Crum v. Guffey-Gillespie Oil Co. , 117 Kan. 54 ( 1924 )

The opinion of the court was delivered by

Dawson, J.:

This was an action for the contract price of an oil and gas lease on eighty acres of Saline county land. The chief defense relied on was that plaintiffs had failed to furnish a good and merchantable title as agreed to in the contract of purchase.

The trial court made findings of fact and conclusions of law which were favorable to plaintiffs, and judgment was entered pursuant thereto.

Defendant assigns various errors which will be noted.

It is first contended that the trial court erred in admitting oral testimony concerning the Skaer-Crum Oil Corporation and of plaintiffs’ ownership by succession of this defunct corporation’s assets, which included the amount due on this contract as a chose in action. Since there was no jury to be misled, even if the evidence was incompetent, and since there was competent evidence to the same effect, no prejudicial error was committed in admitting the testimony complained of. (Starbuck v. Kingore, 112 Kan. 102, 210 Pac. 930, and citations.)

It is next urged that the trial court should have made a finding that plaintiffs had not tendered a good and merchantable title. But the record is clear that the title under this contract was to be one which would satisfy the reasonable requirements of defendant’s attorney to whom the abstract of title was submitted, and the trial court found that all such requirements were met by plaintiffs. That was a sufficient compliance with plaintiff’s obligation so far as title was concerned. (Wheeler v. Beem, 111 Kan. 700; 208 Pac. 626.)

But error is also assigned on the trial court’s finding that all the title requirements specified by defendant’s attorney had been fully met. Under this assignment the appellant raises this point: The eighty acres covered by the lease in controversy was part of the United States land grant to the Union Pacific railroad. That grant reserved to the government “all mineral land, should any such be found,” in the tracts granted to the railway company. It is gravely suggested that this reservation may defeat the original patent and the rights of all who hold thereunder. But we have already said that this land was in Saline county. The court takes judicial notice of the fact that Saline county land is now and always has been considered as agricultural, not mineral land. If modern enterprise at some future time should discover that the land has also mineral value, that would not defeat the title. The government parted with all its title to this property by its patent issued thirty-odd years ago and all questions as to the validity of the rights of persons holding thereunder were laid at rest by statute a generation ago. (Act of Congress March 3, 1891, 26 U. S. Stat. 1099, U. S. Comp. Stat. 1918, § 5114; Act of Congress March 2,1896, ch. 39, § 1, 29 U. S. Stat. 42, U. S. Comp. Stat. 1918, § 4901 et seq.) Furthermore, when defendant’s attorney made his memorandum of requirements as to this abstract he made no requirement touching the reservation of mineral lands from the government grants to the patentee. What possible requirement could he conceivably have had in mind? It would be libeling his intelligence to construe his remark relating to reservation of mineral lands in the grant to the railway company to mean that before he would approve plaintiffs’ title they would have to secure from congress a statutory waiver of the government’s reserved mineral rights in this land. This point attempted by defendant is really too captious for patient consideration.

Another objection to the sufficiency of the title pertains to the mortgages covering this and other lands owned by the lessor. No requirement as to these mortgages was made by defendant’s attorney. This eighty acres was only a relatively small part of the lands (880 acres) covered by the mortgages. The lease apparently contemplated the possible existence of mortgages on the real estate and defined the rights of the lessee under such circumstances. The lease provided:

“Lessor hereby warrants and agrees to defend the title to the lands herein described, and agrees that the lessee shall have the right at any time to redeem for lessor, by payment, any mortgage,' taxes or other liens on the above-described lands, in the event of default of payment by lessor, and be subrogated to the rights of the holder thereof.”

It will be noted that while the lessor agreed to defend the title, he did not warrant the real estate to be free from incumbrances; the lessee was given the right to redeem from any and all such incumbrances and was to have subrogation therefor. This provision in the lease contract precludes the idea that the land was warranted to be free from incumbrance; and certainly such a contract stipulation did not render the title unmerchantable, since the lessee acquired precisely what he bargained for.

Another contention of defendant is that the trial court erred in finding that at the time this action was begun the plaintiffs owned and held all rights of the Skaer-Crum Oil Corporation and of their predecessors in title. The evidence disclosed that the Skaer-Crum corporation had been dissolved and its debts liquidated. Its assets, therefore, belonged to the stockholders. The plaintiffs were the only stockholders. They were therefore the beneficial owners of the chose in action in controversy. If on dissolution there had been any unsettled business to attend to, the last board of directors would ex officio have been trustees for the winding up of the corporate business and for dividing the property among the stockholders. The plaintiffs were members of the last board of directors as well as the only stockholders. Their ownership of the chose in action seems to have been fairly well established from the evidence,, and it is not conceivable that it could have belonged to anybody else. So the trial court’s finding of fact on the point cannot be disturbed.

The record contains no error prejudicial to defendant, and the judgment is therefore affirmed.