Tendolle v. Eureka Oil Syndicate

• Decision Date: 06 June 1928
• Docket Number: 1457
• Parties: TENDOLLE, ET AL. v. EUREKA OIL SYNDICATE, ET AL. [*]
• Court: Wyoming Supreme Court

268 P. 185

38 Wyo. 442

TENDOLLE, ET AL. v. EUREKA OIL SYNDICATE, ET AL. ^[*]

No. 1457

Supreme Court of Wyoming

June 6, 1928

Rehearing Denied 38 Wyo. 442 at 454.

ERROR to District Court, Park County; PERCY W. METZ, Judge.

Action by Henry Tendolle and another against the Eureka Oil Syndicate and others. Judgment for defendants, and plaintiffs bring error.

Affirmed.

C. A Zaring and H. J. Coleman, and Dillon, Ellery & Spencer, for plaintiffs in error.

Unaccrued royalty interest in oil or gas constitutes realty, and can only be conveyed by deed; U.S. v. Noble, 197 F. 292 (C. C. A. 8th); U.S. v. Moore, 284 F. 86 (8th Cir.); Paxton v. Co., (W. Va.) 94 S.E. 472; State v Snyder, 29 Wyo. 163; State v. Association, (Minn.) 156 N.W. 128; Royalty Oil Corp. v. Hemme, 282 F. 750; Waggoner v. County, 298 F. 818; In re Rust's Estate, (Mich.) 182 N.W. 82; Palms v. Palms, (Mich.) 36 N.W. 419. The conveyance was a mere quitclaim, but in the form prescribed by statute, 4617-4620 C. S.; no covenants are implied, 4582 C. S.; 1 Devlin Deeds (3rd Ed.) p. 42; it passed whatever interest he had, Bannard v. Duncan, (Nebr.) 112 N.W. 353; State v. Kemmerer, (S. D.) 84 N.W. 771; Bruce v. Luke, (Kan.) 12 Am. Rep. 491; one having good title ordinarily conveys by warranty deed, Johnson v. Williams, (Kan.) 14 P. 537; Sherwood v. Moelle, 36 F. 478; Meeks v. Lickford, 125 A. 15; the instrument was not one of bargain and sale, Carleton v. Lombardy, (Tex.) 16 S.W. 1081; the conveyance did not extend to after-acquired title, 4618 C. S.; Bryan v. Eason, (N. C.) 61 S.E. 71; Knight v. Dalton, (Kan.) 83 P. 124; Bremhorst v. Co., (Ia.) 211 N.W. 898; Bird v. Stimson, (Mich.) 164 N.W. 438; Gulf Co. v. State, (Tex.) 231 S.W. 133; Selsor-Badley v. Read, (Okla.) 223 P. 651. A permit to prospect for oil or gas, confers no right to such minerals, Tuckel v. Co., (Tex.) 243 S.W. 1068; Moore v. Brown, (N. Y.) 34 N.E. 773; nor does it give title or legal interest in the land, Wagstaff v. Collins, 97 F. 3-8 (8th Cir.); Woodruff v. Wallace, (Okla.) 41 P. 357; Smith v. Co., (La.) 102 So. 574; Johnson v. County, (Mont.) 146 P. 471; Hodson v. Oil Co., 297 F. 293. Permits are assignable, Voeltserl v. Wright, 51 L. D. 38; a mere application confers no interest, Emlow v. Shaw, 50 L. D. 338. The deed did not estop Tendolle, or his grantee, from asserting after-acquired title, since no covenants may be implied, 4582 C. S.; Clark v. Baker, 14 Cal. 612; Jackson v. Bradford, (N. Y.) 4 Wendell 618; Jackson v. Hubble, (N. Y.) 1 Cowen 613; Jackson v. Wright, (N. Y.) 14 Johns. 193; Boswell v. Buchanan, (Va.) 23 Am. Dec. 280; Pence v. Long, (Ind.) 77 N.E. 961; Vary v. Smith, (Ala.) 50 So. 187; Barron v. Co., 171 S.W. 683; Myers v. Reed, 17 F. 401; Comm. v. Bierly, 37 Pa. 496. A deed without covenants of warranty is one of bargain and sale, 3 A. L. R. 948. The decree is not sustained by sufficient evidence.

Paul R. Greever and H. C. Brome, for defendants in error.

The trial court passed upon the facts and questions of credibility, on preponderance of evidence, will not be reviewed, Wyman v. Quayle, 9 Wyo. 326; Huber v. Bank, 32 Wyo. 358 and if there were any merit in the claim of fraud it could not apply except to the one-fourth of one per cent. of royalty owned by Tendolle; the evidence established that Henderson owned three and one-fourth per cent. of the royalty and Tendolle the remainder. No one can obtain relief on the ground of fraud except an injured party, 27 C. J. 4. Henderson obtained his conveyance from Tendolle, with knowledge of the prior conveyance to Taylor. A deed of quitclaim and a deed of bargain and sale are one and the same thing, 4581 C. S.; Balch v. Arnold, 9 Wyo. 17; Roberts v. Hudson, 25 Wyo. 509; Huber v. Bank, 32 Wyo. 358. Title subsequently acquired relates back to the conveyance, 18 C. J. 252; 8 R. C. L. p. 161. The authorities cited by plaintiffs in error refute their claim.

KIMBALL, Justice. BLUME, C. J., and RINER, J., concur.

OPINION

KIMBALL, Justice.

Henry Tendolle and J. B. Henderson, plaintiffs, by their action against Eureka Oil Syndicate and W. O. Taylor, defendants, sought to cancel a deed and quiet title to an interest in the oil and gas in lands controlled by the Federal Leasing Act of February 25, 1920 (41 Stat. 437). The judgment in the trial court was for the defendants, and plaintiffs bring the case here on error.

June 15, 1921, plaintiff Tendolle, then being an agricultural entryman entitled to a preference right to a permit and lease under Section 20 of the leasing act (41 Stat. 445), filed in the United States Land Office his application for an oil and gas prospecting permit. June 13, 1921, it was agreed in writing between Tendolle and one Savage that Savage, on the issuance of the permit, would drill the lands for oil and gas and, if oil or gas was discovered, Savage was to receive 87 1/2 and Tendolle 12 1/2 per cent thereof, the government royalty to be paid from Savage's portion.

September 17, 1921, Tendolle executed and delivered to defendant Taylor the deed in question in the case. We quote the material provisions of that instrument:

"DEED TO AN UNDIVIDED INTEREST IN OIL, GAS AND OTHER MINERALS.

"THIS INDENTURE, Made this 17th day of September, A. D. 1921, between Henry Tendolle, of Powell, Park County, Wyoming, the party of the first part, (whether one or more) and W. O. Taylor, of Billings, Montana, the party of the second part.

"WITNESSETH: That the said party of the first part, for and in consideration of the sum of One Dollar ($ 1.00) to him in hand paid by the said party of the second part, the receipt whereof is hereby acknowledged, does by these presents grant, bargain, sell, release and forever quit claim unto the said party of the second part and to his heirs and assigns forever an undivided 3 1/2% Royalty interest in and to all of the oil, gas and other minerals whatsoever in and under the following described land situate in Park County, State of Wyoming, to-wit:

(Here follows description of the land by legal subdivisions. )

"Together with the rights of ingress and egress at all times for the purpose of mining, drilling, and exploring said land, for oil, gas and other minerals, and removing the same therefrom, and any and all rights and privileges necessary, incident to, or convenient for the economical operation of said land for such purpose.

"TO HAVE AND TO HOLD all and singular said premises, together with the appurtenances and privileges thereto incident unto the said party of the second part, his heirs and assigns forever.

"If such land is covered by a valid oil and gas or other mineral lease, the party of the second part, his heirs and assigns, by this instrument shall have an undivided 3 1/2% interest in the Royalties, Rental, and Proceeds therefrom, of whatsoever nature."

This deed was recorded in the office of the County Clerk of Park County, September 19, 1921.

February 7, 1922, an oil and gas prospecting permit under Section 20 of the leasing act was granted to Tendolle, and May 9, 1922, there was issued to him under the homestead law a patent to the lands reserving to the United States the oil and gas. The lands were explored under the permit by the sinking of a well by Savage and associates acting under the contract of June 13, 1921. In April, 1926, oil was discovered.

The interest obtained by Taylor by the deed of September 17, 1921, has been transferred by him to the defendant Eureka Oil Syndicate, a so-called "common law trust," of which Taylor and two others are trustees. Tendolle has transferred to others all his oil and gas rights except a one-fourth of one per cent interest. A 3 1/4 per cent interest he transferred to J. B. Henderson, the other plaintiff. The two plaintiffs claimed that the sum of their interests was the same interest claimed by the Eureka Oil Syndicate under the deeds from Tendolle to Taylor and from Taylor to the syndicate.

To avoid the deed of September 17, 1921, from Tendolle to Taylor, the plaintiffs claimed that it was obtained by fraud. There is a suggestion by defendants that plaintiff Henderson, as the grantee of Tendolle, had no right to raise the issue of fraud, and that in any event the transfer from Tendolle to Taylor could be set aside so far only as it effects the royalty interest owned by Tendolle at the time of the commencement of the action. That point need not be decided.

The petition alleged in substance that Taylor represented to Tendolle that Savage would be unable to perform his contract to drill under the permit; that he (Taylor) was willing to perform in place of Savage in consideration of a 1 1/2 per cent royalty interest; that Tendolle signed the deed of September 17 without knowing its contents, but believing, on the representations of Taylor, that it was a contract to give Taylor a 1 1/2 per cent royalty interest in consideration of Taylor's promise to protect Tendolle in his rights, and that there was no consideration for the deed. These allegations were supported at the trial by the testimony of plaintiff Tendolle.

The defendant Taylor as a witness denied the testimony of Tendolle on all material matters. Taylor testified that he was representing the Eureka Oil Syndicate, a company or association engaged in the business of buying and holding royalty interests in oil and gas production; that he approached Tendolle for the purpose of buying such a royalty and after explaining the objects of the syndicate, offered to give 500 shares of its stock for the interest in question, with the further promise to give Tendolle $ 1,000 in cash if oil should be discovered on an adjoining tract that was then being or about to be drilled, it being understood that the interest obtained from Tendolle would become the property of the...