King-Stevenson Gas & Oil Co. v. Texam Oil Corp., KING-STEVENSON

• Citation: 1970 OK 45,466 P.2d 950
• Decision Date: 17 March 1970
• Docket Number: No. 42504,KING-STEVENSON,42504
• Parties: GAS & OIL COMPANY, a corporation, Plaintiff in Error, v. TEXAM OIL CORPORATION, Defendant in Error.
• Court: Supreme Court of Oklahoma

Page 950

466 P.2d 950

KING-STEVENSON GAS & OIL COMPANY, a corporation, Plaintiff in Error, v. TEXAM OIL CORPORATION, Defendant in Error.

No. 42504.

Supreme Court of Oklahoma.

March 17, 1970.

Syllabus by the Court

1. An ambiguity in a contract should be resolved against the party who drew it.

2. In determining what the parties intended by a contract, the court should, as far as possible, place itself in the position of the parties when the contract was made, and to the extent that their mutual intention is ascertainable and lawful, give effect thereto.

3. The law will not make a better contract than the parties themselves have seen fit to enter into, or alter it for the benefit of one party to the detriment of another.

4. A cotenant entitled to contribution for expenditures made in protecting or preserving the common estate many enforce his right personally against his cotenant if the latter has agreed to or may be deemed to have authorized such expenditure. But in the absence of such an agreement, the right to contribution is enforceable by way of a personal judgment against a delinquent cotenant only where, at the time of payment, he is personally liable for the debt paid by the cotenant seeking contribution.

Appeal from the District Court of Oklahoma County; Boston W. Smith, Judge.

Action by King-Stevenson Gas & Oil Co., owner of interest in oil and gas lease, against Texam Oil Corporation, owner of interest in same oil and gas lease and cotenant of plaintiff, for personal judgment for one-half of delay rentals paid by plaintiff on lease covering United States lands. Trial court denied plaintiff any relief. Plaintiff appeals. Affirmed.

Lewis G. Mosburg, Jr., C. Temple Bixler, Mosteller, Andrews & Mosburg, Oklahoma City, for plaintiff in error.

Fowler, Rucks, Baker, Jopling, Gramlich & Mee, by Richard W. Fowler, Oklahoma City, for defendant in error.

DAVISON, Justice.

The parties occupy the same relative positions in this court as in the trial court. We will refer to the parties by their trial court designation of 'plaintiff' and 'defendant.'

Plaintiff filed the action for the purpose of securing a judgment against defendant for $18,004.00, being one-half of the amounts the plaintiff had paid the United States Government as delay rentals pursuant to the terms of oil and gas leases on lands of the United States. Plaintiff and defendant each owned an undivided one-half interest in the leases. The trial court rendered a general judgment denying plaintiff any recovery against the defendant.

Plaintiff's petition and amendment thereto alleged that on or about June 27, 1960, the parties entered into an agreement for the joint acquisition, development and operation of certain oil and gas leases and properties, which was modified by a later agreement on or about September 16, 1960; that pursuant to the agreement the plaintiff acquired certain described U. S. Government non-competitive oil and gas leases and did assign to defendant an undivided one-half interest therein, and 'plaintiff and defendant were tenants in common therein;' that defendant refused to pay its share of the delay rentals, but demanded that plaintiff pay the same, and plaintiff did pay the delay rentals in order to preserve the interests of the parties; and that under the parties' agreement the defendant was obligated to pay its share of the delay rentals.

The defendant filed a general denial.

The parties stipulated that they had entered into the two agreements and pursuant thereto, (1) plaintiff acquired the leases and paid the full acquisition cost thereof ($20,000.00) to the U.S. Government, (2) plaintiff assigned to defendant an undivided one-half interest therein and that on or about November 29, 1960, defendant paid plaintiff the total acquisition cost of $20,000.00 for the assignment, (3) plaintiff paid the Federal Government $36,008.00 as delay rentals, no part of which had been paid by defendant, and (4) that both agreements were drafted by the plaintiff. A schedule of the leases shows the effective dates thereof were in 1961 or 1962, and that the delay rentals were paid for years ranging from two to four years at the rate of fifty cents an acre per year.

In addition to the stipulation, the plaintiff introduced in evidence the two agreements and some eighteen letters or communications exchanged by the parties. This constituted all of plaintiff's evidence. The defendant announced it had no evidence to offer, and the matter was submitted solely on the stipulation and the other above descrived instruments.

As stated, the trial court held generally for the defendant with no statement of findings or conclusions of law.

Plaintiff contends that under the agreements between the parties the defendant was obligated to pay one-half of the delay rentals on the leases in which defendant owned an undivided one-half interest.

It is defendant's position that the terms of the agreements do not obligate defendant to pay any delay rentals on the leases. Defendant also contends that, since the parties were tenants in common in the leases, the defendant was not required to contribute to plaintiff for monies expended by plaintiff to pay the delay rentals.

Both of the agreements were in the form of a letter from plaintiff to defendant which was then accepted by defendant. The initial letter-agreement was dated June 27, 1960, and was accepted by defendant on July 26, 1960. It basically stated the parties' agreement concerning acquisition of the leases by plaintiff and then assigning one-half interest therein to defendant.

The second agreement dated September 16, 1960, and accepted by defendant October 24, 1960, retained the provisions of the first agreement plus some provisions the parties apparently thought necessary to more nearly express their agreement and provide for operations in the event of production.

Both agreements provided the plaintiff would acquire leases on Federal Acreage in a certain area, and would 'advance all funds required for the original lease search, filing fees, bonus or advance rentals, and miscellaneous other expenses in connection with said filing or acreage acquisitions,' and that defendant would reimburse plaintiff for the total of such funds expended (not to exceed $20,000.00) and receive one-half working interest in the leases. In this connection, the second agreement also stated it was anticipated there would be no override on the leases when issued.

Both agreements provided, in effect, that the interests of both parties at the time of acquisition would bear the same burdens. This was expressed in the second agreement by language providing that defendant's 'acreage shall be acquired subject to its proportional part of all royalties, overrides, oil payments, etc., existing at the time said leases are acquired by' plaintiff. The second agreement additionally stated that 'If any additional royalties, overrides, oil payments, etc. should be imposed on this acreage by' plaintiff, it 'would be borne' by plaintiff's 50% Of the acquired acreage.

The second agreement further stated that plaintiff was operator of the leasehold premises and had attached to it as an exhibit a sample operating agreement 'for reference to advise the parties of the kind of agreement to be utilized,' but that, 'There are no Exhibits and No Accounting Procedure submitted as the parties hereto understand these inclusions are to be negotiated from time to time in advance of drilling.'

Thereafter, on November 20, 1961, (about one year after the lease agreement and payment of the $20,000.00 to plaintiff) the defendant wrote a letter to plaintiff inquiring as to the terms under which the leases could be held 'after the primary three year period has elapsed' and inquiring 'at what point the three year paid up rental on the properties began.' This letter triggered a series of written exchanges between the parties.

It is our conclusion that these letters reflect and support the following described circumstances and conclusion. At the time of the first agreement the plaintiff knew and the defendant either knew or it was represented to it that, under the then existing Federal Statutes, oil and gas leases like those involved herein were let upon payment of an advance rental for the first year of fifty cents per acre, with the second and third year free, and then twenty-five cents rental per acre for the fourth and fifth years. However, on September 2, 1960, between the first and second agreements, an amendment (Pub.L. 86--705) to 30 U.S.C.A. § 226, became effective whereby free second and third years were eliminated, and an advance delay rental of fifty cents per acre each year was required for the lease term. Plaintiff knew of this change in the law and acquired the leases with the change in the lease provisions, but it is evident that defendant was not informed and did not know of the changed conditions.

In the ensuing written exchanges the defendant took the position that the original understanding was that there would be no rentals to pay for the first three years, that the plaintiff was obligated to pay these delay rentals, and in the end defendant refused to contribute to payment of any of the delay rentals.

As stated above, plaintiff contends that the agreement between the parties obligated defendant to pay one-half of all delay rentals. Plaintiff urges in support of this contention that a consideration of all of the circumstances reveals a situation in which the court should look...