Carter Oil Co. v. Eli , 164 Okla. 273 ( 1932 )

I desire to express some of my individual views which were not set forth in the majority opinion. An examination of the record in the case of Taylor Eli et al. v. Carter Oil Company, No. 17106 (126 Okla. 12, 257 P. 761), shows that an amended petition was filed in the district court in case No. 5205, wherein T.C. Wilson was made a party plaintiff, entitled "Taylor Eli, James Eli, Charlotte Chuculate, nee Muskrat, nee Eli, and T.C. Wilson, Plaintiffs." Said plaintiffs alleged that they were jointly the owners of and entitled to the possession of the east half of the northeast quarter of section eight (8), township twenty-eight (28) north, range fifteen (15) east, situated in Nowata county.

Plaintiffs show deraignment of their title and aver that by reason of same they are jointly and generally the legal and equitable owners of the whole of said land. Plaintiffs further show by mesne conveyances how the Carter Oil Company acquired its rights in and to the oil and gas mining leases covering said premises, and the manner, and the interests acquired by the defendants Calvert and Glass in the premises, and aver that all of the conveyances by which said defendants assert their rights are null and void, and pray in the first cause of action for the cancellation of the deeds, rights, and claims asserted by Louella P. Chesnutt, and of all deeds, rights, and claims asserted by the defendants F.C. Calvert and J. Wood Glass, and cancellation of all claims and rights, and muniments of title purporting to convey unto the Carter Oil Company any interest in and to the oil and gas rights pertaining to the aforesaid land, save and except the guardian's lease executed upon the part of the plaintiff James Eli, on account of which, by mesne conveyances, the Carter Oil Company claims and asserts ownership and rights.

In their second cause of action, they claim damages in the sum of $299,631.03, for the wrongful extraction of oil from said premises, alleging that the said Carter Oil Company unlawfully extracted 90,658.78 barrels of oil subsequent to July 3, 1916, until and inclusive of December, 1917; that the highest market price of aforesaid oil during the unlawful conversion extending over the period aforesaid was the sum of $3.25 per barrel, but that since December, 1917, said company has continued and is continuing to unlawfully produce, extract, and dispose of said oil from said premises, the total amount of which is unknown to the plaintiffs, and the plaintiffs pray that an accounting for the full value of oil and gas extracted from the premises be awarded to plaintiffs, save and except the offset due and allowable to defendants for royalty paid to two of plaintiffs above mentioned.

In their third cause of action, they allege that by virtue of the foregoing facts they are the legal and equitable owners of the lands above described, and entitled to the immediate possession thereof; that defendants deny the plaintiffs' right in and to the whole or any part of said premises save and except for the fact that the Carter Oil Company holds a valid and subsisting lease upon one-fourth interest in and to said premises, and denies the plaintiffs' right, title, and interest in and to the aforesaid land. In their general prayer, the plaintiffs pray judgment awarding possession of the fee and three-fourths interest in and to the oil and gas rights of said premises and for any and all other relief which to the court seems equitable and proper.

The defendant Carter Oil Company denies the plaintiffs' right of assertion of the right of possession to said premises, setting forth in detail the proceedings by which it obtained its title to said leased premises, and asserting that the county court of Adair county assumed and took complete jurisdiction over the estate of Nancy Eli, deceased, from and after November 17, 1908, and has had complete and exclusive jurisdiction of said estate ever since statehood, and was the only court having jurisdiction to hear and pass upon petitions for the approval of deeds or conveyances executed by the plaintiffs of the full-blood Indian heirs of Nancy Eli, deceased.

Said defendant further avers that it, in good faith, went into possession of said land, more than seven years prior to the time petition herein was filed, and began to operate said land under its said oil and gas mining leases; that it had no notice whatever of the claims now asserted by plaintiffs until their aforesaid petition was filed; that all of the wells drilled by this defendant were necessary in order to prevent drainage of said land of its oil and gas deposits by reason of the production of oil and gas on adjoining lands.

That it had made large expenditures in good faith in its operating said lands for oil and gas with the full knowledge of the plaintiffs, and that it had paid the royalties accruing to Charlotte Chuculate, nee Muskrat, and the guardian of the said James Eli, under this lease and the same were accepted and retained without any warning to said defendants that the plaintiffs claimed any interest in the leased premises adverse to the rights of said defendant; that said plaintiffs stood by and permitted said defendant to make said expenditures for over a period of more than seven years without asserting any claim, right, or interest in the premises adverse to said defendant; that the plaintiffs have been guilty of laches in asserting their claim, if any they have, and by their conduct have estopped themselves from now asserting them.

In its cross-petition, the defendant Carter Oil Company prayed that plaintiffs' petition be dismissed; that the defendant R.E. Tucker be made a party to the suit, and be required to set forth the nature of his claim to an interest in the land, and that said defendant have judgment upon its cross-petition against the plaintiffs and each of them and against said Tucker, adjudging the defendant to be the owner of good, valid, and subsisting leases on the said premises and the title and validity of same be confirmed against the plaintiffs in favor of defendants.

The defendants Glass and Calvert set forth the various proceedings, showing how they acquired their title and interest in said premises, and in their cross-petition against the plaintiffs, and R.E. Tucker, they pray for the cancellation of the instruments in favor of plaintiff Wilson and defendant R.E. Tucker, whereby said Wilson and Tucker claim title and interest in said premises, and pray that such conveyances be held for naught and the quieting of the title of said defendants Glass and Calvert, in and to said premises against the plaintiffs and against said defendant Tucker, and all persons, claiming under them adverse to the title of the defendants Glass and Calvert.

In the opening statement of the case, the plaintiff Wilson said, in part:

"May it please the court, this action is for a threefold purpose, being instituted by Taylor Eli, James Eli, Charlotte Chuculate, nee Muskrat, nee Eli, and T.C. Wilson, against the defendants the Carter Oil Company, a corporation, J. Wood Glass, F.A. Calvert, Louella P. Chesnutt, and R.E. Tucker.

"The plaintiffs ask for quieting title; that is the principal and primary object of the action; second, for an accounting for the oil and gas taken from the premises; and third, that they be let into possession.

"They ask to be awarded the entire fee, but we admit that the Carter Oil Company holds a valid and subsisting lease on one-fourth interest in the same, executed by the guardian, covering the interest of the plaintiff James Eli. The primary purpose of the action is for cancellation of the evidence of title claimed by the defendants. The facts in the case are as follows: * * *

"The defendants admit they have been in operation and are now in possession of the lands and taking the oil and gas. We claim we are entitled to an accounting at the highest market value since they went upon the premises and began the sale of oil. I presume those matters will wait in the court upon that question, and, of course, as ancillary we are entitled to be let into possession of the entire fee, and subject only to the defendants' right under the operation of the lease by virtue of this guardianship matter."

From this record it is my view that this is an action in equity; that the gravamen of the issues was the quieting of the title to the premises either in the plaintiffs or in the defendant. The plaintiffs ask for the cancellation of the instruments of conveyance, whereby said defendants claim their rights, title, and interest in and to said premises. The defendants in their answer ask for the same relief. The accounting and the question of possession were incidental to the real issues involved. If this conclusion is correct, we are met at the threshold of this case with the question of whether or not plaintiffs filed their suit under the equitable doctrine of coming into court with clean hands. If they did not institute their action with clean hands, a court of equity will not come to their assistance, but will leave them where it finds them. It is apparent from this record that the proceedings instituted by Wilson and Tucker did not savor of wholesome litigation. It was apparent to them that an action in court was necessary, after the deeds were obtained, to secure to them any rights under said deeds. There is no question of the good faith in the procuring of the deeds and leases by said defendants, nor in the operation and expenditure of the money made by the defendant Carter Oil Company in the production and development of the leases on the premises.

The defendants' contentions presented in their brief were as follows:

"(a) There were no administrative proceedings of any sort pending in the Cherokee county court when the instruments upon which the defendants rely were approved by the county court of Adair county, and the latter court had jurisdiction.

"The jurisdiction of the Cherokee county court was acquired in a special way through the provisions of the Enabling Act and when after statehood such proceedings were fully terminated and closed. Thereafter, by virtue of the Constitution and the statutes of Oklahoma, the Adair county court was the only court having jurisdiction of the settlement of the estate."

"The instruments under which the defendants claim having been approved by the Adair county court during the years 1911 to 1921, long after the final termination of the proceeding in the Cherokee court, were valid and the deeds to Wilson and Tucker which were approved by the Cherokee county court in the fall of 1924 were void.

"(b) The United States having approved of all, and in some instances, having supervised the transactions of the defendants, in acquiring conveyances from the full-blood Indian heirs, and having advised the defendants that their deeds were valid and the defendants having relied thereon, would be estopped to maintain this action, and on such account, the plaintiffs are estopped.

"(c) The defendants at the time of the approval of the deeds under which they claim, in good faith thought that the county court of Adair county had jurisdiction of the settlement of the estate of Nancy Eli, and, in any event, they will be protected against the inequitable claims of the plaintiffs by the principle announced in Burton v. Colley, 113 Okla. 265,242 P. 185.

"(d) Plaintiffs Wilson and Tucker formed a conspiracy, the object of which was to rake up an old claim for a purpose speculative agreeing together to bring suit thereon and divide the spoils in case of success, and in so doing violated principles of the common law which render their deeds void, and violated a criminal statute which prohibits an attorney at law from buying claims with intent to bring suit thereon, which likewise rendered the deeds void.

"(e) The demands of the plaintiffs, under the facts in the case, are stale, inequitable and unconscionable."

Both plaintiffs and defendants claim title through a common source of title, to wit, the allotment of Nancy Eli, deceased, who died intestate without issue on or about November 1, 1903, being at the time of her death a resident of that portion of Indian Territory now known as Adair county, Okla. There is no dispute as to the heirs of said decedent; Taylor Eli, the father of said decedent, inherited an undivided one-half interest in said allotment; James Eli, her brother, and Charlotte Chuculate, nee Muskrat, nee Eli, her maternal half-sister, each inherited an undivided one-fourth interest in same, each of whom was duly enrolled upon the approved rolls of the Cherokee Nation as full-blood Indians.

It appears that the plaintiff James Eli, according to the enrollment records, was one year of age on November 25, 1901, and that, on November 25, 1921, he became 21 years of age. Letters of guardianship were issued over his estate. On May 5, 1916, his guardian filed a petition in the county court of Adair county, Okla., praying for permission and authority from said court to sell a lease for oil and gas mining purposes upon said minors one-f'ourth interest in said land. On May 10, 1916, the county court of said county authorized said guardian to lease the interest of said minor, and on May 18, 1916, an oil and gas lease was sold at public auction to Boesche et al. for a cash bonus of $2,200. The county court of Adair county approved and confirmed said sale and lease, and the same was thereafter, on May 20, 1916, filed of record in the office of the county clerk of Nowata county. On May 29, 1916, said defendant Carter Oil Company became the owner of said oil and gas mining lease. Thereafter, on the 1st day of June, 1916, the plaintiff, Charlotte Chuculate executed an oil and gas mining lease for the same consideration to Boesche, one of the lessees in the aforesaid minor lease, which lease was approved by the county court of Adair county on the 1st day of June, 1916, and filed for record with the county clerk of Nowata county on June 2, 1916, and thereafter on June 9, 1916, said lessee transferred and assigned said lease to the Carter Oil Company, which assignment was filed for record in the office of the county clerk of Nowata county on June 10, 1916. On June 30, 1916, the plaintiff Taylor Eli executed a warranty deed, covering his interest in and to said premises to one Robert Pollock, and thereafter, on May 29, 1916, the Carter Oil Company, through mesne conveyances, acquired an oil and gas lease on said interest, which lease was filed for record in the office of the county clerk of Nowata county on May 29, 1916.

The following constitutes the source of title of the plaintiff Wilson and the defendant R.E. Tucker:

On September 24, 1924, James Eli made a contract and conveyance to said T.C. Wilson of one-eighth interest in and to the east half of the northeast quarter of section 8, township 28, north of range 15 east, Nowata county. Said instrument also granted, conveyed, and assigned unto the said Wilson, his heirs, and assigns as follows:

"The E. 1/2 of the N.E. 1/4 of section 8, township 28, north, range 15 east, Nowata county, Okla., free, clear, and discharged of and from all former liens, grants, and incumbrances of whatsoever nature, and I do hereby grant, convey, and assign unto him, party of the second part, his heirs, and assigns, a one-half interest in and to all royalties arising from the extraction and removal of oil and gas therefrom and in and to all damages arising therefrom, and in and to all damages of whatsoever nature arising from any injury, or in any wise pertaining to the fee and in and to all oil and gas rights thereunto pertaining, or in any wise connected, and all choses of action involved in the same and all damages and things of value pertaining to the property and arising from the proceeds thereof hereunto accrued or accruing pendente lite. And be it herein agreed and by these presents known that the within and foregoing obligation and assignments and liens are in no wise contingent, and shall in no wise be affected by any subsequent conveyance, liens, incumbrances, or assignments of any nature whatsoever, made or entered into by and on behalf of the party of the first part, his heirs, or assigns."

This instrument was approved by the county court on the 4th of August, 1924, and filed for record in the office of the county clerk of Nowata county on October 18, 1924. The said Wilson also obtained a contract of conveyance from Taylor Eli, which provided for the retaining of said Wilson as attorney for the said Taylor Eli relative to the recovery of any interest in and to the allotment of Nancy Eli, deceased, on behalf of said Taylor Eli and the recovery of all moneys, damages, and things of value arising from the taking of oil and gas therefrom heretofore accrued or accruing pendente lite, which instrument conveyed to the said Wilson a one-fourth undivided interest in and to said premises and one-half interest in and to all damages arising from the extraction or removal of oil and gas therefrom. This instrument was dated the 17th of September, 1924, and approved by the county judge of Cherokee county on the 22nd of September, 1924. It was filed for record in the office of the county clerk of Nowate county on October 18, 1924. A similar contract and conveyance was obtained by said Wilson from Charlotte Chuculate. This instrument was approved by the county judge of Cherokee county October 4, 1924, and filed in the office of the county clerk of Nowata county on October 18, 1924.

It thus appears from the foregoing instruments executed to said Wilson that the same were received by him in consideration of his services in connection with the allotment of Nancy Eli, deceased. There is no evidence that any other consideration was given for said contracts and conveyances.

It also appears from the record that the said R.E. Tucker obtained a quitclaim deed from Taylor Eli, James Eli, and Charlotte Chuculate, nee Muskrat, covering the aforesaid premises, subject only to the rights and interests heretofore granted to said T.C. Wilson, which quitclaim deed was dated November 21, 1924, and approved by the county court of Cherokee county on November 21, 1924. This instrument recites a consideration of $750. It is to be observed that the deed taken by said Tucker was procured subsequent to the filing of the original petition in said cause No. 5204, which was commenced in the district court of Nowata county on October 18, 1924.

On the appearance docket of Adair county, the following entry appears.

"1924

"September 25, to certified copies

"(T.C. Wilson of Pryor) 4.00 Pd. by R.E. Tucker

"10-3-24 4.00."

Counsel for defendants contend that Wilson and Tucker knew of the deeds which had been approved by the Adair county court before they took their deeds, and which were approved by the Cherokee county court, and with full knowledge that, when they took these conveyances, their grantors were not in possession of said premises, and that it would be necessary to bring a suit for the possession of the lands or an accounting of the oil and gas produced therefrom. It is my opinion that this record fully justifies this contention. Wilson was called as a witness on behalf of the defendants, and testified that he was a member of the bar of this state, and knew at the time he took the deeds that his grantors were not in possession of the land. He also testified as follows:

"Q. You knew that other parties had been in possession of the land for many years, didn't you? A. I assumed that; I don't know that I knew it positively. Q. You knew that you would have to bring a lawsuit in order to get possession under these deeds, didn't you? A. I didn't know any such things; I anticipated that probably I would. Q. You anticipated it and you expected to bring a lawsuit at the time you took the deeds, didn't you? A. Well, I don't know that I did. My previous answer expresses my attitude in it entirely, at that time. Q. You did bring this suit or cause it to be brought, without demanding possession from any of the defendants in this action, didn't you? A. Yes, sir, I made no personal demand of any one. * * * Q. How long have you been acquainted with Mr. Tucker? A. I have known Mr. Tucker three or four or five years, I guess. * * * Q. You had an understanding or an agreement with him, at or a short time after you got these deeds, with reference to bringing this suit, didn't you? A. The Witness: I can't say that I did, Mr. Rosser. Q. Mr. Tucker furnished money to you to get these contracts and to pay the costs of bringing this suit, didn't he? A. No, sir, he didn't furnish any money to bring this suit. Q. Did he furnish any money to make the deal with the Indians? A. Mr. Tucker may have loaned me some money — But I went on that trip. Q. You had an understanding with him about the matter before you went on that trip, didn't you? A. I had some understanding with Mr. Tucker, yes."

Counsel for plaintiffs contend that the statutes relating to champerty are not being applicable to restricted Indian lands. However, section 1678, C. O. S. 1921 [O. S. 1931, sec. 1938] provides as follows:

"Any person who takes any conveyance of any lands or tenements, or of any interest or estate therein, from any person not being in the possession thereof, while such lands or tenements are the subject of controversy, by suit in any court, knowing the pendency of such suit, and that the grantor was not in possession of such lands or tenements, is guilty of a misdemeanor."

This section applies to the defendant Tucker. If Wilson and Tucker entered into an agreement or conspiracy for the purpose of stirring or raking up this alleged claim or right of said Indians, for their own legitimate purposes and instituting litigation thereon whereby they were to receive the primary benefit therefrom, then this section applies with equal force to both.

In this case, at the most, it may be assumed, although it is not altogether conclusive, that Tucker paid $750 as consideration for the quitclaim deed executed to him. This land had been producing oil since 1916. At the time of the trial the oil runs amounted to practically $300,000, and even though certain sections of our champerty statutes might not be applicable to restricted Indian lands, this fact could not assist plaintiffs in a court of equity on the question of coming into court with clean hands. It is apparent to me, from a review of this record, that the procedure followed by plaintiff Wilson and defendant Tucker, was for a common purpose of disturbing the title to property by parties who had remained in possession since 1916, and for their own ultimate benefit, and that it was not for or on behalf of their grantors, the Indians. Defendant Tucker did not appear as a witness in the trial of said case.

In the case of Casserleigh v. Wood, 119 Fed. 308, the court said:

"In view of these considerations it is difficult to resist the conviction that Casserleigh's purpose in entering into the contract was not to aid a poor and helpless litigant in the prosecution of a claim which he believed to be meritorious, but that his real object was to take advantage of a flaw in another's title for his own benefit; or, in other words, to gamble in litigation. The contract shows that he was to receive by far the greater part of the money or property which might be recovered if an action was brought and successfully prosecuted, and that he intended to profit more largely by the suit than the person whom he ostensibly befriended. We think, therefore, that it might well be held that the contract in question is voidable under the Colorado statute of maintenance, within the construction which has been placed on the statute by the local courts, because it appears from the provisions of the contract and the allegations of the bill that Casserleigh, by promising to produce evidence which was deemed absolutely essential to a recovery, and by engaging to bear the costs of litigation, induced the bringing of a suit concerning a subject-matter in which he had no interest whatever; and that he did so for his own benefit, hoping to derive a large profit from money invested in maintaining a lawsuit. Most any one would permit an action to be brought in his name under the favorable conditions on which the appellant proposed to bring a suit against the owners of the Emma mine, and it may well be that the action would not have been brought but for his active efforts in that behalf and promise of assistance."

In reference to the defense that the demands of the plaintiff under the facts in the case, are stale, inequitable and unconscionable, I think this case should largely be governed by the rule announced in the case of Crosbie v. Partridge,85 Okla. 186, 205 P. 758, wherein the court stated as follows:

"Statutes of the United States providing for allotment of Indian lands and patents, with restrictions upon alienation, were enacted to protect Indians from schemes and fraudulent practices of white men, not to aid in the unconscionable and inequitable enforcement of stale claims, to the injury of innocent parties who, in good faith, for value, and by regular procedure, have purchased allotted Indian lands through the Interior Department of the United States."

In the case at bar the United States government acquiesced in, consented to, and approved the proceedings by which the defendants obtained their title. The doctrine of estoppel is applicable in the instant case to the United States government and to its wards.

It is my view, apart from the holding of the majority opinion, that plaintiffs should have been estopped to institute their action on the theory that they did not come into a court of equity with clean hands.