Whayne v. Seamans

• Decision Date: 26 June 1923
• Docket Number: Case Number: 12679
• Citation: 1923 OK 431,95 Okla. 168,217 P. 859
• Parties: WHAYNE v. SEAMANS et al.
• Court: Oklahoma Supreme Court

1923 OK 431

217 P. 859

95 Okla. 168

WHAYNE v. SEAMANS et al.

Case Number: 12679

Supreme Court of Oklahoma

Decided: June 26, 1923

Syllabus

¶0 1. Vendor and Purchaser--Bona Fide Putchaser--Burden of Proof.

To constitute a bona fide purchaser three things must exist: a purchaser in good faith, for value, and without notice; and where a subsequent purchaser interposes the defense of bona fide purchaser, the burden of proof is upon him.

2. Same -- Notice -- Records -- Duty of Inquiry.

A purchaser of lands, who buys in reliance upon the record title, is chargeable with all the notice brought to him by the records, and if the record contains matters that would put a person of ordinary prudence upon inquiry into the nature of the title of the grantor, or the rights and equities of a former owner, then the law charges such purchaser with all the knowledge an inquiry upon his part, prosecuted with reasonable diligence, would have brought home to him.

3. Notice--Facts Putting Upon Inquiry.

Whatever is notice enough to excite attention and put a reasonably prudent person on his guard and calls for inquiry, is notice of everything to which such inquiry might have led. When a person has sufficient information to lead him to a fact, he shall be deemed conversant with it.

4. Vendor and Purchaser -- Title -- Duty of Inquiry by Vendee.

The general rule is, where a vendor presents conveyances to himself prima facie valid, and assures the purchaser that his title thereunder is perfect, no duty to investigate farther is imposed upon the buyer in the absence of other facts and circumstances suggesting investigation.

5. Oil and Gas -- Departmental Leases -- Cancellation for Nonpayment of Rental.

The various acts of Congress delegate to the Department of the Interior jurisdiction over departmental oil and gas leases, and said leases authorize the Secretary of the Interior to cancel said lease for failure to pay rentals when due. Held, the order of said secretary canceling said lease for the failure to pay rentals is conclusive in the absence of fraud.

6. Same -- Right to Rely on Department Records.

A purchaser of an oil and gas lease may rely upon the records of the Secretary of Interior, which disclose that a prior lease had been canceled by said department for failure to pay the rentals and royalties due under said prior lease.

7. Same.

Plaintiff contends that Seamans, the lessee, in a departmental oil and gas lease, held a one-fourth interest in said lease in trust for said plaintiff. Seamans sold a portion of said lease on January 25, 1920, to defendant oil company. Plaintiff brought suit for his one-fourth interest. Defendant company pleaded it was a bona fide purchaser for value and without notice, and relied upon the record title, which disclosed that in 1913 the guardian of a full-blood Choctaw Indian executed a lease to Myers, which was approved by the Secretary of the Interior; Myers assigned to Whayne, Seamans, Brazell, and Berry. In 1917, Brazell executed a release of his interest in said lease, and filed the same for record. The record disclosed that on July 1, 1919, a subsequent guardian sold an oil and gas lease on said land at public auction, through the county court, to R. E. Seamans, the highest bidder, for $ 10,800. Said sale was confirmed by the county court, and approved by the Secretary of Interior. The purchaser made inquiry of the Department of the Interior regarding the prior lease and ascertained that the prior lease had been canceled by said department June 20, 1919, for failure to pay rentals due December 30, 1918. Held, first, said party had a right to rely upon the record of the Department of Interior regarding the cancellation of a prior lease; held, further, an examination of the records of the county where the land is situated, and of the Department of the Interior disclosed the second lessee's title was prima facie valid, and there was nothing in said record to excite a reasonably prudent man to require him to make further investigation.

8. Same--Findings--Evidence.

Record examined, and held, the finding of the trial court that the defendant company was an innocent purchaser in good faith, for valuable consideration, and without notice, is not clearly against the weight of the evidence.

9. Same -- Assignment of Departmental Lease--Bona Fide Holder.

The assignment of a departmental oil and gas lease in the following form: "The lessee hereby bargains, grants, sells, transfers, assigns and conveys all the right, title and interest of the lessee in and to said lease subject to the approval of the Secretary of the Interior, held, sufficient to make the assignee a bona fide holder, and said assignee took said lease free from any private agreement or secret trust of which he had no knowledge.

10. Conversion -- Property Subject--Leaseholds.

The general rule is that only tangible property is subject to conversion, and a leasehold estate is not a subject for action in conversion.

11. Same--Oil and Gas Leasehold--Damages.

Record examined, and held, that the judgment in favor of Whayne and against Seamans for $ 150,000 cannot be supported upon any theory of the case.

Error from District Court, Carter County; Thomas W. Champion, Judge.

Action by John R. Whayne against R. E. Seamans and others for interest in oil and gas lease. Judgment for plaintiff against defendant Seamans, and both parties bring error. Affirmed in part and reversed and remanded in part.

Bass & Hardy, Abernathy & Howell, and Rainey & Flynn, for plaintiff in error.

Jean P. Day and Eben L. Taylor, for R. E. Seamans.

Geo. S. Ramsey and John M. Chick, for Southwestern Petroleum Company.

W. P. Z. German, for Skelly Oil Company.

Stuart, Sharp & Cruce and N. J. Gubser, for Homa-Okla Oil Company.

McNEILL, J.

¶1 This is a suit in equity in the district court of Carter county by John R. Whayne against R. E. Seamans, Skelly Oil Company, Homa-Okla Oil Company, and Southwestern Petroleum Company to have his interest in and to a certain oil and gas lease in said county declared as one, fourth, and for an accounting for the proceeds from oil and gas taken from said lease by the defendants. The lease was made to Seamans and covered 60 acres of land; thereafter Seamans assigned ten acres of said lease to the Homa-Okla Oil Company, 40 acres to the Skelly Oil Company, and ten acres to the Southwestern Petroleum Company. The three defendant oil companies pleaded they were innocent purchasers for value, and relied upon the record title regarding the ownership of said lease. The defendant Seamans denied generally the allegations of the petition. The trial court rendered judgment in favor of the plaintiff and against the defendant R. E. Seamans for $ 150,000 for conversion of property, and rendered against him. John R. Whayne companies, finding that they were innocent purchasers without notice and for value.

¶2 R. E. Seamans appealed from the judgment rendered against him. John R. Whayne appealed from the judgment rendered against him and in favor of the three oil companies. Since the appeal, stipulations have been filed, and the appeal dismissed in so far as it relates to the Skelly Oil Company and the Southwestern Petroleum Company. This leaves for consideration the appeal of Whayne denying him relief against the Homa-Okla Oil Company and the appeal of Seamans from a money judgment against him in favor of Whayne.

¶3 We will first consider the appeal of Whayne in so far as it relates to the Homa-Okla Oil Company. The material facts in considering this portion of the appeal may be stated about as follows:

¶4 Walton Carney, the owner of the fee, is a full-blood Choctaw Indian, the land being his allotment. On October 23, 1913, while Carney was a minor, J. E. LeBosquet, his guardian, executed a departmental oil and gas lease to E. M. Myers covering 212.83 acres of land, embracing the 60 acres in controversy and 152 acres situated some ten miles distance therefrom, but all located in Carter county. This lease was for a period of ten years from the date of approval by the Secretary of the Interior, and as much longer as oil and gas was found in paying quantities. This lease was approved by the Secretary of Interior on December 30, 1913, and recorded in Carter county in 1914. The parties in their brief refer to this lease, dated October 23, 1913, as the LeBosquet lease, and thereafter when referring to same we will refer to it as the LeBosquet lease. In March, 1914, Myers executed an assignment of said lease to James H. Brazell, R. E. Seamans, H. L. Berry, and the plaintiff herein, for a consideration of $ 10,000 and reserved as a royalty one-fourth of the oil and gas. The 60 acres in controversy was in what was known as wildcat territory, but the 152 acres was in the north edge of the Healdton field, and was considered valuable.

¶5 Thereafter Brazell, Berry, Whayne, and Seamans organized the Elgin Oil & Gas Company and transferred the lease in so far as it related to the 152 acres to the Elgin Oil & Gas Company. Myers thereafter assigned his one-fourth royalty interest to W. G. Weimer. In 1914 and 1915, the Elgin Oil & Gas Company drilled a well upon the 152 acre tract of land. This well is referred to by some as a dry hole, and others as a spoiled well. The lease, however, was not operated nor the property developed. The lease, in so far as it related to the 60 acres in question, still remained the property of Brazell, Whayne, Seamans, and Berry. The lease, in so far as it relates to 152 acres, is not involved, and in referring hereafter to the LeBosquet lease, reference will be made to said lease covering the 60 acres. In 1917 Brazell executed a release to all his interest in the LeBosquet lease, and filed the same in the office of the county clerk of Carter county December 27, 1917. In the meantime, Walton Carney became 21 years of age, and in 1915, was declared an incompetent. H. R. Brown was appointed by the county court of Pittsburg county as his guardian....