Before DUFFY, KNOCH and CASTLE, Circuit Judges.
This appeal involves a declaratory judgment action removed to the District Court on grounds of diversity. The controversy concerns who holds a valid oil and gas lease covering an undivided 1/4 interest in a certain 21 acre tract of land in Clinton County, Illinois. Both plaintiff-appellee and defendants-appellants claim to hold a valid lease covering the interest. The District Court found the issue in favor of and entered judgment for Robert H. Robben, plaintiff-appellee. E. A. Obering and Helen Bailey Obering, defendants-appellants appealed.
The main contested issue is whether the District Court erred in holding the doctrine of after-acquired title inapplicable.
On November 7, 1953 Ed Meirink, as grantor, executed an oil and gas lease covering the tract to E. A. Obering as lessee. Obering conveyed a one-half interest in the lease to his wife, Helen Bailey Obering, on November 23, 1953. The lease contained a covenant of warranty as follows:
"Lessor hereby warrants and agrees to defend the title to the lands herein described * * *".
A leasing agent for Obering testified that prior to the execution of the lease Ed Meirink informed him in response to a telephone inquiry, that he owned the tract and probably would lease it. Meirink testified that at the time he executed the lease he considered himself the owner "of the entire 21 acres". In June of 1956 an oil well was brought in on an adjacent tract. Meirink notified Obering's office and requested a local attorney to have a title search made. Meirink found out that he owned but a 1/4 interest in the tract; that his brother, Arthur, his sister, Laura, and a nephew, each owned a 1/4 interest. Meirink attempted to acquire these interests. He obtained a quit-claim deed from his brother, Arthur, on July 20, 1956. It was recorded the next day. Meirink learned that he could not obtain a conveyance from his nephew because of the latter's minority, nor from his sister, who was then incompetent. Meirink quit-claimed an undivided 1/4 interest back to Arthur Meirink and the latter's wife, Dorothy, in joint tenancy. This quit-claim deed is dated July 20, 1956 and was recorded August 7, 1956. On November 2, 1956 Arthur and Dorothy Meirink, as grantors, executed an oil and gas lease of the tract to plaintiff-appellee, Robben. Arthur Meirink testified that the purpose of his quit-claim deed to Ed Meirink was to get the lease drilled; that Ed promised that "he would give me my share"; and that Ed Meirink quit-claimed back the next day. Ed Meirink testified that he "gave it back to Arthur because I had promised him that even with me holding the paper I would still give him his fractional part".
The District Court rejected defendants' contention that the interest acquired by Ed Meirink by the quit-claim deed from Arthur passed to defendants under the doctrine of after-acquired title and that Arthur Meirink thereafter had no interest to lease to Robben.
Illinois law governs the issue here involved. In the course of oral argument before us both parties conceded that there is no Illinois case directly in point as to the application of the doctrine of after-acquired title to an oil and gas lease.
The doctrine of after-acquired title or estoppel by deed stems from the common law rule of implied warranties. Although the common law rule of implied warranties is not in existence in Illinois unless all of the words of the statute are used (Wheeler v. County of Wayne, 132 Ill. 599, 24 N.E. 625) express warranties are given the same effect as implied warranties at common law. See Biwer v. Martin, 294 Ill. 488, 500, 128 N.E. 518, in which the doctrine of after-acquired title was recognized as applicable in Illinois where an express warranty is made by the grantor. The court stated (294 Ill. at page 496, 128 N.E. at page 522):
"It is likewise the rule in this state that where one who has no interest, or but a part thereof, in the land he undertakes to convey, and afterwards acquires title, the interest he acquires passes to the grantee by way of estoppel, and, if there be a warranty, it not only estops the grantor but a subsequent purchaser from him. Frisby v. Ballance, 2 Gilm. 141; 4 Kent's Com. *98, Phelps v. Kellogg, 15 Ill. 131; Bennett v. Waller, 23 Ill. 97; Walton v. Follansbee, supra; Williams v. Esten, 179 Ill. 267, 53 N.E. 562; Tiedeman on Real Prop. § 728".
Unless repealed by statute the common law is in full force and effect in Illinois. Illinois Bell Telephone Co. v. Slattery, 7 Cir., 102 F.2d 58, 67; Fergus v. Russel, 270 Ill. 304, 377, 110 N.E. 130 and Wunderle v. Wunderle, 144 Ill. 40, 33 N.E. 195, 19 L.R.A. 84.
The common law doctrine of after-acquired title or estoppel by deed applies to leases. In Poultney v. Emerson, 117 Md. 655, 658, 84 A. 53, 54, it was said in this connection:
"It is a well-recognized rule that if a lease is made by one who has no present interest in the demised property, but acquires an interest during the term, the lease will operate upon his estate as if vested at the time of its execution. 1 Tiffany on Landlord and Tenant, § 76; Rawle on Covenants for Title (5th Ed.) §§ 258-273; Bigelow on Estoppel (5th Ed.) 384-390; 1 Taylor's Landlord and Tenant (8th Ed.) § 87; Williams on ...