Meeker v. Ambassador Oil Co.
| Decision Date | 10 September 1962 |
| Docket Number | 6823.,No. 6822,6822 |
| Citation | 308 F.2d 875 |
| Parties | Charles A. MEEKER and his wife, Sybil Meeker, Appellants, v. AMBASSADOR OIL CO., Inc., Appellee. W. G. HAUN, Appellant, v. Charles A. MEEKER, Sybil Meeker, Domestic Oil Corporation, a corp., American Drilling Company, Inc., a corp., Richard H. Meeker, Louis T. Heath, Norman Gluss, Glenn A. Smalley, Michael O'Rourke, Elfrida Von Nardroff, Edward E. Brook, Harry E. Collins, T. M. Mulherin, Olive Mulherin, Joseph P. Mulherin, Walton Dismukes, H. K. Kugel, Tom Kugel, Mary Jane Kugel, C. T. Fitzgerald, H. O. Hollingsworth, E. M. Zacharias, Clara M. Zacharias, E. Roughton, Pat Roughton, Frans Schwable, Beverly Schwable, Jack R. Lloyd, James B. Bell, B. D. Ratcliff, C. W. Andrews, The Coates-Southwest Title Company, now the Southwest Title and Trust Co., a corp., and Champlin Oil and Refining Company, a corp., Appellees. |
| Court | U.S. Court of Appeals — Tenth Circuit |
COPYRIGHT MATERIAL OMITTED
O. R. Adams, Jr., Albuquerque, N. M., for Charles A. Meeker.
Laverne Morin, Wichita, Kan. (T. Murray Robinson, Wallace E. Robertson, C. E. Barnes, J. M. O'Loughlin, J. Thornton Wright, Jr., and J. Stanley Gill, Oklahoma City, Okl., George B. Collins, Oliver H. Hughes, Robert Martin, Kenneth W. Pringle, Jr., William F. Schell, Thomas M. Burns and Robert M. Collins, Wichita, Kan., with him on the brief), for W. G. Haun.
C. Harold Thweatt, Oklahoma City, Okl. (Crowe, Boxley, Dunlevy, Swinford & Johnson, Oklahoma City, Okl., with him on the brief), for Ambassador Oil Corp.
Before MURRAH, Chief Judge, and PHILLIPS and SETH, Circuit Judges.
These are appeals from a single judgment in two cases consolidated for trial in the court below and for the hearing of the appeals in this court.
In No. 6822, Charles A. Meeker and his wife, Sybil Meeker, brought an action against Ambassador Oil Corporation, Hettie E. Lowder, Merle Smith and W. G. Haun. In their second amended complaint they set up two claims. The first claim sought an adjudication that plaintiffs were the owners of an undivided overriding royalty interest of 1/16 of 7/8 in the oil and gas produced under an oil and gas lease, dated June 3, 1958, running from Lowder to Herman L. Hurst for a primary term of 30 days, covering the East ½ of the Northwest ¼ and the West ½ of the Northeast ¼ of Section 23, Township 16 North, Range 4 West, Logan County, Oklahoma, containing 160 acres (hereinafter called the 30-day lease); that none of the defendants in such action have any interest in the oil and gas produced or to be produced from such land, except the 1/8 royalty interest reserved by Lowder under such lease; and that Ambassador account for the Meekers' share of any moneys received by it from production from such land. In their second claim they sought damages against Smith, Lowder and the Ambassador Oil Company for alleged slander of their asserted title to such overriding royalty interest.
In No. 6823, Haun brought an action against the Meekers, Domestic Oil Corporation, American Drilling Company, Inc., Edward E. Brook and others, seeking a judgment decreeing him to be entitled to an overriding royalty interest in 1/16 of 7/8 of the oil, gas and other minerals produced from the 160-acre tract and for an accounting for his share of the oil and gas produced from such land by the defendants.
Before undertaking to state the conflicting claims asserted by the parties in such actions, we shall undertake to state the basic facts, which are not in dispute.
Lowder, at all times herein material, was the owner of the above described 160-acre tract. On June 3, 1953, she executed and delivered an oil and gas lease, running to H. S. Smith, for a primary term of 5 years, covering such 160 acres, hereinafter called the 5-year lease. It was duly recorded on July 9, 1954. It remained in effect during the primary term by the payment of delay rentals. On December 30, 1955, Smith assigned it to Haun. On December 30, 1957, Haun assigned it to Hurst, reserving an overriding royalty of "1/16 of 7/8ths of all oil, gas and casinghead gas produced, saved and marketed from" such 160 acres "under the provisions of" such "lease, or any extension or renewal thereof." The assignment provided that such overriding royalty should be free and clear of any cost and expense of development and operation, "excepting taxes applicable to said interest and the production therefrom."
At the time of the assignment of the 5-year lease to Hurst, he also obtained a farmout from the Continental Oil Company of an adjoining 160-acre lease, called the Robinson lease, and purchased two adjacent leases known as the Austin and Telford leases, to form a development block of 640 acres.
The Meekers and their associates drilled a well on the Robinson lease. It was commenced May 8, 1958, and completed July 9, 1958, as a producing well.
On April 30, 1958, Lowder executed and delivered to Hurst the 30-day lease, in which she reserved a 1/8 royalty. It was duly recorded June 12, 1958. The lease provided it should remain in force for a term of 30 days from June 3, 1958, and for so long thereafter "as oil or gas or either of them is produced from said land by lessee," and if no well was commenced on the land before July 3, 1958, the lease would terminate.
By an assignment dated May 15, 1958, and duly recorded June 12, 1958, Hurst transferred to the Meekers an overriding royalty interest of 1/32 of 7/8 and 33/128 of the working interest in the 30-day lease. By the same instrument Hurst transferred to 16 other named assignees, apparently nominees of the Meekers, 31/128 of the working interest in the 30-day lease. By an assignment dated October 2, 1958, and duly recorded October 3, 1958, Hurst transferred to the Meekers an overriding royalty interest of 1/32 of 7/8 in the 30-day lease. By an assignment dated June 3, 1958, and duly recorded June 26, 1958, Hurst conveyed to Haun a 1/16 of 7/8 overriding royalty interest in the 30-day lease.
Edward E. Brook was the President of the Domestic Oil Corporation and American Drilling Company, Inc. He was the sole stockholder in American and owned about 75 per cent of the stock in Domestic. It was stipulated at the pretrial conference that after Hurst acquired the 30-day lease, the Meekers and Brook agreed that each would own ½ of 15/16 of the 7/8 working interest in such lease and that thereafter Hurst conveyed to Edward E. Brook and the American Drilling Co., Inc., ½ of 15/16 of the 7/8 working interest and conveyed to the Meekers ½ of 15/16 of the 7/8 working interest. After the two last-mentioned transfers from Hurst were made, the Meekers, Brook and the American Drilling Company transferred to other parties fractional parts in their working interest in the 30-day lease. It was further stipulated at the pretrial conference held on September 7, 1960, that the Meekers then owned 27/128 × 15/16 of the 7/8 working interest in the 30-day lease and 27/128 × 29/32 of the 7/8 working interest in an oil and gas lease dated July 22, 1958, duly recorded August 14, 1958, running from Lowder to Ambassador, covering the 160-acre tract, and hereinafter called the Ambassador lease; that American then owned 3/16 × 15/16 of the 7/8 working interest in the 30-day lease and 93/512 × 29/32 of the 7/8 working interest in the Ambassador lease, and that Brook then owned 3/16 × 15/16 of the 7/8 working interest in the 30-day lease and 97/512 × 29/32 of the 7/8 working interest in the Ambassador lease. The remainder of the working interest was then owned by other persons by virtue of assignments from the Meekers, or American, or Brook.
On March 28, 1958, a contract was entered into between Hurst, Brook, as President of American, and the Meekers for the development of the land covered by the 30-day lease. A title opinion was furnished by Hurst to Meeker and Brook, which disclosed the overriding royalty interest of Haun. It was the intention of the Meekers to develop the property under the 30-day lease thereafter to be acquired by Hurst.
On July 1, 1958, Hurst staked out a 10-acre location on the 30-day lease. On the same day, the Beck Construction Company was ordered to do certain work preliminary to drilling on the lease. Beck started work on the afternoon of July 1 and continued on July 2. It built a road, a circulating pit, and leveled the ground for the drilling rig at the 10-acre location. After the work was started on the 10-acre location, Hurst was advised that because the sand was only nine feet thick, a well on the 10-acre location would not be profitable. He then staked out a 20-acre location on the 30-day lease and Beck broke ground on the second location. All of this occurred on July 1 and July 2. On July 2, 1958, Hurst forwarded to the Oklahoma Corporation Commission a written notification of intention to drill on the 10-acre location and another notice of intention to drill on the 20-acre location. While the preliminary work was being carried on and on July 2, Sunray Mid-Continent Oil Company, which owned an oil and gas lease directly offsetting the 30-day lease to the south and east, called Hurst and objected to Hurst proceeding with the drilling of a well at either of such locations and requested him not to drill until a spacing order had been obtained from the Oklahoma Corporation Commission covering the area in which Sunray's lease and the 30-day lease were located.
It is fairly inferable from the testimony of Hurst that when Sunray objected on July 2, 1958, to the drilling of a well on the 10-acre and 20-acre locations that it advised Hurst it was going to make an application for the establishment of 40-acre drilling and spacing units. Hurst testified that he and his associates "wanted to go along with Sunray, because they were neighbors and would help develop this field."
On July 16, 1958, Sunray filed an application with the Oklahoma Corporation Commission for an order establishing 40-acre drilling and...
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