Eagle Oil Corp. v. Cohassett Oil Corp.

• Decision Date: 05 June 1933
• Docket Number: No. 60.,60.
• Citation: 263 Mich. 371,248 N.W. 840
• Parties: EAGLE OIL CORPORATION v. COHASSETT OIL CORPORATION et al.
• Court: Michigan Supreme Court

263 Mich. 371

248 N.W. 840

EAGLE OIL CORPORATION

v.COHASSETT OIL CORPORATION et al.

No. 60.

Supreme Court of Michigan.

June 5, 1933.

Appeal from Circuit Court, Muskegon County, in Chancery; Fred T. Miles, Judge.

Suit by Eagle Oil Corporation against Cohassett Oil Corporation and others, in which defendant Joseph H. Metcalf filed a cross-bill. From the decree defendants Cohassett Oil Corporation, Standard Oil Company of Indiana, and Simrall Pipe Line Corporation appeal, defendant Joseph H. Metcalf cross-appeals, and plaintiff cross-appeals.

Reversed and rendered.

Argued before the Entire Bench, except SHARPE, J.George H. Cross, of Muskegon (E. C. Farmer, of Muskegon, of counsel), for defendants-appellants.

Cross, Foote & Sessions and A. J. Rogoski, all of Muskegon, for plaintiff-appellee.

Harris E. Galpin, of Muskegon, for defendant Wellman Oil Co.

Harold H. Smedley, of Muskegon, for defendant Joseph H. Metcalf.

Corwin, Norcross & Cook, of Grand Rapids, for defendant Simrall Pipe Line Corporation.

McDONALD, Chief Justice.

Under an oil and gas lease from one Harm Doctor, the Eagle Oil Corporation drilled a well on certain premises in Muskegon county at a total cost of $13,273.31. At first the well produced in paying quantities. Subsequently it was held by this court, in Doctor v. Turner, 251 Mich. 175, 231 N. W. 115, that the lessor had no title to the property; that the title was in Joseph H. Metcalf. Turner was interested in the litigation as lessee in a lease which he claimed to have from Metcalf. During the litigation over the title the plaintiff remained in possession, but immediately thereafter was ousted in ejectment proceedings instituted by Mr. Metcalf. The Cohassett Oil Corporation, assignee of the Turner lease, followed in possession. While the plaintiff was in possession, it sold and delivered to the Standard Oil Company of Indiana oil valued at $5,886.28 and to the Simrall Pipe Line Corporation oil valued at $1,698.15, payment of which was subsequently made to the Cohassett Oil Corporation. After the Cohassett Oil Corporation went into possession, it sold oil to the Wellman Oil Company of the value of $906 and received payment therefor. Some of the oil sold to Wellman Company was produced by the plaintiff, but the record is not clear as to the exact amount. By the terms of the Metcalf lease one-eighth of the oil belonged to him as a royalty.

The plaintiff filed this bill on the theory that it was entitled to an equitable lien on seven-eighths of all oil produced until the $13,372.51 expended in drilling the well was fully paid; that it is entitled to payment from the several defendant oil companies of the oil purchased by them and to an injunction restraining the Cohassett Oil Corporation and all others from removing or disposing of the personal property used in drilling the well and storing the oil.

The defendant Joseph H. Metcalf answered and filed a cross-bill in which he asks to recover the entire production of the well on the theory that both the plaintiff Eagle Oil Corporation and the defendant Cohassett Oil Corporation, assignee of the Turner lease, were trespassers because the lessor of the Eagle Oil Corporation had no title and the Turner lease does not include the premises in question. The other defendants except the Wellman Oil Company appeared and severally answered denying plaintiff's right to the relief prayed for in its bill.

At the conclusion of the hearing the trial court decreed that the plaintiff was entitled to an equitable lien on the oil produced during its operation of the well and on future productions until it is fully reimbursed for the money expended in its drilling operations; that until such expenditure is repaid the defendants Cohassett Oil Corporation, John G. Turner, and Frank Marxer shall regularly account for all money received from the sale of oil from any source other than the Standard Oil Company of Indiana and the Wellman Oil Company and pay the proceeds from such sales to the clerk of the court for the use and benefit of the plaintiff; that in the event they abandon the well or surrender their lease before the $13,372.51 is fully paid, the plaintiff may remove all of the personal property; that the plaintiff take nothing from the Simrall Pipe Line Corporation for the oil it purchased, but that the Standard Oil Company of Indiana and the Wellman Oil Company pay to the clerk of the court for the use and benefit of the plaintiff the value of seven-eights of the oil sold and delivered to them; that the lease from Joseph H. Metcalf to Turner covered the lands in question, that Turner and his assigns were not trespassers, and that Metcalf's cross-bill be dismissed; that Joseph H. Metcalf recover from the Standard Oil Company of Indiana and from the Wellman Oil Company and from the Simrall Pipe Line Corporation one-eighth of the value of the oil which they respectively purchased, and that the same shall be paid to the clerk of the court for his use and benefit; that the Cohassett Oil Corporation, John G. Turner, and Frank Marxer, and their successors in interest, deposit every thirty days with the clerk as received for the use and benefit of plaintiff and Mr. Metcalf, the proceeds from the sale of future oil productions until plaintiff is fully paid as provided herein; and that in the meantime the preliminary injunction remain in force.

From the decree entered the defendant oil companies except the Wellman Oil Company appealed. The defendant Joseph H. Metcalf cross-appealed from the provision of the decree dismissing his cross-bill, and the plaintiff took a cross-appeal from denial of relief against the Simrall Pipe Line Corporation.

The first question logically arising for our consideration relates to the contention of defendant Metcalf that his lease of Joseph H. Turner does not include the premises involved. If it does not. Turner and his assigns were trespassers and the court was wrong in dismissing Metcalf's cross-bill.

The land in question consists of 1.5 acres lying north of the city of North Muskegon. With other lands it was acquired by Joseph H. Metcalf on March 4, 1901, by deed from Hackley and Hume. In the deed it was recited as being within the city of North Muskegon. A part of the description was within the city. When the Turner lease was made, it was believed by all of the parties that the parcel in question was within the city, and it was in fact so located until the boundaries were changed in 1895. The Turner lease was secured through one A. K. Primeaux, acting as agent for Mr. Metcalf, who resided in Seattle, Wash. The lease was executed in accordance with a preliminary agreement escrowed with the National Lumberman's Bank of Muskegon. It was executed in Seattle and the escrow agreement in Muskegon, which probably accounts for the difference in description of the land leased. We think the description in both instruments, though incomplete, fairly includes the parcel in question. The trouble arose over the mistaken recital in both instruments that all of the land lay within the city of North Muskegon. Mr. Turner was entitled to a lease of all of the land described in the escrow agreement. It is contended by him that the premises in question are included in the description in the lease wherein it says, ‘And all that part of block twenty-four (24) lying west of the county road.’ This contention is supported by...