Rist v. Westhoma Oil Co.

• Court: Oklahoma Supreme Court
• Writing for the Court: Elmer W. Acams, George H. Bowen, Cecil R. Buckles, Tulsa, Cecil C. Cammack, Bartlesville, Angus A. Davidson, Glen R. Davis, Tulsa, John O. Dean, Robert E. Gill, Jr.; BERRY; BLACKBIRD
• Citation: Rist v. Westhoma Oil Co., 385 P.2d 791, 1963 OK 126 (Okla. 1963)
• Decision Date: 21 May 1963
• Docket Number: Nos. 40226,40227,s. 40226
• Parties: B. C. RIST and Gladys E. Rist, Plaintiffs in Error, v. WESTHOMA OIL COMPANY, a corporation, Defendant in Error. Ernest L. CARPENTER and Blanch M. Carpenter, Plaintiffs in Error, v. PEERLESS OIL AND GAS COMPANY, Jake L. Hamon and Westhoma Oil Company, Defendants in Error.

Page 791

385 P.2d 791

1963 OK 126

B. C. RIST and Gladys E. Rist, Plaintiffs in Error, v. WESTHOMA OIL COMPANY, a corporation, Defendant in Error.

Ernest L. CARPENTER and Blanch M. Carpenter, Plaintiffs in Error, v. PEERLESS OIL AND GAS COMPANY, Jake L. Hamon and Westhoma Oil

Company, Defendants in Error.

Nos. 40226, 40227.

Supreme Court of Oklahoma.

May 21, 1963.

Rehearing Denied July 23, 1963.

Application for Leave to File Second Petition for Rehearing

Denied Oct. 22, 1963.

Syllabus by the Court

1. A contract must be interpreted as to give effect to the mutual intention of the parties, as it existed at the time of contracting, so far as the same is ascertainable and lawful.

2. The language of a contract is to govern its interpretation if the language is clear and explicit, and does not involve an absurdity.

3. Courts will not make a contract for parties, but will only effectuate purpose of a contract actually made.

4. Where a cause is submitted upon an agreed statement of facts, it is the duty of this court on appeal to apply the law to such facts as a court of first instance and direct judgment accordingly.

Appeal from the District Court of Texas County; C. R. Board, Judge.

Action by lessees to quiet title to oil and gas leasehold interests claimed by them in that part of lessors' mineral estate which is located below sea level. From a judgment quieting lessees' title, lessors appeal. Affirmed.

Hemry & Hemry, Oklahoma City, Tryon, Sweet & Hensley, Guymon, Light & Yoxall, Liberal, Kan., Fleeson, Gooing, Coulson & Kitch, Wichita, Kan., Hugo T. Wedell, Wichita, Kan., of counsel, for plaintiffs in error.

Cochran, Dudley, Fowler, Rucks, Baker & Jopling, Richard W. Fowler, Oklahoma City, Vincent Dale, Guymon, for defendants in error.

Grester H. LaMar, Guymon, amicus curiae for Texas County Land and Royalty Ass'n Elmer W. Acams, George H. Bowen, Cecil R. Buckles, Tulsa, Cecil C. Cammack, Bartlesville, Angus A. Davidson, Glen R. Davis, Tulsa, John O. Dean, Robert E. Gill, Jr., J. Paul Greve, W. W. Heard, Tulsa, Joe M. Holliman, Tulsa, Mainard Kennerly, Oklahoma City, Hawley C. Kerr, Tulsa, Darwin M. Kirk, Wm. F. Latting, Tulsa, Gentry Lee, Bartlesville, Richard R. Linn, Oklahoma City, R. O. Mason, Bartlesville, Joseph W. Morris, G. W. Morrow, Wm. B. Nance, Tulsa, Gordon O. Oldham, O. L. Peck, Jr., Tulsa, William C. Phelps, Tulsa, Robert W. Richards, Oklahoma City, Nathan Scarritt, Enid, Warren M. Sparks, Tulsa, Norton Standeven, Oklahoma City, William M. Taylor, H. B. Watson, Jr., Tulsa, R. M. Williams, Bartlesville, John Wimbish, Philip R. Wimbish, Tulsa, Wm. J. Zeman, Bartlesville, amici curiae.

BERRY, Justice.

These consolidated appeals are from separate judgments entered by the District Court of Texas County in actions brought by lessees to determine whether the oil and gas leases involved had terminated as to all horizons below sea level at the expiration of their respective primary terms because of failure to obtain production at this level. They present a common question of law bearing on similar and undisputed facts.

The parties, having stipulated to the facts, each moved for judgment (on the pleadings) and the lower court gave judgment for the plaintiffs (lessees) and against the defendants (lessors). The lessors have appealed.

Plaintiffs in error here will be identified hereinafter as lessors or by name, and defendants in error will be identified as lessees or by name.

The two leases involved here cover land located in Texas County in the Guymon-Hugoton gas field. They are identical in form, differing only as to one day in date, individual lessors and land descriptions. Each was for a ten-year primary term.

By mesne assignments, lessees, Westhoma Oil Co. et al., became the leasehold owners of all horizons below sea level in each tract and other lessees became the owners of the leasehold estate above sea level. No question is raised as to the validity of these assignments.

There has been no oil or gas production nor operation of any kind as to the horizons below sea level. Lessees, Westhoma et al., contended in the lower court that their leasehold interest in the below-sea level leaseholds were extended beyond the primary term by unit production obtained by separate lessees from horizons above sea level. The trial court entered judgment for these below-sea level lessees and quieted their title to the below-sea level leasehold.

'Where a cause is submitted upon an agreed statement of facts it is the duty of this court on appeal to apply the law to such facts as a court of first instance and direct judgment accordingly.' Whitten v. Kroeger, 183 Okl. 327, 82 P.2d 668; Odom v. Turner, Sheriff, 204 Okl. 370, 230 P.2d 487; Landy v. First National Bank & Trust Co. of Tulsa, 368 P.2d 987.

As we view the record, the respective claims of the parties involve, in the final analysis, the task of construing the terms of their written contract.

The lease contract provided, in so far as expiration and extension, as follows:

'* * *.

'2. This lease shall remain in force and effect for a term of ten (10) years from the date of its delivery (hereinafter sometimes called the 'primary term') and as long thereafter as oil, gas, or other minerals are or can be produced from any well on said premises and as long as hereinafter otherwise provided in the event of consolidation.

* * *

* * *

'9. Lessee is expressly granted the right and privilege (which lessee may exercise at any time either before or after production has been obtained upon this premises or any premises consolidated herewith) to consolidate the leasehold estate, created by the execution and delivery of this lease, or any part or parts thereof, with the mineral leasehold estate or estates or parts thereof in any other lands upon which this lessee shall at the time own valid and subsisting lease or leases, located and situated near the property described herein, provided that any resulting consolidated estate shall not cover and include more than 2560 acres, * * * and it is agreed:

'(a) This lease shall thereafter continue in full force and effect for all purposes as to the premises covered hereby and included in any such consolidation of estates, so long as gas is or can be produced from any well located on any part of the land included in such consolidation (whether on lands covered hereby or not) except as herein otherwise provided, or so long as oil is or can be produced from any well drilled on a portion of the land covered hereby.

'(b) During the primary term hereof and until production has been obtained, from this or the consolidated leasehold, the lessee shall be privileged to pay the annual delay rentals stipulated herein on any part of this leasehold included in a consolidation of estates or not so included, and thereby continue this lease in full force and effect as to the part or portions thereof upon which rentals are so paid, but this lease, insofar as it covers any tract or tracts not included in a consolidation of estates held in force by production as herein provided, shall terminate at the expiration of the primary term hereof, unless oil, gas, or other minerals is or can be produced from a well or wells thereon.

* * *

* * *

'13. Not withstanding anything in this lease contained to the contrary, it is expressly agreed that if lessee shall commence drilling operations upon these premises or upon premises consolidated herewith at any time while this lease is in force, this lease shall remain in force and its term shall continue so long as such operations are prosecuted and, if production results therefrom, then as long as production continues.'

The identical lease provisions involved in these appeals were considered in Rogers v. Westhoma Oil Co., 10th Cir., 291 F.2d 726, rehearing denied, 291 F.2d 732. In a divided opinion, the Federal Court reversed the trial court (U. S. District Court, Kansas) and held in effect that the lease contemplated both horizontal and vertical separations; that such was the intent of the parties; that such a separation of 'parts' had been accomplished by lessees and that failure to explore the severed part below sea level within the primary term, effected or resulted in a termination of the lease as to the below-sea level leasehold and that unit production from the horizons above sea level did not operate in law to extend the lease as to below-sea level horizons.

The lessors urge this Court to adopt the reasoning and holding in the Rogers case, supra, and the lessees contend against it.

15 O.S.1961 § 152, provides:

'A contract must be so interpreted as to give effect to the mutual intention of the parties, as it existed at the time of contracting, so far as the same is ascertainable and lawful.'

Under this section a contract...