387 F.2d 155 (10th Cir. 1967), 9258, Socony Mobil Oil Co. v. Humble Oil & Refining Co.
|Citation:||387 F.2d 155|
|Party Name:||SOCONY MOBIL OIL COMPANY, Inc., a New York Corporation, Appellant, v. HUMBLE OIL & REFINING COMPANY, a Delaware Corporation (substituted for Wasatch Development Company, a Colorado Corporation), Appellee.|
|Case Date:||November 29, 1967|
|Court:||United States Courts of Appeals, Court of Appeals for the Tenth Circuit|
John R. Evans, of Haskell, Helmick, Carpenter & Evans, Denver, Colo. (Richard R. Helmick, Denver, Colo., Jack E. Earnest, New York City, and Burns H. Errebo, Denver, Colo., with him on the brief), for appellant.
Fred Winner, of Winner, Berge, Martin & Camfield, Denver, Colo. (William S. Livingston, Denver, Colo., with him on the brief), for appellee.
Before PICKETT, HILL and HICKEY, Circuit Judges.
PICKETT, Circuit Judge.
This appeal challenges the construction of an Option Agreement between General
Petroleum Corporation and Wasatch Development Company relating to unpatented oil shale mining claims in western Colorado. Socony Mobil Oil Company, which succeeded to the rights of General, brought suit against Wasatch in the United States District Court for the District of Colorado, to enforce its right to purchase the claims covered by the agreement. Prior to trial, Humble Oil and Refining Company succeeded to the rights of Wasatch and was substituted as defendant. The trial court construed the Option Agreement in favor of Humble, holding that Socony Mobil's attempt to exercise the option was ineffective and that the agreement was terminated.
Wasatch, a corporation the stock of which was closely held by the family of Joe T. Juhan, owned a large number of unpatented oil shale claims in Rio Blanco and Garfield Counties, Colorado. On November 19, 1958, after considerable negotiation and redrafting, General and Wasatch entered into an Option Agreement which provided in part:
'4. When United States patents have issued on lands subject hereto having a total value of not less than $428, 000.00 (determined in accordance with paragraph 3 hereof), Wasatch shall give General written notice of such fact and General, for a period of thirty days from the receipt of such notice, shall have the exclusive right and option to acquire all of the lands subject to this agreement upon agreeing to pay therefor a total purchase price equal to the value thereof (approximately $2, 452, 000.00). If General exercises said option by giving written notice thereof to Wasatch within such thirty-day period, Wasatch shall have the continuing duty to convey to General by warranty deed all of said lands on which patents are then issued or thereafter issue. Each warranty deed shall convey to General title to all minerals (an undivided one-half in the case of the Sunset-Gabbs Block) in the lands covered hereby in fee simple, together with the right to remove and extract such minerals and such surface rights as are included in said United States patents.
'5. The total purchase price as aforesaid shall be paid as follows:
(a) the payment of $278, 000.00 referred to in paragraph 1 hereof shall be credited against the purchase price unless General shall have exercised the right to apply such payment as provided in paragraph 6 hereof.
(b) the balance of $2, 174, 000.00 shall be payable in thirteen annual installments of $150, 000.00 each and a fourteenth annual installment of approximately $224, 000.00, all without interest. The first such installment shall be due upon the exercise of this option by General and the succeeding installments shall be due on the first day of February in the following calendar year and in succeeding calendar years.
To the end that General shall not be obligated to pay for lands which have not been patented and conveyed to it, until such lands are patented and conveyed, it is agreed that if, at the time any payment is due Wasatch hereunder, lands shall have been patented and conveyed to General which have a value less than all payments previously made Wasatch hereunder plus the amount of the payment then to be made, the portion fo such payment which would be so in excess shall be deferred until additional lands equal in value to the amount of the excess shall have been so patented and conveyed to General.
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