Rieckhoff v. Consolidated Gas Co.

• Decision Date: 11 April 1950
• Docket Number: No. 8929,8929
• Citation: 123 Mont. 555,217 P.2d 1076
• Parties: RIECKHOFF v. CONSOLIDATED GAS CO.
• Court: Montana Supreme Court

Page 1076

217 P.2d 1076

123 Mont. 555

RIECKHOFF v. CONSOLIDATED GAS CO.

No. 8929.

Supreme Court of Montana.

April 11, 1950.

Rehearing Denied May 23, 1950.

E. K. Cheadle, Helena, Harris & Hoyt, Shelby, L. P. Donovan, Shelby, for appellant.

Cedor B. Aronow, Shelby, E. J. McCabe, Great Falls, for respondent.

BOTTOMLY, Justice.

Action for an accounting for the natural gas produced and sold from a well drilled by the defendant, Consolidated Gas Company, a corporation, on lands on which the plaintiff E. O. Rieckhoff, held a valid oil and gas lease, and to enjoin the defendant from taking gas therefrom or in any manner interfering with plaintiff's possession. Judgment was entered, ordering defendant to account, awarding plaintiff the amount found due and adjudging plaintiff's lease to be wholly terminated as of midnight, March 1, 1946.

From that part of the judgment ordering an accounting and awarding plaintiff a money judgment defendant has appealed, and from that portion of the judgment terminating his oil and gas lease on the property, plaintiff has cross appealed.

The pertinent facts are as follows: On September 2, 1937, Katherine L. Jones, owner of the fee to the southwest quarter of section 3 of the northwest quarter of section 10, in township 32 north, range 2 west, Toole county, Montana, executed to the plaintiff Rieckhoff an oil and gas lease thereon. The lease was duly recorded and within the time therein specified, plaintiff commenced operations on the property.

March 4, 1942, Katherine L. Jones conveyed the fee in the described lands to the defendant gas company.

April 2, 1942, the gas company commenced an action against Rieckhoff and others seeking to quiet title to the real estate and the oil, gas and other minerals therein or thereunder, alleging ownership thereof in the gas company and seeking to have the lease to Rieckhoff declared null and void.

August 11, 1942, the quiet title action was tried to the court sitting without a jury.

August 13, 1942, Rieckhoff was inducted into the United States Army.

August 14, 1942, decree was filed.

August 24, 1942, Consolidated Gas Company entered upon the lands, removed Rieckhoff's oil drilling rig from location, set up its own rig and started drilling.

August 28, 1942, Rieckhoff filed his affidavit and motion that the decree so given and entered against him be vacated under the provisions of the Soldiers' and Sailors' Civil Relief Act, 50 U.S.C.A.Appendix, § 501 et seq.

The decree awarded to the Consolidated Gas Company costs in the amount of $90.77.

September 7, 1942, Consolidated Gas Company procured the issuance of a writ of execution, which it placed in the hands of the sheriff requiring him to levy on the oil and gas drilling rig, equipment and tools of Rieckhoff to make the amount of said costs of $90.77.

September 10, 1942, the defendant, Consolidated Gas Company, completed a gas well which produced gas in paying quantities.

September 16, 1942, the sheriff of Toole county, proceeding under the aforesaid execution, sold at sheriff's sale, as the property of Rieckhoff, his oil and gas drilling rig, equipment and tools, for the sum of $32, same being purchased at such sale by the defendant, Consolidated Gas Company, which company thereupon removed the same from the leased lands.

From the decree so entered against him in the quiet title action Rieckhoff appealed to this court, same being No. 8401 herein and reported in Consolidated Gas Co. v. Rieckhoff, 116 Mont. 1, 151 P.2d 588, 590.

There, concerning the lease agreement and contract executed by Katherine L. Jones and Rieckhoff, this court said: 'The contract is clear that the only contingency which would operate to ipso facto terminate the contract and obviate the necessity of notice would be the failure to commence the well within the term. Since there is no question but that the well was commenced in time, the only thing which can operate to terminate the contract would be a breach of the covenant to diligently perform. Befor the question of diligence can be litigated, the plaintiff must, under the terms of the agreement, allege and prove that a notice of default was given and no sufficient effort to remedy the default was made. This was not done and we must therefore hold that the complaint fails to state facts to constitute a cause of action.

'The judgment is reversed with directions to dismiss in so far as the appealing defendant [Rieckhoff] is concerned.'

This court handed down the above decision on February 29, 1944, whereupon the respondent Gas Company petitioned for rehearing, which petition was denied October 2, 1944, at which date remittitur issued, and on October 19, 1944, formal judgment dismissing the action against E. O. Rieckhoff was duly entered and filed in the district court.

That decision became the law of this case in all matters therein determined.

During all the time from August 26, 1942, when he started active service in the army of the United States, until his honorable discharge in the fall of 1945, E. O. Rieckhoff, the plaintiff herein, was without the state of Montana, serving in the battles and campaigns of North Africa, Naples-Foggia, Rome-Arno, Southern France-Rhineland and Central Europe.

Upon receiving said discharge he went to the state of Missouri to visit his mother and father. While there at the home of his parents he was served by the sheriff in the state of Missouri with a notice from Consolidated Gas Company in substance notifying him that under the terms of his oil and gas lease agreement with Katherine L. Jones of September 2, 1937, 'you have failed to prosecute the drilling of an oil and gas well on the premises to the first known oil and gas horizon with reasonable diligence or otherwise. Notice is further given that all of your rights under said oil and gas lease shall terminate thirty (30) days after the service of this notice upon you unless the default hereinabove specified is remedied within said period.'

Following the receipt by him on January 30, 1946, of the above notice, E. O. Rieckhoff made written demand upon the defendant gas company for an accounting of all gas produced and sold from the above described lands, but the company refused to comply with such demand in any particular.

The plaintiff Rieckhoff here contends: That the oil and gas lease of September 2, 1937, between him and Katherine L. Jones has been at all times and is now in full force and effect; that the defendant Consolidated Gas Company was a wilful trespasser by entering upon said leased premises on August 24, 1942, and in drilling a gas well thereon and completing the same to production on September 10, 1942, and by continuing to produce gas and selling the same to the present time; that although the defendant removed plaintiff's drilling rig, tools and other property from the location, and from the leased premises, yet the defendant immediately started drilling at the same place and by drilling a gas well to production, the defendant has perfected and validated the plaintiff's lease and has fulfilled for plaintiff the requirement to drill a gas well to the first known gas or oil horizon and has produced gas in commercial quantities, and although a trespasser as to plaintiff, yet defendant kept and thereby fulfilled the lease requirements and thereby maintained the lease in full force and effect; that plaintiff is entitled to an accounting from the trespassing defendant for all gas so produced and sold from said leased lands and that defendant should be enjoined and restrained from taking, appropriating or selling natural gas upon or from the lands and from interfering with plaintiff's entry upon or possession of the lands and from interfering with plaintiff in the exercise of his rights in and upon said land in accordance with the terms of his written agreement.

The defendant gas company contends: That defendant has been the owner of the land covered by the lease from Katherine L. Jones to E. O. Rieckhoff, dated September 2, 1937, since the 4th day of March 1942, and still is the owner of the fee thereof, is in possession and entitled to possession thereof; that defendant on or about September 2, 1942, and without plaintiff's consent, commenced a well upon the said property and drilled the same to completion and encountered gas therein in paying quantities and sold the same, and intends to continue to do so; that by a decree of the district court the plaintiff's lease had been declared null and void and of no force and effect whatever; that the cost of production and marketing of the gas exceeded the market value thereof; denies that the lease of plaintiff is in force or effect; contends that said lease has long since expired and become forfeited and terminated; contends that defendant on August 14, 1943, the date of the district court decree, was under contract to supply gas to the city of Shelby; that the supply of gas was becoming dangerously inadequate; that it was imperative that the defendant find and produce gas with which to supply the needs of Shelby; that by reason thereof, and as owner in possession of said property, and after the district court decree had declared plaintiff's lease null and void quieted defendant's title to the land; that defendant commenced drilling an oil and gas well upon the land and obtained gas therein in paying quantities and produced gas therefrom using same to supply the needs of Shelby; that defendant caused to be served upon plaintiff a notice notifying plaintiff that he had failed to prosecute the drilling of an oil and gas well on the land to the first known oil or gas horizon with reasonable diligence or otherwise and that all plaintiff's rights under his lease would terminate thirty days after the service upon him of the notice unless within such thirty days default be remedied; that plaintiff failed within said time or at all to commence drilling a well or to carry on any other operations upon the...