Pacific-Wyoming Oil Co. v. Carter Oil Co.

• Decision Date: 19 August 1924
• Docket Number: 1107
• Citation: 228 P. 284,31 Wyo. 452
• Parties: PACIFIC-WYOMING OIL CO. v. CARTER OIL CO
• Court: Wyoming Supreme Court

228 P. 284

31 Wyo. 452

PACIFIC-WYOMING OIL CO. v. CARTER OIL CO

No. 1107

Supreme Court of Wyoming

August 19, 1924

APPEAL from District Court, Natrona County, CYRUS O. BROWN, Judge.

On petition for rehearing. See also 31 Wyo. 314, 226 P. 193.

Petition for rehearing denied.

F Chatterton, J. B. Roote and F. A. Williams, for plaintiffs and appellants.

James A. Veasey, Peter Q. Nyce, and Hagens & Murane, for defendant and respondent.

BLUME Justice. POTTER, Ch. J., and KIMBALL, J., concur.

OPINION

BLUME, Justice.

We held in the original opinion that, as disclosed upon the face of the pleadings herein, "the condition upon which the payment demanded in the petition depends, has been fairly nay, even literally and strictly fulfilled;" and that the possibility that a future act of Congress, not likely to be enacted, which might change the present law giving lessees under the act of Congress of February 25, 1920 the preference right of renewal, is so remote, and hence of such trifling significance, that it should not be taken into consideration in determining whether such condition has been so fulfilled.

Counsel for respondent have filed a petition for rehearing and a vigorous brief in support thereof. We have given them a most painstaking consideration, but while this case, upon the face of the pleadings, may be close to the border line, so that it is hard to determine whether the condition mentioned should be considered as strictly performed or whether the contingency contemplated in the contract involved herein has happened, we have not been able to come to a different conclusion than that arrived at originally.

We shall not attempt to go into the details of the arguments now advanced by counsel but shall as briefly as possible consider some of the main points. Before proceeding, we might mention that the contention that our holding as to performance of the contract is upon grounds not previously argued, does not appear to be well taken, since the appellant specifically argued that the opportunity given under the law gave "ample time within which to extract the oil and gas, in fact a much longer period of time than would be 'a period as long as oil and gas shall be found in paying quantities'" and the main argument of respondent was directed to showing that the conditions of the contract had not been performed.

1. Counsel claim that we have overlooked the following provisions of the contract of March 12, 1919, which are additional to those mentioned in the original opinion:

"Should the second party (respondent) be vested with the right to develop and operate said lands for oil and gas mining purposes as aforesaid, then to the extent of the lands covered thereby and upon the vesting of such right, the second party shall pay the first party a royalty of 5 per cent from all oil produced from said lands in addition to the 2 1/2 per cent royalty payable to the particular homesteader in addition to the royalty payable to the United States--* * * Provided, further, that if such congressional legislation shall vest the particular homesteader or the second party with a mineral patent covering part of the lands described above which relieves the second party from any royalty payable to the United States, then as to operations conducted on that land, the only royalties payable by the second party shall be 2 1/2 per cent payable to the homesteaders and 5 per cent payable to the first parties. In the event the second party shall not elect to acquire the oil and gas rights under any contract with said homesteader and in the event Congress shall confer said rights on such homesteader, then upon demand of first parties second party shall assign that particular contract with the homesteader to first parties."

It is also claimed that we have overlooked certain provisions of the contracts with the homesteaders as follows: Section 3 provides that in the event that the homesteaders are vested with title to the minerals in the land, as well as the surface right, they will execute to respondent, upon demand by respondent, a lease upon the following terms: (1) to run for a term of 10 years and as long thereafter as oil or gas shall be produced therefrom in paying quantities; (2) to reserve a royalty of one-eighth of the oil produced, or $ 250.00 for each gas well; (3) if producing oil or gas wells are on adjoining lands, offset wells shall be drilled on the lands in question; if no offset wells are necessary, lessee shall drill a well on said land within two years.

Section 4 of said contracts with the homesteaders provides that if the latter obtain from the United States a permit, lease, or other contract or instrument, granting them or either of them the right to develop and operate said lands or a part thereof for oil and gas mining purposes, then they will, upon demand by respondent, make application to the proper governmental authority for such permit, lease or contract to be taken for the exclusive use of respondent, subject to royalties; that such permit, lease or other contract shall be immediately assigned to respondent, subject to the royalties due the United States and subject to 7 1/2 per cent royalty to the homesteaders; if there is no provision in the law for the assignment provided for, then the homesteader shall hold the title created thereby for the exclusive use of respondent subject to said royalties. All expenses to obtain the permit or lease are to be paid, and all development work required by the permit or lease must be done, by respondent.

It will be noticed that the provisions of the contract of March 12, 1919, and of the contracts with the homesteaders seem to be inconsistent as to the royalty payable to the latter, but no point is made of that either in the original arguments of the parties or in the brief of respondent for rehearing, and we express no opinion thereon, but shall assume that proper explanation therefor exists. Nor is it improper here to say, in as much as it is urged that we erred in overlooking the provisions in the contracts with the homesteaders above mentioned, that counsel for respondent in their original brief, as well as on oral argument, strenuously maintained "that the homesteaders' contracts have no relation to this case." The position now taken appears to be opposed to that taken originally, for the difference found to exist in the several provisions of the homesteaders' contracts is now said to be of the "very essence of the case." We may therefore, be pardoned, if we cannot fully grasp, or see the soundness of the argument now advanced by counsel. The gist of this argument, if we understand counsel, is that inasmuch as the contract with the homesteaders provides for two different contingencies--one contingency mentioned in section 3 thereof, which contemplates that the homesteaders might become the absolute owners of the oil and gas in the land, and the other contingency mentioned in section 4, which contemplates that the homesteaders will receive only a right to an oil and gas permit or lease-- and inasmuch as section 3, and that only, provides for a lease of "ten years and as long as oil and gas shall be found in paying quantities," that, therefore, the provision for the payment of the extra bonus "when the second party is actually vested with the right to develop and operate said lands for oil and gas mining purposes for a period as long as oil and gas shall be found in paying quantities, or when the second party under appropriate legislation has an opportunity to secure such right," applies only to the contingency contemplated in section 3 above mentioned of the contracts with the homesteaders. We do not, however, from the facts as they now appear before us, see the necessary connection. And the provision in the contract of March 12, 1919, above quoted, that if the homesteader is vested with a mineral patent, the royalty payable is limited to 2 1/2 per cent to the homesteader and 5 per cent to appellant, does not, in the present state of the record, strike us, as it does counsel for respondent, as shedding much light on the subject. The "opportunity" of respondent to acquire a right to develop and operate the land for oil and gas mining purposes for as long as that shall be found in such land in paying quantities, surely does not, in the absence of a contract or understanding to that effect, necessarily mean that such opportunity must be derived from a definite source or from one of two sources, when two sources are referred to in the contract.

It is argued that the right for which respondent contracted is a peculiar right and that we have failed to grasp the nature thereof. The peculiarities have not been made clear to us. If counsel mean that a right to develop and operate land for oil and gas mining purposes "for as long as oil and gas is found in paying quantities" had a technical meaning, in contemplation of which the contract herein was executed, then such fact does not appear in the record before us, and hence we cannot consider that point. Among other things, in this connection, counsel say:

"Clearly the opportunity which conditioned respondent's obligation was an opportunity that would vest in praesenti for the entire term contracted for and the estate so presently vested to be characterized by the same rights and obligations throughout the entire term."

We cannot agree to the correctness of this statement. Taking all of the various arguments made by counsel for respondent their contention, in its ultimate analysis, seems to be that respondent is, under the contract of March 12, 1919, entitled to the opportunity to receive the equivalent of a grant vesting in praesenti the total right that might ultimately be acquired, and expressing in definite and...