Breeding v. Ritterhoff

1927 OK 255, 259 P. 227, 126 Okla. 225, 1927 Okla. LEXIS 122
CourtSupreme Court of Oklahoma
DecidedSeptember 13, 1927
Docket17185
StatusPublished
Cited by8 cases

This text of 1927 OK 255 (Breeding v. Ritterhoff) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Breeding v. Ritterhoff, 1927 OK 255, 259 P. 227, 126 Okla. 225, 1927 Okla. LEXIS 122 (Okla. 1927).

Opinion

RILEY, J.

This appeal is brought by the plaintiff below, who instituted the action on a promissory note and to foreclose a real estate mortgage given to secure the payment thereof. After the mortgage in question had been executed and filed for record the mortgagors executed an oil and gas lease to one P. E. Smith, who assigned various undivided interests therein to certain individuals and corporations, all of whom were made parties defendant. The assignees of the oil and gas lease filed answers alleging that their lease was paramount and superior to plaintiff’s mortgage by reason of the fifth paragraph of the mortgage. Judgment was rendered in favor of plaintiff, except that the oil and gas lease was decreed to be paramount and superior to the lien of the mortgage.

Recapitulating: To secure the payment of a promissory note in the sum of $3,200, Harry Ritterhoff and Estelle Ritterhoff executed and delivered to Gum Brothers their real estate mortgage covering the following described .real estate lying in Okmulgee countyi, Okla.: East one-half (%) of northwest quarter and the southwest quarter of the northeast quarter of section 21 in township 12 north, range 14 east of the Indian Meridian. Gum Brothers Company assigned the note and mortgage sued on to plaintiff.

The following clause, referred to as the fifth paragraph, appeared in . plaintiff’s mortgage:

“As additional and collateral security for the payment of the note and the indebtedness hereinbefore described, said parties of the first part hereby assign to the said party of the second part, its successors and assigns, all of the profits, revenues, royalties, rights and benefits accruing to them under all oil, gas or mineral leases now on said property, or which may hereafter be placed thereon, and the lessee or assignee or sublessee is hereby directed on production of this mortgage or certified copy thereof, to pay said profits,. revenues, royalties, rights and benefits to the said party of the second part, its successors and assigns.” (C.-M , 17.)

The following clause appeared in the mortgage referred to as the first paragraph thereof:

“The said first parties shall not commit or suffer waste. * * *”

Judgment was rendered in the court below foreclosing the mortgage and granting a judgment upon the note sued on in the petition. The mortgage was ordered foreclosed subject to* the existing liens, and the royalties accrued since July, 1924, were ordered to be paid to the receiver appointed. The P. E. Smith lease was adjudged to be valid and paramount and superior to plaintiff’s mortgage.

The plaintiff excepted to the ruling of the court that the oil and gas lease executed since the date of the mortgage was super *226 ior to tlie rights of the mortgagee. Motion for new trial was filed and overruled, and the plaintiff 'brings his case properly before this court on an appeal under the one contention that his mortgage was paramount and superior to the oil and gas lease subsequently executed by the mortgagor. The plaintiff in error contends that nowhere in the mortgage does the mortgagor reserve, nor the mortgagee grant, the right to execute leases; that such subsequent leases should not have priority; that such construction cannot by application be put on the clause assigning the royalties and profits, for such construction is repugnant to the express terms of the mortgage, and the clause in and of itself cannot be interpreted to show any such construction.

It is well established that all persons acquiring an interest in property take such interest subject to the lien of all mortgages then of record. The leases of the defendants in error were executed after the plaintiff’s mortgage had been filed of record; they were then sujbject and inferior to the mortgage, unless there is contained in the mortgage some clause that will take the case out of the general rule.

The defendants in error contend that the plaintiff, by inserting in the mortgage a clause heretofore set out as paragraph 5, established such a provision as did take the case out of the general rule.

It is clear that the mortgage does not in express terms reserve to the mortgagor the right to make oil and gas leases. Paragraph 5 can only be given such effect by implication. for the mortgagor does not specifically reserve the right to make oil and gas leases, nor does it provide that subsequent leases shall have priority over the mortgage.

The mortgage contract provided:

“The said first parties shall not commit or suffer waste. * * *”

In the recent case of Aldridge v. Houston Oil Co., 116 Okla. 281, 244 Pac. 782, it was held:

“When production is reached, the fee is impaired and diminished to the extent of the value of the oil and gas‘which is brought to the surface and reduced to possession. This would not be income, but conversion of the fee pro tanto, or, as expressed at common law, waste. * * * Rupel v. Ohio Oil Co. (Ind.) 95 N. E. 225: Marshall v. Mellon (Pa.) 36 Atl. 201; Williamson v. Jones (W. Va.) 27 S. E. 411.”

The mortgagor had the right to rent or sell, or further incumber • the mortgaged real estate or any part thereof, subject to the mortgage; likewise, he had the right to explore for oil, gas, or other minerals, or to permit others by lease to explore, subject, however, to the mortgage, unless otherwise specified, for in the Aldridge Case, supra, it was said until there is development and production, an oil and gas lease conveys no interest in the land, but only a right to use the surface for the purpose of exploration.

Now it is most reasonable to conclude that the parties to the mortgage contract considered that production on an extensive scale might diminish or destroy the value of the mortgaged property. That so considering, the mortgagor stipulated not to commit or suffer waste, and notwithstanding such an agreement, considering the right of the mortgagor to explore, the mortgagee, realizing that despite the stipulation the mortgagor might produce oil and gas and appropriate the minerals, he caused to be inserted the clause for his protection in such event, not intending to grant the mortgagor the right to make oil and gas leases superior to his mortgage nor to permit the production of oil or gas — the mortgagor expressly agreed not to do so by agreeing not to commit or suffer waste — but to protect himself in the event the stipulation was violated. The words of the clause in dispute, “as additional and collateral security,” etc., lend force to such a view.

To say that the mortgagee authorized the execution of oil and gas leases by the disputed clause, as contended by defendants in error, is to say that clause 5, by constructive implication, is contrary to the express provisions of the mortgage, paragraph 1, wherein the mortgagor agrees not to commit or suffer waste and that it creates this repugnancy between the clauses of the mortgage which otherwise would be in concord and harmony.

“A contract cannot be construed contrary to its explicit language.” Brooks v. Brumfield (Wash.) 225 Pac. 232.

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Bluebook (online)
1927 OK 255, 259 P. 227, 126 Okla. 225, 1927 Okla. LEXIS 122, Counsel Stack Legal Research, https://law.counselstack.com/opinion/breeding-v-ritterhoff-okla-1927.