Petroleum Rental Services, Inc. v. Inter-South Properties Corp.

1987 OK CIV APP 93, 749 P.2d 130, 1987 Okla. Civ. App. LEXIS 179, 1987 WL 41966
CourtCourt of Civil Appeals of Oklahoma
DecidedDecember 22, 1987
DocketNo. 66153
StatusPublished

This text of 1987 OK CIV APP 93 (Petroleum Rental Services, Inc. v. Inter-South Properties Corp.) is published on Counsel Stack Legal Research, covering Court of Civil Appeals of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Petroleum Rental Services, Inc. v. Inter-South Properties Corp., 1987 OK CIV APP 93, 749 P.2d 130, 1987 Okla. Civ. App. LEXIS 179, 1987 WL 41966 (Okla. Ct. App. 1987).

Opinion

OPINION

MEANS, Presiding Judge.

Defendant appeals from the trial court’s order which overruled its motion to vacate a default judgment. Having reviewed the record and applicable law, we reverse and remand.

On March 4, 1983, Plaintiff and Defendant’s predecessor in interest, Southern Oklahoma Production Company, executed a promissory note and mortgage for oil and gas leases and mineral interests. The terms of the entire note are set out below:

FOR VALUE RECEIVED, the undersigned promises to pay to the order of PETROLEUM RENTAL SERVICES, INC., the principal sum of Two Hundred Seventeen Thousand Five Hundred and 00/ioo ($217,500.00) Dollars, with interest from date at the rate of Twelve (12%) Percent Per Annum on the unpaid balance until paid.
As of June 1, 1983, and on the 1st day of each successive month until paid, there shall be applied a sum equal to Twenty-five (25%) Percent of the net proceeds of the capitalized properties received by Southern Oklahoma Production Co., “net proceeds” being defined as those proceeds attributable to hydrocarbon production from the properties less production tax, and windfall profits taxes. Application of these proceeds shall be first applied to accrued interest, with the balance being credited to principal. The monthly installments received by Southern Oklahoma Production Co. as net proceeds of the capitalized properties shall be payable hereunder only as if and when received by Southern Oklahoma Production Co. It is, however, anticipa[132]*132ted that said proceeds will be received by Southern Oklahoma Production Co. and paid to Petroleum Rental Services, Inc. on approximately the 1st day of each successive month. This Note shall be due and payable in full on December 1, 1985. In any event, the full amount of the indebtedness called for by this note shall be paid by Southern Oklahoma Production Company on or before the 1st of December, 1985.
In the event this note is placed in the hands of an attorney for collection, then, in said event, the maker hereof agrees to pay a reasonable attorney fee for the collection hereof.

The note contains no provision concerning acceleration or default. Over the next two and a half years, Defendant made payments on the note of nearly $60,000 out of its net proceeds.

On August 15, 1985, Plaintiff filed this action to collect on the promissory note. In its petition, Plaintiff made the following statements:

5. That the conditions of said Mortgage and Note have been broken in that Southern Production Company and its successor, the Defendant, Inter-South Properties Corporation, have made no payments on the same.
6. Plaintiff further states that by reason of the premises and by the default of Southern Oklahoma Production Company and its successor, the Defendant, Inter-South Properties Corporation, to make said payments as due, the conditions of said Mortgage have been broken and the whole amount of the debt thereby secured has matured and is now due and payable together with interest at the rate of twelve percent (12%) per annum from the 4th day of March, 1983, as well as reasonable attorney’s fee and, therefore, Plaintiff is entitled to the foreclosure of the said Mortgage on the said oil and gas leases and to have the same sold to satisfy the said indebtedness.

Plaintiff named Inter-South as a defendant as well as thirteen other individuals and corporations allegedly claiming some type of interest in the leases. Plaintiff attached copies of the mortgage and note which by its terms was not due until December 1, 1985, approximately two and a half months in the future. The petition was signed by Plaintiffs attorney.

On September 9, 1985, Inter-South received a letter from Bigheart Pipe Line Corporation, dated September 6, 1985, informing it that its interests on the leases were “being placed in suspense due to Petition and Lis Pendens Notice filed of record by Petroleum Rental Services, Inc., Plaintiff Case No. C-85-523.” Thus, this premature action effectively prevented Defendant from making payments on the note after September 6.

The Defendants, including Inter-South Properties, were properly served. In spite of the fact that it had been properly served and was not in default, Inter-South filed no responsive pleading. Although Inter-South did not file an answer or motion to dismiss, one of the defendants, Keystone Beard Equipment Company, filed an answer on August 22, which alleged that “the promissory note held by the Plaintiff is not due and, accordingly, is not in default.”

On October 23, 1985, still more than a month before the note was due, the trial court entered a default judgment for Plaintiff for the total amount of the note, $217,-500, plus interest and $15,000 in attorney’s fees. The court’s order also foreclosed the mortgage and allowed Plaintiff to execute on the judgment and sell the leases.

On November 22, 1985, after the default judgment had been entered, but within thirty days of the judgment, Inter-South filed an answer and a motion to vacate the default judgment. Inter-South’s basic complaint was that the judgment was void because the note was not yet in default. It also complained that the court had entered judgment without hearing any evidence concerning the amount which had been paid on the note.

While the motion to vacate was pending the leases were appraised at $100,000 and subsequently sold for $66,667 to Plaintiff at a sheriff’s sale on December 23, 1985.

[133]*133On January 16, 1986, Plaintiff filed a motion to confirm the sheriffs sale and a request for a deficiency judgment of $239,-658.96. At this time Defendant’s motion to vacate was still pending and Plaintiff was still asserting that Defendant had paid nothing on the note, a fact which is not even arguably true.

On January 23, 1986, three months after Defendant’s motion to vacate was filed, Plaintiff filed a response to the motion to vacate. In its response Plaintiff contended that notice of the taking of the default judgment was not required because Defendant had never filed an appearance. Plaintiff also asserted that the motion to vacate was not timely filed and that Defendant’s conduct was “harsh and dilatory. It should not be allowed to abuse the rules of the court. It has offered no defense to the note and mortgage, which is now due and payable.” On this date Plaintiff also filed an amended motion for a deficiency judgment. In this document Plaintiff for the first time apprised the court of payments of $54,796.53 which Defendant had made.

On January 30, 1986, Defendant filed an objection to the sheriff’s sale, again asserting that the underlying judgment was void and premature. Defendant once again pointed out false statements in the original petition and argued that the petition did not state a cause of action because the note had not yet become due.

On January 31,1986, the trial court finally heard evidence concerning the amount owed on the note and the amount which had been paid. She also heard argument from both parties concerning the original default judgment entered in October 1985. In response to these arguments, counsel for Plaintiff stated:

The Answer of the Defendant, in effect, admitted that the Note was due on December 1 of 1985. This may have been a premature judgment given.

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Bluebook (online)
1987 OK CIV APP 93, 749 P.2d 130, 1987 Okla. Civ. App. LEXIS 179, 1987 WL 41966, Counsel Stack Legal Research, https://law.counselstack.com/opinion/petroleum-rental-services-inc-v-inter-south-properties-corp-oklacivapp-1987.