SEEGER v. ODELL (1940)

The plaintiffs appeal from a judgment on the pleadings entered in favor of the defendants. The action was one to cancel a lease, to set aside a foreclosure sale and deed, and for an accounting of profits received under the lease.

The appellants owned a small lot in Huntington Beach which they had leased to the respondents McAdoo and Colter, out of which transaction grew two former actions which reached this court. Seeger v. McAdoo, 110 Cal.App. 48, 293 P. 694; Gibbs v. Seeger, 130 Cal.App. 123, 19 P.2d 514. The complaint herein alleges that in July, 1933, after the judgment in the foreclosure action (Gibbs v. Seeger, supra) became final, they were invited to a conference by the respondents Odell and Gibbs; that at this conference these respondents and their attorney, Ben H. Neblett, assured the appellants “that they were plaintiffs' friends and that they were going to make a very unselfish proposition out of the goodness of their hearts for the benefit of plaintiffs and not otherwise, so that plaintiffs, otherwise without any possible returns from said land, would get some benefit therefrom after all”; that the proposition was that if they would join the respondent Gibbs in leasing said land to respondent Odell they would receive a definite royalty from the production of an oil well which was to be forthwith drilled on said land; that the said Neblett then told the appellants that they could rely on all he said; that he had superior knowledge of many facts concerning said land; that he had acted as attorney for McAdoo and Colter in Seeger v. McAdoo, supra, and had levied execution on their judgment for costs in that action; that the land had been sold thereunder to McAdoo and Colter and a sheriff's deed had been issued to them; and that “also out of the goodness of their hearts” McAdoo and Colter were going to submit to the foreclosure of the mortgage which they had assigned to respondent Gibbs, the sale being set for August 2, 1933, and would exercise no equity of redemption in connection therewith. It is then alleged that the appellants knew of the judgment in the case of Seeger v. McAdoo, supra, and knew “of the possible execution on their property in payment of said judgment debt”, but that appellants did not live at or near said land and by reason of financial reverses had been unable to pay said debt or watch the proceedings in that case but supposed that no levy had yet been made and “that when so made they would take steps to redeem the same”; that the respondents then realized that by virtue of said sheriff's deed they had lost all their interest in said property and could have no rights of redemption subsequent to the foreclosure sale in the mortgage action; that, relying upon the representation that their land had been sold upon execution in the former action, they joined with respondent Gibbs in a lease to respondent Odell, which lease provided that he would immediately drill for oil, giving the appellants a 21/212 per cent royalty interest and the respondent Gibbs a 121/212 per cent royalty interest; that, thereafter, they permitted the period of redemption after the sale of the land in the mortgage foreclosure action to expire; that during this period of redemption many other persons offered to lease this land, with advances sufficient to cover “said mortgage indebtedness”, which offers they refused “in never ending reliance on the said representations of their alleged friends and well-wishers, the defendants herein”; and that save for said misrepresentations they would have refused to sign said lease and would have redeemed said land shortly after the foreclosure sale on August 2, 1933.

It is then alleged that the representations as to the levying of the execution and the issuance of the sheriff deed in the first of the former actions were false; that no such levy or sale had been made or had; that the appellants were aged and poor and lived in Pasadena, far removed from the offices of the sheriff and recorder of Orange county; that they had no convenient means for inspecting the records of said offices; that in May of 1936, through a friend, they discovered that no such levy or sale had been made; that shortly after August 2, 1933, the respondent Odell caused an oil well to be drilled on said land, from which he has profited to the extent of more than $100,000; and that the respondent Gibbs secured title to said land through the foreclosure sale held on August 2, 1933. In a supplemental complaint it is alleged that the respondent Gibbs had conveyed title to the land to respondents McAdoo and Colter. The complaint in this action was filed on July 25, 1936.

In Robins v. Hope, 57 Cal. 493, where a deed had been obtained without consideration upon a representation that the plaintiffs were without any claim or title to the property since their mother had previously given a deed thereto as their guardian, the court said: “The misrepresentation complained of was as to the title of the plaintiffs to the premises which they were induced to convey, under the impression that they had no title thereto, and we understand the rule to be, as stated by the learned judge who sustained a demurrer to this complaint, that ‘a person is conclusively presumed to know the state of his own title to real property. This is always the case where the party deals with a stranger, as in the present case. No misrepresentations made by Hope or his agents, therefore, as to the proceedings in probate concerning plaintiffs' title, or as to the state of their title in any respect, could have had the effect of misleading them.’ ”

The rule there applied was approved in Parsons v. Weis, 144 Cal. 410, 77 P. 1007.

The appellants argue that this rule is not applicable here since the representation here, that a sheriff's deed after execution sale had been issued, is one of fact rather than one of law, and for the further reason that a confidential or fiduciary relation existed between the parties here since the appellants had been friendly with the respondent Gibbs after the judgment in the mortgage action was affirmed, and since at the conference in July, 1933, the attorney for the respondents assured the appellants that the respondents were their friends.

Such a rule and the presumption that a person knows the state of his own title are based upon both the actual and constructive knowledge of the person involved, and express a public policy for the protection and repose of land titles. Not only does a person ordinarily possess opportunities through public records and other sources for acquiring knowledge of all facts affecting title to his own land, which are at least equal to those possessed by an outsider, but the public policy requires him to vigilantly use these opportunities before surrendering his rights. In Robins v. Hope, supra, it is stated that no misrepresentations as to the previous proceedings in probate concerning the plaintiffs' title could have had the effect of misleading them. In principle, there is no real distinction between that case and the one now before us, where the representation was that the proceedings in a prior action had been carried to a final conclusion through an execution sale and sheriff's deed. The real substance of the matter here, actually and as understood by the appellants, was that they had no title to the land because the proceedings of the prior action had been culminated in the issuance of a sheriff's deed. Whether an execution had been issued, a sale had, and a sheriff's deed issued, could have easily been ascertained and it may fairly be said that not only were the appellants presumed to know the facts in this regard with respect to their own title but a duty rested upon them to make use of the available means for ascertaining the truth. It may be further observed in this connection that, strictly speaking, the appellants did not accept and act upon the representation that they no longer had any interest in the property because they then exercised a right of ownership and joined in an instrument leasing their interest for oil development purposes upon the consideration of a substantial share in any oil that might be produced.

It not only appears from the complaint that no confidential or fiduciary relation existed between the parties, but that there were a number of circumstances which in an unusual degree should have put them upon their guard. The fact that the respondents were so anxious to have the appellants sign this new lease and were willing to give them 21/212 per cent of the production or 1/6th of the entire landowner's royalty was very suggestive under the circumstances. The most natural inference to be drawn was that the appellants had some equity or right in the premises which it was necessary for the respondents to acquire in order to make a lease which would justify the expenditure of large sums for drilling purposes. Not only are no facts alleged which show any confidential or fiduciary relationships between the parties, but the appellants had been engaged for years in rather bitter litigation with all of the respondents except Odell, who then appeared in company with respondent Gibbs who had just secured final judgment in a hotly contested foreclosure action, and Odell was then represented by one of the attorneys who had represented all of the other respondents in the two former actions. In the two former actions these appellants had charged all of the respondents except Odell with fraud and misrepresentation. While this would indicate that the parties were dealing at arm's length the appellants argue that this is not the case because they were then friendly with the respondent Gibbs. The allegation as to this friendship contains nothing to indicate confidential or fiduciary relations, and the further fact that the appellants were then told that respondents McAdoo and Colter, although they then held a deed to the property, would submit to respondent Gibbs' foreclosure of the mortgage and would not redeem the property was practically a confession that those three parties were working together and should have been a warning to the appellants that they were, in fact, dealing with the same parties with whom they had been fighting for some years. The very fact that respondents McAdoo and Colter were willing to submit to the foreclosure of the mortgage and waive their right of redemption, although they claimed to have a deed to the property, should have indicated to the appellants both that these parties were working together and that the respondents McAdoo and Colter did not have the complete title which it was claimed they had. There was a further and significant warning to the appellants, in this regard, in that the lease to Odell did not mention and was not signed by McAdoo and Colter, although they were supposed to have a deed conveying the full legal title. Moreover, while it is alleged that shortly after the lease was executed Odell caused an oil well to be drilled on the land, it is also alleged that many other people offered to lease the property from the appellants and advance a sum sufficient to pay off the mortgage debt. This was during the period of redemption and the fact that other people were willing to make such offers to lease the property at a time when the respondent Odell was drilling a well thereon indicates that such people had information causing them to believe that Odell's lease was invalid or voidable and should have put the appellants upon their guard, and any reasonable investigation then made would have disclosed the true facts before the period of redemption expired.

In the face of all of these things, which should have been a sufficient warning, the appellants not only signed the lease but allowed the matter to rest for nearly three years, knowing that a large amount had been expended upon the property, and accepting very substantial returns from oil that was produced. While they allege that they were without means to redeem the property from the mortgage sale and that they lived in Pasadena, far from the county offices of Orange county, it also appears from their complaint that they received somewhere from $2,500 to $3,000 as royalty from the production of oil under the terms of the lease. While it does not appear exactly when this was received, in view of the fact that Pasadena is only a few miles from Santa Ana, it can hardly be held that the facts alleged constitute a sufficient excuse for their failure to make a reasonable investigation and examination of the records. The complaint alleges that the appellants were unable to pay the judgment for costs in the first action, they have never paid or offered to pay the mortgage debt involved in the foreclosure action, and the allegations of the complaint, taken as a whole, rather clearly indicate that their desire to save something out of the property and participate in the profits of an oil well which could be drilled thereon were such that they shut their eyes to ample warnings which should have put them on their guard, that they proceeded to deal with their former enemies on a basis that seemed at the time advantageous to them, and that this action is more of an afterthought than anything else.

All of the circumstances, taken together, are sufficient to justify a court of equity in holding that the appellants are estopped from now asserting the claim here made. If it be assumed that the rule that a person is presumed to know the state of his own title to real property and may not rely on misrepresentations affecting that title should not always be applied, or that exceptions to that rule should be allowed in some cases where the circumstances warrant equitable relief, the allegations of the complaint here in question fail to present a situation justifying such a relaxation of the rule or the applying of any exception thereto. After being twice amended, the complaint failed to set forth a cause of action which justified a trial of the issues attempted to be raised. The granting of the motion for judgment on the pleadings was therefore proper.

The judgment is affirmed.

BARNARD, Presiding Justice.

We concur: MARKS, J.; GRIFFIN, J.