Empire Natural Gas Co. v. Southwest Pipe Line Co.

• Decision Date: 13 April 1928
• Docket Number: No. 217.,217.
• Citation: 25 F.2d 742
• Parties: EMPIRE NATURAL GAS CO. v. SOUTHWEST PIPE LINE CO.
• Court: U.S. District Court — Northern District of Oklahoma

25 F.2d 742 (1928)

EMPIRE NATURAL GAS CO. v. SOUTHWEST PIPE LINE CO.

No. 217.

District Court, N. D. Oklahoma.

April 13, 1928.

Warren T. Spies, of Bartlesville, Okl., for plaintiff.

N. E. McNeill, of Tulsa, Okl., and Chapman, Cutler & Parker, of Chicago, Ill., for defendant.

KENNAMER, District Judge.

This suit involves the validity of a written contract executed by the Revelle Oil Company, vendor, and the Empire Natural Gas Company, vendee. The contract, in part, provides:

"The undersigned vendor, in consideration of one ($1.00) dollar in hand paid, receipt acknowledged, hereby sell and agree to sell and deliver at the mouth of the wells to the Empire Natural Gas Company, vendee, and the vendee agrees to receive in the usual conduct of its business ratably with other producers in the same field having gas in the same producing horizon or sand, and in accordance with approved practices in the industry, all the merchantable gas in its natural state as produced (except casinghead gas) from wells now drilled and hereafter to be drilled on" eighty acres of land situated in Creek county, Oklahoma.

The contract was to be in force during the present leasehold estate on the described premises; the vendee was relieved of the obligation to receive gas when the same could not be delivered in commercial quantities; the contract provided that the vendee was to install necessary meter equipment, and was to have an easement for installing and maintaining proper equipment on the leasehold estate, the right to inspect its wells, to make necessary manipulation of gates at mouth of wells or point of delivery, to regulate the flow of gas, to meet fluctuating conditions of vendee's market, and to begin the construction of gathering lines within 30 days after acceptance of contract by vendee. Payments for gas to be made on division order furnished by vendor. The contract provided it was subject to present and future orders, rules, and regulations of duly constituted authorities having jurisdiction. The contract shall be binding on the heirs, personal representatives, successors, and assigns of the parties. It was executed on August 21, 1923.

The Revelle Oil Company was the lessee under an oil and gas lease dated December 12, 1912, covering the lands involved in this action. Two producing wells of natural gas in paying quantities were on the land on the date of the execution of the contract. In the vicinity of this lease the vendor had other producing properties. The vendee was engaged extensively in the business of purchasing, transporting by pipe line, and selling natural gas in Kansas, Missouri, and Oklahoma. Immediately after the execution of the contract the vendee constructed a pipe line to the field in which the leasehold estate involved here is situated at a cost of approximately $125,000, and received the gas continuously from November, 1923, from the Revelle Oil Company. The Revelle Oil Company assigned the leasehold estate on May 1. 1926, to the Bu-Vi-Bar Petroleum Corporation, which assignee continued to deliver the gas from the premises until January 4, 1927. The Bu-Vi-Bar Petroleum Corporation assigned the leasehold estate to the Southwest Pipe Line Company on or about December 1, 1926. Thereafter the Southwest Pipe Line Company disconnected the pipe lines of the plaintiff herein and refused delivery of any gas from the wells located on the leased premises. The defendant connected its own pipe line to the gas wells and has since been taking the gas, which the plaintiff alleges it is entitled to receive under its contract of purchase. This action is prosecuted by the plaintiff to enjoin the defendant from preventing the delivery of the gas to the plaintiff, to desist from interfering in any way in its possession of the leasehold estate, and to require the defendant to make specific performance of the contract.

In the oral argument and brief filed by counsel for the defendant the contention was made that the contract sued upon is one for the sale of personalty; that specific performance of the contract will not be decreed by a court of equity; that before the plaintiff can prevail there must have been an assumption of the obligations of the contract by the assignee of the leasehold estate, who was not a party to the sales contract; or there must have been a novation of the contract for the sale of the gas. The plea of innocent purchaser has been made.

From a careful consideration of the authorities it appears the right granted by the contract to lay pipe lines upon the leased premises and to build compressor stations to assist in receiving and marketing of the gas creates such an interest in realty, or imposes such burden upon the leasehold estate during its term, as to create a right running with the land during the term of the leasehold estate. This creates such an interest in the leasehold estate as to remove it from the classification of mere personalty. In Adams v. Gordon, 265 Ill. 87, 106 N. E. 517, the court held the right to maintain a pipe line connecting the plaintiff's premises with an artificial tank fed by a pump operated by a gasoline engine located on the defendant's land, with the right to receive water from such pump, tank, and pipe line, created such an easement, which passed as an appurtenant to a grant of the plaintiff's land from the defendant. In Hamilton Ridge Lumber Co. v. Southern Cotton Oil Co. (C. C. A.) 271 F. 934, the court held: "A contract by which in terms defendant sold to complainant all its timber of certain kinds situated in South Carolina, to be cut and delivered by defendant at complainant's mill, the purchase price to be measured by the logs, which were to be measured and paid for as delivered, * * * carries an interest in real estate." See Larsen v. Peterson, 53 N. J. Equity, 88, 30 A. 1094; Mudge v. Hughes (Tex. Civ. App.) 212 S. W. 819; Stanislaus Water Co. v. Bachman, 152 Cal. 716, 93 P. 858, 15 L. R. A. (N. S.) 359.

By section 1153, Revised Laws of Oklahoma 1910, it is provided: "The words `land,' `real estate' and `premises,' when used herein or in any instrument relating to real property, are synonyms and shall be deemed to mean the same thing, and, unless otherwise qualified, to include lands, tenements and hereditaments; and the word `appurtenances' unless otherwise qualified shall mean all improvements and every right of whatever character pertaining to the premises described." By section...