Gulf Refining Co. v. Travis , 201 Miss. 336 ( 1947 )

The tract of land here involved, consisting of approximately one hundred acres, is situated in or near the Heidelberg Oil Field in Jasper County. The discovery well in that field was brought in during the month of December, 1943.

On June 14, 1932, the land was owned by G.B. Travis, the common source of title. On that date he conveyed it to his daughter, Mrs. J.H. Hooks, for a valuable consideration paid but Mrs. Hooks, as so many thousands of others have done in the past and will doubtless continue to do in the future, failed to promptly put her deed of record, and did not file it for record until April 13, 1942.

Mrs. Hooks then lived in a different part of the State, and later moved to Louisiana. She made arrangement with her father, who lived in Heidelberg about three miles from the land, that he would look after it, and the tenants thereon would pay the taxes, and the like. For convenience Mr. Travis allowed the land to be continued to be assessed to him along with two other tracts owned by him or his wife. He had no authority, however, as it is now shown, to make any lease on the land other than the ordinary agriculture lease, and none to convey away any other interest.

Although without authority to do so, G.B. Travis, on April 24, 1933, made a mineral deed on this land, including also the two other tracts owned by him or his wife to Frederick G. Cook, Trustee. Later and on October 21, 1937, he made a mineral lease on the same three tracts to Gulf Refining Company, and on the next day a mineral deed to C.R. Ridgway. These three instruments were promptly recorded, and it is under one or the other of them that all appellants herein claim.

When the said mineral deed was made on April 24, 1933, a substantial part of the hundred acres here involved was in the actual possession of a tenant who was put there after consultation with Mrs. Hooks about the particular tenant. This tenant had begun his plowing on the land for the 1933 crop in February of that year, and he was well aware of the fact that Mrs. Hooks, and not Mr. Travis, owned the land. This tenant had not been on the land during its ownership by Mr. Travis. Mrs. Hooks was in the actual occupancy of the land by her tenants when the mineral lease and the mineral deeds were made by Mr. Travis in 1937, and these tenants also knew that Mrs. Hooks and not Mr. Travis was the owner. An inquiry of the tenants in possession at the dates mentioned in this paragraph would have disclosed her ownership to any prospective purchaser.

But the persons or agents who procured the mineral deeds and leases aforementioned did not go to the land or upon it, nor did they send any person to do so. No information about it otherwise was obtained by them. They had, therefore, no actual knowledge of the occupancy of Mrs. Hooks by her tenants. They made no search of the public records other than the assessment roll; and seeing that the tract was assessed to G.B. Travis, they dealt with him on the assumption that he was the owner.

In 1940 G.B. Travis and his wife became invalids, and to a large extent helpless. Two of their sons lived in Jackson, and in 1942 they brought their invalid parents to Jackson in order to better attend to their needs. One of these sons is the appellee, and the other is Cecil Travis, prominent at the bar of the State. Mrs. Hooks desired to share in the expense and to that end she conveyed this land to her brother, J.A. Travis, the appellee here, this deed being of date January 4, 1943, recorded June 9, 1943. Mrs. Hooks knew nothing of the mineral leases and deeds made by her father until a short time before the institution of this suit to cancel them as clouds upon the true title, and, as stated, she had not authorized her father to make them.

The salient facts above stated are either undisputed or else are shown by evidence sufficient to support the finding upon the facts in favor of appellee by the chancellor. They present the first contention earnestly pressed by appellants, that it is immaterial whether Mrs. Hooks was in actual possession of the land by her tenants at the time appellants acquired their mineral leases and mineral deeds aforestated, because, as appellants contend, the registration statutes as amended by Chap. 239, Laws 1924, Sections 2146, 2147 and 2148, Code 1930, same sections 867, 868, 869, Code 1942, give priority in title to the holder who first files his deed for record in the absence of actual notice to him.

For a century, beginning as far back as Dixon v. Doe ex dem. Lacoste, 1 Smedes M. 70, and through a uniform line of decisions on down to Beauchamp v. McLauchlin, 200 Miss. 83,25 So.2d 771, decided in 1946, it has been consistently held that the registration statutes do not affect an owner in possession by himself or by his tenants, and that his actual possession is all the notice necessary to any prospective purchaser.

On February 4, 1924, the case of Craig v. Osborn, 134 Miss. 323, 98 So. 598, was decided. It was erroneously interpreted as holding that the registration of a deed under the statutes as they then read took effect from the time of its actual recording, and not from the time it was filed. The legislature was then in session and on April 9, 1924, the amendatory act now under consideration was approved, Chap. 239, Laws 1924, which expressly clarified the rule, so that the deed first actually filed for record would take priority, and not the time of the recording, in the absence of actual notice. This was the only purpose of the Act, and it properly excepted from its operation that a deed first filed would not take priority over a deed of an earlier date when the person first filing had actual notice of the earlier deed. This was the only issue before the legislature, namely, that which was dealt with in Craig v. Osborn, and there was no thought or purpose to interfere in any way whatever with the established rule with reference to the effect of actual possession of the land.

If we were to sustain the contention now made by appellants on this point, we would open up one of the most profitable fields for legalized plunder that could well be imagined. Millions of acres of improved lands in this State are held by owners who cannot trace their title by unbroken chain back to the government, and hundreds of thousands of these acres, even to highly improved city lots, are held by owners who have not been in actual adverse possession for as much as ten years. Under appellants' contention, searchers of records in the recorders' offices throughout the State could find the innumerable instances where there is a break in the recorded chains, and being careful not to seek or receive any information about the possession of the land, could go to the last person in the chain of record title up to the time it was broken, or to his heirs and obtain from him or them a deed which he would promptly record and thereupon through such means could evict from their homes and farms and shops every owner thereof who had not been in actual possession for as much as ten years. Case upon case is to be found in our decisions to the effect that we are not obliged to act upon literalness in legislative language when so to do would make it embrace that which the legislature could scarcely have had in mind and which would produce grossly unjust and impolitic results.

Moreover, there have been a number of cases before this Court in the twenty-two years since the passage of Chapter 239, Laws 1924, wherein the stated rule as to the effect of actual possession has been continued to be maintained. One of these is Kalmia Realty Ins. Co. v. Hardy, 164 Miss. 313, 145 So. 506, 507, wherein it was suggested that the rule previously maintained as to the effect of actual possession as notice should be modified, and the Court responded that "No hardship can result from refusing to modify the rule and continuing to hold persons who desire to purchase or obtain liens on property to the necessity of ascertaining whether or not it is in the possession of a person other than its owner; and, if so, what the title of the possessor is, and, if he claims under another, what the title of such other is." And this case was followed as late as Beauchamp v. McLauchlin, supra, in 1946. And to the argument that the amended Act of 1924 was not called to the attention of the court in any of these several cases, we reply with the quotation taken from the opinion in Gabriel v. Brame, 200 Miss. 767,28 So.2d 581, 583, decided by us two weeks ago, that "Where there has been a long series of uniform decisions asserting the same principle and reaching the same conclusion upon facts which are alike and where a point now lately made was as much involved, the fact that the point has not been raised in any of these cases by counsel or stated by the court is strong support that it is now made without ground."

The twenty-two years since the amendatory Act was passed, and during all which time the decisions have proceeded to maintain the same rule in relation to possession as before its passage, have been by far the most active in the entire history of the State in the transfers of title. Thousands upon thousands of such transfers have taken place in that twenty-two years on the faith of those decisions, and upon obvious principles of public policy they must now stand.

Appellant, Gulf Refining Company, invokes against appellee the doctrines of equitable estoppel and ratification based upon the facts briefly outlined in the two paragraphs next following. The doctrine of estoppel is not available for several reasons, and we mention one of them only as being sufficient within itself to dispose of that contention. It plainly appears that the Refining Company and those, if any, claiming under it did nothing whatever in altering its or their position to its or their prejudice in reliance upon the acts of appellee, other than to pay the small sums in renewal, and this can be fully rectified by the repayment thereof with interest, which appellee offered to do. Estoppel operates only in favor of one who induced by the acts or representations of another so changes his situation that injury would result if the truth were known. Garmon v. Fitzgerald,168 Miss. 532, 540, 151 So. 726, quoting from Hart v. Livermore Foundry Machine Co., 72 Miss. 809, 830, 17 So. 769 — to cite one among many to the same effect.

The mineral lease to the Gulf Refining Company, made by G.B. Travis on October 21, 1937, contained provisions for its annual renewal through a period of ten years by the payment on or before October 21st of each year of an annual rental, commonly called delay rentals, of approximately twenty-five cents an acre. These payments were made by voucher checks, payable to G.B. Travis and wife, through a designated bank in Jasper County. After appellee's parents became seriously ill in 1940 as heretofore mentioned, the affliction of the father being such as to disqualify him mentally, the bank sent notice of these voucher checks to appellee, who endorsed them in the name of his father and mother, and used the proceeds in aid of their care. This was done for the years 1940 to and including 1944. These voucher checks each stated that they were in payment of annual rental on lease made by G.B. Travis and wife on October 21, 1937 on 270 acres in two different sections of land, naming the sections but not the descriptions within the sections.

And on March 20, 1944 Mr. Eugene Seale, an attorney for the Gulf Refining Company, wrote a letter to appellee describing the particular land in controversy in this case, stating that it was covered by lease to the Refining Company executed by Mr. and Mrs. G.B. Travis, but not stating when the lease was executed, and asking questions about corrections to be made in the title to an adjoining forty acres. Appellee says, and this is undisputed, that he made no inquiry into any of these matters and paid no attention in detail to the recitals of the bank notices and the voucher checks, and that as to the letter from Mr. Seale, he turned that over to his lawyer brother for attention, without himself reading it further than to observe that it was a matter in his estimation for the consideration of a lawyer rather than for the attempt at understanding by a layman. Upon the reference of the letter to his lawyer brother, the latter informed him that an abstract on the property would be obtained as soon as possible, and that thereupon the lawyer would report to him upon the matter. It turned out that the congested conditions at the county courthouse, owing to the unprecedented activity there brought about by the recent discovery of oil in the county, were such that the abstract could not be and was not obtained until December 1944, and after the annual rental due on October 21, 1944, had been collected by appellee.

We think it is not of controlling consequence whether or not appellee read the documents and the letter above mentioned, for, if he had done so, none of them would have furnished him any information on the following two facts not only of material, but of dominant, importance: First, as to when it was that G.B. Travis conveyed the land to his daughter, Mrs. Hooks; and of more importance, second, whether Mr. Travis had been authorized by his daughter to execute the lease in her behalf. The record definitely supports the finding of the chancellor that appellee had no knowledge whatever of the matter last above mentioned until receipt of the abstract in December 1944, and upon inquiry then made whether the authority mentioned existed, when for the first time he learned that there had been no such authority, and when, as heretofore stated, for the first time Mrs. Hooks was informed that there had been any such leases. Up to that time appellee, as the son of his father, was entitled to assume either that the lease was made while G.B. Travis still owned the land, or else that it was made on the authority of his daughter, the owner.

It may be admitted for the purposes of this case that the information carried by the documents mentioned was sufficient to put appellee on inquiry, which, if diligently pursued by him here and there, would have led him to full knowledge, and thus the question is squarely presented whether notice was all that was necessary to bind him as by ratification or whether knowledge as such, full and complete, was required.

It is a principle which pervades the decisions by the great weight everywhere that when a person is sought to be charged by way of ratification, it must be shown that he had full and complete knowledge of all the material facts, and a familiar expression used in that connection is that the proof must show that such full knowledge has been brought home to him, and it is not enough that he has information which, if pursued by him, would have led him to full and complete knowledge.

The classical text upon and around which the body of law on Agency has been built, Story on Agency, explains the particular point in hand in this language: "The principal, before a ratification becomes effectual against him, must be shown to have had previous knowledge of all the facts and circumstances in the case, and if he assented to or confirmed the act of his agent while in ignorance of all the circumstances, he can afterwards, when informed thereof, disaffirm it. And the principal's want of such knowledge, even if it arises from his own carelessness in inquiring or neglect in ascertaining facts, or from other causes, will render such ratification invalid. His knowledge is an essential element." Story on Agency, Sec. 231, note 1. That statement by Story is found again in the 8th Edition, Sec. 253, note 1, and this is cited with approval by Campbell, J., in Meyer v. Baldwin, 52 Miss. 263, at page 271.

Quoting this statement by Story, the Supreme Court of Alabama, in Brown v. Bamberger et al., 110 Ala. 342, 355, 20 So. 114, 118, said further upon the point: "The doctrine of constructive knowledge, or imputation of knowledge from mere notice, does not obtain in this connection. It is what the party sought to be charged knows, and not what he has mere legal notice of, that is to be considered in determining whether there has been a ratification. He is charged on full knowledge, and not because be ought to have known but did not, — not because he had notice which should have incited him to an inquiry which, if properly prosecuted, would have brought knowledge."

Cases in great number to this effect are collected in 36 Words and Phrases, Perm. Ed., pp. 132 to 136, and see 2 Am. Jur., Agency, Sec. 224, and the wealth of cases cited in the notes to that section. An interesting case, by one of our ablest courts, and closely in point here, is Kidder v. Greenman, 283 Mass. 601,187 N.E. 42, 88 A.L.R. 1370, which may be read with profit.

We must forbear to extend this opinion, already lengthy, by a further review of the authorities which support what we are holding herein and will say only that when appellee did obtain full and complete information, he promptly filed his bill to cancel the unauthorized leases; and this in itself is enough to distinguish this case from Koenig v. Calcote, 199 Miss. 435,25 So.2d 763, so confidently relied on by appellant, besides which that case was not one involving ratification but was a suit to rescind and cancel a lease made by the party complainant himself.

There is an exception to the rule as stated in the three preceding paragraphs, but the exception is not here involved. And there are a few cases, some of which are cited and relied on by appellant, which hold that where a reasonably prudent man would naturally have been excited to inquiry and the full facts are immediately and conveniently at hand, he will be held to have known them; but we must decline to follow any such minority rule, not alone because it is so far in the minority but because also it would be capable of dangerous uses, unsuited to a sound administration in the practical affairs of life.

We will add, however, an observation touching the argument made in behalf of appellant, Gulf Refining Company, that a man with appellee's education and experience, and with his more than average general intelligence, ought to be held, especially after the letter to him by Seale, to have known enough of the essential facts to charge him, as a man of sense, with what amounted to a ratification in his acceptance in October 1944 of the annual rental, to which it is enough to reply that if he did know enough of the facts and if by the acceptance of the trifling sum of twenty-three dollars on this land, well within the newly discovered oil field, he intended at that time to ratify this unauthorized lease, he would be made out, not as having any sense, but as being little if any better than a moron. We are of the opinion that the chancellor was correct in holding that there was no ratification.

We have examined the other errors assigned and argued, but we are of the opinion that they are not sufficient to require a reversal of the decree.

Affirmed.

McGehee, J., being a close kinsman of some of the appellants, took no part in this decision.