’

From the testimony of Smith, a lawyer who lived in Flora, and the deposition of C. T. Montgomery who, in June, 1946, was a notary public and well acquainted in the neighborhood where Grubb resided, it appears that, on the morning on June 4, 1936, they repaired to Grubb's farm, located six or eight miles south and west of Noble. Grubb and Smith discussed leases taken by the Pure Oil Company in the general neighborhood and the possibilities of drilling test wells. Smith told Grubb he was buying royalty for a group of businessmen in Flora and was acting as trustee for the so-called syndicate. To Grubb's inquiry as to what interest he was buying, Smith replied that he was purchasing one half of the one-eighth royalty. Smith later learned from Montgomery that some royalties had been sold in the neighborhood for fifty dollars for forty acres. Smith testified he was aware of leases to the Pure Oil Company containing a provision that the lessee would pay the landowner one eighth of all oil and gas produced from the land, adding ‘all Mr. Grubb had was his right to demand and receive from the Pure Oil Company one eighth of the oil and gas which is the royalty interest under the lease.’ According to Smith, Grubb said that he would sell him the royalty interest, that is, one half of the royalty which he had left. Montgomery testified that Smith offered Grubb eighty dollars for ‘half of your royalty, or a one-half of the one-eighth that you have left.’ In the afternoon, at Montgomery's suggestion, he raised this offer to $100 for a one-half interest in Grubb's eighty acres. Smith testified, further, that he prepared the mineral deed and read it to Grubb; that they examined the deed together and Grubb asked him to explain its exact meaning; that he answered, ‘Mr. Grubb, you are selling one half of the mineral rights to me, and under this deed I am entitled to one half of the oil royalty that is paid to you by the Pure Oil Company under this lease;’ that he also told him if oil was discovered on his farm he and Grubb would each receive one half of the royalty; that, after re-reading the second clause of the deed to Grubb, he said, ‘in other words, we become partners in any oil produced on your land,’ and that Grubb replied, ‘all right,’ and signed the deed. Smith added, ‘I wrote him a check for $100 and left.’ Montgomery's testimony corroborates Smith. He testified that both Grubb and Smith understood that the Pure Oil Company had a seven-eighths interest in the oil and gas and that Grubb had only one eighth left; that Smith told Grubb he was buying ‘half of their one-eighth, half of what they (Grubb and his brother, Henry, who, apparently, also sold a part of his royalty interest to Smith) had left, and they understood, I suppose, what they were selling. They couldn't help but understand it,’ and ‘he (Smith) said, ‘I'll give you one hundred dollars for half of your royalty-half of what you have left. It tickled both of them when they found out they were going to get twenty dollars more than what they first agreed on.’

Thereafter, on June 26, 1936, Grubb executed a mineral deed to Frank J. Piper, conveying an undivided one-thirty-second interest in and to all of the oil and gas and other minerals in, under and upon the tract of eighty acres, subject to the oil-and-gas lease from Grubb to McGowan.

By another mineral deed, executed on May 19, 1937, Grubb conveyed an undivided one-half of one-thirty-second interest in and to all of the oil, gas and other minerals to Roy F. Gibson. By a corrected mineral deed, dated May 19, 1937, Grubb conveyed to Gibson an undivided one-eighth interest in and to all of the oil, gas and other minerals.

On December 28, 1940, Grubb executed a warranty deed to Oakie and Agnes Grubb, conveying to them forty acres of the eighty-acre tract involved in this litigation. This deed contains a clause providing ‘In case oil, and gas is found, and produced in paying quantities, and marketed, one-half of the same so marketed shall go to, and paid to Maymie Seaton, and Charles Seaton.’ The deed recites, further, that it was executed and delivered to the grantees by the grantor upon the express condition that they would contribute one half of the cost of maintenance, board and clothing necessary, and the care and attention needed for the grantor during his lifetime and, upon his death, furnish one half of a suitable burial, and necessary medical expenses in his last illness. On the same day, by another warranty deed, Grubb conveyed the other half of the eighty acres to Maymie and Charles Seaton. This deed contains clauses identical with those in the deed to Oakie and Agnes Grubb.

Before purchasing his interest in the land, Charles Seaton testified that he examined the records with respect to Grubb's land and that he then went to the office of the Pure Oil Company and made inquiries of its attorney. He said that he relied and depended upon the records in the office of the clerk of the circuit court in making his purchase of the land. Oakie Grubb testified that he made an examination of the records concerning the title to the property in question and that he, too, checked at the Pure Oil Company's office. He testified that he did not talk with Smith about the interest claimed by him in the land before purchasing the forty acres from Grubb.

Oil was discovered and produced from the property in controversy in 1944 and the question of the ownership of the royalty oil presented itself. When Smith was advised by the Pure Oil Company that a dispute obtained as to the mineral owners and that defendants were claiming adversely, he instituted this action.

By this complaint filed on August 18, 1944, the plaintiff, Clarence T. Smith, syndicate trustee of Arbuthnot Oil & Gas Syndicate, alleged that the interest in oil and gas was erroneously stated in the deed from Grubb to himself as being ‘one-half of one-eighth’ instead of ‘one-half;’ that this alleged error was not discovered by him for a long time thereafter; that Grubb made a like error in another mineral deed to another person, (Gibson) which was subsequently corrected by him; that when Grubb conveyed the property to defendants he was the owner of only an undivided eleven-thirty-seconds interest in the oil and gas under the land, and that they had notice of his (plaintiff's) rights when they purchased the property from Grubb. The relief sought was a decree (1) adjudging plaintiff to be the owner of an undivided one-half interest in the oil and gas under the premises in question, free and clear of all claims of the defendants, subject, however, to the oil-and-gas lease of the Pure Oil Company; (2) correcting and reforming the purported mistake of the scrivener in the preparation of the mineral deed dated June 4, 1936, and (3) ordering and directing defendants to execute and deliver to plaintiff a ‘correction’ mineral deed conveying to him an undivided one-half interest in the oil and gas. The complaint concluded with a prayer for general relief. Defendants answered, denying the material allegations of plaintiff's complaint and averring that they purchased the property for a valuable consideration, without notice or knowledge of plaintiff's claim, and entered into possession, and further, that plaintiff was guilty of laches in asserting his rights, if any, against them. Plaintiff's reply denied laches on his part and charged defendants with notice of his claim to the ownership of one half of the oil under the premises involved.

Frank J. Piper's motion for leave...