Meyering v. Petroleum Holdings
| Decision Date | 19 May 1949 |
| Docket Number | 28499. |
| Citation | 86 N.E.2d 78,227 Ind. 313 |
| Parties | MEYERING v. PETROLEUM HOLDINGS, Inc., et al. |
| Court | Indiana Supreme Court |
Appeal from Pike Circuit Court; Lester Nixon Judge.
Ortmeyer Bamberger, Ortmeyer & Foreman, Evansville, Gray & Waddle, Petersburg, for appellant.
A. K. Swann, Evansville, Dillin & Dillin, Petersburg, for appellees.
Appellant, in the first sentence of 'Argument' in his brief, says, 'This appeal raises the single question as to whether or not the trial court erred in appointing a receiver in this cause without notice to the defendants, including the appellant.'
The appellant, Lawrence V. Meyering, and the appellees, Higgins, Remien and Camfield, are the owners of a half interest in four certain oil and gas leases, covering real estate in Pike County, Indiana. These parties are all residents of the State of Michigan and their interests are alike, except as to the proportion held by each, and they will be referred to hereafter in this opinion as the Michigan group. They have no agents in Indiana upon whom notice or process may be served. The appellee, Petroleum Holdings, Inc., is an Indiana corporation, with its principal office in Evansville, Indiana, and owns the other half interest in said leases. The appellees, McDonald, McDonald and Eads, are engaged in the business of purchasing oil from oil producers and the appellee, Farm Bureau Oil Company, Inc., is in the same business. The McDonald-Eads group and the Farm Bureau Oil Company, Inc., will be referred to as oil purchasers. They have purchased oil and gas taken from the ground covered by said leases.
The complaint in this case was filed by the appellee, Petroleum Holdings, Inc., against the appellant and the other persons constituting the Michigan group and the persons constituting the oil purchasers, who were made parties because they held money distributable to the persons constituting the Michigan group for oil and gas produced in the operation of said leases. The purpose of the action was to collect from the Michigan group $9,220.57 alleged to be due plaintiff from them as their share of the cost and expense of operating said leases, and to enforce a contractual lien upon the interests of the Michigan group in and under the four oil and gas leases above referred to, including the money belonging to them in the hands of the oil purchasers alleged to be $3,380.35. A receiver was asked to take control of the interests of the Michigan group in and under said leases to prevent loss and waste of the property to which plaintiff's lien had attached.
The complaint was filed on November 8, 1947. At the same time affidavit of non-residence of the defendants constituting the Michigan group was filed and publication of notice to said non-resident defendants was ordered. On November 9, the court made an entry, reciting that the first publication of notice to the non-resident defendants had been made and that summons for the resident defendants had been issued. This entry then shows that plaintiff's application for a receiver was submitted upon the verified complaint and that the court found that a receiver should be appointed to take over the interest in said leases of the defendants constituting the Michigan group, and a receiver was appointed to take charge of same during the pendency of the action to preserve such leasehold estates and to preserve the interests therein of the defendants constituting the Michigan group upon which plaintiff held a lien. A receiver's bond was fixed and given and the receiver took oath and qualified.
The complaint is the only evidence before us and we may look to it alone for the facts upon which to decide the case. From it we have gathered all the facts stated in this opinion.
Appellant and the Michigan group are the owners of four described oil and gas leases, one of which is known as the Hunter lease, and another of which is known as the Alice Stewart lease. The Michigan group acquired their several interests in said leases by assignment from appellee Petroleum Holdings, Inc., and at or about the time of such assignment Petroleum Holdings, Inc., and each of the members of the Michigan group entered into a written contract governing the manner in which said leases should be developed and operated. By this written contract it was provided that all costs and expense in connection with the drilling, equipment and operating of said leasehold properties should be paid by the parties in proportion to their respective interests. The duty of operating said properties was delegated to Petroleum Holdings, Inc., subject to a provision that the operator before incurring any single item of expenditure in excess of $1,000, should obtain the consent and approval of the other parties. It was provided that the operator should pay and discharge all of the costs and expenses incurred in the development of the leasehold estates and charge the other parties their respective proportionate shares thereof, and the operator was, by the terms of said contract, given a lien upon the interest in said leases of each of said other parties, and upon the oil and gas produced therefrom, to secure the payment to the operating party of all amounts becoming due to him and that such lien should be subject to foreclosure in the event of default. Petroleum Holdings, Inc., was also given the privilege of requiring the other parties to advance their shares of development and operating costs upon estimates submitted.
Petroleum Holdings, Inc., as the operating party under said contract, drilled and completed four producing wells and has two additional wells in process of drilling and has rendered monthly statements to the Michigan group of the costs and expenses incurred in such drilling and operation but the Michigan group have failed to pay any part of their share of the costs of the drilling and operation since January 22, 1948, and there was owing from the members of the Michigan group to Petroleum Holdings, Inc., the operator, $9,220.57, as of October 31, 1948. The Michigan group have both verbally and in writing promised to pay their proportionate part of the cost of the development and operation of said leases but have wholly failed to do so, and the Petroleum Holdings, Inc., plaintiff in the case, is unwilling to continue to advance the entire cost of development and operation of said leasehold estates without reimbursement from the Michigan group.
The Hunter lease, by its terms, will expire and be forfeited unless the drilling of a well thereon is commenced on or before November 15, 1948, just one week after the date of the commencement of this action. This fact was called to the attention of the Michigan group and demand was made upon them for the deposit of their share of the cost of drilling the necessary well on said Hunter lease, but that defendants have wholly ignored such notice and demands and have failed to take any action with respect to said lease, either to authorize plaintiff to commence a well thereon or to notify plaintiff that they will not participate in the expense of drilling said well thereon. There are producing wells upon leases located north and south and west of said Hunter lease, all within a distance of approximately three-eighths of a mile or less from the Hunter lease, and said Hunter lease is valuable and justifies the cost of drilling a test well thereon.
The Alice Stewart lease covers land immediately adjoining a forty acre tract, upon which a producing oil well had been completed within thirty days prior to the filing of the complaint herein. The production of this well is not less than 50 barrels per day and it is located only 330 feet from the north property line of the Alice Stewart lease and by virtue of this fact the oil and gas available through wells drilled upon said Alice Stewart lease is being captured by others and the value of said Alice Stewart leases is being depreciated and plaintiff alleges there is an obligation to lessor created by law to protect the Alice Stewart lease by drilling an offset well thereon within a reasonable time. The Petroleum Holdings, Inc., has called this situation to the attention of the Michigan group and has furnished them with estimates of their pro rata shares of the cost of drilling said offset well but they have not responded.
It is alleged in the complaint that because of the willful and deliberate failure of the Michigan group to comply with the terms of said operating agreement and furnish their proportionate costs of the development and operation of said leasehold estates, including the cost of a test well on the Hunter lease and the drilling of an offset well on the Alice Stewart lease, the interests of all the parties in said leasehold estates, including the plaintiff Petroleum Holdings, Inc., is in danger of being lost, or materially injured or reduced, and that all of said parties are suffering or are in imminent danger of suffering irreparable injury.
It is further alleged in the complaint that notice to the Michigan defendants may be had only by publication for 51 days in a newspaper. It is alleged that an emergency exists for the appointment of a receiver, for the interest of said Michigan defendants, without notice for the reason that the Hunter lease will expire by its terms before notice or intention to apply for a receiver could be given to said defendants by publication, and that it would be to the best interest of all concerned that a decision be reached as to the drilling of an offset well on the Alice Stewart lease before notice can be given to the defendants who constitute the Michigan group.
The prayer of the complaint is for judgment against the individual members of the Michigan group for the sums which the plaintiff has...
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