Robinson v. Miracle
| Citation | 146 Okla. 31,1930 OK 502,293 P. 211 |
| Decision Date | 11 November 1930 |
| Docket Number | Case Number: 19592 |
| Parties | ROBINSON et al. v. MIRACLE et al. |
| Court | Supreme Court of Oklahoma |
¶0 1. Oil and Gas--Forfeiture of Lease for Breach of Implied Covenant for Diligent Operation.
"Forfeiture of an oil and gas mining lease will be decreed for breach of an implied covenant to diligently operate the property when such forfeiture effectuates justice." Scott v. Price, 123 Okla. 172, 247 P. 103.
2. Same--Forfeiture of Lease as to Undeveloped Portion of Premises.
Where part of the lease premises has been developed and operated with reasonable diligence by drilling and operating one well, and the other portion of the lease has not been, the lease will be canceled as to the undeveloped portion for breach of the implied covenant to diligently operate the property, and permit the lessee to continue to operate the developed portion where reason and justice require it.
3. Appeal and Error--Order Relating to Appointment of Receiver--Statute Applicable.
An order appointing a receiver, made on the date and at the time judgment was entered, to carry the judgment into effect, is an appointment made after judgment under the provisions of subsection 3, section 518, Comp. Stat. 1921. Such order is reviewable only under the provisions of section 525, Comp. Stat. 1921, which does not permit an appeal from an order appointing a receiver, but only from an order denying the appointment or an order refusing to vacate the appointment.
Commissioners' Opinion, Division No. 2.
Error from District Court, Okfuskee County; John L. Norman, Judge.
Actions by V. W. Miracle and Ida Miracle against E. L. Robinson and Gibson-Zahniser Oil Corporation, one for conversion of drip gasoline, the other to cancel oil and gas lease for nondiligent operation and development of the premises. Judgment for plaintiffs, and defendants appeal. Affirmed.
Logan Stephenson, Ethel M. Proffitt, and Jas. M. Shackelford, for plaintiffs in error.
Jess I. Miracle and A. Francis Porta, for defendants in error.
¶1 On September 30, 1926, V. W. Miracle and Ida Miracle brought suit against E. L. Robinson and the Gibson-Zahniser Oil Corporation, a corporation, and others, to recover for drip gasoline produced from their premises and of which they claimed full ownership and concerning which the lease contract contained no specific reference. On November 10, 1926, the same plaintiffs filed another suit against Gibson-Zahniser Oil Corporation, a corporation, and E. L. Robinson, to cancel oil and gas lease on their property to wit: The east one-half (E. 1/2) of the northwest quarter (N.W. 1/4) and the southwest quarter (S.W. 1/4) of the northwest quarter (N.W. 1/4) of section 25, township 11 north, range 9 east, Okfuskee county, Okla. They therein alleged that the defendants by mesne assignments acquired ownership of oil and gas lease on the premises which they executed on December 9, 1919, same being a five-year lease; that a one-year extension of said lease was given to the defendants; that the defendants drilled one well thereon, but have refused further to develop the premises or to protect the south and east lines of said lease premises from drainage; that the defendants had neglected to operate said premises skillfully or properly, thereby violating the covenants of said oil and gas lease contract. E. L. Robinson and Gibson-Zahniser Oil Corporation filed joint answer in each case. In the suit for the drip gasoline they denied that they had taken the quantity of drip gasoline alleged; alleged that the same was gas of which, under the terms of the lease, plaintiffs were entitled to one-eighth royalty, and that the plaintiffs had been delivered more than their share thereof. In the suit to cancel the lease they admitted their ownership of the lease, alleged that they had diligently operated and produced the premises, and alleged that further drilling at the time would have been impractical. The two causes were consolidated. All parties other than those above named were eliminated, and they are not parties to these proceedings.
¶2 On trial the court found, as a fact, that the parties had agreed on the interpretation to be given the terms of the lease with reference to the drip gasoline, to wit: That the plaintiffs were entitled to one-eighth thereof as royalty; that it was impossible from the evidence adduced to determine whether or not the plaintiffs had received their proper portion thereof, so no money judgment was entered thereon. The court found, however, that the defendants had so negligently cared for this drip gasoline that the court should appoint a receiver to see that the plaintiffs should obtain the portion thereof which is their due.
¶3 The court further found that the defendants had obtained a paying producing gas well on the southeast location of the southeast quarter of the northwest quarter of the lease, but that they had failed, neglected, and refused to develop diligently further, and that the plaintiffs were entitled to a cancellation of the lease except on the southeast quarter of the northwest quarter thereof by reason of the abandonment of the defendants of the balance of said lease premises, by reason of their breach of their implied covenant diligently to develop the entire lease premises.
¶4 From this judgment E. L. Robinson and Gibson-Zahniser Oil Corporation appeal. The parties will be referred to, the plaintiffs in error as lessees, the defendants in error as lessors. It might be here noted that the trial court refused to pass upon or interpret the terms of the oil and gas lease with reference to the plaintiffs' right to the drip gasoline under the terms of the lease which failed specifically to cover drip gasoline, but merely gave effect to the interpretation of the lease which the lessors and the lessees had themselves given it, and that question is not before us here.
¶5 It is well settled in this jurisdiction that there is an implied covenant, in oil and gas mining lease contracts which contain no specific provision providing for the number of wells to be drilled in case paying production is discovered, to operate diligently and develop oil and gas lease premises after paying production has been discovered thereon for the mutual benefit or profit for both lessor and lessee, and neither is, in the absence of a stipulation to that effect, the arbiter of the extent to which or the diligence with which the operations shall proceed, but both are bound by the standard of what in the circumstances would be reasonably expected of an operator of ordinary prudence having regard to the interest of both. Equity abhors forfeitures, but will, where justice requires, cancel a lease contract by reason of the lessee's failure diligently to produce and develop the premises. Brewster v. Lanyon Zinc Co. (8th C.C.A.) 140 F. 801; Indiana Oil, Gas & Development Co. v. McCrory, 42 Okla. 136, 140 P. 610; New State Oil & Gas Co. v. Dunn, 75 Okla. 141, 182 P. 514; Strange v. Hicks, 78 Okla. 1, 188 P. 347; Pelham Petroleum Co. v. North, 78 Okla. 39, 188 P. 1069; Gypsy Oil Co. v. Cover, 78 Okla. 158, 189 P. 540; Wapa Oil & Development Co. v. McBride, 84 Okla. 184, 201 P. 984; Papoose Oil Co. v. Rainey, 89 Okla. 110, 213 P. 882; Mistletoe Oil & Gas Co. v. Revelle, 117 Okla. 144, 245 P. 620; Scott v. Price, 123 Okla. 172, 247 P. 103; Fox Petroleum Co. v. Booker, 123 Okla. 276, 253 P. 33; Merrill, Covenants Implied in Oil and Gas Leases, sections 3, 43, 44, 48, 53, 117. This is as well true where gas production is had as when the paying production discovered is oil. Blackwell Oil & Gas Co. v. Whitesides, 71 Okla. 41, 174 P. 573; Donaldson v. Josey Oil Co., 106 Okla. 11, 232 P. 821; Carder v. Blackwell Oil & Gas Co., 83 Okla. 243, 201 P. 252. Each time an effort is made to cancel a lease for breach of the implied covenant to diligently develop and produce oil and gas lease premises is controlled by its own facts. Neither lessor nor lessee may presume arbitrarily to determine of what diligence should consist, what a reasonable operator should do under the circumstances,...
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