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Magnolia Petroleum Co. v. Carter Oil Co.

: August 30, 1954.

MAGNOLIA PETROLEUM COMPANY, A TEXAS CORPORATION, APPELLANT,
v.
THE CARTER OIL COMPANY, A WEST VIRGINIA CORPORATION, AND STATE OF OKLAHOMA, EX REL. COMMISSIONERS OF THE LAND OFFICE APPELLEES.



Murrah

Before PHILLIPS, Chief Judge, and MURRAH and PICKETT, Circuit Judges.

MURRAH, Circuit Judge.

Magnolia Petroleum Company appeals from a judgment quieting title in the Commissioners of the Land Office of the State of Oklahoma as the owner of the fee simple title and in The Carter Oil Company as the owner of oil and gas leases executed to it by the Commissioners covering land forfeited to the Commissioners by defaulted certificate of purchase holders. Magnolia counterclaimed to the quiet title action instituted by Carter, interpleading the Commissioners as third-party defendants, contending that as the record owner of one-half of the minerals under the forfeited land without notice of the forfeiture, it was entitled to have its title quieted as against Carter and the Commissioners.

The controverted property is part of the original Oklahoma school land grant placed under the control of the Commissioners. Enabling Act, June 16, 1906, c. 3335, § 7, 34 Stat. 272; Okla.Const. Art. 6, § 32. By mesne conveyances B. J. Ebenkamp and Willis Tooley obtained equitable title to the land from the Commissioners, evidenced by Certificates of Purchase. The State retained legal title to secure the balance of the unpaid purchase price with the understanding that a patent would issue upon payment of the full purchase price and that forfeiture would result from failure to make annual deferred payments. Title 64 O.S. § 187, R.L.1910, § 7152; Laws 1916, ch. 36, p. 96, § 2; Laws 1933, ch. 91, p. 163, § 7; Stevens v. Patten, 174 Okl. 582, 50 P.2d 1106, Ch. 57, S.L.Okla. 1923-24; Dale v. Deal, 159 Okl. 111, 14 P.2d 363.

As holders or owners of certificates of purchase, Ebenkamp and Tooley executed mineral deeds to an undivided one-half of the minerals under the land, ultimately assigned to Magnolia by mesne conveyances dated June 26, 1930. These deeds were recorded in Beaver County where the land was located.

Thereafter, upon default by Tooley, the Commissioners on September 16, 1935, served notice of cancellation upon Tooley and his lien holder; and on May 31, 1941, the Commissioners served notice of cancellation upon Ebenkamp and his party in possession, as provided by Ch. 57, S.L.1923-24, §§ 1 and 2. No notice of cancellation of the certificates of purchase was served upon Magnolia, and it had no actual knowledge of cancellation until Carter requested quit-claim deeds covering the minerals. Magnolia refused to quit claim on the grounds that it had claimed title to the minerals since 1930, and this quiet title action ensued.

The Trial Court held that the mineral deeds executed by certificate holders Ebenkamp and Tooley, not being approved by the Commissioners of the Land Office in accordance with § 191, O.S. Title 64, R.L.1910, § 7156; Laws 1910-11, ch. 44, p. 87 § 1; Laws 1915, ch. 210 § 8, and the terms of the certificates of purchase, did not convey to or vest in Magnolia any right, title or interest in the lands as against the State of Oklahoma; and not having acquired any interest in the lands, Magnolia was not entitled to notice of cancellation under §§ 1 and 2 of Ch. 57, S.L. of Okla., 1923-24. It concluded therefore that cancellation of the certificates, being in conformity with the applicable statutes, operated to forfeit all right, title and interest of the certificate holders and any and all persons claiming by, through or under them, including the Magnolia Petroleum Company; that upon such forfeiture the State of Oklahoma was revested with the fee simple title to the lands in question free and clear of any interest of the certificate holders and Magnolia, and that Carter acquired valid oil and gas leases from the State of Oklahoma after forfeiture.

§ 191 O.S. Title 64, under which the original certificates of purchase were issued, provides in material part:

"Any purchaser of lands under the provisions of this act shall have the right to transfer or assign all his rights, title and interest in and to such lands * * *; provided, before delivery of patent, such assignment, to be valid, shall be duly recorded in a proper book, kept for that purpose by the Commissioners of the Land Office; * * *. Upon the sale and transfer of the interest of a holder of a certificate of purchase in and to the land covered thereby, if the same is approved by the Commissioners of the Land Office, and upon the payment of any principal or interest due to date of transfer, and the surrendering of the certificate of purchase transferred, the Commissioners of the Land Office shall issue and deliver to the transferee a new certificate of purchase upon the execution by the transferee of a new certificate of purchase note for the deferred payments, and the note, executed by the holder of the certificate of purchase transferred, shall be canceled and surrendered to him."

On the reverse side of the certificates issued in pursuance of the statute appears a transfer certificate to be signed by the transferors showing that they do "assign * * * all of (their) right, title and interest" in the lands described in the Certificate, "said transfer and sale being made subject to the approval and acceptance of the Commissioners of the Land Office of the State of Oklahoma."

In construing the statute as applying to a conveyance of the mineral interests by the certificate holders and requiring the approval of the Commissioners, the Trial Court construed the critical word "all" as including any part of the interest of the certificate holders; and thus concluded that "approval and acceptance of the Commissioners of the Land Office" was a prerequisite to the validity of the conveyance of a lesser interest than the whole. The Trial Court's conclusions in this respect are buttressed by evidence in the record to the effect that for at least seven or eight years preceding the trial it had been the policy of the Commissioners of the Land Office not to recognize the validity of a conveyance of any interest in the lands covered by a certificate of purchase unless the same was accepted and approved by the Commissioners of the Land Office in accordance with the terms of the certificate.

Absent any other authoritative interpretation of the state statute, we should of course be prone to give great weight to the administrative interpretation, Great Northern Life Ins. Co. v. Read, 10 Cir., 1943, 136 F.2d 44, reversed on another point, 322 U.S. 47, 64 S. Ct. 873, 88 L. Ed. 1121; Cities Service Gas Co. v. Peerless Oil & Gas Co., 203 Okl. 35, 220 P.2d 279, 290, especially in view of the affirmation of the learned Trial Court. But we think the interpretation placed upon this statute by recent decisions of the Supreme Court of Oklahoma renders the administrative interpretation of the statute untenable.

Berryman v. Producers Corp., 206 Okl. 24, 240 P.2d 1111 and Johnson v. Farmers' Union Co-op Royalty Co., 205 Okl. 478, 238 P.2d 831 leave no doubt that § 191 O.S. Title 64 is applicable only to a conveyance by a certificate holder of "'all his rights, title and interest' in the land, which is equivalent to an assignment of the certificate of purchase", Berryman v. Producers Corp., supra, 240 P.2d at page 1113, and that the statute is inapplicable to a conveyance of less than all of his right, title and interest in the land; that the recording of a conveyance of a mineral interest by a certificate holder in the county where the land is located is constructive notice and binding as against all those claiming under reissued certificates of purchase after assignment or forfeiture. And this is so although the mineral conveyance was not approved or accepted by the Commissioners of the Land Office as provided in the statute and the certificates of purchase.

Indeed Appellees concede as much.They suggest, however that the Commissioners of the Land Office were not a party to the proceedings in either the Johnson or the Berryman case, and earnestly contend that the construction placed upon § 191 in those cases was not intended to apply with binding effect on the State of Oklahoma.

True, the Commissioners of the Land Office were not parties to the proceedings in the Johnson and Berryman cases, but we think there can be no doubt that the rule of those cases has equal application to the Commissioners. To hold otherwise would result in the anomalous and wholly untenable situation in which one claiming under a reissued certificate would have good title against all in the chain of title except ...


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