Shaffer v. Marks

• Decision Date: 10 February 1917
• Docket Number: 2256.
• Citation: 241 F. 139
• Parties: SHAFFER v. MARKS et al.
• Court: U.S. District Court — Eastern District of Oklahoma

241 F. 139

SHAFFER v. MARKS et al.

No. 2256.

United States District Court, E.D. Oklahoma.

February 10, 1917

[Copyrighted Material Omitted]

George S. Ramsey, Edgar A. De Meules, Malcolm E. Rosser, and Villard Martin, all of Muskogee, Okl., for complainant.

John Devereux, Bird S. McGuire, and F. B. Dillard, all of Tulsa Okl., for lessors and C. D. Coggeshall.

Thomas H. Owen and J. C. Stone, both of Muskogee, Okl., and Edward H. Chandler, Farrar L. McCain, Randolph, Haver & Shirk, and John B. Meserve, all of Tulsa, Okl., for defendants.

CAMPBELL District Judge.

Without stating the case in detail, the court will outline the conclusions reached after a careful study of the voluminous record and the many authorities relied upon by counsel in support of their several contentions as to the law of this case.

At the threshold lies the question of the court's jurisdiction raised by counsel for defendant Aggers by supplemental brief filed by leave of court after the case was heard and submitted upon the merits. As against the jurisdiction it is alleged that, inasmuch as it appears that the plaintiff, Shaffer, bases his right to the relief he prays upon an oil and gas lease ^[1] from certain of the defendants to one Terry, which Terry, in turn, assigned to Shaffer, it not appearing affirmatively that Terry was not a citizen of Oklahoma, Shaffer is therefore precluded from maintaining this action in this court by the provision of section 24 of the Judicial Code to the effect that:

'No District Court shall have cognizance of any suit * * * to recover upon any promissory note or other chose in action in favor of any assignee, * * * unless such suit might have been prosecuted in such court to recover upon said note or other chose in action if no assignment had been made.'

It is contended that the oil and gas lease upon which plaintiff bases his right to the relief sought comes within the term 'chose in action,' as contemplated in the foregoing provision of the Code, and that this is essentially a suit to recover upon such lease, and is therefore a suit to recover upon a chose in action by an assignee whose assignor it does not appear could have maintained the suit in this court.

Upon consideration of the authorities, I conclude that this contention is not well founded, and that this court has jurisdiction of this controversy, notwithstanding plaintiff's assignor, Terry, may have been a citizen of Oklahoma. In considering the provision, 'any suit to recover the contents of any promissory note or other chose in action in favor of any assignee,' the Supreme Court of the United States, in the late case of Brown v. Fletcher, 235 U.S. 589, 35 Sup.Ct. 154, 59 L.Ed. 374, said:

'These were technical terms of variable meaning. They might have been given a literal construction, in which case the act would not have wholly remedied the evil intended to be corrected. They were also susceptible of a construction so broad as to include subjects far beyond the congressional policy. For a 'chose in action embraces in one sense all rights of action.' * * * So that, if the words of the statute had been given their most comprehensive meaning, every assignee or vendee would have been prevented from suing in the United States court unless the assignor could have maintained the action. It is evident, however, that there was no intent to prevent assignees and purchasers of property from maintaining an action in the federal court to recover such property, even though the purchaser was an assignee and the deed might, in a sense, be called a chose in action.'

Whether the right conveyed by an oil and gas lease be termed a chattel real, an incorporeal hereditament, or what not, it is nevertheless a right or interest relating to real property, although not arising to the dignity of an estate, and as such right or interest is property, and may be the subject of transfer. The Supreme Court of this state (In re Indian Territory Illuminating Oil Co., 43 Okl.at page 316, 142 Pac.at page 100) said:

'Generally, an oil and gas lease, a school land lease, or a lease of any sort, for that matter, undoubtedly is property.'

And in Kolachny v. Galbreath, 26 Okl. 772, 110 P. 902, 38 L.R.A.(N.S.) 451, it is held that, while an oil and gas lease does not vest in the lessee the title to the oil and gas in the land and is not a grant of any estate therein, it is, however, a grant of a right to prospect for oil and gas, an incorporeal hereditament. In Heller v. Dailey, 28 Ind.App. 555, 63 N.E. 490, it is said:

' * * * The owner of land is not, by virtue of his proprietorship thereof, the absolute owner of the oil and gas in and under it in its free and natural state, nor yet reduced to actual control of any person; but he, together with the other owners of land in the gas field, has a qualified ownership, consisting of or amounting to his exclusive right to do what may be done on, through, or under his land (as the making of wells), necessary to reduce the minerals to his possession, and, by thus acquiring the exclusive control, to become the owner of the mineral substances as his personal property, observing due regard in his operations to the like enjoyment of such exclusive right by all other landowners in like circumstances. This exclusive right is his private property. He cannot grant more than he owns. Therefore, by granting all the oil and gas in and under his land, he does not grant more than a right to reduce to ownership the oil and gas which may be obtained by operating on the land, whereby substances which, at the time of the making of the grant, may be in and under lands of other surface proprietors, may come into rightful ownership of the grantee as his personal property. Though, because of the peculiar nature of oil and gas, a corporeal interest in them in place cannot be created, and title to the specific mineral substances cannot be acquired without the reduction of them first to personal property, yet the exclusive and assignable right to do this, with the accompanying rights necessary to such accomplishment, constitutes, not a privilege revocable before it has been acted upon, but a subsisting, exclusive, assignable, and irrevocable right, which accrues upon the execution of the written instrument of conveyance and before any action has been taken thereunder. The right so created is not susceptible of livery of seisin, and is in the nature of an incorporeal hereditament. * * * While, for reasons which we have sought to state, we do not regard the contract in suit as a grant of land, or as a 'lease,' properly so called, but do regard it as a grant of a right in the nature of an incorporeal hereditament, operative from the time of its execution and during the accomplishment of its purpose as a transfer of an exclusive right to search for, take, and appropriate the minerals mentioned in the instrument, under whatever technical common-law term it may most properly be classed, it must be held to be a conveyance of an interest in land within the meaning of our statutes.'

This suit, rightly understood, is an action by Shaffer to enjoin the invasion by certain of the defendants of this property right conveyed by the lease under which he claims, and which right he contends has not been forfeited. He is not seeking to enforce any executory contractual provisions of the lease. He is asserting no claim based upon either tort or breach of contract arising in favor of his assignor and assigned to him. I think the jurisdiction of the court in this case is clearly sustained by the reasoning of the following authorities, among others: Bushnell v. Kennedy, 9 Wall. (76 U.S.) 387, 19 L.Ed. 736; Ambler v. Eppinger, 137 U.S. 480, 11 Sup.Ct. 173, 34 L.Ed. 765; Mexican National R.R. v. Davidson, 157 U.S. 201, 15 Sup.Ct. 563, 39 L.Ed. 672; Brown v. Fletcher, supra; Guffey v. Smith, 237 U.S. 101, 35 Sup.Ct. 526, 59 L.Ed. 856; Oak Grove Construction Co. v. Jefferson County, 219 F. 860, 135 C.C.A. 528; Crown Orchard Co. v. Dennis, 229 F. 652, 144 C.C.A. 62.

Now, as to the contention of counsel for defendant Aggers that under the terms of the lease of March 18, 1912, from Marks and others to Terry, the lessors had the right, regardless of whether it was tendered in strict accordance with the provisions of the lease, to refuse to accept the payment for June 18, 1915, and declare the lease contract terminated: Assuming, for the purpose merely of the consideration of this branch of the case, that the tender of the payment due June 18, 1915, was made by Shaffer in all respects in strict accordance with the terms of the lease, were the lessors or their assigns obligated to receive the same and continue the lease in force for the quarter for which such tender was made? The determination of this question involves a consideration of the terms of the lease and a construction thereof as to the respective rights reserved by the instrument to the several parties thereto. The estate and rights (as distinguished from remedies) created by the instrument under consideration, so far as determined by decisions of the Supreme Court of Oklahoma at the time this lease contract was entered into, must be accepted and applied by this court as rules of property in the consideration of this question. Guffey v. Smith, 237 U.S. 101, 35 Sup.Ct. 526, 59 L.Ed. 856. The extent to which such decisions are controlling in a case of this character is clearly defined by certain rules announced by the United States Supreme Court in Kuhn v. Fairmount Coal Co., 215 U.S.at page 360, 30 Sup.Ct.at page 143, 54 L.Ed. 228, as follows:

'We take it, then, that it is no longer to be questioned that the federal courts in determining cases before them are to be guided by the following rules: (1) When

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