Magnolia Petroleum Co. v. Ouart

• Decision Date: 08 April 1947
• Docket Number: Case Number: 32002
• Citation: 1947 OK 117,200 Okla. 258,192 P.2d 698
• Parties: MAGNOLIA PETROLEUM CO. v. OUART
• Court: Oklahoma Supreme Court

1947 OK 117

192 P.2d 698

200 Okla. 258

MAGNOLIA PETROLEUM CO. v. OUART

Case Number: 32002

Supreme Court of Oklahoma

Decided: April 8, 1947

Syllabus

¶0 1. ESTOPPEL - Party estopped to maintain inconsistent positions in same action or in separate actions.

A party is estopped to maintain inconsistent positions based upon opposite and irreconcilable claims of right, not only in the same action, but also in separate actions involving the same parties and questions.

2. APPEAL AND ERROR - Appeal dismissed as to defendant in error who has died and cause of action not revived.

Where it is made to appear that one of defendants in error departed this life after appeal was perfected, and that more than one year has elapsed since the date of death without the action having revived, the appeal will be dismissed as to the deceased party.

Appeal from District Court, Pottawatomie County; Clyde G. Pitman, Judge.

Action by C.J. Ouart against Magnolia Petroleum Company, and action by the Magnolia Petroleum Company against C. J. Ouart et al. After hearing all the evidence, the court consolidated the two cases. From a judgment in the action by the Magnolia Petroleum Company, it appeals. George K. Hunter, husband of Eva F. Hunter, deceased, files a motion to dismiss the appeal as to deceased. Motion to dismiss appeal granted as to Eva F. Hunter, and judgment affirmed as to C. Jano Ouart.

Walace Hawkins, of Dallas, Tex., W.R. Wallace, of Oklahoma City, and I.C. Saunders, of Shawnee, for plaintiff in error.

Crump & Carver, of Wewoka, and Foy Edwards, of Shawnee, for defendants in error C.J. Ouart and Leila Ouart.

Reily, Reily & Spurr, of Shawnee, for defendant in error George K. Hunter.

BAYLESS, J.

¶1 The Magnolia Petroleum Company has appealed from a judgment decreeing C.J. Ouart and Leila Ouart a 7/48ths interest and Eva F. Hunter a 5/95ths interest in the 1/8th royalty in the lease in controversy and a money judgment for their prorata part of the royalty funds impounded by Magnolia at the date of trial. The interests of other persons were determined by the judgment, but we are concerned only with the controversy between Magnolia and the parties named above.

¶2 This controversy involves the interpretation of an oil and gas lease, Producer's Form 88, executed by the Ouarts in 1938. The lease described an entire 40-acre tract of land, although the Ouarts only owned an undivided interest in the west half of this tract, which fact was known to Magnolia. Magnolia took five separate leases covering all or part of the land involved at various times during the year 1937 and the first half of 1938. Three of these leases, including the Ouarts' lease, described the entire 40-acre tract. One of the leases described "all interest in entire 40-acres", and the remaining lease covered a part of the west half of the 40-acre tract. Three of these leases, including the Ouarts' lease, were to "remain in force for a term expiring April 23, 1942, and as long thereafter as oil or gas or either of them is produced from said land by lessee." The leases provided for a delay rental of $1 per acre. The last delay rental, in the sum of $5.84, was paid to the Ouarts in April, 1941. The receipt on the bottom of the rental check provided:

"In full payment of: Rental for twelve months, payable 9 day of May, 1941, on forty acres covered by oil and gas lease recorded in . . ."

¶3 In August, 1941, Magnolia drilled a producing oil well in the southeast ten acres of the 40-acre tract. Shortly thereafter they drilled a well in the northeast quarter of the 40-acre tract which was not a commercial producer. Magnolia accepted division orders signed only by those owning royalty in the southeast ten acres and we assume it paid the 1/8th royalty to such owners for a period of time at least, until payment was suspended, although there is no proof of such payment in the record. On July 8, 1942, C.J. Ouart filed an action in the district court of Pottawatomie county, No. 19062, against Magnolia, alleging the execution of the lease covering the described 40-acre tract, the interest owned by him in the west 20 acres of the tract, that there had been no development on the west 20 since the execution of the lease, that Magnolia had obtained a large producing well in the southeast ten acres, and that same had drained oil from under his property. He asked to have the lease canceled and to recover damages for drainage. Magnolia's answer admitted the execution of the lease and plaintiff's ownership in the west 20 acres; but alleged it had kept plaintiff's lease in full force and effect by making developments thereon, pleading in detail the drilling of the two wells mentioned above, denying the allegation of drainage and that it would be prudent or profitable

"to further drill any other oil or gas well on any portion of said premises at this time, or was so at any time prior thereto; . . . that by reason of the facts . . . stated it has fulfilled all of its duties toward plaintiff under the terms of said contract, which is still in full force and effect."

¶4 Ouart's reply was in the nature of a general denial of all affirmative allegations contained in Magnolia's answer.

¶5 At the commencement of the trial Ouart's attorney stated to the court that he adopted Magnolia's theory that the lease covered the entire 40-acre tract. He orally amended his petition and prayer to show that he was entitled to a portion of the royalty from production from the southeast ten acres. The following discussion then took place:

"The Court: Do you have any stipulation now to make as to what ownership of land the plaintiff has in that 40? Mr. Crump: We haven't stipulated, and they are estopped from showing it, because under their answer they state the lease covers the whole of said 40 acres. I will read the answer. If that is not true, they are out on a limb and they are now estopped. They say the lease covers the entire 40, and we adopt their theory."

¶6 Magnolia did not at that time or any subsequent time offer to surrender or terminate Ouart's lease, but has steadfastly maintained that the lease covering the entire 40-acre tract remained in full force and effect by reason of development and production in the south-east ten acres. On March 29, 1943, the court rendered judgment in favor of Ouart, decreeing him to be the owner of an undivided 7/48ths interest in the oil, gas, and mineral rights under said lease, and decreeing a money judgment for production prior to the date of trial. A motion for new trial was filed but not acted upon. A few weeks later Magnolia filed a separate action, cause No. 19337, in the nature of a stakeholder's suit, alleging the aforesaid production, that payment of the royalty had been suspended because of conflicting claims, and praying the court to determine who should be legally entitled to share in the royalty payments. The answer of the Ouarts alleged they were entitled to 1/8th royalty as provided in the various leases in the proportion that their individual ownership bore to the entire 40 acres covered by the leases. They pleaded the judgment in cause No. 19062 rendered March 29, 1943, and prayed that their interests be determined in accordance with said judgment. Magnolia's reply denied that Ouarts were entitled to receive any royalty since production was not had from their land, stating that the contemporaneous leases, including the Ouarts' lease, were not communitization or unitization leases but were separate, individual leases of individual owners of portions of the 40-acre tract; that both parties had so construed the contract; and that the Ouarts, by their acquiescence with full knowledge of the facts as to production and distribution, were now estopped from claiming any interests in the royalty.

¶7 The Ouarts' lease contained the following provisions:

"To deliver to the credit of the lessor, free of cost in the pipe line to which he may connect his wells, the equal 1/8 part of all oil produced and saved from the leased premises.

"If said lessor owns a less interest in the above described land than the entire and undivided fee simple estate therein, then the royalties and rentals herein provided for shall be paid the said lessor only in the proportion which lessor's interest bears to the whole and undivided fee".

¶8 The parties stipulated as to most of the facts involved. The following is quoted from the stipulation:

"It is further stipulated and agreed that the Magnolia Petroleum Company paid the rental on said oil and gas lease on or before the 9th day of May, 1939, 1940, and 1941, in the amount of $5.84 per annum, a photostatic copy of said Magnolia Company vouchers showing payment of said rentals being attached hereto marked 'Exhibit E-1' and made a part hereof."

¶9 After hearing all the evidence the court, on its own motion, consolidated the two cases. It then rendered judgment, which for practical purposes was the same as the judgment rendered in cause No. 19062, and Magnolia has appealed from the latter judgment.

¶10 Magnolia urges that the Ouarts' lease cannot be construed to be a communitized or unitized lease and that Ouarts are not entitled to proceeds from production from land which they do not own or in which they have no interest. The Ouarts contend that it should be so construed. It is not necessary to pass. upon this question other than to hold that the Ouarts' lease, considering all of the facts and circumstances involved, was ambiguous and therefore subject to construction by the court. We hold that if the Ouarts' lease is kept in force and effect after the expiration of its term, by reason of production on a portion of the described lease in which Ouarts admittedly own no title, then it follows as a matter of law that the lessee is obligated to pay royalty to the Ouarts on a prorata basis. We do not hold, or even intimate, that this is the proper construction of the lease, but considering the ambiguity, Magnolia could so interpret the lease. The Ouarts...