Opinion
No. 35977.
December 10, 1945.
1. MINES AND MINERALS.
Where broker, after obtaining landowners' agreement to execute mineral lease upon their land for a stated consideration, expressed desire to purchase a one-half interest in their minerals for a specified sum and thereupon prepared a mineral deed and royalty conveyance conveying to him such interest, and landowners contemporaneously executed both lease and deed, at which time they received a small cash sum and two drafts, which they cashed, landowners were not entitled to have deed canceled on ground that they did not read deed and that contents thereof were not explained.
2. CONTRACTS.
A person cannot avoid a written contract which he has entered into on ground that he did not read it or have it read to him and that he supposed terms were different, unless he was induced not to read it or have it read to him by fraudulent representations made to him by other party on whom he was entitled to rely.
3. MINES AND MINERALS.
Where broker procured from landowners an oil and gas lease containing an irrevocable option to broker to renew lease for successive one-year terms for ten years by annnual payment of a specified sum but which imposed no obligation on broker to renew, broker's act in taking a mineral deed to an undivided half of minerals, contemporaneously with lease, was not a fraud on theory that it served to destroy nearly a half of the rental value so as to warrant cancellation of deed.
APPEAL from Chancery Court of Copiah County, HON. V.J. STRICKER, Chancellor.
R.H. J.H. Thompson and Fulton Thompson, all of Jackson, and John T. Armstrong, of Hazlehurst, for appellant.
It is the universal rule that proof of fraud must be clear and convincing.
Harris v. Godbold et ux. (Miss.), 21 So.2d 149; Carter v. Eastman Gardner Co., 95 Miss. 651, 48 So. 615; Metropolitan Life Ins. Co. v. Hall, 152 Miss. 413, 118 So. 826; New York Life Ins. Co. v. Gill, 182 Miss. 815, 182 So. 109; Grenada Auto Co. et al. v. Waldrop et al., 188 Miss. 468, 195 So. 491; Hunt v. Sherrill, 195 Miss. 688, 15 So.2d 426.
The decree is not supported by the preponderance of the credible evidence and this Court has consistently refused to affirm judgments and decrees which have appeared to it as being manifestly wrong.
Wilson v. Horne, 37 Miss. 477; Otey v. McAfee's Administrator, 38 Miss. 348; Baker v. Cochran, 2 Miss. Dec. 96; Pollock v. Butler (Miss.), 23 So. 577; Jackson v. Day, 80 Miss. 800, 31 So. 536; Montgomery Ward Co. v. Windham, 195 Miss. 848, 16 So.2d 622.
The testimony of the attesting witness cannot be disregarded. He was a disinterested party and stands unimpeached, and according to his testimony there was no fraud.
Griffith's Mississippi Chancery Practice, Secs. 501, 502, 589.
The facts in this case show that $2 per mineral acre was paid, or a total of $97 was paid for 48 1/2 acres. The record is silent as to the value of same, except the appellant testified that he knew of no early prospective development on or near said lands. The appellees do not contend that they were underpaid. Therefore, there is no fraud alleged as to the appellees not being paid the market value therefor. Keep in mind that these appellees are askng to retain the money and also to have said mineral deed set aside because of fraud, when the evidence taken as a whole shows no fraud whatsoever. The appellees do not contend that they were underpaid, or at least offered no evidence as to the value of said minerals. The burden of proving fraud was upon the appellees.
A failure to read a conveyance, where parties could read, is no ground for fraud, their failure to read the deed not having been induced by any fraudulent conduct on the part of the other party.
Blaylock v. Lonn, 157 Miss. 783, 128 So. 555; American Oil Co. v. Williamson, 154 Miss. 441, 122 So. 488; Gunter et al. v. Henderson Molpus Co., 149 Miss. 603, 115 So. 720; Continental Jewelry Co. v. Joseph, 140 Miss. 582, 105 So. 639; 26 C.J.S. 272, 275.
The oil, gas and mineral lease and the mineral deed were two separate and distinct transactions. It cannot be said that anyone buying an oil, gas and mineral lease and a mineral deed at the same time is committing a fraud. If one owns property he can sell all or a part thereof.
A business transaction is valid between two parties, and when they are strangers each should know what he is doing.
Deshatreaux v. Batson, 159 Miss. 236, 131 So. 346; Fornea v. Goodyear Yellow Pine Co. et al., 181 Miss. 50, 178 So. 914.
The case of White et al. v. Union Producing Co., 140 F.2d 176, does not govern this case as the facts therein are different.
The allegations in the bill of complaint are not sustained by the lower court in its final decree and finding of fact. The sole basis of appellees' complaint is that they knew nothing about the purchase of minerals and that the subject was not mentioned to them at any time by appellant or any one else at the time and on the occasion when the transaction was consummated. The affirmance of the decree here appealed from would require this Court to repudiate and hold for naught the chancellor's finding of fact, as stated in the final decree that "the purchase of the mineral interest was mentioned to them," and that promptly thereafter the mineral deed was executed contemporaneously with the execution of the oil, gas and mineral lease acquired by appellant.
The testimony in this case shows that the appellees received a valuable consideration for said mineral deed, and in line with the actual value of said minerals, yet they do not offer to return said consideration.
See Griffith's Mississippi Chancery Practice, Sec. 43.
Whenever the chancellor in his decision is in error it becomes the duty of the appellate court to reverse him.
Gills v. Smith, 114 Miss. 665, 75 So. 451.
McNeil, Goss Zama, of Hazlehurst, for appellees.
Considering the nature of the transaction and the attendant circumstances, the appellant was under a legal duty to inform the appellees of the nature of the instruments which he procured from them and having failed to do so, he is guilty of legal fraud.
Carter v. Eastman Gardner Co., 95 Miss. 651, 48 So. 615; Salter v. Aviation Salvage Co., 129 Miss. 217, 91 So. 340; 23 Am. Jur. 854, Sec. 78.
In view of the fact that appellees agreed to execute an oil, gas and mineral lease, and in view of the further fact that all of the negotiations were made at one time, and in view of the further fact that from what representations were made, appellees thought they were executing only an oil lease, the fact that they did not read the instruments which they signed will not prevent a recission of the mineral deed obtained from them by fraud.
White et al. v. Union Producing Co., 140 F.2d 176; 12 Am. Jur. 637, Sec. 145.
There was but one transaction. It is a principle of evidence that where two writings refer to each other, with a view to the construction of either, being contemporaneous and kindred in respect to subject matter, they are deemed one instrument. This is the case where the controversy is between the original parties and their representatives.
Doe ex dem Caillaret v. Bernard et ux., 7 Smedes M. (15 Miss.) 319.
The evidence supports the result reached by the lower court. Fraud in a transaction may be proved by inferences which may reasonably be drawn from intrinsic evidence respecting the transaction itself, such as inadequacy of consideration, or extrinsic circumstances surrounding the transacton. In fact, many of the elements of fraud are such as not to be susceptible of proof by direct testimony. Fraud in its nature is not a thing susceptible of ocular observation or readily demonstrable physically; it must, of necessity, be proved in many cases by inferences from the circumstances shown to have been involved in the transaction in question. Indeed, circumstances may be such as to raise a presumption of fraud and thereby cast upon the party charged with fraud the burden of disproving its existence.
24 Am. Jur. 89, Sec. 257.
Appellees are the owners of a homestead of 97 acres in Copiah County. Appellant is a broker engaged in the business of procuring and selling oil and gas leases and other mineral rights. On March 17, 1944, he visited the home of appellees for the purpose of obtaining an oil, gas and mineral lease on their land. The opposite parties were strangers, never having seen each other before. The trade was made and appellant filled in the name of the parties, the description and the consideration upon a printed form of lease in common use in this state, and made and signed a bank draft for the agreed amount, the draft reciting that it was in payment for oil lease on 97 acres. This being done, but before the oil and gas lease was signed, appellant proposed to buy from appellees, subject to the oil and gas lease, an undivided one-half interest in and to all the oil, gas and other minerals in, on or under the said lands, and appellant drew up a deed by filling in as aforesaid on a printed form, also generally used in this state, and made and signed another and separate bank draft for the consideration to be paid, this draft reciting that it was in payment for one-half mineral interest in the 97 acres. Appellees thereupon signed and delivered the lease and also the deed, carbon copies being delivered to them, and they accepted delivery of the drafts, together with $10 cash in payment.
Although able to read and write, appellees did not read the instruments, nor were they read to them. They did not request any explanation of the contents of the papers, nor was any explanation made to them. Apparently they were content to execute what, because of the printed forms, they could see others were executing in similar transactions; but they admit that they read the bank drafts before they took them to the bank and collected the money.
About four months thereafter, appellees filed their bill seeking to cancel the deed to the one-half mineral interest on the allegation that in the transaction wherein they had executed the two instruments above outlined, there had never been any mention of a deed to an undivided mineral interest, and that the deed to that interest had been procured by fraud, and that being unacquainted with such transactions, they were under the belief that they were executing only an oil and gas lease and that they never at any time had any intention to convey away an undivided interest in the minerals.
The allegation that the mineral sale was never mentioned and had no place in the transaction was not sustained by the proof, and the chancellor ruled against it as is seen by the following recitals in his decree:
"That the said complainants agreed to execute an oil, gas and mineral lease upon the said lands for said considertion; that the defendant then prepared an oil, gas and mineral lease covering said lands, and thereafter stated to the complainants that he desired to purchase a one-half interest in their minerals for the sum of $2.00 per acre, and thereupon prepared a mineral deed and royalty conveyance covering an undivided one-half (1/2) interest in and to all oil, gas and other minerals in, on and under the lands of the complainants, and at the same time presented to the complainants for their signatures both the oil, gas and mineral lease and the mineral deed and royalty conveyance which were contemporaneously executed by the complainants, and that at said time the defendant paid to the complainants the sum of $10.00 in cash and gave to them two drafts, each in the sum of $92.00."
This finding is sufficient, under this record, to dispose of the case because, knowing that an undivided mineral interest was involved in the transaction, appellees executed the deed, took the draft, and collected the money, and may not now avoid their action on the ground, as they seem to think, that they did not read the deed, and that the contents thereof were not explained. "A person cannot avoid a written contract which he has entered into on the ground that he did not read it or have it read to him, and that he supposed the terms were different, unless he was induced not to read it or have it read to him by fraudulent representations made to him by the other party, on which he was entitled to rely." Continental Jewelry Co. v. Joseph, 140 Miss. 582, 585, 105 So. 639; Gunter v. Henderson Molphus Co., 149 Miss. 603, 621, 115 So. 720; Fornea v. Goodyear Yellow Pine Co., 181 Miss. 50, 64, 178 So. 914; Alliance Trust Co. v. Armstrong, 185 Miss. 148, 163, 186 So. 633.
We may add, however, that the chancellor sustained the bill, and cancelled the mineral deed, on the ground, as we read the findings in the decree, that the taking of the mineral deed contemporaneously with the oil and gas lease was a fraud, in that it served to destroy nearly one half of the rental value to appellees in the lease, this apparently upon the idea that appellant was obliged by the lease to pay an annual rental of $97, which for nine more years of the ten-year lease term would be $873, when by the mineral deed appellee would get one half of this by his payment for the mineral deed of only $97. If the oil and gas lease had obligated appellant to pay an annual rental of $97 for nine more years, there might or might not be good ground for the decree, as to which we express no opinion, but the lease imposed no such obligation upon appellant. The lease instrument, initially effective for one year, gave an irrevocable option to appellant to renew the lease, for successive terms of one year each, the renewal to be made before the expiration of each successive annual period throughout the ten years by the annual payment of $97, but did not obligate him to do so, and so far as obligated, appellant may have never thereafter paid a cent on the lease. The taking of an oil and gas lease, and at the same time a deed to an undivided mineral interest for an additional consideration, is not an unusual transaction in the oil and gas business in this state, and we must assume that it is regarded as legitimate, there being no proof to the contrary in this record.
Reversed and decree here for appellant.