State Ex Rel. Com'rs of Land Office v. Southland Royalty Co.

HALLEY, J.

The State of Oklahoma on relation of the Commissioners of the Land Office instituted this action against the Southland Royalty Company to quiet title to 160 acres of land in Texas county, Oklahoma. Plaintiff *285•alleged that the State was. the owner of the land in fee simple and in possession, having acquired title by sheriff’s deed dated June 25, 1941, duly recorded on the same date; that the Southland Royalty Company claimed some interest in the land, alleged to be inferior to the title of the State, and prayed for judgment quieting title and barring the Southland Royalty Company from any interest.

The Southland Royalty Company answered by general denial, but admitted that the plaintiff was the grantee in the sheriff’s deed mentioned, and set up a claim to an undivided one-half interest in all of the oil, gas, and other minerals in the land, alleged to have been acquired by mineral deed dated July 27, 1929, from the then owners of the land, recorded September 3, 1929; and by cross-petition prayed that title to such one-half interest in the minerals be quieted in it as against the State.

The plaintiff replied by general denial, .and alleged that the deed to one-half of the mineral interest was canceled and extinguished by resale tax deed from the board of county commissioners of Texas county, Oklahoma, dated May 20, 1941, and recorded June 12, 1941.

The case was tried on stipulation, by which the following facts were agreed upon:

(1) The Southland Royalty Company ■acquired a one-half interest in all the oil, gas and other minerals in the land by mineral deed dated July 27, 1929, executed by Joe T. Watson et ux., then owners of the land.

(2) That on September 24, 1930, the Watsons executed a mortgage covering the land to the Commissioners of the Land Office to secure a loan of $1,750. That such mortgage was foreclosed by decree entered June. 29, 1940, providing for a six months’ stay of .execution, and that on June 23, 1941, the sheriff executed to the plaintiff his deed conveying the. land to the State of Oklahoma.

(3) That in 1937, the land was sold for taxes to Texas county, Oklahoma, and on May 20, 1941, the county treasurer of Texas county offered it for resale, and it was sold to Texas county by deed recorded June 12, 1941.

(4) That on July 7, 1941, the Secretary of the Commissioners of the Land Office notified the treasurer of Texas county that title to the land had. been acquired by the Commissioners of the Land Office, in compliance with Title 64, sec. 151, O.S. 1941.

(5) That the county treasurer of Texas county made proper notations on his records, canceling all delinquent taxes, tax certificates, and tax deeds, as required by Title 64, sec. 151, O.S. 1941.

(6) That the Southland Royalty Company was not a party to the foreclosure proceeding and had never executed any conveyance affecting its interest in the minerals.

This stipulation was amended to the effect that the board of county commissioners of Texas county was a party defendant in the foreclosure proceedings, and that the decree therein provided for a stay of execution for six months; that such payment of the amount of the foreclosure judgment or mortgage indebtedness was not made, and the sheriff duly executed a deed conveying the land to the State of Oklahoma. The stipulation makes no exception to the regularity of the matters agreed upon.

Judgment in this cause was entered quieting title in the State to all of the land except an undivided one-half interest in the oil, gas and other minerals, and title thereto was quieted in Southland Royalty Company; and the plaintiff has appealed.

The stipulation of facts upon which the court entered judgment makes no mention of whether or not there was production of oil and gas upon this *286land. In the absence of an agreement or showing that there was production on any of the pertinent dates, this court assumes that the land was not producing, and bases its decision upon such assumption. In the absence of production, the mineral rights pass with the land by a resale tax deed. Sears v. Randolph et al., 195 Okla. 200, 156 P. 2d 595; Hales et al. v. Lee et al., 199 Okla. 110, 184 P. 2d 451; Three-in-One Oil & Gas Co. v. Bradshaw, 192 Okla. 309, 135 P. 2d 992.

We are here concerned only with the one-half of the royalty which was owned by Southland. Clearly this interest was not divested from Southland by the mortgage foreclosure, because they owned the paramount title to this one-half of the royalty and were not even made parties to the foreclosure. In State ex rel. Commissioners of the Land Office v. Reynolds et al., 201 Okla. 400, 206 P. 2d 184, we held that the paramount title holder could not be foreclosed of his rights in an action where he was a party and in which case there were no allegations in the petition or showing made that his title was subordinate to the mortgage. Certainly Southland’s interests were not cut out by the mortgage foreclosure. We then must consider the effect of the resale tax deed issued on June 12, 1941. In our opinion this effectively placed the title to the interest owned by Southland in the purchaser at the resale, Texas county, Oklahoma, if the proceedings leading up to the resale and the resale itself are regular. This one-half of the royalty is still vested in Texas county unless the Commissioners of the Land Office obtained good title to this one-half by virtue of the sheriff’s deed of June 23, 1941. The title to this one-half interest of royalty was never properly in the foreclosure proceedings, because the paramount title to it was in Southland until the resale tax deed was issued.. At the time the judgment of foreclosure, was taken, Texas county had no title to the one-half royalty, b'ut was only a purchaser at the delinquent tax sale and had only a lien for its taxes, subject to the right of the Watsons and Southland to redeem up until the resale, so that judgment could not give this one-half to the Commissioners of the Land Office. The Commissioners of the Land Office have no right to foreclose an interest not covered by their mortgage. See State ex rel. Commissioners of Land Office v. Reynolds, supra.

Inasmuch as the Commissioners of the Land Office never acquired the title to the one-half of the royalty formerly owned by Southland, their Secretary had no authority to certify to the county treasurer of Texas county that the Commissioners were the owners thereof, and said county treasurer had no authority or right to strike said property from the taxable-property list and strike all delinquent taxes assessed and charged against said land, and all tax certificates and tax deeds based upon such delinquent taxes, insofar as this one-half of the royalty is concerned; so sec. 151, Title 64, O.S. 1941, has no application.

This case cannot be properly disposed of without the presence of Texas county herein. Under section 236, Title 12, O.S. 1941, which was taken from Kansas and construed by the Supreme Court of Kansas in Benton v. Benton, 84 Kan. 691, 115 P. 535, we have the right to order an additional party or parties to be brought in an action so that the case may be fully and finally disposed of.

The cause is reversed, with directions to the trial court to proceed in conformity herewith.

ARNOLD, C.J., LUTTRELL, V.C.J., and GIBSON and JOHNSON, JJ., concur. WELCH, CORN, DAVISON, and O’NEAL, JJ., dissent.