Opinion
No. 11316
Opinion Filed July 24, 1923.
1. Contracts — Rescission — Retention of Benefits.
In suits for the rescission and cancellation of contracts, the court applies the maxim that, he who seeks equity must do equity. The plaintiffs will not be permitted to repudiate their contract and still retain the benefits which they have derived from it, but will be required to restore to the defendants everything of value received by the plaintiffs by virtue of said contract.
2. Appeal and Error — Review of Equity Case — Insufficiency of Evidence.
In a case which is cognizable only in a court of chancery, it is the duty of the court to consider the whole record, to weigh the evidence, and, when the judgment of the trial court is clearly against the weight of the evidence, render, or cause to be rendered such judgment as the trial court should have rendered.
3. Same — Cancellation of Oil Lease for Fraud — Restoration of Consideration.
Record examined, and held, that plaintiffs should have been required, by the judgment of the trial court, to restore to the defendants the $900 the plaintiffs received by virtue of the lease they sought to cancel and rescind.
(Syllabus by Jarman, C.)Commisioners' Opinion, Division No. 2.
Error from District Court, Stephens County; Cham. Jones, Judge.
Action by L.W. Florence and Estella Florence against the Minnehoma Oil Company, Loyal Petroleum Company, and Ralph Talley. Judgment for the plaintiffs, and the defendants bring error. Reversed and remanded, with instructions.
C.H. Rosenstein, for plaintiffs in error.
H.B. Lockett, for defendants in error.
This action was commenced in the district court of Stephens county by L.W. Florence and Estella Florence against the Minnehoma Oil Company, Loyal Petroleum Company, and Ralph Talley, to enjoin the recording of a certain oil and gas lease, and for a decree canceling said lease and barring the defendants from claiming any right, title, or privilege under said lease. Judgment was rendered for the plaintiffs, from which the defendants Loyal Petroleum Company and Ralph Talley have appealed.
The plaintiffs filed their petition alleging that they were the owners and in possession of the lands covered by the oil and gas lease in controversy, and that in April, 1919, the defendant Loyal Petroleum Company procured an oil and gas lease from the plaintiffs on said land through false and fraudulent representations that said defendant was blocking up an acreage in the vicinity of the plaintiffs' land with the intention of drilling for oil thereon, and represented to the plaintiffs that it was procuring leases from other land owners in that vicinity for a bonus of $15 per acre, and, relying upon these representations, the plaintiffs executed said oil and gas lease to this defendant; that as a matter of fact, said defendant was paying as high as $40 and $50 per acre for leases on other lands in that vicinity; and the plaintiffs prayed that defendant Ralph Talley, county clerk, be enjoined from recording said oil and gas lease and that said lease be canceled on account of the fraud practiced in procuring same. The plaintiffs tendered the $900 bonus received from the defendant Loyal Petroleum Company for said lease.
A separate answer was filed by the Loyal Petroleum Company, denying generally and specifically the allegations in the petition of the plaintiffs and alleging that the transaction in procuring said oil and gas lease was free from fraud and made in good faith. A separate answer was filed by Ralph Talley, defendant, and also by the Minnehoma Oil Company, defendant. The case was submitted to the court without a jury. The court found and rendered judgment that the Minnehoma Oil Company had no interest in said lease and rendered judgment for the plaintiffs canceling said lease and enjoining the placing of the same of record.
The defendant Loyal Petroleum Company argues only one assignment of error, to wit: That the court erred in not rendering judgment for the said defendant against the plaintiffs for the $900 bonus paid to the plaintiffs for said lease.
The defendant concedes that the evidence is sufficient to support the judgment of the lower court in holding that said lease was procured by fraud and canceling same, and, therefore, there is but one question presented to this court, and that is whether the trial court erred in its failure and refusal to render judgment for the defendant Loyal Petroleum Company for the amount that plaintiffs received for executing said lease.
Before the plaintiffs could rescind their contract, the lease in question, it was necessary for them to restore to the defendant Loyal Petroleum Company everything of value which they received by virtue of said lease, or they must offer to restore the same. Section 5079, Comp. Stat. 1921.
This is purely an equitable action, and in order for the plaintiffs to obtain the relief sought, it is necessary that they should do equity; and in discussing this principle, the court, in the case of Crouch Son v. Huber et al., 87 Okla. 83, 200 P. 764, quotes with approval the following:
"In suits for the rescission and cancellation of contracts the court applies the familiar maxim of equity, of almost universal application, that he who seeks equity must do equity. The plaintiff will not be permitted to repudiate his contract and still retain the benefits which he has derived from it, and his desire and willingness to restore what he has received must appear in the bill or complaint; otherwise, he will have no standing in a court of equity." (18 Ency. Pl. Pr., 829.)
In this case, the plaintiffs tendered the $900 they had received in connection with the execution of this lease contract, which they seek to rescind, and the court should have required the plaintiffs to return the same to the Loyal Petroleum Company before judgment canceling the oil and gas lease should become effective. If the plaintiffs were in good faith in tendering the $900, then certainly they could not be prejudiced by being required to pay the same to the Loyal Petroleum Company. It would be inequitable to cancel the oil and gas lease and still permit the plaintiffs to retain the $900 they had received for executing the same. As stated in the case of Crouch Son v. Huber et al., supra:
"A party will not be permitted to repudiate his contract and still retain the benefits which he has derived from it."
This is purely an equity case, and in this connection our court has repeatedly laid down the following rule, to wit:
"In a case which is cognizable only in a court of chancery, it is the duty of the court to consider the whole record, to weigh the evidence, and, when the judgment of the trial court is clearly against the weight of the evidence, render or cause to be rendered such judgment as the trial court should have rendered." Lee v. Little, 81 Okla. 168, 197 P. 449; Blakeslee v. Young, 82 Okla. 114, 198 P. 605.
In the case of Unkle v. Wills et al., 281 Fed. 29, which is a case appealed from the District Court of the United States for the Eastern District of Oklahoma to the Circuit Court of Appeals, Eighth Circuit, the court held:
"Appeals in equity are heard de novo and disposed of finally without remanding the cause for another trial except in exceptional cases."
Under the foregoing rule, as announced by the authorities above referred to, the judgment of the lower court is reversed, and the cause remanded, with instructions that the trial court render judgment enjoining the defendants from placing said lease of record and canceling said lease, upon the condition that the plaintiffs pay to the defendant Loyal Petroleum Company the sum of $900, the amount received by the plaintiffs for executing said lease.
By the Court: It is so ordered.