## Facts

- In November 1933, Bennie Shaw executed a warranty deed conveying a 144-acre tract to Mark Greer.
- Greer did not record the 1933 deed for several years; his subsequent conveyance to J.G. Burnside likewise was not of record.
- On May 28, 1936, while Shaw still appeared as record owner, Shaw executed an oil and gas lease to Carter Oil Company and a mineral deed to C.R. Bennett.
- Carter’s lease had a three-year primary term ending May 28, 1939, and continued thereafter only so long as oil or gas was produced.
- Carter’s lease and Bennett’s mineral deed were promptly recorded.
- In October 1938, Greer (later joined by Burnside) sued for partition and to remove clouds on title, attacking the lease and mineral deed as invalid due to the earlier 1933 deed.
- The lease’s primary term expired during the lawsuit without production on the land.
- The circuit court upheld the lease and mineral deed and allowed Carter a reasonable time after the decree to drill so the lease could be maintained beyond the primary term.

## Issues

1. Whether an oil and gas lease and mineral deed executed by a grantor who previously conveyed the land by an unrecorded deed are enforceable against the earlier grantee.
2. Whether the lessee and mineral grantee qualified as bona fide purchasers/lessees for value without notice under Illinois recording law.
3. Whether equity may extend or toll an oil and gas lease’s primary term when the lease expires during litigation challenging its validity.

## Decision

- The Supreme Court of Illinois affirmed.
- The Carter oil and gas lease and Bennett mineral deed were valid against Greer and Burnside because Carter and Bennett took for value without notice while Shaw appeared as owner of record.
- Greer and Burnside’s failure to record permitted reliance on the public record and supported estoppel against their challenge to the later recorded interests.
- Equity permitted extending the lease by allowing Carter a reasonable time after the decree to drill, where litigation over the lease contributed to delay and a strict expiration would work a forfeiture.

## Legal Principles

- A prior unrecorded deed, though effective between the parties, is subordinate to the rights of subsequent purchasers or lessees for value who take without actual or constructive notice and record their interests.
- A grantee who leaves an interest unrecorded and thereby enables the grantor to appear as record owner may be estopped from defeating later good-faith conveyances made in reliance on the record.
- When litigation contests an oil and gas lease and materially impedes development during the primary term, a court of equity may extend or toll the time for performance and allow a reasonable post-judgment period to drill to prevent forfeiture.

## Conclusion

The court held that the recorded lease and mineral deed taken for value without notice prevailed over the earlier unrecorded deed, and it approved an equitable post-decree extension giving the lessee reasonable time to drill when the lease’s primary term expired during litigation attacking the lease.


Greer v. Carter Oil Co., 373 Ill. 168, 25 N.E.2d 805 (Ill. 1940)