Eadus v. Hunter

I cannot join in the opinion of Mr. Justice FEAD.

Counsel for plaintiffs, at the trial, disclaimed that the action was for slander of title and stated that it was only to recover damages "for conversion of the leasehold interest under the lease."

As I shall endeavor to point out in the course of this opinion plaintiffs, by their own acts, are estopped from having substantial damages; the husband by direct acts, and the wife by acquiescence and waiver; and in any event the damages are not only excessive but, in large measure, based upon elements not within the scope of the action.

In Eadus v. Hunter, 249 Mich. 190, it was held that, after deposit of the lease in escrow by Mr. Eadus, Mrs. Eadus conferred on her husband no authority to further manage the transaction for her, nor were there circumstances or a course of dealing from which new authority or a continuance of the original power to make unconditional delivery could be implied. The lease was, therefore, canceled and, upon that holding, plaintiffs, in the action at bar, have been awarded $8,000 damages, occasioned, it is claimed, by defendants wrongfully obtaining the lease and placing it of record.

If the lease was delivered by Mr. Eadus, contrary to the rights of Mrs. Eadus, and she learned of the delivery and knew that money coming to her hands was by reason of such delivery and used the money, instead of repudiating the transaction, then she ratified what Mr. Eadus had done and is estopped from recovering damages. The dearth of evidence on this point in the previous case is now supplied by this record.

Plaintiff Fred Eadus took the lease out of escrow and both plaintiffs were trying to obtain a substitute lease when it was placed of record.

Plaintiffs filed an amended declaration in May, 1932. An answer to the amended declaration averred payment of $100 to plaintiffs as a "consideration for the release of said lease from escrow and the immediate delivery thereof to defendants for recording, and said plaintiffs have not, nor has either of them, returned or offered to return said $100 to defendants, but on the contrary have applied the same to their own use and benefit."

In reply to such answer plaintiffs pleaded that "the sum of $100 was paid to Fred A. Eadus in consideration of his consenting to the release of said lease from escrow temporarily so that a new lease might be executed whereby the defendants would obtain an extension of time of 60 days additional; that plaintiff Katherine J. Eadus had no use or benefit of the said sum of $100 or any part thereof."

Plaintiff Fred Eadus took the lease out of escrow and both plaintiffs were trying to obtain a substitute lease when it was placed of record. Mrs. Eadus testified:

"My husband told me afterwards about getting the $100 from Mr. Gage. I understood that he was to pay it back. What I told him to do before I went to work was to go to the bank and borrow it and get a signer. We wanted the money to send my daughter at college. She was at Ypsilanti and needed her tuition money and other expenses and it had to be paid right at that time for her quarter semester. * * * I knew the lease had been taken out of the bank. My husband told me that night. I didn't know at that time that my husband had gotten $100 from Mr. Gage. I didn't think my husband had the $100 yet. I cannot tell you for sure whether my husband got the lease before or after he got the $100. Mr. Hunter told me that he and Mr. Gage would come over Monday night and we would talk it over and be friendly about it, we weren't going to have trouble about it. I hadn't had trouble with Mr. Hunter and I never saw Mr. Gage before that. Mr. Hunter said we were going to be on friendly terms. I was angry because they took the lease out of the bank. I knew at that time that the lease had been taken out. That is why I happened to go to Mr. Hunter. I cannot tell exactly how long that was before the 60 days expired. I know it was a short time.

"It was in October and it was November the lease was supposed to be up. It was only a matter of a week or two it would be up, and I told him that we only had a short time * * * before the lease would be up. I was awfully anxious to get a well on the place. * * * I never had a talk with either of these people about putting this lease on record. It wasn't supposed to go on record. That was understood or I wouldn't have signed the lease."

One plaintiff consented to taking the lease from escrow and the other plaintiff, when made aware of such taking, was perfectly willing to enter into another lease and supplant the old one, and also knew the $100 had been given to her husband and, with such knowledge, used the money.

The conversion was not in recording the lease. The wrong was in not entering into a new lease which plaintiffs were willing to give after the lease, now claimed to have been converted, was taken from escrow. This subject was not passed on in the equity case brought to cancel the lease; nor did that record enlighten us on this subject. Even if it be held that defendants converted the lease it must be said that from then on all their acts and the consequences to plaintiffs were wrongs for which an action of tort, perhaps, might be brought but for which conversion is not the remedy.

Had defendants removed any of the oil or gas then trover for such would lie; but they removed nothing.

It is elementary that one, otherwise entitled to bring an action of trover, may afford the wrong-doer a complete defense to the action by waiving the right to treat the act as wrongful. 26 R. C. L. p. 1144.

Trover lies only for the conversion of personal property and not for property while it is a part of the realty. 26 R. C. L. p. 1106.

Oil and gas, until severed from the containing soil, are a part of the realty. Deprivation of opportunity to remove oil and gas from the containing soil does not constitute conversion. Conversion of the lease could not carry the consequences imposed by the judgment herein.

At the time the lease was made plaintiffs' land was "wildcat territory," but after the Prather well came in as a producer there was considerable activity in acquiring leases, and then there was a speculative value.

The testimony relative to lessened value of plaintiffs' lands, by reason of nearby wells and possible effect of drainage of the oil was highly speculative, as one witness for plaintiff testified. There may be a flowing well at one point, and 100 feet away there might be a dry hole put down, and characterized this as the "oilman's luck," and made the trite observation that he had had considerable experience himself. Another witness said that the matter of a lease was a gamble anyhow, but from hearsay about other properties and leases he thought a lease of plaintiffs' property would have been worth about $1,500 in 1928. Another witness thought the lease, at about the time it was given, was worth about $1,000 per acre, and this is probably the estimate accepted by the jury.

Plaintiffs' case is not planted for an equitable conversion. If it were, then the court of equity would have had sole jurisdiction and, instead of canceling the lease, defendants would have been asked to respond for taking it without right and the damages would have been measured by the loss occasioned by nonperformance of the lease. Instead, plaintiffs have been awarded damages, measured by what could have been obtained had there been no lease.

Defendants, by answer, pleaded:

"The good faith of the defendants in the premises was adjudicated by the Supreme Court of the State of Michigan in the case of Eadus v. Hunter, 249 Mich. 190, where the court on page 192 specifically held:

" 'There was no indication of fraud or overreaching on the part of defendants.'

"This was an adjudication by said court upon the question of fraud upon which plaintiffs' right to recover here depends, binding on the parties to this suit, and conclusive of their rights herein, and sufficient to bar plaintiffs' right to recover."

In reply to this plaintiffs pleaded:

"As to paragraph two, plaintiffs admit that said opinion of the Supreme Court contains the statement quoted, but deny that said statement is conclusive upon the question of the good faith of the defendants.

"In support of this denial, plaintiffs will show that said statement was not necessary to the decision of said cause but was merely obiter dictum and not res judicata on that issue.

"As to paragraph three, plaintiffs deny that there has been an adjudication by the Supreme Court in any respect conclusive upon the right of plaintiffs relative to the fraud of the defendants, and deny that said decision is sufficient to bar plaintiffs' rights to recover."

Defendants wanted an extension of the lease and paid $100 for that purpose. Both plaintiffs were willing to give the extension. The proper extension was not executed. Plaintiffs should have returned the $100.

There was no fraud. At the most, there was an honest assertion of rights, supported by advice of an attorney, but unjustified under holding by this court.

The judgment is reversed and a new trial granted, with costs to defendants.

NELSON SHARPE, C.J., and BUTZEL, BUSHNELL, and EDWARD M. SHARPE, JJ., concurred with WIEST, J.