Continental Oil Co. v. Osage Oil & Refining Co., 558.

• Decision Date: 14 March 1932
• Docket Number: No. 558.,558.
• Citation: 57 F.2d 527
• Parties: CONTINENTAL OIL CO. v. OSAGE OIL & REFINING CO.
• Court: U.S. Court of Appeals — Tenth Circuit

57 F.2d 527 (1932)

CONTINENTAL OIL CO. v. OSAGE OIL & REFINING CO.

No. 558.

Circuit Court of Appeals, Tenth Circuit.

March 14, 1932.

Robert F. Armstrong, of Ponca City, Okl. (Wm. H. Zwick, of Ponca City, Okl., and Ray S. Fellows, of Tulsa, Okl., on the brief), for appellant.

W. F. Wilson, of Oklahoma City, Okl. (J. E. Whitehead, of Dallas, Tex., and W. F. Wilson, Jr., and R. E. Owens, both of Oklahoma City, Okl., on the brief), for appellee.

Before LEWIS, COTTERAL, and McDERMOTT, Circuit Judges.

McDERMOTT, Circuit Judge.

This is an appeal from an order of the trial court denying an application for leave to file a tendered supplemental bill directed at a decree rendered herein in April, 1927. That decree was based on a contract by which appellant agreed to purchase a one-half interest in an Osage oil lease for $50,000, if the Secretary of the Interior approved assignments of the half interest to it. The assignments and the $50,000 were in the possession of the clerk of the court. The decree enjoined upon appellant the duty of co-operating with appellee in securing the approval of the secretary to the triplicate assignments which were tendered into court by appellee. Under the Osage regulations, a prerequisite of such approval is that the assignee accept the assignments in writing. If such assignments were approved, and if good title was tendered within thirty days after the decree became final, the clerk was directed to pay the $50,000 to appellee; otherwise, to appellant.

The supplemental bill alleges that the appellee neglected to operate the lease pending an appeal, as directed in the decree; that, by reason of such neglect, the lease ceased to produce oil in paying quantities and expired according to its terms; that the secretary declined to approve the assignments; and that the appellee failed to tender good title thereto. The prayer of the bill is that the clerk be directed to pay the $50,000 to appellant.

By that decree, the appellee's title to the lease was quieted against the claims of one Axelrod. Both the appellant herein and Axelrod appealed from such decree, but neither superseded it pending appeal. The decree was affirmed in toto on November 8, 1928, and the mandate spread of record on January 16, 1929. Axelrod v. Osage Oil & Refining Co. (C. C. A. 8) 29 F.(2d) 712. Seventeen days thereafter the appellant filed in the court below a motion asking that "the decree be modified so as to relieve the defendant from the obligation to purchase from plaintiff any interest in said purported oil lease." The principal ground assigned was that on December 22, 1928, the superintendent of the Osage Tribe had served a notice on Axelrod and appellant that the lease had terminated on October 31, 1928. The motion also stated that there was a mortgage on the lease, but since the motion was filed while appellee still had thirteen days in which to clear the title, that ground of the motion could be no more than a make weight. This effort to be relieved of the decree by a motion in the trial court was abortive. Osage Oil & Refining Co. v. Continental Oil Co. (C. C. A.) 34 F.(2d) 585, 589. In that opinion this court said: "It is our opinion that the only power possessed by the United States District Court for the Northern District of Oklahoma over the decree of April 29, 1927, affirmed by the Circuit Court of Appeals for the Eighth Circuit, is the power to enforce its execution and it should exercise such power unless the Continental Company, within a reasonable time hereafter, obtains leave from such United States District Court to file a supplemental bill setting up facts which, in the judgment of such court, entitles the Continental Company to be relieved from the duty enjoined on it by the decree of April 29, 1927, to purchase a one-half interest in the lease. In which event, issues should be made up and that cause regularly heard and disposed of."

Upon the coming down of that opinion, the appellant applied to the trial court for permission to file the supplemental bill to which we have referred. The appellee filed a response to such application, challenging generally the right to the relief sought and specifically alleging that the appellant had made no effort to secure the approval of the Secretary of the Interior to the assignments tendered, as required by the decree, but, on the contrary, had exerted every effort to induce the secretary not to approve such assignments and to induce him to terminate the lease; that the appellant was estopped from relying upon a state of affairs which it had brought about in an effort to evade the decree of the court; that it could not ask equity because it had not done equity.

Upon the issues so joined, there was a trial, at which the court received all the proof tendered; at the conclusion thereof the trial court, exercising the judgment committed to it by the former opinion of this court, denied the application. The single question before us is, Did the trial court abuse the discretion confided to it?

Appellee has filed a motion to dismiss the appeal on two grounds: (1) That the order is not appealable; and (2) that during the proceedings the Continental Oil Company of Delaware was superseded by the Continental Oil Company of Maine, with no order of substitution. The motion is not well taken. The latter point is highly technical, to say the least, and we find that there was an informal substitution in the trial court. On the first point, we think the order was a final one. An order granting leave to file a supplemental bill is not final nor appealable; if an adverse judgment results, an appeal lies from the judgment, and on that appeal the court's ruling on the application to file may be assigned as error. But an order denying leave to file a supplemental bill is final, at least in a case where relief can be granted only by a supplemental bill. That is this case, for in an independent action the appellant would be foreclosed by the original decree herein. The law is as stated by appellant, that: "An application for leave to file a supplemental bill is addressed to the discretion of the court, and the ruling thereon will not be disturbed on appeal unless the discretion has been abused." General Inv. Co. v. Lake Shore Ry., 260 U. S. 261, 281, 43 S. Ct. 106, 115, 67 L. Ed. 244.

A bill seeking to restrain or avoid a final decree after it has been enrolled is a bill of review. Foster's Fed. Prac. § 446 et seq.; Simmons Co. v. Grier Bros. Co., 258 U. S. 82, 89, 42 S. Ct. 196, 66 L. Ed. 475. Mr. Justice Story, speaking of such, many years ago, said: "It may be refused, therefore, although the facts if admitted would change the decree, where the court, looking to all the circumstances, deems it productive of mischief to innocent parties, or for any other cause unadvisable." Dexter v. Arnold, Fed. Cas. No. 3,856, 5 Mason 303, 305.

This language has been crystallized into a rule of practice. Ricker v. Powell, 100 U. S. 104, 107, 25 L. Ed. 527; Craig v. Smith, 100 U. S. 226, 233, 25 L. Ed. 577; Thomas v. Brockenbrough, 10 Wheat. 146, 6 L. Ed. 287; Wood v. Mann, Fed. Cas. No. 17,953, 2 Sumn. 334; Hopkins v. Hebard (C. C. A. 6) 194 F. 301, 309; Swift v. Parmenter (C. C. A. 8) 22 F.(2d) 142; Story's Eq. Pleading (9th Ed.) § 338; Id. (10th Ed.) § 417. See, also, Fraenkl v. Cerecedo, 216 U. S. 295, 30 S. Ct. 322, 54 L. Ed. 486; Beers v. Equitable Trust Co. (C. C. A. 8) 286 F. 883. The reason why the trial court is vested with such discretion is not far to seek, for if a defeated litigant could, as a matter of right, file a bill to relieve him of the judgment, and demand a trial thereon, an intolerable situation would result. In any event, this entire proceeding is in equity; the application for leave to file the tendered bill, and the response thereto, raised the pivotal issues of whether appellee or appellant was responsible for the termination of the lease, and the question of estoppel. Upon those issues, full opportunity was given to explore the facts, as apparently was done. There is no reason why this court should not proceed to a determination of the rights of the parties. This will require an examination of the facts.

On July 22, 1918, the Osage Tribe executed the lease in controversy to appellee; its term was for five years "and as long thereafter as oil is found in paying quantities." It provides that it shall be subject to regulations now or thereafter prescribed by the Secretary of the Interior, and that he shall have power to cancel the lease for violation of its terms or conditions, after notice and hearing; it provides that if a well becomes unprofitable, the parties may mutually agree as to future operations.

In 1925 Axelrod purchased the lease at a sheriff's sale. In February, 1926, she agreed to assign a one-half interest therein to appellant for $50,000 in cash and $50,000 in oil. The $50,000 in cash was escrowed, pending the outcome of the litigation involving the title, and is the $50,000 now in dispute. By that contract, appellant agreed to drill a well and assume the "control, superintendence, and management of said leasehold estate." An appeal was then pending in the Supreme Court of Oklahoma from the decree of foreclosure which culminated in the sheriff's deed to Axelrod. In April, 1926, the appellee filed a suit to enjoin Axelrod and appellant from recording transfers of the lease. This move was unsuccessful, and the title was transferred on the Osage records to Axelrod and the Continental. In November, 1926, the state Supreme Court held the sheriff's deed void. Axelrod would not yield to this holding, claiming she was not a party to the appeal. Appellee then brought this suit to bar Axelrod, and to hold the appellant to its offer, made in the pleadings in the 1926 suit, to abide by its contract with whichever claimant was found to be the owner, whether it be appellee or Axelrod.

In April, 1927, the trial court found that the appellant was bound...