Warren Oil & Gas Co. v. Gardner

Decision Date27 May 1919
PartiesWARREN OIL & GAS CO. v. GARDNER ET AL.
CourtKentucky Court of Appeals

Appeal from Circuit Court, Allen County.

Suit by W. T. Gardner and another against the Kentucky-Indiana-Tennessee Oil & Gas Company, a partnership to cancel an oil and gas lease, in which the Warren Oil & Gas Company were denied the right to intervene, and such company appeals. Judgment affirmed.

W. B Gaines and Sims, Rodes & Sims, all of Bowling Green, for appellant.

Noel F Harper, of Scottsville, for appellee.

SAMPSON J.

A partnership was formed in 1917, by J. Dan Stark and Scott Isabel, both of Bowling Green, Warren county, Ky. under the firm name of Kentucky-Indiana-Tennessee Oil & Gas Company for the purpose of engaging in the business of buying and selling oil and gas leases, and they filed in the office of the clerk of the Warren county court the certificate required by section 199b, Kentucky Statutes, regarding the employment of a fictitious name in business in this state. After transacting some business in Warren county, the partnership, through Stark, went into Allen county and acquired two oil and gas leases from landowners, one being the lease in controversy, executed by W. T. Gardner and wife to the Kentucky-Indiana-Tennessee Oil & Gas Company, and bearing date October 31, 1917, consideration $25, and reservation of royalties to continue for a term of three years. Stark issued and delivered to Gardner a check on a Bowling Green bank for $25 in payment of the bonus on the lease, but this check was returned unpaid through some mistake of the bank, whereupon Stark tendered Gardner $25 in cash, which Gardner refused, and instituted this action in the Allen circuit court to have the lease contract adjudged null and void, canceled and held for naught on the grounds: (1) That it was executed without consideration; (2) fraud and misrepresentation on the part of the grantee and its agents in obtaining the lease; (3) the lease contract was void because the partnership Kentucky-Indiana-Tennessee Oil & Gas Company had not complied with section 199b, Kentucky Statutes, by filing the required certificate in the office of the clerk of the Allen county court, and was not authorized to do business in said county. Process was first issued only to Warren county for defendants, and when returned executed was quashed on motion of defendants. In the meantime summons was issued to Allen county and executed upon Stark and Isabel in that county the requisite time before the convening of the April term, 1918, of the Allen circuit court, and on the fifth day of that term of court, the defendants having failed to answer or make defense, the cause was submitted, and on the sixth day of the term, which was the 20th day of April, judgment was entered adjudging the lease null and void for the reasons set out in the petition, and in accordance with the prayer thereof. Within a very few days thereafter and at the same term of court, defendants moved to set aside the submission and judgment for two reasons: (1) Because a motion was pending to quash process; (2) the lease had been transferred to the Warren Oil & Gas Company. The first ground was without merit, because the motion to quash had been disposed of several days before. The second ground presents a more serious question. A one-half undivided interest in the lease had been transferred by the partnership to the Warren Oil & Gas Company some ten days before the commencement of this action, but not recorded until some months later. Each of these grounds were set forth both in the motion of defendants and in the petition to be made party, answer, and counterclaim of Warren Oil & Gas Company, which was offered by it at the same time the motion was entered, asking the judgment to be set aside. By the petition, answer, and counterclaim of the Warren Oil & Gas Company, it is admitted that the certificate required by section 199b, Kentucky Statutes, was not filed by the Kentucky-Indiana-Tennessee Oil & Gas Company in the office of the clerk of the Allen county court, but it is alleged:

"That it did not intend and has not transacted any business in Allen county, except to take the lease in controversy and one other lease, intending before they should do any further business in Allen county to file said statement, but having parted with all interest in said lease on November 13, 1917, two weeks after acquiring same, they did not file said statement in Allen county."

This pleading also contained a traverse of certain averments of the petition, and affirmatively alleged that the Warren Oil & Gas Company was at all times a duly incorporated company. The court declined to file the petition to be made party of the Warren Oil & Gas Company, and the special demurrer and motion of the defendants Stark and Isabel were likewise rejected; but all these pleadings were made part of the record. The motion to set aside the judgment was overruled, to which exception was saved, and the Warren Oil & Gas Company appeals.

The grounds argued for reversal of the judgment are: (1) The court erred in rejecting the petition to be made party offered by appellant, Warren Oil & Gas Company, because that company, being the owner of a one-half undivided interest in the lease in controversy with title of record before the issual of summons to Allen county, was entitled to be heard before the lease was canceled. (2) A partnership operating under a fictitious name...

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