Klippel v. Beinar

• Decision Date: 11 July 1977
• Docket Number: No. 48480,H-V,48480
• Citation: 222 Kan. 681,567 P.2d 867
• Parties: B. W. KLIPPEL, Jr. (Plaintiff), Appellant, v. Peter J. BEINAR (Defendant), Appellee, Happy Wildcat Oil Company, a Missouri Corporation (Defendant). B. W. KLIPPEL, Jr. (Plaintiff), Appellant, v. Joseph W. VOWELL and Donald A. High, co-partners d/b/aOil Company, a partnership (Defendants), Appellees.
• Court: Kansas Supreme Court

Page 867

567 P.2d 867

222 Kan. 681

B. W. KLIPPEL, Jr. (Plaintiff), Appellant, v. Peter J. BEINAR (Defendant), Appellee,

Happy Wildcat Oil Company, a Missouri Corporation (Defendant).

B. W. KLIPPEL, Jr. (Plaintiff), Appellant, v. Joseph W. VOWELL and Donald A. High, co-partners d/b/a H-V

Oil Company, a partnership (Defendants), Appellees.

No. 48480.

Supreme Court of Kansas.

July 11, 1977.

Syllabus by the Court

In actions brought by an oil operator-producer to recover operating expenses from individual lease owners holding interests in leased tracts within an alleged unitized field unit the record on appeal is examined and it is held genuine issues of material fact were in dispute including (1) whether the lease interests were included in a unitized acreage from which oil was being produced thus extending the primary terms of the original leases, (2) if said interests were not unitized in the field unit, whether the lease owners may have become bound by their ratification of the unitization agreements in accepting credits and paying pool expenses after receipt of their interests, (3) whether the lease owners held valid and existing interests in oil and gas which could contribute to the common pool or unit, and (4) whether the operating agreements should be set aside on grounds of misrepresentation, unconscionability and fraud or because the nonoperators held no valid oil and gas interests which could contribute to the common pool. Accordingly, it was error for the trial court to enter summary judgments in favor of the defendants.

J. D. Conderman of Conderman & Talkington, Iola, argued the cause and was on the brief for appellant.

Charles E. Henshall of Henshall & Pennington, Chanute, and H. Carroll Bayler, Louisville, Ill., argued the cause and were on the brief for appellees.

FROMME, Justice:

This appeal is from an order of the trial court granting motions for summary judgments in favor of defendants, Peter J. Beinar, Joseph W. Vowell and Donald A. High. Plaintiff B. W. Klippel, Jr. appeals.

Appellant Klippel was an oil operator-producer conducting development, production, maintenance and marketing operations on twelve oil leases in Woodson County under oil and gas lease operating agreements covering what is referred to as the East Rose Field Unit.

Appellant filed separate actions against Peter J. Beinar, et al., and against Joseph W. Vowell and Donald A. High. The issues in the separate actions are quite similar and the actions were consolidated for trial and remain consolidated for purposes of this appeal.

In the petitions Klippel alleges that defendant Beinar is the owner of an oil and gas lease covering the South Half of the North Half of the Northeast Quarter (S 1/2 N 1/2 NE 1/4) of Section 21, Township 26 south, Range 16 east, and that Vowell and High are the owners of an oil and gas lease covering the South Third of the East Half of the Southeast Quarter (S 1/3 E 1/2 SE 1/4) of Section 21, Township 26 south, Range 16 east, all in Woodson County. He alleges that both leases are in a unitized area and subject to operating agreements held by him. He further alleges that by reason of expenditures, charges, credits and receipts allocable to the respective unitized tracts the defendants are individually indebted to him in stated amounts as shown in itemized statements attached to the respective petitions.

In these itemized statements, after arriving at the total operator's cost in the East Rose Field Unit, Klippel lists the twelve leases participating in the unit, names the original lessors and the present lessees including the respective lessee-defendants, assigns a "unit participating factor" to each lease and thereby arrives at the lessee's respective share of the total operator's costs in the field unit for the period covered.

Generally it can be said that the defendants in their answers admitted that they owned leases covering the respective tracts of land. Their ownerships were asserted under assignments of leases. They denied that their leases were subject to the burdens of unitization and alleged the operating agreements on which plaintiff based his claims for unit operating expenses were void because of fraud, misrepresentation and unconscionability. In addition to the answers the defendants filed counterclaims asserting that the assignments of leases conveyed nothing to them and that the plaintiff had wrongfully demanded and had been paid large sums for operating expenses not incurred on defendants' leases. Defendants prayed for accountings and for return of payments wrongfully received by plaintiff plus damages and costs.

We are not concerned with these counterclaims since they were not determined when the summary judgments were entered. They are pending in the trial court.

In the motions for summary judgments defendants alleged that the oil and gas leases referred to in plaintiff's petitions had expired by their terms, that the operating agreements under which plaintiff claimed had expired with the termination of the leases and that the agreements could no longer be enforced because of lack of mutuality and unconscionability.

At the hearing on the motions for summary judgments the parties furnished various copies of documents to the court. These included copies of leases, court records in a quiet title action involving the lease interests, the assignments of the leases and of the participating interests in the East Rose Field Unit to Beinar, Vowell and High, the operating agreements and certain orders signed by Beinar and by High as president of Reddy-Kay Drilling Company, a corporation, addressed to an oil purchasing company denominated "Working Interest Division Order, Confirmation of Unitization Agreement, Appointment of Common Agent."

In addition to this documentary evidence the record on appeal contains portions of depositions by Peter J. Beinar, defendant, and B. W. Klippel, Jr., plaintiff, and affidavits of two individuals with reference to unitization of the TEC Unit effective October 1, 1966, and mentioning a previous affidavit filed in 1967. The deposition of plaintiff indicates that the East Rose Field Unit was producing 30 barrels of oil per day and the break even point to cover operating expenses would be 75 barrels of oil per day. This was tertiary recovery and we find nothing in the record as to when primary or secondary recovery of oil began.

In what is referred to by the parties as the unitizing lease to Owen Snow Petroleum Engineering Company, executed in 1966, the parties to that lease acknowledge unitization and refer to the total unit acreage as the TEC Unit. There is nothing in the record to indicate when this unit was put together or when oil was first produced from wells in that unit. We can only assume the TEC Unit later became the East Rose Field Unit since the twelve leases in controversy are included in both units.

In a memorandum decision covering ten pages of the record on appeal the trial judge attempted to set forth a history of the ownership of the leases and of the interests of the respective parties and concluded:

"The Court concludes that in each action the plaintiff has failed to state a cause of action on which relief may be granted and that the motion for summary judgment lodged against...