First Nat. Bank of Waurika v. Clay

1918 OK 485, 177 P. 115, 74 Okla. 112, 1918 Okla. LEXIS 190

• Court: Supreme Court of Oklahoma
• Decided: August 20, 1918
• Docket: 8923
• Status: Published

Opinions

Opinion by

STEWART, C.

The plaintiffs brought action against the defendants for the return and recovery of money deposited in escrow with the defendant First National Bank of Waurika, Okla., in the sum of $1,500 as “earnest money” to secure the faithful performance on their part of an oil and gas lease contract, the lease being made to the plaintiffs by the defendant E. J. Kelly on 1,000 acres of land situated in Jefferson county. It was stipulated in the lease contract that the defendant should furnish to the plaintiffs a complete abstract of title to the land to be submitted to A. L. Zinser, attorney for plaintiffs, and that the lease should take effect and the mutual obligations of the parties accrue only in case such attorney should approve the title to the land. The undisputed evidence is that the abstract was furnished and was examined by the attorney within a reasonable time, the title being by him disapproved; that plaintiffs immediately notified the defendant E. J. Kelly of such disapproval and of the intention of the plaintiffs to proceed no further under the lease, demand being made for the return of the $1,500 deposited. The defendant bank paid out the money to Kelly after due notice from the plaintiffs not to do so. Kelly refused to return the same to plaintiffs. There was no evidence of bad faith in the disapproval and rejection of the title, and the trial court, after hearing the testimony, peremptorily instructed the jury to return a verdict for the plaintiffs, which verdict was accordingly returned and judgment rendered thereon for the plaintiffs. The defendants urge as error: First, the court erred in refusing to allow the defendants to introduce certain competent evidence; second, the court erred in refusing to submit the case to the jury.

During the course of the trial the defendants offered to prove that the opinion of the attorney was based upon his general objection to the title of certain tracts of land known as “government lands,” being unal-lotted Indian lands sold by the United States government, and upon which final payment had not been made. The defendants offered to prove that when the written contract was made it was agreed and understood between the parties that the lands to be leased were mostly of such class, and that there would be no objection to the title on that ground. This testimony the court excluded, the defendants preserving exceptions. Testimony as to any agreement had at the time of or prior to the execution of the written contract as to the kind of title the plaintiffs would accept is inadmissible, as the contract speaks for itself, and contemplates only such title as would be approved by plaintiffs’ attorney. The written contract is complete, and does not contain such ambiguities as would authorize the introduction of the proffered evidence in explanation of its terms. Evidence as to the attorney’s reasons for rejecting the title might be admissible as throwing light upon his actions to be considered in connection with other evidence on the question of good or bad faith. The defendants, however, have made no showing in the record that they have suffered prejudice in such respect from the rejection of testimony offered. Such testimony in itself would not establish bad faith, and there is not sufficient other testimony introduced or offered which, in connection therewith, would have justified the submitting of the question of good or bad faith to the jury. The undisputed evidence authorized the directing of a verdict for the plaintiff. In Farm Land Mortgage Co. v. Wilde, 41 Okla. 45, 136 Pac. 1078, the syllabus reads in part:

“The courts generally hold that parties have the right to make any contract which is not unlawful or against public policy. They have the right to provide for an arbitrator whose decision, in the absence of fraud, shall be final. They have the right, in making a contract for the sale of land, to make an attorney or any one else exclusive and final judge as to whether or not the title is defective. In such case, the courts are inclined to leave the parties to abide by the contract as they have made it, and not to make a different one.”

It is well settled that, when, by the terms of a contract of sale of land the title is to be approved by any particular person or attorney, the opinion of such person is final and binding, in the absence of fraud or bad faith. A leading case on this question is Church v. Shanklin, 95 Cal. 626, 30 Pac. 789, 17 L. R. A. 207, in which case the rule is epitomized in the following words:

“A vendee cannot be compelled to accept a title which is in fact perfect, but which his attorney in good faith refuses to approve where his contract requires the title to be perfected ‘to the satisfaction of’ such attorney.”

Further collation of authorities would be useless.

The defendants urge in support of their claim of bad faith that the evidence shows that the attorney in question was the secretary of I-Iealdton Pool Oil & Gas Company, for whom the plaintiffs were in fact procuring the lease; that, before passing upon the abstract of title furnished, the attorney wrote to the defendant Kelly, claiming that the lands contracted for were about six miles east of where the contract purported to locate them; that the attorney further says in his letter:

“I will examine the abstract anyway, however. and report on title as soon as I have had time to make a careful examination.’'

Defendants also complain that the defects in the title or objections to the same were not pointed out for the purpose of correction. We cannot agree that such facts, if proven, are sufficient to authorize a finding of bad faith. The burden was upon the defendants to prove bad faith on the pari; either of the plaintiffs, or their attorney acting .for them. It was perfectly competent, and proper for the parties to contract to leave the question of title to any person, whether interested or not, and this was done. No bad faith will be presumed because of such interest. The fact that the attorney called attention to the lands being situated otherwise than located in the contract does not' affect the question of good faith in passing on the title. In the absence of a stipulation in the contract requiring the same, the attorney was under no duty to point out defects in the title or disclose his objections for the purpose of correction. Such has been held in McCroskey v. Ladd, 3 Cal. Unrep. Cas. 433, 28 Pac. 216; Lessenich v. Sellers, 119 Iowa, 314, 93 N. W. 348, and we think the holding is sound. In the case at bar, it would have been futile to have given Kelly an opportunity to correct alleged defect in the title, as, according to the showing of defendants, the objection was to á particular class of titles to Indian lands, and t'he objection could have been met by the vendor.

The trial court did not err in peremptorily instructing the jury, and the judgment is affirmed.

By the Court: It is so ordered.