Eadus v. Hunter , 268 Mich. 233 ( 1934 )

Plaintiffs had verdict of a jury and judgment in action for damages for conversion of an oil and gas lease. Defendants contend verdict for them should have been directed on the ground of ratification or estoppel and also that the court erred in refusing their requests to charge.

August 13, 1928, plaintiffs owned five acres of land by the entireties and another three and a half acres were owned by Eadus and occupied by plaintiffs as their homestead. They executed an oil and gas lease to defendant Hunter, who took and held for himself, Gage, and one Moyer. The latter negotiated the lease but was not served herein.

The lease provided that a well be commenced by November 13, 1928, or the lessee pay $45 rental to cover extension of one year for commencing the well. Moyer and Eadus deposited the lease in a bank in escrow, upon the condition that the lessee should commence drilling within 60 days after a neighborhood well should produce oil or gas in paying quantities. The other well produced on September 14th.

October 20th defendants paid Eadus $100 and he executed an instrument extending the drilling time on the lease held in escrow. The period of extension was not stated in the instrument but, concededly, it was 30 days. On November 3d Eadus and Moyer withdrew the lease from escrow. Moyer, on advice of his attorney, had it recorded the same day. Mrs. Eadus claims she did not know of the withdrawal of the lease for a few days and, on learning of it, protested to Hunter. Eadus claims he asked both Moyer and Hunter to return the lease but could not get it. November 13th defendants tendered the $45 rental to plaintiffs but it was refused. November 21st plaintiffs commenced suit in chancery to have the lease declared void and the record cleared, and it was so decreed. Eadus v. Hunter, 249 Mich. 190.

The conversion arose from breach of the arrangement between Eadus and Moyer when they withdrew the lease from escrow. Eadus claimed that the lease was withdrawn in order that a new one should be executed in its place to provide for a 30-day extension for drillng and the new lease was to be deposited in escrow upon the same conditions as the old one. Defendants claimed the lease was delivered to Moyer without conditions. The issue of fact so made was submitted to the jury, which found for plaintiffs. No new lease was executed and defendants did not commence drilling on the Eadus land within any period of the extension.

Defendants contend Mrs. Eadus ratified the 30-day extension of time for drilling because she used for her daughter's education the $100 received by Eadus for the extension and did not return the money on discovery of its source. Granting the claim, it would not work a ratification of defendants' breach of the arrangement under which the lease was withdrawn from escrow and sanction defendants' recording the lease and claiming under it.

Defendants say they could not be guilty of conversion because the lease was in force and was their property. Aside from the fact that the chancery proceedings settled the issue of delivery of the lease, the verdict in the instant case determined that there was no delivery to convey to defendants.

Defendants further contend that the action is for slander of title, to which good faith and want of malice is a defense, and the court erred in refusing their requests to charge to that effect. It is conceivable that the action of slander might have been brought (Kingkade v. Plummer, 111 Okla. 197 [239 P. 628]), but plaintiffs declared on conversion of the lease, so elected at the trial, and the court charged on that theory.

Actions of trover for conversion of leases or muniments of title long have been known to the law. 65 C. J. p. 21, 50 A.L.R. 1171, note. Not in point but of special interest in connection with the facts at bar are: Daggett v. Davis,53 Mich. 35 (51 Am. Rep. 91); Parry v. Frame, 2 Bos. Pul. 451 (126 Eng. Repr. 1379); Robert v. Wyatt, 2 Taunt. 268 (127 Eng. Repr. 1080); Hooper v. Ramsbottom, 6 Taunt. 12 (128 Eng. Repr. 936); Cronkhite v. Chaplin (C.C.A.), 282 Fed. 579. Good faith and want of malice is not a defense to an action of conversion.

I think Mr. Justice WIEST overlooks three facts, (a) that excessiveness of damages is not raised in the statement of questions involved nor argued in the briefs; (b) the conversion consisted of taking and using the lease in a manner contrary to the agreement of the parties (65 C. J. p. 36); and (c) all damages to plaintiffs caused by the misuse are referable to the conversion (65 C. J. p. 130), and do not constitute an independent tort.

Judgment should be affirmed, with costs.