Kieffer v. Kinney-Coastal Oil Co.

• Decision Date: 25 November 1925
• Docket Number: No. 7060.,7060.
• Citation: 9 F.2d 260
• Parties: KIEFFER et al. v. KINNEY-COASTAL OIL CO. et al.
• Court: U.S. Court of Appeals — Eighth Circuit

9 F.2d 260 (1925)

KIEFFER et al. v. KINNEY-COASTAL OIL CO. et al.^*

No. 7060.

Circuit Court of Appeals, Eighth Circuit.

November 25, 1925.

C. D. Murane, of Casper, Wyo. (G. R. Hagens, of Casper, Wyo., on the brief), for appellants.

Joseph C. O'Mahoney, of Cheyenne, Wyo., and Paul P. Prosser, of Denver, Colo. (D. Avery Haggard, of Cheyenne, Wyo., and Edward M. Freeman, of Denver, Colo., on the brief), for appellees.

Before LEWIS and KENYON, Circuit Judges, and MUNGER, District Judge.

LEWIS, Circuit Judge.

This suit presents a controversy over the respective rights of the parties in 80 acres of land in the Wyoming oil fields. The eighty and other public lands there were classified as valuable for oil and gas deposits and withdrawn from entry. Thereafter the Act of July 17, 1914, 38 Stat. 509 (Comp. St. §§ 4640a-4640c), was passed, which provides that lands of the United States so withdrawn, containing such deposits, might be entered and purchased, if otherwise available, under the non-mineral land laws of the United States, subject, however, to a reservation to the United States of their mineral deposits, together with the right to prospect for, mine and remove the same. In 1918 Michael F. Kieffer, one of the appellants, made a homestead entry on 320 acres, including the 80 acres in controversy, and in October, 1923, received a patent from the United States conveying to him the 320 acres, with the reservation provided for in the Act. The reservation contained in the patent is set up in the answer, and is in these words:

"Also excepting and reserving to the United States all the oil and gas in the lands so patented, and to it, or persons authorized by it, the right to prospect for, mine, and remove such deposits from the same upon compliance with the conditions and subject to the provisions and limitations of the Act of July 17, 1914 (38 Stat. 509)."

The patent contained no restrictions on the use of the surface by Kieffer or his assigns, nor on his right to convey it. Kieffer fenced the 320 acres, made other homestead improvements, but not on the eighty, and has continued to live there.

On August 9, 1922, the United States gave a lease to appellee, Kinney-Coastal Oil Company, by which it granted to and gave that company the exclusive privilege and right to drill for, mine, extract, remove and dispose of all the oil and gas deposits in and under the 80 acres and other described lands, in all 480 acres, in the Salt Creek Oil Field; together with the right to construct and maintain thereupon all works, building, plants, waterways, roads, telegraph or telephone lines, pipe lines, reservoirs, tanks, pumping stations or other structures necessary to the full enjoyment thereof, for a period of twenty years, with a preference right in the lessee to renew the lease for successive periods of ten years. The lease was given under the Mineral Lands Leasing Act of February 25, 1920, 41 Stat. 437 (Comp. St. Ann. Supp. 1923, §§ 4640¼-4640¼ff, 4640¼g-4640¼ss), and among other considerations therefor to the lessor expressed in the lease the lessee agreed to give 25 per cent. of the oil and gas produced from the 80 acres. The Act of July 17, 1914, is entitled:

"An Act to provide for agricultural entry of lands withdrawn, classified, or reported as containing phosphate, nitrate, potash, oil, gas, or asphaltic minerals."

Its second section reads in part thus:

"That upon satisfactory proof of full compliance with the provisions of the laws under which the location, selection, entry, or purchase is made, the locator, selector, entryman, or purchaser shall be entitled to a patent to the land located, selected, entered, or purchased, which patent shall contain a reservation to the United States of the deposits on account of which the lands so patented were withdrawn or classified or reported as valuable, together with the right to prospect for, mine, and remove the same, such deposits to be subject to disposal by the United States only as shall be hereafter expressly directed by law. Any person qualified to acquire the reserved deposits may enter upon said lands with a view of prospecting for the same upon the approval by the Secretary of the Interior of a bond or undertaking to be filed with him as security for the payment of all damages to the crops and improvements on such lands by reason of such prospecting, the measure of any such damage to be fixed by agreement of parties or by a court of competent jurisdiction. Any person who has acquired from the United States the title to or the right to mine and remove the reserved deposits, should the United States dispose of the mineral deposits in lands, may re-enter and occupy so much of the surface thereof as may be required for all purposes reasonably incident to the mining and removal of the minerals therefrom, and mine and remove such minerals, upon payment of damages caused thereby to the owner of the land, or upon giving a good and sufficient bond or undertaking therefor in an action instituted in any competent court to ascertain and fix said damages."

In 1922 the lessee began the sinking of an oil well on one of the forties, and completed it in August, 1923. Its production is about 80 barrels per day. It also placed stakes at eight or nine different points on that forty early in February, 1924, as an indication of its intention to put down other wells at those points. In January, 1924, Kieffer and wife filed in the office of the county clerk of Natrona county, the county in which said 80 acres is situate, a townsite plat covering the forty on which the well had been sunk, wherein the entire forty was divided into blocks, lots and streets as the Edgerton townsite; and shortly thereafter they sold more than half of the lots to divers and sundry persons, each deed, however, excluding mineral rights in the oil and gas, reserving them to the United States in the same language in which they were reserved in the patent. The purchasers have constructed buildings on some of the lots; none of them is of brick or stone; most of them are frame buildings; some are of galvanized iron and some have tent tops. Most of them are occupied as residences. There is a clothing store, a grocery store, a dance hall, a cafe, a pool hall, a garage, a blacksmith shop, a boiler shop and a filling station, about eighty structures in all. Any of them can be easily moved from the tract in a day or less time.

In June, 1924, the Kinney-Coastal Company and the Texas Production Company, the latter having acquired some interest in the lease, brought this suit against Kieffer and wife, some of the purchasers of lots, the county clerk of Natrona county, Edgerton Public Utilities Company and Casper National Bank; alleging that plaintiffs were the holders of an oil and gas lease from the United States covering the 80 acres, that they had the exclusive right to drill for, extract and remove the oil and gas in or under the land, together with the right to construct and maintain all buildings and other improvements for that purpose, that they required the use of all of the surface of the 80 acres and that all of the surface was necessary for the production and removal of oil therefrom, that Kieffer and wife had filed a townsite plat on one of the forties with the county clerk of Natrona county and were about to file a like plat on the other forty, that the placing of buildings on the lots and the improvement of the tract as a town would be an obstruction to the exercise of the rights of plaintiffs under their lease and work an irreparable injury to them which could not be compensated in damages, and they prayed injunctive relief —

(a) That Kieffer and wife be restrained from selling town lots on the tract, from delivering or contracting to deliver deeds therefor, from erecting or encouraging the erection of dwellings or other structures thereon, and from filing a townsite plat on the other forty.

(b) That the county clerk be restrained from filing and recording any deed or instrument purporting to convey any lot or lots within the townsite and from accepting, filing or recording a townsite plat on the other forty.

(c) That the defendant lot owners and all lot owners be restrained from erecting or maintaining any dwelling house or other structure upon the land and from using or attempting to use any of the surface thereof during the life of plaintiffs' lease.

(d) That the Edgerton Public Utilities Company be restrained from further prosecuting its application before the Public Service Commission of the State of Wyoming for a certificate of public convenience and necessity for the laying of gas mains and the erection of a water system on the platted forty.

(e) That the defendant Casper National Bank be restrained from further acting as escrow holder of deeds executed by Kieffer and wife conveying lots in the townsite and from receiving or delivering any such deeds; and that plaintiffs be decreed to be entitled to the use of all of the surface of the 80 acres during the life of their lease, and that the townsite plat on the forty be decreed to be invalid.

Defendants in their joint answer admitted that Kieffer obtained his title to the 80 acres subject to the reservation contained in the patent, that plaintiffs held the lease which they claimed and that they were entitled to occupy and use all of the surface necessary to develop the oil and gas deposits thereunder and recover and remove the same, but denied that all of the surface of the tract was necessary or needed for that purpose. They alleged that the rights of plaintiffs had never been denied or interfered with by any of the defendants, that they were willing to enter into negotiations with plaintiffs for settlement of damages to defendants or to have those damages adjudicated in accordance with the Act of July 17, 1914; asserted a right in Kieffer and wife to plat the tract as a townsite, to file a townsite plat or plats for that purpose, to sell...