Peterson v. Donelley

THE COURT.

In this matter three suits have been consolidated for trial as they all grow out of the following facts:

In 1922 the John P. Mills Organization, a corporation, established three trusts, designated as K,"L and N, consisting of acreage divided into units which were sold at $400 a unit. These trusts were formed for the purpose of developing the lands therein described for oil and gas, and unit certificates were sold to raise the funds necessary to pay for and develop these tracts.

Under the authority of the trusts the John P. Mills Organization, during 1922 and 1923 sold these units to various purchasers and issued certificates to such purchasers in accordance with the trust agreements.

Exploration for oil was made, and about 1925, having determined the land was nonproductive of oil, the trustee, in accordance with a provision in the trust agreement, proposed to sell the property and divide the proceeds thereof among the holders of certificates of interest in accordance with their respective rights.

[135]

When a title company was called upon to pass upon the title to the property.it refused to pass title to the buyer for the reason that the declaration of trust contained no statement of the duration of the trust. Thereafter actions for declaratory relief were commenced by a unit holder in each of the trusts to have the trust declared void and empowering the trustee John P. Mills Organization to make sales of the land as provided in the trust agreement, and also to have it legally determined that the land was not productive of oil in commercial quantities.

In accordance with these proceedings a judgment was rendered in each case wherein the court found that the land did not contain oil or gas in commercial quantities, and that the property should be sold under the provisions of the trust agreement with the consent, however, of the unit holders, and that the proceeds be divided among the holders of the various units and that a resulting trust be declared. It being impossible to get the consent of all of the unit holders, no sale was made of any of the properties in the trust and no further attempts were made to develop oil or gas upon the lands.