Delaney v. Carter Oil Co., 3798.
| Decision Date | 18 May 1949 |
| Docket Number | No. 3798.,3798. |
| Parties | DELANEY et al. v. CARTER OIL CO. et al. |
| Court | U.S. Court of Appeals — Tenth Circuit |
A. W. Trice, of Ada, Okl. (Orel Busby and L. H. Harrell, both of Ada, Okl., and Benjamin C. Conner, John M. Winters, Jr., Gentry Lee and Roger S. Randolph, all of Tulsa, Okl., on the brief), for appellants.
Haskell Paul, of Pauls Valley, Okl. (R. D. Hudson, of Tulsa, Okl., on the brief), for appellee Glen S. Dille.
Before BRATTON, HUXMAN and MURRAH, Circuit Judges.
The Carter Oil Company of West Virginia brought this declaratory action against Delaney, Dille and the Zephyr Drilling Company, all citizens of Oklahoma, for a declaration of the rights of the parties under an oil and gas development contract between Carter, Delaney and Zephyr, in the subject matter of which Dille also claims an interest. Delaney and Zephyr answered, and cross-claimed against Dille, who moved to dismiss the action on the grounds that the only justiciable controversy was between Dille and his co-defendants, and there being no diversity of citizenship between them, the court was without jurisdiction.
Upon statements made in open court by counsel for Dille concerning the nature of his claim, and particularly to the effect that he was asserting no claim adverse to Carter, the court dismissed the action for lack of a justiciable controversy between parties of diverse citizenship.
Delaney and Zephyr have appealed, contending that Carter's complaint did state a justiciable controversy between citizens of different states in which they had a litigable interest, and that the trial court's order of dismissal rests not upon the sufficiency of the complaint, but upon concessions and stipulations obtained in open court. Of course if Carter's complaint did not state a claim for declaratory relief, the court's jurisdiction necessarily fails, for there is no requisite diversity between the parties to the cross-complaint. See Kelleam v. Maryland Casualty Company, 312 U.S. 377, 61 S.Ct. 595, 85 L.Ed. 899; Moore v. New York Cotton Exchange, 270 U.S. 593, 46 S.Ct. 367, 70 L.Ed. 750, 45 A.L.R. 1370; Isenberg v. Biddle, 75 U.S. App.D.C. 100, 125 F.2d 741; Kromer v. Everett Implement Co., C.C., 110 F. 22. Since jurisdiction must be judged by the sufficiency of the complaint, we look to it as determinative of our question. Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 61 S.Ct. 510, 85 LEd. 826.
After alleging diversity of citizenship and requisite amount in controversy, Carter's complaint alleged in substance that on or about March 5, 1946, Carter entered into a written contract with Delaney and Zephyr, under which it acquired an undivided 60% interest in certain oil and gas leases owned by Delaney and Zephyr, in consideration of cash and the drilling and completion of an oil well on the leases; that after examining the abstracts of title, and being convinced that Delaney and Zephyr were the record owners of the leases, it drilled and completed a well in accordance with the contract, and thereafter drilled and completed nineteen other wells on the lease at a cost of more than $1,000,000.00, not less than 60% of which was paid by it; that on May 6, 1948, these leases were producing approximately 1845 barrels of crude oil per day, with a gross value of $156,000.00 per month, and that it is operating the partnership leases, and purchasing and paying for the oil to Zephyr and Delaney. That in the course of the orderly development and operation of the lease, additional wells may be drilled, for which the parties will be liable in proportion to their interest in the leases. It alleged that the defendant Dille had filed a suit in the District Court of Garvin County, Oklahoma against Delaney and Zephyr to establish a joint venture, under which Dille would be the owner of an undivided one-third interest in the leasehold estates covered by the Carter contract, and had asserted the right to have the interest in the leasehold estates partioned in kind; that if Dille owns any interest in the leases, it is subject to the Carter contract as executed by his alleged joint adventurers. It was further alleged that under the contract, Carter had the duty to develop and operate the properties, to sell and pay for the oil, and the questions concerning the drilling of additional wells and of expenditures in connection with the operation of the properties, as well as the question as to whom among the defendants shall be liable for the development and operation cost attributable to the 40% interest, must necessarily be decided if the orderly development and operation of the property was to be continued.
It is said that until such determination is made, Carter cannot comply with its obligation under the contract to distribute proportionately to the parties income derived from the leases. Wherefore, Carter prayed for a declaration: (1) that the contract was in full force and effect and binding upon each and all of the defendants; (2) that none of the defendants had a right to partition Carter's undivided interest in the leases; (3) determining the proportionate share of each of the defendants in the 40% interest in the leasehold estates, together with the respective rights of each defendant in the oil that may be produced therefrom, and the respective liability of each defendant for further development and operating cost; (4) that regardless of whether the defendant Dille owns any interest in the properties, the defendants Delaney and Zephyr were authorized to bind all of the parties to the provisions of the contract, including the consent to the drilling of additional wells, and the making of expenditures in connection with operations in accordance with the terms of the contract; and (5) for such other relief as might be equitable and just.
When the motion to dismiss came on for hearing, Dille's attorney announced in open court that he was asserting no claim adverse to Carter; that he recognized the contract, and agreed to be bound thereby; and that since there was no controversy...
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