Patterson v. Stanolind Oil & Gas Co.

• Decision Date: 01 March 1938
• Docket Number: Case Number: 27884
• Citation: 1938 OK 138,182 Okla. 155,77 P.2d 83
• Parties: PATTERSON v. STANOLIND OIL & GAS CO. et al.
• Court: Oklahoma Supreme Court

1938 OK 138

77 P.2d 83

182 Okla. 155

PATTERSON v. STANOLIND OIL & GAS CO. et al.

Case Number: 27884

Supreme Court of Oklahoma

Decided: March 1, 1938

Syllabus

¶0 1. CONSTITUTIONAL LAW--OIL AND GAS--"WellSpacing Act" Held Proper Exercise of State's Police Power and not Violative of Provisions of State and Federal Constitutions.

The police power of the state includes the protection of the correlative rights of owners in a common source of oil and gas supply, and this power may be exercised by regulating the drilling of wells into said common source of supply and distributing the production thereof among the owners of mineral rights in land overlying said common source of supply as provided by chapter 59, art. 1, S. L. 1935, without violating either sections 7, 15, or 23 of article 2 of the Oklahoma Constitution, or section 10, article 1, and section 1 of the Fourteenth Amendment to the United States Constitution.

2. SAME--"Well-Spacing Act" Held not Unlawful Delegation of Legislative Power to Corporation Commission.

Chapter 59, art. 1, S. L. 1935, does not constitute an unlawful delegation of legislative power to the Corporation Commission in violation of section 1 of article 4 of the Constitution of Oklahoma.

3. STATUTES--Oil and Gas Conservation Measure Known as "Well-Spacing Act" Held not Invalid for Indefiniteness.

Chapter 59, art. 1, S. L. 1935, is not invalid because of indefiniteness and uncertainty.

4. APPEAL AND ERROR--Abstract Question as to Nature of Review of Order of Corporation Commission not Considered Until Order Appealed From.

Until an order of the Corporation Commission is appealed from, the nature of such review remains an abstract question and will not be considered.

Appeal from District Court, Tulsa County; Prentiss E. Rowe, Judge.

Action by Russell B. Patterson against the Stanolind Oil & Gas Company and Amerada Petroleum Corporation for the recovery of oil royalty payments in the sum of $988.68. From a judgment in his favor for the sum of $824.32, the plaintiff appeals. Modified and affirmed.

A. S. Norvell, W. M. Haulsee, and R. J. Roberts, for plaintiff in error.

Clay Tallman, Guy H. Woodward, Victor C. Mieher, Joseph A. Gill, Jr., and Ray S. Fellows, for defendants in error.

W. A. Delaney, Jr., W. T. Anglin, R. L. Gordon, Jas. A. Veasey, R. B. F. Hummer, and Robert S. Kerr, amici curiae.

DAVISON, J.

¶1 This action questions the constitutionality of chapter 59, art. 1, Session Laws 1935, an oil and gas conservation measure commonly known as the "Well-Spacing Act," whereby in certain proceedings had before the Corporation Commission said commission is authorized to promulgate rules and regulations as to the spacing of oil and gas wells in the different pools of Oklahoma. The present action was commenced in the district court of Tulsa county by the plaintiff in error, a royalty owner, against the defendants in error, colessees, to recover the sum of $988.68, allegedly due him as his share of the proceeds from oil produced by said lessees by reason of his ownership of an undivided one-sixteenth interest in the minerals under the tract of land upon which the production was procured.

¶2 The parties will hereinafter be referred to as they appeared in the trial court.

¶3 The defendants denied that the plaintiff was entitled to the sum he prayed for, but alleged that his share of the proceeds of said well amounted to the sum of only $824.32, which they tendered into court. The reasons they assigned for the plaintiff being entitled to this sum rather than the larger one which he sought were that the well from which the production was derived was located in the center of a ten-acre drilling unit, the creation of which was authorized by order of the Corporation Commission issued on June 18, 1936, in accordance with the provisions of chapter 59, S. L. 1935, and that after the issuance of said order the owners of the royalty interests in said drilling unit, other than the plaintiff, were entitled, by the provisions of subdivision (c) of section 3, art. 1, of said well-spacing act, to the difference between the sum they tendered into court and the sum that the plaintiff prayed for.

¶4 At the trial no evidence was introduced except the lease of the defendants, the mineral deed of the plaintiff and the various documents filed in the proceedings had before the Corporation Commission in which the above-mentioned well-spacing order was issued. The parties stipulated the physical facts concerning the drilling, location, and production of the well in question.

¶5 The trial court rendered judgment for the plaintiff in only the amount which the defendants had tendered, and the plaintiff has appealed.

¶6 The land upon which the aforementioned order of the Corporation Commission established ten-acre well-spacing is known as "The North Wellston Area" in Lincoln county, and includes 520 acres as shown on the plat below. The only specific portions of this area necessary to mention herein make up an 80-acre tract described as the N. 1/2 of the S.E. 1/4 of section 35, township 15 N., range 2 east, designated by the shaded strips on the plat. Of this tract, the north 25 acres and the south 55 acres are under separate ownership and are covered by separate oil and gas leases jointly owned by the defendants. On the plat below, the 25-acre tract is represented by the portion in darker shading marked tract "A", while the 55-acre tract is represented by the portion in lighter shading and is designated as tract "B". The plaintiff's mineral deed covers tract "A", only. The site upon which the defendants drilled the well in question is in the center of a ten-acre unit in the northeast corner of the 80-acre tract. This unit consists of 6 1/4 acres in tract "A" and 3-3/4 acres in tract "B" and is represented by the small heavily outlined square on the plat. As shown by the large dot representing the location of the well, the same is entirely upon tract "A", in which the plaintiff's interest lies. The well was completed some months prior to the date of the aforesaid spacing order of the commission.

¶7 The allegations contained in the plaintiff's reply to the defendant's answer, which pleaded the proceedings of the Corporation Commission out of which the well-spacing order for the North Wellston Area was issued as the basis for their contention that the plaintiff was entitled only to the sum that they tendered instead of the sum he prayed for, are substantially as follows: That said proceedings of the commission and the statute authorizing same are violative of the following constitutional provisions, to wit: Section 7, article 2, of the Oklahoma Constitution, which prohibits the taking of life, liberty, or property without due process of law, and section 1 of the Fourteenth Amendment to the United States Constitution, which contains the same prohibition and provides for equal protection of law to all citizens; section 23, article 2, of the Oklahoma Constitution, which prohibits the taking of property for private use; section 59, article 5, of the Oklahoma Constitution, which provides for the uniform operation of laws; section 15, article 2, of the Oklahoma Constitution, and section 10, article 1, of the United States Constitution, which prohibits the impairment of contract obligations; and section 1, article 4, of the Oklahoma Consitution, which provides for a distribution of the powers of government.

¶8 In this appeal the plaintiff presents essentially the same contentions that he advanced in the trial court in support of the allegations above named, except that he specifies additional error in the retroactive effect which the judgment of the trial court gave the Corporation Commission's wellspacing order in question. This error has been confessed before this court, and in this connection the defendants have tendered the additional sum of $47.68, which represents the proportion claimed by the plaintiff of the proceeds of the oil produced by the well in question from the time that it was completed as a producer to the date of the commission's spacing order. Another departure from the issues joined in the trial court is the waiver by plaintiff's counsel, upon oral argument, of one of the contentions previously urged to support the allegation that the plaintiff has been denied due process, to wit: that he was not legally summoned to the proceedings in which the wellspacing order was made and entered.

¶9 The questions raised herein can be consolidated into two principal ones and stated as follows: (1) Does the state have the power to enact legislation providing for well-spacing? (2) If it does possess such power, is the same constitutionally exercised by the enactment of chapter 131, Session Laws 1933, and its amendment, which is chapter 59, art. 1, Session Laws 1935, and by the proceedings therein prescribed?

¶10 As to the first question, the plaintiff contends that the well-spacing order in question has the effect of depriving him of property without due process of law in that it authorizes the distribution of the production of the well in question (as well as all others in the North Wellston Area), in accordance with the provisions of subdivision (c) of section 3, art. 1, c. 59, S. L. 1935, which reads as follows:

"In the event a producing well, or wells, is completed upon a unit where there are two or more separately owned tracts, any royalty owner, or group of royalty owners, holding the royalty interest under a separately owned tract, shall share in one-eighth of all of the production from the well or wells drilled within the unit in the proportion that the acreage of their separately owned tract bears to the entire acreage of the unit."

¶11 In the present case, the defendants' compliance with the above provision allows the owners of the mineral rights in the 3-3/4 acres of the drilling unit to share with the plaintiff and his co-owners of the mineral rights in the other 6 1/4 acres of the unit, the oil and gas produced...