Conscious that each member of this court, those with whom I disagree and those with whom I agree, is doing his best to arrive at a just decision in this cause, I regret to dissent from the majority opinion. Without compelling reasons I should not dissent. Those reasons I shall give as briefly as I can under the circumstances.
On or before May 26, 1927, Glenwood Pruitt, Freelin Pruitt and Oceana Pruitt, minors, were the owners of an undivided interest in the following described land, lying in Seminole county, Okla.: An undivided interest in and to the north half of the northeast quarter and the northwest quarter of the northeast quarter of section 2, township 9 north, range 5 east; and on that date Ollie Dunlap, as guardian, filed a petition in the county court of Seminole county asking permission to lease their interest for oil and gas purposes. On the same date the county court entered its order authorizing the guardian to make such lease.
On the 1st day of June the guardian made return that he had leased the minors' undivided interest, being a 1/6 interest, in the above-described land for a bonus of $1,000, with the usual oil and gas royalty, and on that date the court made an order confirming the sale, and in this order the land was described as 1/6 of the above-described land. In the proceedings for the sale of the oil and gas lease the guardian was represented by S.S. Orwig, attorney, of Wewoka, Okla.
On the 19th day of October, 1929, Freelin Pruitt, by his joint guardians, G.L. Sandlin and W.E. Harber, filed an action against S., S. Orwig, A.E. Graham, C.E. Gragg, and Gordon Dovell, wherein he claimed that he was the owner of a one-sixth interest in the above-described land, and attacked the guardian's sale of the oil and gas lease above mentioned on the grounds of fraud, and particularly on the grounds that S.S. Orwig, the attorney for the guardian in conducting the sale, was the real purchaser and purchased the lease at the sale without the knowledge and consent of the guardian, and that the other defendants were purchasers with notice of the fraud, and asked the court to decree that the defendants hold the leasehold interest as trustees for him, and that the court require them to make a full accounting for all moneys received by them from the oil and gas produced under the lease.
During the pendency of the cause A.E. Graham died and the cause was revived against his administratrix and his heirs; and also Gordon Dovell died and the cause was revived against his administratrix and heirs.
The cause was tried before E.A. Summers, assigned judge. On the 5th day of January, 1932, the court rendered judgment against the defendant C.E. Gragg and the representatives and heirs of A.E. Graham and Gordon Dovell, and as to the defendant S.S. Orwig found in his favor and dismissed him from the cause, decreeing that the sale was invalid, and decreeing that C.E. Gragg and the representatives and heirs of Graham and Dovell held the leasehold estate in trust for the plaintiff, and that the plaintiff have a full accounting from them for all of the proceeds received by them from the leasehold estate, and found and decreed as follows:
"The court further finds that the said oil and gas lease brought its full market value at the time it was sold and that there was no fraud in said sale; the court further finds that at the time of said sale the said S.S. Orwig acted in the utmost good faith with no intention on his part to cheat, wrong or defraud this plaintiff, but that the said S.S. Orwig did not advise the plaintiff or the guardian of the plaintiff of the fact that he was the purchaser at said sale and did not make a full and complete disclosure to his client of all the material facts concerning said sale.
"The court further finds that the defendant, S.S. Orwig, in all other respects gave the plaintiff and his guardian the same full, complete and fair advice that he would have given had the sale been made to a stranger, except to advise the guardian or the plaintiff that he, S.S. Orwig, was the purchaser.
"The court further finds that the plaintiff has failed to make out a case against the defendant S.S. Orwig, and that he has heretofore sustained the demurrer of S.S. Orwig to the evidence offered by the plaintiff and said cause is dismissed as to the defendant S.S. Orwig."
The court further found that Graham, Dovell, and Gragg were not innocent purchasers.
Following this judgment, on hearing of *Page 376 the accounting ordered thereby, the court gave judgment in favor of plaintiff against Graham's estate in the sum of $37,926.99, Dovell's estate $2,092.71, and against Gragg in the sum of $20,252.28.
The land in controversy was the allotment of Victoria Walker, deceased, and at the time of the contemplated sale of an oil and gas lease on the minors' interest there had been no determination of heirship, and there were upward of 30 parties who either claimed or had an interest in the allotment. Orwig had an interest in the fee, which was determined to be a one-fifth interest; defendants Gragg and Dovell had an interest in the fee and also J.L. Mainard.
Just prior to the putting up of the minors' interest for sale, there was a conference between Orwig, Gragg, Dovell, and Mainard; the purpose of the conference, according to the record, was to devise some means of getting the title to the oil and gas rights in such shape that some company would accept an oil and gas lease on it and develop the same, and there was a tentative agreement that if the guardian of the minors and Mr. Orwig, as attorney for the guardian, would put the sale through, there would be a bid by one or the other of the other parties for the lease if it was sold cheaply enough, and at this conference $1,000 was suggested as a reasonable price.
The questions in this case are whether or not Orwig, as attorney for the guardian, who conducted the sale, was the real purchaser of the real estate sold, and if so whether or not he fully informed the guardian as to his being purchaser and the guardian consented to his purchasing the property; and whether or not Graham, Gragg, and Dovell are innocent purchasers
In the consideration of this case it appears to me that the case turns more on the construction of the testimony of Orwig, who was a witness, than on where the weight of the evidence lies. Orwig's testimony divides into two parts; one part, taking his statements literally, is in favor of the plaintiff, and the other part, taking his statements literally, is in favor of the defendants. I believe it would be more readily understood to set it out as nearly as possible into the two parts.
First. He testified in substance that he was the attorney for the guardian and conducted the sale of the leasehold estate and prepared all of the papers, and when neither Gragg, Dovell, nor Mainard, who had previously agreed to appear at the sale and bid on the lease, appeared, he asked Spencer Norvell to appear and buy the lease; that Mr. Norvell did not put any money into it. About August 5th Mr. Graham gave Norvell $500 of the purchase price, and he, Orwig, gave Norvell $500 of the purchase price, and on that date or the next, Mr. Norvell paid the guardian for the lease; that Graham and Gragg and Dovell knew how the lease was held by Mr. Norvell. It was agreed between all of them that Graham was to pay one-half of the purchase price and the witness, Orwig, the other half.
After the assignment of one-half interest to Graham, the other half interest was held by Mr. Norvell for the use and benefit of witness Orwig; that one-half of the interest in the leasehold estate remained in the name of Spencer Norvell as trustee for the witness, Orwig, until after the first well came in, and he was holding it for the witness.
That at the time the assignment was made to Graham of his half interest, Graham knew the circumstances surrounding the guardian's sale. Witness had advised Graham as to that, and that at the time Norvell made the assignment of the other half interest to Gragg the witness had discussed the circumstances surrounding the holding of the leasehold estate by Norvell.
The witness did not tell the guardian that he, his attorney, was purchasing the lease.
Orwig also testified that Gragg, was to have an interest in the lease on condition he paid for the same.
Second. Testimony of witness in favor of the defendants: By former agreement with Mainard and Gragg and Dovell and witness, the lease was put up for sale, and they were to bid on the lease, but when they failed to appear, witness went to Norvell's office and asked Norvell to bid on it; that it was not the intention of the witness to have any interest in the property himself, and the reason he got Norvell to bid on it was because the other parties had not appeared to bid; that he had had a previous conference with Gragg, Dovell, and Mainard, and it was agreed for the purpose of getting the whole lease in shape to have someone drill on the land, the minors' interest should put up at public auction and sold. There was no agreement that witness should have any interest in the property. Witness does not know whether Gragg and Dovell knew witness was attorney to represent the minors at the sale, but they knew that witness *Page 377 wanted the land sold and the lease put through the court.
Norvell did not own any interest in the lease he took for the use and benefit of the persons who finally took it over.
The guardian was present at the sale and knew that Norvell bid in the lease. The guardian did not know in truth whether or not Norvell was the real purchaser. Witness did not discuss that with the guardian.
Witness did not tell Norvell that he was buying it for the witness, or that the witness had an interest in it. Witness never received any income from the leasehold estate in question.
Mr. Graham knew nothing about the purchase of the leasehold estate at the time it was sold at the guardian's sale.
The witness knows that at the time Norvell made the assignment to Gragg there had been a producing well drilled on the property, and at the time the assignment was made there was over $11,000 in Norvell's hands produced from the leasehold estate in question. (This, as the evidence hereinafter will show, was a mistake.) The assignment from Norvell to Gragg was dated the 17th day of January, 1928.
Witness states that at some time he would like to make a full explanation to the court with reference to the handling of this matter to show his good faith. The court stated that he did not think it was necessary, the court thought the witness had acted entirely fair in this matter, and the court could not see how he could have acted with more good faith.
At the time this sale was made there was not much activity with reference to buying and selling of oil and gas leases in the immediate vicinity of this land. There had been a well drilled in section 10 south, and while this sale was being put through there was a dry hole drilled between the land in question and the well.
All of the parties, including the guardian of these minors, interested in the land in question were anxious to have the property leased and developed.
In representing the guardian of the minors the witness in putting through the sale gave the guardian the benefit of all his knowledge and information regarding it, both as a lawyer and as an individual owning oil and gas leases and royalties in the community, and put the sale through just like the minors had been his own children, and he advised the guardian as fairly and fully in the sale as any other client would have been advised. The guardian was advised that the sale was made for the benefit of the minors in order that their interest might be developed for oil and gas. There was never any intention on the part of the witness to wrongfully procure the interest of the minors in the property.
Witness believes first well was drilled in April (1928). Asked whether or not witness had advised Gragg, Dovell, and Graham that the sale was fairly and legally made, witness replies that Mr. Graham was a lawyer and he examined the records and knew that Mr. Norvell was holding the lease. Witness told Mr. Graham that if he thought too much had been bid for the lease, he would split the purchase price with Mr. Graham and Mr. Graham could pay half the purchase price and the witness would pay the other half. Witness did not take the lease with the intention of holding it himself. If he had intended to buy the lease himself, he would not have put the sale through. All the witness was trying to do was to get the title cleared up so that the same could be drilled, and the reason he had Mr. Norvell to bid was that the parties who had agreed to appear and bid did not appear. He expected either Mainard, Gragg, or Dovell to be at the sale and bid.
That on the hearing in the county court for allowance of attorney fees to Mr. Graham for clearing up the title witness did not remember testifying that he had no interest in the lease sold at the guardian's sale, but probably that was true because that was a fact. All witness ever got out of this deal was that he got stuck for $500.
Norvell's Testimony: Witness never owned any interest in the property, never received any rents or royalties from the same. He bid the property in at the request of Mr. Orwig and he paid the $1,000 of the purchase price to the guardian. Graham give him $500 and Orwig $500 of the purchase price. He made the assignment to Graham with the consent of Orwig and would not have made it otherwise.
Subsequent to the purchase of the property he had a conversation with Orwig; the occasion of the conversation was that he had received a check from the Superior Oil Corporation for approximately $1,100. When he received that check witness was surprised because he thought he had transferred *Page 378 all of the interest in the lease, and went to Mr. Orwig and told him that if the property was producing he wanted it out of his name, as he, witness, owned no interest in it and did not want money to come into his hands. Orwig told him to keep the check, that it wasn't his, and afterwards he gave the check to Gragg, he supposes at the request of Orwig. He could not say whether he had made the assignment at that time or not, but the same was not on record. He knew at that time he did not have any interest in the leasehold in question and Orwig told him that he was not the owner of it.
Testimony of J.L. Mainard: He testified that he and his brother owned a fee interest in the lands in controversy. Testified substantially as the other witnesses as to getting the title to the lands in shape to have the same drilled for oil and gas; that after the sale Orwig, Gragg, Graham, and himself were at the Aldridge Hotel and Mr. Orwig said that they were not there to bid it in, so he had Spencer Norvell buy it in, and Orwig told witness to go to Spencer Norvell's office the next morning and see him and tell Norvell to assign the interest to Mr. Graham, but Mr. Gragg seemed to have some interest in it that was doubtful, so Orwig told Mr. Graham to take the interest and then go ahead and clear up the title and whatever attorney fees were made for clearly up the title Mr. Graham and Mr. Orwig divided. Witness believes that Mr. Graham was to take assignment for all of the minors' interest in the leasehold estate.
Gragg, one of the defendants, testified that prior to the sale of the lease in question, he owned an interest in the land. That he and various other persons who had acquired interest in the lands were trying to work out some plan whereby they could have the land developed for oil and gas. That he discussed with Mr. Orwig the question of having the minors' interest sold. This discussion took place some time in May. He told Orwig he would bid $50 an acre for the minors' interest. The witness and Orwig went to Graham's office in Okmulgee in the latter part of July, 1927, and they agreed with Graham that they would meet the other interested parties the same evening in Wewoka.
Witness told Orwig to assign a half interest in the lease to Graham. The other half interest was held by Norvell for the use and benefit of witness, and was assigned to witness on the 17th day of January, 1928. The oil runs from that interest were paid to the witness. Witness believes he received the first check on the 2nd day of July, 1928. The first well came in on the lease in April or May. At that time the minors' interest in the lease was vested in Graham and Norveil and witness. The first check for witnesses' half interest was made payable to Norvell because witness had not recorded his assignment prior to the bringing in of the first well. The check received by. Norvell was signed by the witness.
Dovell had an interest in the fee acquired some time in May, 1927. He authorized a bid to be made for $50 an acre for the lease at the sale of the same for himself and Mr. Dovell. The witness did not pay the guardian the purchase price of the lease. He left that to Mr. Orwig. Witness never paid Orwig the $500. Witness offered to pay Orwig several times before suit was brought.
Witness never asked Norvell to buy the property for him, but authorized Orwig to make a bid for him of $1,000. Witness has known Mr. Orwig for a good many years and has been interested with him in other transactions, and it was not unusual for witness to owe Mr. Orwig.
On the 4th day of January, 1928, the owners of the lands described, including the holders of the leasehold in question, entered into an oil and gas lease contract with the Superior Oil Company, whereby it was agreed that the company should drill a first well or test well free on the premises and pay the usual royalties of 1/8 of the oil and gas to the fee owners, and it was agreed that the working interest should be divided 3/8 to the fee owners and the holders of the leasehold estate in question and 5/8 to the company. The company was to develop the property and operate the same and the expenses of the development and operations should be borne, the fee owners and holders of this lease 3/8 interest, and the company 5/8 interest, excluding the first well. At the time of the accounting in this case, under this lease and agreement, there had been produced and sold $1,836,553.20 in oil and gas, and the plaintiff herein had received his royalties.
As the evidence shows, there were two conferences held between some of the feeholders and Mr. Orwig, the first some time prior to the 26th day of May and one some time about the 25th day of July, after the sale of said lease, at which Gragg, Mainard, Dovell, and Graham were present. Graham was not present at the first conference. The purposes of these conferences *Page 379 were to get title to the land and the leasehold estate of the minors in shape to have the property developed, and the record discloses that there were no plans laid or schemes discussed at these conferences which were antagonistic to the interest of the minors. It was to the best interest of all parties to have the lands leased and developed. The interest in this lease of the minors and the other feeholders were mutual; whatever benefit the other feeholders received was also received by the minors.
As will be noticed from the findings of the court set out above, Orwig was the real purchaser at the guardian's sale of the leasehold estate in question, and he did not inform the guardian, his client, that he was purchasing at the sale. This finding must be based upon the testimony of Orwig wherein he stated in answer to one question that Norvell was holding for his use and benefit, and in answer to another question that Norvell was holding for him in trust, and upon the fact that Orwig paid one-half of the purchase price to Norvell.
The evidence discloses, as set forth above, that Orwig testified that there was no intention on his part of being a purchaser of the minors' lease interest; that there was no agreement or understanding that he should jointly own this lease with the other parties, and positively stated that the leasehold of the minors sold was held by Norvell for the parties who finally took it. He also testified that he did not remember whether he testified at the hearing in the county court to fix the fee of Graham for representing the minors in clearing up the title to this land that he had no interest in this leasehold estate, but he must have, because that was a fact. Also, when Norvell received the first check from the oil company and Norvell called Orwig's attention to it, Orwig stated to Norvell that it was not his check, that he had no interest in it, and told him to deliver it to Gragg. The evidence further shows that Orwig never at any time claimed any interest in this leasehold estate or received one penny of benefit from the same.
The evidence further shows that Orwig advised the guardian in all things to the same effect as if he had been a stranger and handled the sale the same as if the minors had been his own children. It is a fact that Orwig was asked if he told the guardian he was the purchaser and Norvell held it for him and he stated he did not. From the view I take of his testimony, it is a matter of course that he did not tell the guardian that he was the purchaser and Norvell held the leasehold for Orwig, for if he had told the guardian that, he would have told him something that was untrue according to this record.
The evidence shows that at the time the sale was called and neither of the parties whom Orwig had expected to appear and bid did appear, he went to Norwell and had Norvell to bid, explaining the reason to Norvell why he wanted him to bid. Orwig no doubt was handling this sale from the very beginning and managing it and there is no doubt from the record that Norvell was to hold this and assign it to the parties who were to be there and bid at the direction of Orwig.
My interpretation of the testimony of the witness Orwig that the property was held for his use and benefit and held in trust by Norvell for him, is that he had in mind and intended that it was held at his direction as attorney representing the guardian of the minors and not in fact for the use and benefit of the witness himself.
Giving it this interpretation, it is consistent with all of the circumstances and the facts and the testimony in this record and is consistent with the testimony, including the testimony of Orwig himself. To give it the literal interpretation that he meant that the lease was held by Norvell for his, Orwig's use and benefit and in trust for him, then it is inconsistent with all the facts and circumstances in this case and irreconcilably inconsistent with the testimony of Orwig himself.
Orwig unquestionably was the more interested in the development of this property than any other parties interested, for the reason that he had the largest interest. The records show that he was most active in having this property developed, and that he realized that in order to have this property leased and developed the minor's interest must be sold. After the dry hole came in between this property and the well south of it, the other parties seem to have lost interest. At the first conference after the sale of the property there was a dispute between the parties who were to bid on the property with Orwig and Graham about the bid being too high, or rather I should say an agreement that the minors' interest had sold too high.
Under all of the circumstances and the position Orwig was in at that time, it would not be unnatural for him to advance or chance $500 to save the sale and save his *Page 380 efforts in getting the title in shape to lease. The only reasonable deduction to make from the paying of the $500 by Orwig was that he put the money in for that purpose and with the expectation of receiving it back from one of the parties who were to bid at the sale and not with the intention of acquiring an interest in this leasehold estate.
Giving these items of evidence the interpretation that I am giving them, then it is certain that Orwig's testimony is consistent with the court's finding that he acted in the utmost good faith.
It will be noted from the above that Orwig testified that the assignment by Norvell to Gragg was after a well had come in on the property. The assignment to Gragg was made on the 17th day of January, 1928. The lease under which the property was developed was executed on the 4th day of January, 1928, and filed of record on the 27th day of January, 1928. Both Orwig and Gragg testified that to the best of their memory the first well came in about April or May, 1928, so if this is material Orwig was mistaken as to the relative time as to when the first money was received and as to when the assignment was made to Gragg. Gragg states that the check was received on the 2nd day of July, 1928.
It is difficult to reconcile the findings and conclusions of the trial court as to the acts or of Orwig as attorney for the guardian in conducting this sale, either with themselves or with its conclusion. If Orwig acted with the utmost good faith and without fraud, as found by the court, then he did everything that he should have done in the premises and did nothing that he should not have done. The findings of the court that he was the real purchaser could mean nothing less than that he had the bid made in the name of Norvell to conceal the fact that he was the bidder. It is the only conclusion that can be reached from a consideration of the court's findings. This is not good faith on the part of the attorney. The trial court found and concluded that Orwig had acted in the utmost good faith and exonerated him on account of his acts and dismissed him from the case without any liability, yet on account of the acts of Orwig as attorney for the guardian he holds the sale invalid, and holds that the defendants were not innocent purchasers, and passes the consequences of the acts of Orwig as attorney for the guardian on to them, and they, according to the decree, are to bear the full burden of these acts.
The position of a lawyer to his client is one of great trust. He must not use this position to his advantage. The outstanding fact in this case is that Orwig never used his position for his own benefit or to the injury of his client.
In effect, the decree is that property passes from innocent hands to guilty hands. Graham, Gragg, and Dovell owed no obligation whatever to the minors or their guardian. There was no intimation that they imposed on the minors or their guardian, or their attorney.
Orwig states that he discussed how the purchase was made by Norvell with the purchasers, Graham, Dovell, and Gragg. It would be much more reasonable to find that Orwig told Graham, Gragg, and Dovell that Norvell was holding the lease for Gragg and Graham on account of their not appearing and bidding than it would be to hold that he told them that Norvell held the property for him, Orwig. It is much more reasonable to draw the conclusion from the evidence that if Orwig was the real purchaser, these parties were innocent purchasers, than to find that Orwig from the evidence was the real purchaser.
It is agreed by all parties that the minors received at this sale the full value of the property and they were not injured in the sale of the lease and no wrong was done them. The court so finds.
The purpose of this action is to establish a constructive trust. The burden rested on the plaintiff to establish his case with clear, convincing, and satisfactory proof. Boles v. Akers,116 Okla. 266, 244 P. 182; Hayden v. Dannenberg, 42 Okla. 776,143 P. 859.
It is my conclusion from the evidence that the plaintiff failed to carry this burden.
The primary purpose of the courts of equity is to prevent wrongs, remedy wrongs and enforce rights, to administer justice. My firm conviction, after careful and thorough consideration of all the facts and circumstances in this case, is that the judgment of the trial court is clearly against the weight of evidence, in fact, against all of the evidence, if the evidence is given a natural, reasonable, and sensible interpretation.
The gravest error that the trial court can commit is to render judgment for the wrong party. This court, especially reviewing an equity case, as this is, should not hesitate to correct such error.
The judgment of the trial court should be reversed, with directions to enter judgment for the defendants in this case.
McNEILL, C. J., and OSBORN, V. C. J., concur in this dissent. *Page 381