McCray v. Miller &8212 Bland v. Bland

On the application to file a second petition for rehearing, the defendants in error contend the court overlooked one question raised by their brief, which is decisive of the case at bar and was not passed upon in the opinion of the court. This question is stated as follows:

"The decision of this court, applying to the rights of the parties hereto the rule of law announced by this court in the case of Rich v. Doneghey, 177 P. 86, and refusing to apply the principle or rule of law laid down in Brown v. Wilson,58 Okla. 392, wherein it was held that a 'surrender clause' oil and gas lease is a nudum pactum, and conveys no rights, either to the lessor or lessee, which can be enforced as against the other, other than the right to drill a well within the primary period of such a lease, results in depriving the defendants in error of their property without due process of law and impairs their rights under the oil and gas leases from Fern Bland, taken by them while the principle announced in Brown v. Wilson, supra, was in force in this state, in violation of section 1, art. 14, and sec. 10, art. 1, of the Constitution of the United States, and further violates the doctrine of stare decisis recognized and applied by this court in its former decisions."

The opinion omitted to pass on said question, and we will now consider the same, upon this application. We do not think the defendants in error bring themselves within the rule above announced.

The facts are that on November 18, 1915, Owen Bland executed an oil and gas lease on 160 acres of land to Simmons for a term of five years. The lease provided the lessee was to complete a well within 12 months or pay a certain annual rental. January 6, 1916, Owen Bland deeded 80 acres of said land to Helen Fern Bland. November 15, 1916, the Simmons lease was assigned, and thereafter by different assignments became the property of W. S. McCray et al. Between November 15, 1916, and November 18, 1916. Helen Fern Bland accepted $80 as the rental on her 80 acres to cover the rental period from November 18, 1916, to November 18, 1917. January 10, 1916, Helen Fern Bland executed an oil and gas lease to Ambrose Miller, who assigned a certain portion of the same to the other defendants in error. November 9, 1916, a second oil and gas lease was executed by Helen Fern Bland to Ambrose Miller. All of the oil and gas leases were filed for record immediately or within a very short time after their execution. The answer of defendants contains the following statement:

"That these defendants and the said W.N. Sill are such owners of a certain oil and gas lease dated January 10, 1916, executed by Helen Fern Bland to Ambrose Miller * * * and under and by virtue of a subsequent lease between the same parties dated November 9, 1916 * * * made to cure a clerical defect in the first lease aforesaid."

And also the further statement:

"That Helen Bland at the time of accepting the deed from Owen Bland * * had no knowledge of the existence of the lease relied upon by the plaintiff, and the said Helen Bland after becoming aware of the existence of said lease repudiated said leases, and declared them void, and still repudiates and declares them void. * * * That at the time of taking said lease, in January, 1916, none of the defendants were aware of the existence of the lease relied upon by plaintiffs, and that said lease of January 10, 1916, was supported by valuable consideration from Ambrose Miller to the defendant Helen Fern Bland."

The defendants in error in their answer in the trial court claim title by reason of the lease executed to them January 10, 1916, and assert there was a valuable consideration paid for said lease, and that the lease dated November 9, 1916, was taken only for the purpose of curing a clerical defect in the lease dated January 10, 1916. This being true, we are unable to see how the defendants in error could claim they obtained their lease relying upon the rule of law or principle announced in the case of Brown v. Wilson, supra, or how the overruling of that case would impair any of their rights obtained in their lease contract dated January 10, 1916, for the reason the opinion in the case of Brown v. Wilson was not rendered until January 11, 1916, or one day after the defendants acquired their lease. The opinion in the Brown v. Wilson case did not become final until October.10, 1916, so the rule of law contended for by the defendants in error, even if correct, has no application to their case, for the reason their lease was obtained prior to the time the principle announced in the Brown v. Wilson case was in force in this state.

While counsel for defendants in error argue that the lease dated November 9, 1916, brought them within the rule, their answer and their pleadings allege that this lease was taken only for the purpose of curing a clerical error in the first lease and the consideration was paid for the first lease. Counsel also suggest that the case of Brown v. Wilson was cited with approval by this court in the case of Warner v. Page,59 Okla. 259, 159 P. 264, but if they rely upon that case, they have taken their lease in direct violation of the rule and principle announced in that case, as the court therein said:

"Where a lease for oil and gas provides, among other things, that the lessee shall begin operations within six months, and, upon failure to do so, shall pay annually $500 into a certain bank, or to the lessor direct, and that failure to commence operations or to pay shall render the lease null and void, held, that such lease was a mere option preventing the lessor, after receiving the delay money, from leasing to another for the period of one year from the date of such payment."

The Simmons lease, or the one on which plaintiffs in error rely, was the prior lease on the premises, and was executed by Owen Bland on November 18, 1915, for a term of five years, and contained the provision:

"That the lessee agrees to complete a well on said premises or pay an annual rental," etc.

Then, according to the lease, and even under the decision of Brown v. Wilson, the plaintiffs in error's lease would not be nudum pactum, until November 18, 1916, and under the rule announced in the case of Warner v. Page, supra, the lessor or his assigns were prevented from leasing to another for a period of one year from the date of the lease, or until November 18, 1916. That being true, defendant's lease was taken in direct violation of the rule and principle announced in the case of Warner v. Page, upon which they rely.

As to the doctrine of stare decisis, we think it has no application to the case at bar. While the rule of stare decisis might have been argued with force in the Rich v. Doneghey case, supra, which overrules the Brown v. Wilson case, supra, yet, after that case has been overruled, it has no application in this case. This court, in the case of Inman v. Sherrill,29 Okla. 100. 116 P. 426, speaking through Justice Kane, said:

"Where a series of decisions of a court or last resort have been accepted and acted upon as the proper interpretation of the law for a long time, courts are slow to interfere with principles announced in the former decisions, and often uphold them even though they would decide otherwise were the question a new one."

The defendants in error, in our judgment, can claim no right under the rule of stare decisis, for the reason their answer admits they obtained their property rights in their lease, if any, prior to the time the rule or principle was announced in the Brown v. Wilson case, supra.

The second contention of defendants in error is stated as follows:

"Independent of any statutory provision, where a contract has been interpreted by the highest court of a state and the obligation and rights of parties thereunder determined, the rights of any person purchasing similar contracts subsequent to the decision of the court, interpreting the same, cannot be impaired by a subsequent decision of the court."

This we do not think is the correct statement of the law. The rule is announced in 6 Ruling Case Law, 324, as follows:

"In accordance with the rule stated in the preceding paragraph, the decisions of the state courts are not 'laws' within the prohibition against the impairment of the obligation of contracts, and therefore the Supreme Court of the United States has no jurisdiction to review a judgment of a state court, on the ground that the obligation of a contract has been impaired, unless some legislative act of the state has been upheld by the judgment sought to be reviewed. For the same reason, a decision by the holding unconstitutional a statute held to be constitutional by such decision does not impair the obligation of a contract entered into before the latter decision was rendered. There is no vested right in the decisions of a court, and a change of decisions of a state court does not constitute the passing of a law, although the effect of such change is to impair the validity of a contract made in reliance on prior decisions."

Vol. 12, Corpus Juris, 990, states as follows:

"The prohibition of the contract clause or the Constitution is directed at legislative, not judicial, action. Acting, however, under a contrary impression, induced principally by misinterpretation of a dictum of Chief Justice Taney, some courts have held, in general terms, that the clause is violated by a judicial decision which overrules previous decisions and thereby impairs the obligation of a contract under the law as construed when it was made. But it is now definitely and authoritatively settled that the contract provision of the Constitution does not apply to the decision of a state court, where such decision not based on a constitutional or statutory provision. The mere fact that the decision of the state court is against the validity of a contract either in whole or in part does not of itself present a question under the contract clause, nor give the federal courts jurisdiction to review the decision, and this rule applies even where the decision of the state court complained of changes a rule of the common law which, by virtue of previous judicial decisions, was established and in force when the contract was made."

Black's Constitutional Law (3d Ed.) 722 states as follows:

"The obligation of the contract must have been impaired by some law, that is, some constitutional provision or statute; but a decision of a court is not a 'law', and a change of judicial decisions is not obnoxious to this constitutional prohibition, though it way invalidate contracts previously sustained."

The Supreme Court of the United States, in the case of Cleveland and Pittsburg Ry. v. City of Cleveland, Ohio,235 U.S. 50, 59 Law Ed. 127, stated as follows:

"It is equally well settled that an impairment of the obligation of the contract, within the meaning of the federal Constitution, must be by subsequent legislation, and no mere change in judicial decision will amount to such deprivation. Ross v. Oregon, 227 U.S. 150, 161, 57 L.Ed. 458, 463, 33 Sup. Ct. Rep. 220, Ann. Cas. 1914-C, 224; Moore-Mansfield Constr. Co. v. Electrical Installation Co., 234 U.S. 619, 624, 58 L. Ed. 1503, 1505, 34 Sup. Ct. Rep. 941."

The Supreme Court Of the United States, in the case of Cross Lake Shooting and Fishing Club v. State of Louisiana,224 U.S. 632, 56 L.Ed. 924, stated:

"But if there be no such law, or if no effect be given to it by the state court, we cannot take jurisdiction, no matter how earnestly it may be insisted that that court erred in its conclusion respecting the validity or effect of the contract; and this is true even where it is asserted, as it is here, that the judgment is not in accord with prior decisions on the faith of which the rights in question were acquired."

To the same effect is the case of Central Land Company v. Laidley, 159 U.S. 103, 40 L.Ed. 91. The defendants in error relied upon the case of Muhlker v. New York H. R. R. Co.,197 U.S. 544, 49 L.Ed. 872, and Sauer v. N.Y., 206 U.S. 536. But these cases are based upon a legislative enactment, and the question determined by the Supreme Court of the United States was the power of the legislature to impair a contract. These cases are distinguished in the case of Crigler v. Shepler (Kan.) 101 P. 619, 23 L. R. A. (N. S.) 500, the court there stating the rule as follows:

"A person who is not a party or privy in an action cannot have a vested right in an erroneous decision made therein."

And under the note in 23 L. R. A. (N. S.) 502, the Laidley and Muhlker and Sauer cases are distinguished; but since said note was written distinguishing said case, the Supreme Court of the United States, in the later decisions of Cleveland Pittsburg Ry. Co. v. Cleveland, and Cross Lake Shooting and Fishing Club v. Louisiana, supra, has adhered to the rule announced in the Laidley case.

Although defendants in error in their brief suggest that while the Brown v. Wilson case did not construe any statute, it had the effect of construing sections 911 and 926, Rev. Laws 1910, yet with this we cannot agree, as the opinion neither in the Wilson case nor in the Rich v. Doneghey case refers to said sections of the statute, nor in our judgment have they any applications to the same.

For the reasons stated, the application to file a second petition for rehearing is denied.

OWEN, C. J., and RAINEY, KANE, and JOHNSON, JJ., concur.