The Oklahoma Bar Journal January 2023

participate, share and share alike, in such gas, oil or valuable mineral and in all profits and royalty arising therefrom.” 9 In 1932, all the shareholders agreed to convey the lands owned by the corporation to the individ ual children based on the distribu tions in the will, so each child was the owner of one or more divided tracts. The shareholders further agreed that any royalties received would be used to pay off certain corporate debt if there were not sufficient corporate funds to do so. In 1934, one child leased her minerals and received a bonus, but she did not turn the bonus money over to the corporation to apply toward the agreed debt. In 1936, the same child requested that the other children join her in a lease of the minerals. At least some of the other children refused to join the lease unless they received a share of the bonus. The lessor child did not agree to share the royalties, and the suit was filed to void the conveyances from the corporation to the children and to determine rights to the bonus and royalty money from both the 1934 and 1936 leases. 10 The court declined to void the conveyances based on the trial court’s finding that all the children were stockholders and, as such, gave full assent to the conveyances. 11 However, the court extensively discussed the general prohibition on self-dealing by quot ing at least three prior decisions: It makes no difference what the consideration of deeds made in the execution of such an agreement was, even though it was adequate and full, and no actual injury was done to the stockholders. The principle will still be strictly adhered to that, against the dissent of any

COBB V. NEWMAN This author found no Oklahoma case law interpreting the inter section between these seemingly competing statutes. One case that may yield some insight is Cobb v. Newman , 8 wherein the court dis cussed cestui que trusts in relation to stockholders of a corporation. J.O. Kuyrkendall owned several tracts of land that included min erals interests. Some tracts were owned by himself individually and some by D.O.K. Land and Cattle Co., of which he owned 879 of 1,200 shares. His will gave specific tracts to specific children and distributed specific numbers of shares of the corporation to specific children. The will stated a child could sell their tract before discovery of min erals (or discovery and production, depending on how you read it), but after the minerals were discovered (or discovered and produced), the “oil, gas or valuable mineral shall be the property of all my said chil dren above named and they shall

should be made to a title on this ground after the expiration of five years from the date of record of such instrument. 6 One can presume from this language that within the five-year period, a title examiner either can or should make such an objection. In Oklahoma, the “five-year period” presumably would be 10 years under the Simplification of Land Title Act (SLTA), which protects a purchaser for value, without notice, from one claiming under a convey ance by a trustee where the trust agreement is not of record. 7 As a title examiner, within the 10-year period between the record ing of the conveyance and the application of the SLTA, should one rely on OTES §15.1 and pass the title without objection, or does the prohibition in 60 O.S. §175.1 pre vent the application of OTES §15.1? Further, does said prohibition prevent the application of the SLTA even after 10 years have passed?

20 | JANUARY 2023

THE OKLAHOMA BAR JOURNAL