Carter Oil Company v. Weil

Smith, J. On December 9, 1921, tbe Four States Lumber Company, a corporation, hereinafter referred to as the Company, was the owner of the 40-acre tract of land which is the subject of this litigation. The officers of the Company were: Leo Krouse, president; I. J. Kosminsky, secretary; Allen Winham, Jr., assistant secretary; and Fred Offenhauser was a stockholder and one of the directors. All of these persons except Winham were dead at the time the testimony was taken on which the case was submitted and decided in the court below. On the date mentioned the Company conveyed the land by warranty deed to Nick Harvey. Following the habendum clause in the deed appeared this separate paragraph: “It is expressly understood that a one-half undivided interest is reserved to the said Four States Lumber Company in all oil and mineral rights.” By mesne conveyances numerous persons have acquired various interests through Nick Harvey, the grantee in the deed, and this suit was filed against them by plaintiffs, who had acquired, and now own, the interest in the oil and minerals which the grantor reserved, to cancel the conveyances under which claims are asserted to the undivided one-half interest and for an accounting for the oil and gas produced from the land.' The relief prayed was granted, and from that decree is this appeal. Answers were filed, alleging the invalidity of the reservation of the undivided one-half interest in the oil and gas, and alleging also that its insertion in the deed was the result either of a mutual mistake or of an intentional fraud, and reformation of this deed was prayed, which relief was denied. We consider first the question of the right to have the deed reformed. Harvey testified that he purchased the land for a cash consideration of $450, and that he refused to accept a deed containing the reservation, and that the Company’s agent assured him that he would procure a deed which did not contain that reservation, and another deed was delivered to him which, like the first, contained the reservation, but he was assured that it did not; that he is an illiterate man, and did not know a fraud had been practiced when the second deed was delivered. The testimony of Harvey is corroborated by that of one Arthur Gurley, who testified that he, as the agent of the Company, negotiated the sale and delivered both deeds; that he reported to the Company’s officers that Harvey would not accept a deed containing the mineral reservation, and that he was assured that another deed would be prepared omitting it, and that he supposed this had been done, and that when he delivered the second deed he -assured Harvey that this had been done. The chancellor did not credit this testimony, nor do we. The Company surrendered its charter in 1923 after disposing of its lands. Winham testified that as assistant secretary he kept the Company’s records from March 15, 1917, until the dissolution of the corporation, and that practically all the Company’s records have been lost or destroyed. As assistant secretary he prepared practically all the deeds, and that he wrote the deed in question. It was the invariable practice of the Company to insert the mineral reservation in all the deeds it executed, and that this reservation was printed in the blank form of deeds used by the Company, but that the deed in question was typewritten on legal size paper, and he remembers the deed because of that fact, as he wrote the deed. He knew nothing about Harvey’s refusal to accept the first deed, and so far as he was aware only one deed to Harvey had ever been written. Winham further testified that he had known Gurley for twenty-five years, and that Gurley never represented the Company, had never handled any business for the Company, was never its agent, and was never authorized to sell lands for the Company. One Armstrong testified that he was employed by the Company in the sale of its lands from 1919 until the Company was dissolved, and that he never heard of Gurley representing the Company in any matter. It appears highly improbable to us that Gurley, after promising Harvey to secure a deed which did not contain the mineral reservation, would deliver a deed which did contain it. In view of the rule established by many decisions of this court that deeds will be reformed only upon testimony that is clear and convincing, we think the court properly refused reformation. It appears that one of the grantees claiming not from but through Harvey procured an abstract of the title to this tract of land, and had the title examined by a highly competent attorney and title examiner, and on a page of the abstract containing a copy of the deed to Harvey the examiner made the notation: “Under the authority of Cole v. Collie, 131 Ark. 103, 198 S. W. 710, our opinion is that the reservation is void.” This notation was signed by the examiner. The land was purchased in reliance upon this opinion. It is insisted that, inasmuch as the case of Cole v. Collie had not been overruled at the time of this purchase, the parties had the right to rely upon that case as supporting the examiner’s opinion, and, that the case of Beasley v. Shinn, 201 Ark. 31, 144 S. W. 2d 710, 131 A. L. R. 1234, which overruled the'Cole case, does not apply under the facts in the instant case; and further that the Beasley case should be construed as operating only prospectively. We think no valid distinction can be made between the instant case and the Beasley case, as the deed there construed had been executed subsequent to the Cole case and before that case had been overruled; and we are, therefore, of the opinion that the law as announced in the Beasley case applies here. There remains, therefore, only the question whether the opinion in the Beasley case should be construed as operating only prospectively and as having no controlling effect upon deeds executed prior to its rendition. It will presently appear that the Beasley case is not the only one which overruled the Cole case. It must be confessed that this court has not been consistent in its holdings as to the effect to be given recitals found in the habendum or other clauses-of a deed conflicting with those found in the granting clause. It is urged that under the rule of stare decisis the authority of the Cole case should not be impaired, but that if this is done the impairment should operate only prospectively, having no effect upon titles acquired while the Cole case was the declared law. It may be answered that, if the rule of stare decisis prevents a change in a holding of this court which affects rights acquired under a previous holding, the Cole case itself violates that rule, as it contravenes the first holding of this court on the question now under consideration announced in the case of Doe, Ex. Dem., Phillips’ Heirs, v. Porter, 3 Ark. 18, 36 Am. Dec. 448. In the case just cited, it was held to quote from the headnotes, that “All deeds are to be construed favorably, and as near the intention of the parties as possible, consistently with the rules of law. “The construction ought to be put on the entire deed, and every part of it, for the whole deed ought to stand together, if practicable, and every sentence and word of it be made to operate and take effect. “If two clauses in a deed stand in irreconcilable conflict to each other, the first clause shall prevail, and the latter be regarded as inoperative; and the law will construe that part of a deed to precede which ought to take precedence, no matter in what part of the instrument it may be found.” This holding cannot be reconciled with the Cole v. Collie case, which did not indicate any intention of overruling the Doe case, supra. If the Doe case is sound law, and it has never been overruled, the Cole v. Collie case was unsound, and it would necessarily follow that the undivided half interest in the oil and mineral rights here involved were not conveyed, but were expressly reserved. Now, it is true, of course, that the Cole case is a later case, and insofar as the cases are in conflict the last case would control; but the point is that cases, even those under which property rights were acquired, may be overruled. Chancellor Kent, in his Commentaries, vol. 1, p. 477, warns against the use of this power, which inheres in courts of last resort, for the reason that the law should be certain, and that rights acquired under earlier decisions should not be lightly disturbed; but he then proceeds to say: “But I wish not to be understood to press too strongly the doctrine of stare decisis, when I recollect that there are more than one hundred cases to be pointed out in the English and American books of reports, which have been overruled, doubted, or limited in their application. (This text was written more than a hundred years ago, and such cases now number, not hundreds, but thousands.) It is probable that the records of many of the courts in this country are replete with hasty and crude decisions; and such cases ought to be examined without fear, and revised without reluctance, rather than to have the character of our law impáired, and the beauty and harmony of the system destroyed by the perpetuity of error. Even a series of decisions are not always conclusive evidence of what is law; and the revision of a decision very often resolves itself into a mere question of expediency, depending upon the consideration of the importance of certainty in the rule, and the extent of property to be affected by a change of it.” Blackstone, in his Commentaries, vol.' 1, p. 70, expresses the same views. The courts’ power and duty, in proper circumstances, to overrule cases, is recognized by him, and he says: “For if it be found that the former decision is manifestly absurd or unjust, it is declared, not that such a sentence was bad law, but that it was not law; that is, that it is not the established custom of the realm, as has been erroneously determined. ’ ’ This view is criticized in two recent very learned articles in the Columbia Law Review, vol. XVII, No. 7, p. 593, and vol. XVIII, No. 1, p. 230; but it is the view expressed by Chief Justice Cockrill, who would have adorned any Bench, in the case of Taliaferro v. Barnett, 47 Ark. 359, 1 S. W. 702, in which case he said: “A decision of this court is adhered to in all subsequent stages of the same case, although it may be clearly erroneous. It becomes an adjudication between the parties to the suit from which the Supreme Court itself is not, upon a second appeal, at liberty to depart. But strangers to the suit acquire no such right, nor, indeed, any right to the decision in any case, further than it may be as a guide to their conduct. An exception is made, by statute, as to some criminal acts. Mansf. Dig., § 6340. A decision of the court when overruled stands as though it had never been, and the court in the reversing judgment declares what the rule of law was in fact when the erroneous decision was made.” The power of the court to overrule the case of Cole v. Collie is expressly conceded in the able brief filed by learned counsel for appellants; and the right of the court to refuse to make its opinion prospective only is also conceded in the brief. This view comports with the decision of the Supreme Court of the United States in the case of Great Northern Ry. Co. v. Sunburst Oil & Refining Co., 287 U. S. 358, 53 S. Ct. 145, 77 L. Ed. 360, 85 A. L. R. 254. That court reviewed a decision of the Supreme Court of Montana in which a prior decision of the Montana court had been overruled; but it was held that retroactive effect would not be given to the opinion. The right of the court to thus limit the effect of the decision was challenged on the appeal to the Supreme Court of the United States; but the right was upheld. Justice Cardozo, speaking for the court, there said: ‘ ‘ The choice for any state may be determined by the juristic philosophy of the judges of her courts, their conceptions of law, its origin and nature. We review not the wisdom of their philosophies, but the legality of their acts. The State of Montana has told us by the voice of her highest court that with these alternative methods open to her, her preference is for the first. In making this choice, she is declaring common law for those within her borders. The common law as administered by her judges ascribes to the decisions of her highest court a power to bind and loose that is unextinguished, for intermediate transactions, by a decision overruling them. As applied to such transactions we may say of the earlier decision that it has not been overruled at all. It lias been translated into a judgment of affirmance and recognized as law anew.” It will be observed that the Supreme Court of the United States did not say that the Supreme Court of Montana should have held as it did. It was decided only that the Montana court had this power. But we do. not elect to use that power. If so used the use would not be consonant with Judge Cockrell's statement in the Taliaferro case from which we have just quoted. Now, courts do not make the law. Their function is to declare what is law, and their declaration as to what is law is the highest and the conclusive evidence of that fact, and remains so until changed by a subsequent declaration or by legislative or constitutional enactment. But in the meantime no one- can be said to have acquired a vested right to have the benefit of an erroneous decision. But we are not presently overruling cases. On the contrary, we are upholding recent cases which received our most careful consideration. Those cases are: Luther v. Patman, 200 Ark. 853, 141 S. W. 2d 42; Beasley v. Shinn, 201 Ark. 31, 144 S. W. 2d 710, 131 A. L. R. 1234; Stewart v. Warren, 202 Ark. 873, 153 S. W. 2d 545. In the case of Mason v. Jackson, 194 Ark. 236, 106 S. W. 2d 610, 111 A. L. R. 1071, the case of Cole v. Collie was cited and approved, and this was done for the reason, there stated, that a recital in the habendum clause would be disregarded if in conflict with the recital of the granting clause. The reading of the opinion in the Mason case can leave no doubt that the opinion flaunted the express unambiguous intent of the parties, because it was believed that this rule of construction required that holding. The necessary and inevitable effect of that opinion was to give the grantee something he had not bought and to take from the grantor an interest he had expressly reserved. Any rule of construction leading to that result must necessarily be unsound, unjust, and illogical; and we so stated when the question was next presented in the case of Luther v. Patman, supra. In that case Mr. Justice Humphreys, speaking for an undivided court, quoted with approval the statement of the law from 16 Am. Jur., § 237, p. 570, to the following effect: That the modern and now widely accepted rule to determine the estate conveyed by a deed with inconsistent clauses has for its cardinal principle the proposition that if. the intention of the parties is apparent from examination of the deed “from its four corners” without regard to its technical and formal divisions, it will he given effect even though, in doing so, technical rules of construction will be violated. And, further, that, under this view the rule that an habendum clause creating an estate contradictory of or repugnant to that in the granting clause must he rejected, is not a rule of property, hut is merely a rule of construction, which will he resorted to only where the court cannot determine which of the clauses was intended to he controlling, and that the intention of the parties, if it can he gathered from the instrument in the entirety, must control. The case of Luther v. Patman did not expressly overrule either the case of Cole v. Collie or Mason v. Jackson, which approved it; hut it did necessarily impair and destroy their authority as to the effect of this rule of construction. Following the Luther v. Patman case came the case of Beasley v. Shinn, supra, in which we said: “To the extent that this opinion conflicts with Mason v. Jackson, supra, and other cases involving mineral reservations they are overruled.” The opinion in the Beasley case gave effect to a mineral reservation, and if it had been intended that this case overruling others should be given prospective effect only, that fact should and would have been stated, as the deed there construed was dated August 26, 1927, a date long subsequent to the date of the rendition of the opinion in the Cole v. Collie case. It may be true that the parties to the Beasley case were unaware of the holding in the Cole v. Collie case, and did not rely upon it; while here they were aware of the case and did rely upon it.' But this is not a controlling difference. The law would be rendered too uncertain for practical enforcement if an application or lack of application of a rule of construction were made dependent upon proof of a party’s knowledge of that rule. We would not know how to construe a deed until we first knew what the party’s knowledge was, which might be present in one case and absent in another. Next came the case of Stewart v. Warren, supra, which expressly- approved the Beasley case, and it would now be vacillation to the nth degree to overrule those three cases above cited, which all disapproved the case of Mason v. Jackson and necessarily the case of Cole v. Collie, also. As pointed out in the text cited and approved by Justice Humphreys in the Luther v. Patman case, we have not changed a rule of property, but only refused to follow a rule of construction which was believed to be illogical, unsound, and unjust. It is with great reluctance that a court overrules a prior decision, even though it is not a rule of property, and one. of' the chief reasons for this reluctance is that the change may disturb rights which apparently had vested. Of course, if such an opinion were applied prospectively only, it would not have that effect, and courts would be less reluctant to overrule a case. The instant case demonstrates the wisdom of the change of the rule of construction, and the fact that the beneficial results to be obtained by a departure from the rule stated in Cole v. Collie will greatly exceed any disastrous effects likely to flow therefrom. This departure will, in the instant case and all other similar cases, operate to prevent the grantee being given an interest he had not bought and taking from the grantor an interest which he reserved and had not sold. These views are in accord with the decree of the court below, and, it is, therefore, affirmed.