Moore Oil v. Snakard

• Decision Date: 05 February 1957
• Docket Number: Civ. No. 7131.
• Citation: 150 F. Supp. 250
• Parties: MOORE OIL, Inc., Plaintiff, v. W. F. SNAKARD, Defendant.
• Court: U.S. District Court — Western District of Oklahoma

150 F. Supp. 250

MOORE OIL, Inc., Plaintiff, v. W. F. SNAKARD, Defendant.

Civ. No. 7131.

United States District Court W. D. Oklahoma, Civil Division.

February 5, 1957.

COPYRIGHT MATERIAL OMITTED

Brown & Verity, Oklahoma City, Okl., for plaintiff.

P. D. Erwin, Chandler, Okl., Dudley, Duvall & Dudley, Oklahoma City, Okl., for defendant.

RIZLEY, District Judge.

This is an action by the owner of four oil and gas leases covering eighty-five undivided mineral acres in the NW ¼, Sect. 2, Township 14 North, Range 2, East, I.M., in Lincoln County, Oklahoma, to quiet title against the defendant, who is the record owner of prior oil and gas leases covering the entire mineral interest in the same quarter section of land. Plaintiff seeks to obtain cancellation of defendant's leases as a cloud upon its title and enjoin defendant from asserting any right, title or interest in and to the second Wilcox sand horizon underlying the disputed leasehold. Jurisdiction is founded upon diversity of citizenship and requisite amount in controversy.

Plaintiff contends that defendant's leases have all expired by virtue of his failure to commence operations for the drilling of a well on or before July 1, 1955, as expressly required by his leases; or, in the alternative, if defendant timely commenced his operations, they were not carried out to commercial production with the diligence required to extend the leases beyond July 1, 1955. The plaintiff also asserts that, by assignment of a pooling order of the Corporation Commission of Oklahoma from one Hoyt B. Moore, it holds the exclusive right and duty to develop the second Wilcox sand horizon underlying the disputed leasehold.

Defendant denies that jurisdiction exists over the subject matter of this action, asserting that plaintiff's failure to allege its possession of the disputed leasehold renders the complaint fatally defective. It is also contended that the requisite jurisdictional amount is not involved in this dispute. To the merits of the complaint, defendant answers that he is the owner of valid and subsisting oil and gas leases covering the entire mineral interest in the land in question and has been in possession, continuously engaged in drilling operations since July 1, 1955; that the plaintiff's lessors had executed prior leases of their undivided interests to the defendant, which are of record and paramount to plaintiff's leases. The defendant denies that the proceedings before the Corporation Commission, or its order, purporting to grant plaintiff's assignor the exclusive right to develop the second Wilcox sand horizon is binding on him, alleging that such proceedings and order are void for want of statutory or actual notice to him, and for want of jurisdiction in the Commission to determine the rights of lessees claiming leases upon the same tract of land, which jurisdiction is said to be vested in the District Courts of the State of Oklahoma.

Defendant's contention that this Court is without jurisdiction over the subject matter of the action is not well founded. The case of Lancaster v. Kathleen Oil Company, 241 U.S. 551, 36 S.Ct. 711, 60 L.Ed. 1161, involved an action by an oil and gas lessee brought to obtain the same type of relief sought by this plaintiff. The Supreme Court held that where the legal remedy is inadequate, or such legal remedy is unavailable, a court of equity would take jurisdiction to determine all the issues between the parties, including the right of possession. The authorities cited by defendant are clear in showing that the legal remedy of ejectment is not available to this plaintiff; it is not suggested that any other adequate remedy at law exists, and the Court finds that there is in fact none available.

The Oklahoma Supreme Court has sustained the right of a lessee, not in possession, to sue for the purpose of canceling an adverse claimant's lease executed by the same lessor under whom plaintiff claimed. In Gypsy Oil Co. v. Marsh, 121 Okl. 135, 248 P. 339, 48 A.L.R. 876, the court canceled the lease of the adverse claimant, put the plaintiff in possession and enjoined the defendant from claiming any interest in the disputed leasehold. The Court pointed out that the rule announced in Kolachny v. Galbreath, 26 Okl. 772, 110 P. 902, 38 L.R.A.,N.S., 451, did not apply to an action seeking determination of conflicting rights of lessees claiming the same interests from the same lessor. And see Pine v. Webster, 118 Okl. 12, 246 P. 429; Franklin v. Margay Oil Corporation, 194 Okl. 519, 153 P.2d 486.

The case of Twist v. Prairie Oil & Gas Company, 274 U.S. 684, 47 S.Ct. 755, 71 L.Ed. 1297, is not applicable to this case, except insofar as it recognizes that there are instances in which quiet title actions may be maintained by one not in possession, and that such actions are within the equity power—or jurisdiction of the Federal Courts.

Defendant's contention that the action does not involve the requisite jurisdictional amount of $3,000 arises from the fact that the proceedings before the Corporation Commission, in June, 1955, which plaintiff pleads and relies upon, fixed a value upon the disputed leasehold of $10 an acre. It is suggested that such value is binding upon this Court in determining whether the jurisdictional amount is involved in this action.

This Court is charged with the duty of determining the facts upon which its jurisdiction, or want of it, is grounded. The findings of the Corporation Commission of Oklahoma, or of some other tribunal, cannot foreclose this Court's inquiry into the value of the subject matter of an action before it.

The proof is undisputed that the value of this leasehold, at the time the complaint was filed, was between $50 and $100 per acre. Limiting the amount in controversy to the eighty-five undivided acres claimed by plaintiff under its leases, the dispute involves well over the jurisdictional amount of $3,000. The Court finds, therefore, that jurisdiction exists over this action.

Plaintiff seeks to draw into issue the validity of each of the oil and gas leases, held of record by defendant, covering undivided mineral interests in the subject land. However, as plaintiff's title to the disputed mineral leasehold rests upon only four leases covering an aggregate of eighty-five mineral acres in the disputed Thomas lease, this Court must limit its determination to whether those leases held by plaintiff are valid and in force. This is true for the reason that the plaintiff must recover, if at all, on the strength of his own title. Pauline Oil & Gas Co. v. Fischer, 191 Okl. 346, 130 P.2d 305; Moore v. Barker, 186 Okl. 312, 97 P.2d 776. The owners of undivided mineral interest in the Thomas leasehold who have not executed leases to plaintiff are not parties to this action; they are neither necessary nor indispensable to the dispute between this plaintiff and defendant, and neither the validity of leases executed by them to the defendant nor the rights existing between them and defendant are issues before this Court. Skelly Oil Company v. Wickham, 10 Cir., 1953, 202 F.2d 442.

The force and effect of plaintiff's leases must in final analysis depend upon whether defendant's prior recorded leases of the same interests have expired or terminated. Determination of this question requires a construction of defendant's leases to ascertain his rights and duties thereunder and ascertainment of the facts, which bear upon his performance or breach of such duties, from the evidence which is in dispute.

The parties are in disagreement as to the proper construction of the four leases in dispute. Two forms of leases are involved, one form stipulating no definite term, the other providing for a term of one year; each of the leases contain an unusual habendum clause and an express drilling obligation. The "unless" provision of the leases are stricken out. It is not contended that the instruments in dispute do not constitute leases or that they are ambiguous.

The defendant's leases from David Thomas and Rex R. Moore, are identical, both are dated October 16, 1954, and contain the following provisions:

"It is agreed that this lease shall remain in full force and effect for a term of ____ years from this date, and as long thereafter as oil or gas, or either of them, is produced from said land by the lessee, or the premises are being developed or operated.

* * * * * *

"If operations for the drilling of a well be not commenced on said land on or before July 1st, 1955, this lease shall terminate as to both parties,

* * * * * *

"If the lessee shall commence operations to drill a well within the term of this lease or any extension thereof, the lessee shall have the right to drill such well to completion with reasonable diligence and dispatch, and if oil or gas, or either of them, be found in paying quantities, this lease shall continue and be in force with like effect as if such well had been completed within the term of years herein first mentioned."

The defendant's leases from Bleeker Croom and Irene Croom, his wife, and from Hoyt B. Moore and Ethel Moore, his wife, are each identical, each is dated July 1, 1954, and both leases contain the following provisions:

"It is agreed that this lease shall remain in full force for a term of one year from this date, and as long thereafter as oil or gas, or either of them, is produced from said land by the lessee, or the premises are being developed or operated.

* * * * * *

"If the lessee shall commence operations to drill a well within the term of this lease or any extension thereof, the lessee shall have the right to drill such well to completion with reasonable diligence and dispatch, and if oil or gas, or either of them, be found in paying quantities, this lease shall continue and be in force with the like effect as if such well had been completed within the term of years herein first mentioned.

* * * * * *

"If no well be commenced on the above described property on or before July

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