Towne v. Martin

HURST, V. C. J. This is a suit for damages for malicious prosecution of a civil action commenced by-the plaintiffs, L. J. Towne and Ram Morrison, against the defendants, C. M. Martin, V. V. Harris, E. B. Galloway, George C. Naden, Melton H. Ehrlich, and H. A. Newbill. From a judgment for the defendants, the plaintiffs appeal. The history of the transactions here-, in involved extends back to 1907, when H. H. Kroeger secured a written contract from Apple and Franklin for oil leases upon 740 acres of land'in Pontotoc county. Thereafter, C. M. Martin and Sadie L. Knotts purchased the land, and on April 4, 1913, Kroeger entered into a written contract with Martin and Knotts, known as the Martin-Kroeger contract, wherein Martin and Knotts became the owner of the surface and Kroeger became the owner of all oil and gas rights under the land “for a period of fifteen years from and after the date hereof, and as much longer thereafter as oil or gas is produced from said premises. And it is further agreed that all the parties of the first part shall receive five per cent of all oil produced and saved from wells on said lands and shall receive Fifty Dollars per annum from the sale of the products from each well producing gas only.” The interpretation of said contract has caused considerable difficulty. Was it a sale of royalty? Was it an oil and gas lease? When should it terminate? The trouble started on September 17, 1915, when Martin and Knotts executed an oil and gas lease upon the property to Walter H. Gant. Thereafter, on March 24, 1916, Kroeger filed suit No. 2877 in the district court of Pontotoc county against Martin, Knotts, and Gant for the cancellation of the Gant oil and gas lease, and to quiet Kroeger’s title to his oil and gas rights. The defendants prevailed in the lower court, but upon appeal the case was' reversed, this court holding that the Martin-Kroeger contract was valid and enforceable, and that it did not contain an implied covanant to develop, as in the case of an oil and gas lease, and the defendants therein were restrained from further interfering with Kroeger’s title. See Kroeger v. Martin, 72 Okla. 198, 180 P. 955. Thereafter, on September 22, 1927, and prior to the expiration of the 15-year period, Martin and cithers again sued Kroeger for the cancellation of said' Martin-Kroeger contract. The action was dismissed without prejudice on October 26, 1927. On September 7, 1928, and after the expiration of the 15-year period mentioned in the Martin Kroeger contract, the grantees of Martin and Knotts brought another action against Kroeger and associates for the cancellation of said Martin-Kroeger contract in so .far as it related to one particular 40-acre tract of said land. This relief was denied by the trial court, and the judgment was affirmed on appeal. See Galloway v. Kroeger, 169 Okla. 645, 34 P. 2d 250. It was found in said action that there was some production on the 740-acre tract, but no production on the 40 acres there involved. The court held: “That the owner of a 40-acre tract of land, acquired subsequent to the execution of said lease covering said 40-acre tract is not entitled to the cancellation of said lease as to said 40-acre tract upon the theory that no oil or gas was being produced on said 40-acre tract at the end of said primary term of *512 15 years, in the absence' of a showing of- want of diligence subsequent to the end of. said primary terrn-of 15 years-”' On May 23, 1936, Martin and Knotts' in sáid cause No. 2877 filed an application for permission to sue Kroeger again for the'cancellation of his said contract. This. permission was denied. Thereafter, on April 26, 1938, the defendants herein, Harris and his associates, including Martin, Knotts and others, brought another action in the district court of Pontotoc county against Towne, arid , Morrison and' others, including Kroeger,. for the, purpose of cancelirig said Martin-Kroeger Contract on the; entire 740-acre -tract of land, except the 10-acre tracts upon which each producing oil or gas iyell had been drilled; in. which it was * alleged that the property had not-; been developed with due diligence. This action resulted adversely to the plaintiffs therein, who are the defendants herein. ..No appeal was prosecuted from that; judgment. This last. action ■ is the one-which the plaintiffs herein say was brought maliciously and without probable .cause. ,. ,,. The plaintiffs herein rely. upon the above history and upon the abpve legal proceeding in their pleadings and in their evidence herein. They. ,álso rely upon, the development or lack of development of said land for oil and gas purposes. Some small production was developed in 1928, a few months prior to the expiration of saidbll jirpear period. There has been very little production, and at, times no production, at .áll. The evidence shows that thére/wás no production from December,. 1929, to February,, 19.30, inclusive, and. also from September,.,1.933, to.Mayi;il9.35, inclusive. The defendants herein' contend that they had a right to .bring their action for cancellation, and Say that they had probable causé fqr so:dbin'g.. Their contention is based upon the proposition that at any time after, the. expiration of. the 15-year, period when production ceased, the Martin-Kroeger contract thereupon, terminated ipso facto, or if; it did not thus so terminate, the Martin-Kroeger contract then became subject to the rule of implied covenants to develop, and was subject to cancellation for want of diligence as to all parts which had not been developed. In. an action for malicious, prosecution, there are five essential elements, (1) the bringing of an action, (2) its successful termination in favor of the plaintiffs, (3) want of probable cause, (4) malice, and (5) damages. It is admitted that the action wa§ brought and that it successfully terminated in favor of the- plaintiffs herein, but the defendants 'deny that there was any malice or want of probable cause in their action. Under the view we take of this case the entire matter hinges upon the question as to whether or not there was want of. probable cause. It is argued by the plaintiffs that the defendants had rib,probable cause, in view of the two decisions, of this court heretofore mentioned, and in view of the fact that there was actual production on parts of the 740-acre tract at the time of bringing said action.. ' .An analysis of the two cited decisions heretofore rendered by this.court shows thé, folio wing: In the case of Kroeger y.', Martin, based upon facts existing on M^rch 24,. 1916, when the case was ¿led," this court interpreted the Martin-Kroeger contract as méaning that “no implied covenant exists requiring the lands to be explored and developed with reasonable . diligence, as is commonly required- in case of an ordinary oil and gas lease.” . In .the. case of Galloway v. Kroeger, based upon, facts existing on September. 7, 1928, when the casé was ¿léd,. and .asking for ..the cancellation bf ,á particular 40 acres of the tract, this- court held that since there was production, on some, parts of the 740-aefe.tract, the. Martin-Kroeger contract could pot,-bé cariceléd as to the particular -40-acre tract, “in the abséricé ..of a, showing of want of diligence subset quent to the end of said primary term of 15 years.” This statement, by inference - at -least, indicates that subsequent- ‘to -i the expiration of said- 15— *513 year period there would.be an implied covenant to fully develop. Since it was held in the casé of Martin v. Kroeger that the Martin-Kroeger contract, covering a 15-year period, did not carry with it an implied covenant to develop, it is argued by the plaintiff that the nature of the contract did not change at the end of 15 years, and that there is still no implied covenant to drill. The defendants, on the other hand, admit that they are bound by the decision during the T 5-year period, or until April 4, 1928, but contend that after that date, Kroeger and his associates were bound by an implied covenant to develop. These facts, substantially alleged in the petition and amended petition, and substantially proved by the evidence in the action complained of, present some doubtful questions, which we think were proper to be litigated. In Gray v. Abboud, 184 Okla. 331, 87 P. 2d 144, it was said: “It has very aptly been stated that one who initiates civil proceedings against another, has ‘probable cause’ for so doing if he reasonably believes in the existence of facts upon which his claim is based and reasonably believes that under such facts the claim may be valid at common law or under an existing statute. See Restatement of the Law, Torts, sec. 675, p. 446. Thus it follows that a reasonable belief in the possibility that his claims may be held valid is sufficient to give the prosecutor probable cause for instituting such proceedings.” The evidence relating to probable cause or want of probable cause consists substantially of documentary evidence, including contracts, court proceedings and records of oil and gas production on the property showing the dates and amounts of production and the parts of the property developed. There being no conflict in the evidence on the issue of probable cause, the question of whether this evidence showed probable cause was one of law for the court rather than one for the jury to pass upon. Champlin Refining Co. v. Le Force, 176 Okla. 48, 54 P. 2d 190. We are of the opinion, and hold, that the plaintiffs in the suit complained of had probable cause for bringing the action, and it therefore follows that the other elements urged, such as malice and conspiracy, are immaterial. Southern Ice & Utilities Co. v. Bench, 179 Okla. 50, 64 P. 2d 668; 34 Am. Jur. 729. The plaintiff complains that the .court excluded proper evidence upon the • question of conspiracy and admitted improper evidence relating to advice from counsel. But those alleged errors are immaterial' in view of what we have said.' Before directing á verdict, the- trial court permitted the defendant Martin to withdraw his motion for a .directed verdict. Thereupon the plaintiffs herein dismissed their, action without prejudice as to the defendant Martin. The plaintiffs herein complain that the court committed error in allowing Martin to withdraw his motion for a directed verdict after the court had announced his ruling, but cite no authorities sustaining such contention, and we. know of none. , Affirmed. GIBSON, C. J., and RILEY, OSBORN, WELCH, CORN, -ánd DAVISON, JJ., concur.