North Dakota Mineral Interests, Inc. v. Berger

• Decision Date: 02 December 1993
• Docket Number: No. 920371,920371
• Citation: 509 N.W.2d 251
• Parties: 128 Oil & Gas Rep. 74 NORTH DAKOTA MINERAL INTERESTS, INC., Plaintiff and Appellant, v. Kenny BERGER, Defendant and Appellee, and Saul Azar, Intervenor Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 251

509 N.W.2d 251

128 Oil & Gas Rep. 74

NORTH DAKOTA MINERAL INTERESTS, INC., Plaintiff and Appellant, v. Kenny BERGER, Defendant and Appellee, and Saul Azar, Intervenor Defendant and Appellee.

Civ. No. 920371.

Supreme Court of North Dakota.

Dec. 2, 1993.

Michael J. Maus (argued), of Howe, Hardy, Galloway & Maus, PC, Dickinson, for plaintiff and appellant.

Rauleigh D. Robinson (argued), Bismarck, for defendant and appellee Kenny Berger. Appearance by defendant and appellee Kenny Berger.

Ross H. Espeseth (argued), Bismarck, for intervenor defendant and appellee Saul Azar.

MESCHKE, Justice.

This is a dispute over the proceeds from the sale of a Smaco pumping unit, a cement pad, a horizontal treater, and a fiberglass tank removed from the Andrew Heiser # 1 oil well site in Dunn County. North Dakota Mineral Interests, Inc. [Mineral], appeals from a judgment awarding the first $7,960.75 in sale proceeds to Kenny Berger to pay his lien and dividing the remaining proceeds equally between Mineral and Saul Azar. We affirm in part, reverse in part, and remand with directions.

During the 1980s, Great Plains Petroleum, Inc. [Petroleum], whose president and sole shareholder was Thomas Haugen, had a substantial interest in, and operated, the Heiser well. Petroleum filed for bankruptcy in 1986. In July 1989, Petroleum's bankruptcy trustee conveyed Petroleum's interest in the Heiser well and other wells to Great Dakota Oil Company [Dakota], whose principal stockholder and president was Saul Azar. The "Conveyance, Assignment and Bill of Sale" also granted Dakota 100 percent of Petroleum's interest "in all personal property ... now or hereafter located on or under any of the oil, gas and disposal properties including ... all ... replacements thereof and to include, without limiting the language of this paragraph, the personal property specifically described in Exhibit 'B' attached hereto...." Exhibit B described the personal property that was then located on the Heiser well as follows:

4--400 bbl. steel internally coated tanks;

1--400 bbl. fiberglass tank;

1--6 X 15 horizontal treater;

1--M912D pumping unit w/100 hp. electric motor--9000 feet of 2 3/8 tbg.--9000 feet of sucker rods;

1--Sucker rod pump; and

Miscellaneous valves, fittings.

According to the parties, the "M912D pumping unit" refers to a Lufkin pumping unit. In August 1989, Dakota hired Thomas A. Haugen Operating Company [Operating] to operate the wells, including the Heiser. Later that month, Operating purchased a fiberglass tank from Mor-Tech-Fab for use on the Heiser well. Operating received an invoice for the purchase of the tank.

In July 1990, Operating agreed with Sun Well Service, Inc. [Sun] that Sun remove the Lufkin pumping unit from the Heiser well and replace it with the smaller Smaco pumping unit in dispute here. According to Haugen, the Lufkin unit "was causing mechanical problems" at the Heiser well, and no one was reimbursing him for the expenses on the well. Haugen testified that replacing the Lufkin unit with the smaller Smaco unit was necessary to put "the well ... back in operation." According to Haugen, because of a lack of operating capital from the mineral interest owners, he allowed Sun to keep the more expensive Lufkin unit in consideration for its services in exchanging the pumps. Sun gave Operating a bill of sale for the Smaco pumping unit.

In July 1991, Azar, on behalf of Dakota, contacted Berger, who runs an oil field service and trucking business, and instructed him to disassemble the equipment on the Heiser well and to haul the equipment to Berger's place of business in Dickinson. According to Berger, after he arrived at the well, Andrew Heiser, the landowner, appeared and

locked the gate on us. He says they were using that for dumping from other locations. Tom is hauling garbage into that place. This is like a dump yard. He said, "I'd like to have this place cleaned up," ... It was like a garbage dump out there.

Berger told Azar what had happened and that Berger could not do all of this work for the originally agreed price. According to Berger, Azar instructed him to " '[g]et it done to please the guy.' " Berger cleaned up the well site, dismantled the equipment, and took the property disputed in this case to his place of business.

Mineral entered this sour drama on October 25, 1991, when it advanced Operating $47,000 in an attempt to purchase the Signalness oil well. Operating agreed to deliver certain oil field equipment to Mineral if Operating could not give Mineral clear title to the Signalness well. Mineral's president, George Childress, went with Haugen to Berger's yard to view the equipment. Childress did not question why Berger had possession of the equipment, but did contact Sun to confirm that Haugen and Operating had title to the equipment. Childress learned that Sun had given Haugen a bill of sale for the Smaco pumping unit, and Haugen showed Childress a receipt from Mor-Tech-Fab for the tank. Operating was unable to provide clear title to the Signalness well, and on December 16, 1991, Haugen and Operating gave bills of sale to Mineral for the Smaco pumping unit, cement pad, horizontal treater, and fiberglass tank located in Berger's yard.

After receiving those bills of sale, Mineral attempted to take possession of the equipment, but Berger refused to allow Mineral possession because he had not been paid for his work on the Heiser well. Berger claimed a lien on the equipment for the work performed.

In December 1991, Mineral sued Berger to recover the equipment. Berger counterclaimed, asserting a repairman's lien on the equipment. The trial court, however, refused to allow Berger to serve a third-party complaint on Azar. In May 1992, Berger assigned his interest in the repairman's lien to GL Trucking & Rental, Inc. [Trucking]. Mineral moved to join Trucking as an additional defendant, but this was denied by the trial court.

Meanwhile, Dakota filed for bankruptcy. In August 1992, Azar, in his personal capacity, purchased Dakota's interest in the Heiser well and other wells from Dakota's bankruptcy trustee. This "Conveyance, Assignment and Bill of Sale" was virtually identical to the document conveying Petroleum's interest "in all personal property ... now or hereafter located on or under any of the oil, gas and disposal properties ... including ... all ... replacements thereof ..." to Dakota. An attached exhibit described the personal property on the Heiser well in the exact language as the earlier conveyance from Petroleum's bankruptcy trustee, describing the larger Lufkin pumping unit, rather than the smaller Smaco pumping unit. When Azar purchased the Heiser well from Dakota's bankruptcy trustee, none of the equipment was at the well, but instead was located in Berger's yard.

Between the first day and the second day of trial almost one month later, the trial court allowed Azar to intervene over Mineral's objection. Azar asserted that he, rather than Mineral, was the owner of the disputed equipment in Berger's yard because he had purchased it from Dakota's bankruptcy trustee.

The trial court found that Berger, Mineral and Azar each had "weak claims" to the equipment in Berger's yard. Realizing that its "decision is not legally perfect," the court attempted to arrive at a resolution "as equitable and as just as it can be under the circumstances...." The court ruled that Berger had a valid lien on the equipment in the amount of $7,960.75 "for the work he did to secure this property," and ordered that the equipment be sold and that Berger be paid first out of the sale proceeds. The court ordered any remaining proceeds to be divided equally between Azar and Mineral. Mineral appealed.

I

Mineral claims the trial court committed procedural errors. Mineral asserts that the court erred in allowing Azar to intervene after the trial began. Mineral argues that it was prejudiced by this late-hour intervention because it was unprepared to defend against Azar's claim of ownership of the equipment, especially after the trial court had previously refused to allow Berger to serve a third-party complaint against Azar. We reject Mineral's argument.

Although a motion for intervention under NDRCivP 24 must be timely, we have held that, under some circumstances, even a post-judgment motion is not too late. See Quick v. Fischer, 417 N.W.2d 843, 845 (N.D.1988). Assuming Azar was not entitled to intervene as of right, permissive intervention under NDRCivP 24(b) was discretionary with the court because Azar's claim to ownership of the property involved a question of law or fact in common with the main action. 7C C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure: Civil 2d, § 1913 (1986). Although it would have been preferable for the trial court to have allowed Azar's joinder earlier, Mineral, in response to the motion to intervene, did not seek a continuance in order to conduct discovery and to adequately prepare. Azar testified during the first day of trial, and Mineral was aware of Azar's possible interest in the property at an earlier stage. Under these circumstances, the trial court did not abuse its discretion in allowing Azar to intervene.

Mineral argues that the trial court erred in allowing Berger to maintain his claim to a lien after Berger assigned his interest to Trucking. Mineral claims that because Trucking, and not Berger, had become the real party in interest, the trial court "should not have allowed the case to continue." This argument is meritless.

After learning that Berger had assigned his lien to Trucking, Mineral moved to join Trucking as a defendant in the action under NDRCivP 19, 20 and 21. This lien assignment occurred about five months after the action began. Although NDRCivP 17, requiring that an action be brought in the name of the real party in interest, controls when an interest has been transferred before the suit is begun, NDRCivP 25(c) controls when an...