Leonard v. Barnes

Decision Date19 July 1965
Docket NumberNo. 7488,7488
Citation1965 NMSC 80,75 N.M. 331,404 P.2d 292
PartiesJ. M. LEONARD and wife, Mary Leonard, Neville G. Penrose and wife, Dorls Penrose, Plaintiffs-Appellants, v. J. C. BARNES et al, Defednants-Appellees, Johnson-Walker Oil Company, Intervening Defendant-Appellee, Indiana Oil Purchasing Company, Defendant-Appellee and Counter Claimant and Cross-Claimant in Interpleader.
CourtNew Mexico Supreme Court

Clarence E. Hinkle, Paul W. Eaton, Jr., Roswell, for appellants.

Atwood & Malone, Roswell, for appellees.

CHAVEZ, Justice.

Appellants, plaintiffs in the lower court, appeal from a judgment dismissing appellants' complaint and adjudging appellees to be the owners of the 1/4 of 1/8 royalty interest in question.

The stipulated statement of facts is as follows:

'1. That on June 13, 1946 an oil, gas and mineral lease was made and entered into by and between J. V. Terrill, a bachelor, S. J. Iverson and wife, Marjorie Iverson, Neville G. Penrose and wife, Doris Penrose as 'Lessor' and Forrest Oil Corporation as 'Lessee' which described the lands covered thereby in Lea County, New Mexico, as follows:

Undivided 1/4 interest in N/2SE/4, SE/4SE/4, E/2SW/4SE/4 of Section 14; N/2NE/4 and SW/4NE/4 of Section 23, owned by J. V. Terrill, lessor herein;

Undivided 1/4 interest in N/2SE/4, SE/4SE/4, E/2SW/4SE/4 of Section 14; N/2NE/4, SW/4NE/4 of Section 23, owned by S. J. Iverson and wife, Marjorie Iverson, lessors herein;

Undivided 1/2 interest in SE/4SW/4, W/2SW/4SE/4 of Section 14; SE/4 and SE/4NE/4 of Section 23, owned by Neville G. Penrose and wife, Doris Penrose, lessors herein; All in T-15-S, R-37-E, N.M.P.M.

That said lease, covering the 520 acres above described, was for a primary term of ten years from date 'and as long thereafter as oil, gas or other mineral is produced from said land * * *.' and provided for the payment to the Lessor of an annual rental for the privilege of deferring the commencement of drilling operations from year to year.

'That the oil and gas lease above referred to was entered into by and between said parties as a result of negotiations between the defendant, J. V. Terrill, and the Forrest Oil Corporation for an agreed bonus consideration of $25.00 per acre. The details of the transaction were handled by Mr. Lediber, a landman of the Forrest Oil Corporation and the lease form used in consummating the transaction was selected by Mr. Lediber and the preparation of the lease was by him. The lease form was delivered by the Forrest Oil Corporation to the defendant, J. V. Terrill and mailed by him to the plaintiff, Neville G. Penrose, with the request that he obtain the signatures of S. J. Iverson and wife, Marjorie Iverson. The lease was executed and acknowledged by Iverson and wife on July 1, 1946; by Penrose and wife on July 10, 1946; and by J. V. Terrill on July 12, 1946 and the lease bonuses were paid by Forrest Oil Corporation directly to the respective lessors in proportion to their acreage interests. None of the parties who were named as lessors in the lease had anything to do with the preparation of the same and there was no discussion between any of the parties who were lessors and the lessee, or by or between or among the parties who were lessors as to whether or not it was intended by the execution of the single lease prepared by the Forrest Oil Corporation to pool or provide for the apportionment of the royalty which might accrue under the lease. That the delay rentals provided for under the terms of said lease were paid in conformity therewith for the years 1947 through 1950 and each of the lessors received their proportionate part of the total rentals paid for each year based on the number of acres owned by each.

'2. That at the time of the execution of said oil and gas lease on June 13, 1946, the defendant J. V. Terrill, a bachelor, was the owner in fee simple of an undivided one-fourth interest and S. J. Iverson and wife Marjorie Iverson were the owners of an undivided one-fourth interest in and to all of the oil, gas and other minerals in and under and which might be produced from the following described lands situated in Lea County, New Mexico, hereinafter referred to as Tract Number 1:

Tract No. 1:

Township 15 South, Range 37 East, N.M.P.M.:

Section 14: N/2SE/4, SE/4 SE/4, E/2SW/4SE/4

Section 23: N/2NE/4, SW/4 NE/4

containing 260 acres, more or less.

'3. That as of the time of the execution of said oil and gas lease on June 13, 1946, the plaintiffs Neville G. Penrose and wife Doris Penrose were the owners in fee simple of an undivided one-half interest in and to all of the oil, gas and other minerals in and under and which might be produced from the following described lands situated in Lea County, New Mexico, hereinafter referred to as Tract Number 2:

Tract No. 2:

Township 15 South, Range 37 East, N.M.P.M.:

Section 14: SE/4SW/4, W/2 SW/4SE/4

Section 23: SE/4, SE/4NE/4

containing 260 acres, more or less.

'4. That during the primary term of said oil and gas lease and while the same was in good standing, the lessee and its assigns caused Well 1-B to be commenced on or about March 5, 1951 and completed on or about July 14, 1951 as a well capable of producing oil and gas from the Devonian Formation.

'That the lessee and its assigns also caused Well 2-B to be commenced on or about September 19, 1952 and completed on or about November 14, 1952 as a well capable of producing from the Wolfcamp Formation.

'That both of said wells were drilled upon the NW/4SE/4 of Section 14, Township 15 South, Range 37 East, N.M.P.M. and being a part of the lands described in Tract No. 1 above referred to.

'That oil and gas has at all times continued to be produced from said wells and is still being produced therefrom and that no other wells have been drilled upon the lands covered by said lease. That oil and gas has not at any time been produced from the lands described as Tract No. 2.

'5. That the defendant, Indiana Oil Purchasing Company has been running and purchasing the oil from the producing wells located upon said leasehold premises since January 1, 1953 and on account of the failure and refusal of the parties who were named as lessors in said lease and their successors in interest to agree upon a division order for the payment of 1/4 of 1/8 of the royalty which is claimed by plaintiffs to be due and owing them on account of the production from said leasehold premises, the Indiana Oil Purchasing Company impounded and held in suspense all of the proceeds accruing on account of the sale of oil and gas since January 1, 1953 which are payable on account of said 1/4 of 1/8 royalty interest claimed by the plaintiffs and the Indiana Oil Purchasing company has paid into the registry of this Court the sum of $53,611.37 being the proceeds from 1/4 of 1/8 of the production from the wells on said leasehold premises, from January 1, 1953 to March 31, 1963 inclusive. The said Indiana Oil Purchasing Company has further agreed to tender into Court an amount equal to 1/4 of the 1/8 of the proceeds accruing for each subsequent month, all of which are to be held subject to a determination of the interest of the parties to this cause therein.

'6. That at the time of the filing of this action and the lis pendens in connection therewith and at all times since January 1, 1953, the undivided one-half interest in the minerals covered by said oil and gas lease insofar as the same covers and affects Tract No. 2 above described was owned and held by the plaintiffs as follows:

An undivided 1/8 interest .. Neville G. Penrose

An undivided 3/8 interest .. J.M. Leonard

'7. That at the time of the filing of this action and the lis pendens in connection therewith and at all times since January 1, 1953, except as hereinafter set forth, the undivided one-half interest in the minerals insofar as said lease covers and affects Tract No. 1 hereinabove described was owned and held of record by the defendants in undivided interests as follows:

                3/26 ................. C.E. Marsh, II, Trustee
                2/26 ................. Wayne Moore
                1/26 ................. J.C. Barnes
                1/78 ................. Jane Barnes Ramsland )
                1/78 ................. Shirley B. Winn      )            1/26
                1/78 ................. J.C. Barnes, Jr.     )
                2/26 ................. Charles R. Turner
                1/195 ................ Sunac Petroleum Corporation, formerly Stekoll
                                       Petroleum Corporation
                23/195 ............... Brook Oil Corporation
                1/390 ................ Eldredge E. Combs
                1/390 ................ Ted L. Bear
                1/390 ................ B. Morton de Lespinasse and Gretchen Sumpf
                1/390 ................ de Lespinasse
                                       Louise S. Sumpf
                1/390 ................ William F. Maloney
                1/390 ................ Hillard R. Giffen
                1/390 ................ Martha Helm Craig
                1/390 ................ Mary Helen Mason
                1/390 ................ William Helm, Trustee
                1/390 ................ Robert Sumpf
                TOTAL: 1/2 INTEREST
                

'The undivided 3/26 interest shown hereinabove to be vested in C. E. Marsh II, Trustee, was conveyed by J. V. Terrill to the said C. E. Marsh on February 8, 1957 effective as of 7:00 o'clock A.M. January 1, 1957 and the defendant J. V. Terrill was the record title owner of said interest at all times from January 1, 1953 to said effective date and C. E. Marsh II, Trustee, has been the record title owner of said interest since that time.

'The undivided 1/195 interest shown hereinabove to be vested in the Sunac Petroleum Corporation, formerly Stekoll Petroleum Corporation, was acquired by deed from Beaver Lodge Oil Corporation, formerly Beaver Lodge Corporation, dated May 15, 1959, and was affective as of May 1, 1959. The Beaver Lodge Oil Corporation was the record title owner of said interest from January 1, 1953 to May 1, 1959 and the Sunac Petroleum Corporation, formerly Stekoll Petroleum Corporation, has been the record title owner of said interest from May 1, 1959 to the time of the filing of this action and the lis...

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12 cases
  • Harvey E. Yates Co. v. Powell, 95-2214
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