Waechter v. Amoco Production Co.
Decision Date | 14 June 1975 |
Docket Number | No. 47474,47474 |
Citation | 537 P.2d 228,217 Kan. 489 |
Parties | Leland C. WAECHTER et al., Appellees, v. AMOCO PRODUCTION COMPNY, formerly Pan American Petroleum Corporation,Appellant. |
Court | Kansas Supreme Court |
1. A lessee under an oil and gas lease is not a fiduciary to his lessor; his duty is to act honestly and fairly under a contractual relationship.
2. An oil and gas lease which provides that the lessee shall pay lessor monthly as royalty on gas marketed from each well one-eighth of the proceeds if sold at the well, or, if marketed off the leased premises, then one-eighth of the market value at the well, is clear and unambiguous as to gas sold at the wellhead by the lessee in a good faith sale, and lessor is entitled to no more than his proportionate share of the amount actually received by the lessee for the sale of the gas.
3. A statute of limitations does not confer a right of action and its bar cannot be the basis of a claim for affirmative relief.
4. The record on appeal in a declaratory judgment action is examined and it is held: (1) The lessee in certain gas leases was not obligated to account to the lessors for gas taken during the period June 23, 1961, to June 23, 1966, on the basis of 14.5cents per mcf at 14.65 psi instead of on the basis of lower prices paid it by the purchaser; (2) nor, under the particular circumstances and the doctrines either of 'pure defense' or recoupment was the lessee obligated to account for the collection of overpayments of royalty it made to the lessors during the period January 1, 1954, to December 22, 1957.
R. H. Landt, Denver, Colo., and Glenn D. Young, Jr., of Gott, Hope, Gott & Young, P. A., Wichita, argued the cause and were on the briefs for appellant.
Dale M. Stucky of Fleeson, Gooing, Coulson & Kitch, Wichita, argued the cause, and John T. Conlee, Wichita, was with him on the brief for appellees.
HARMAN, Commissioner:
This is a declaratory judgment action commenced July 16, 1964, by Leland C. Waechter and approximately five hundred other named landowner-lessors, representing a class of some 3000 landowner-lessors, all in the Kansas Hugoton gas field, involving two separate claims against Amoco Production Company, formerly Pan American Petroleum Corporation, formerly Stanolind Oil and Gas company, as a result of gas taken by Amoco.
One claim is to determine whether Amoco as lessee under certain gas leases is obligated to account to the plaintiff-landowners for gas taken during the period June 23, 1961, to June 23, 1966, on the basis of 14.5cents per thousand cubic feet at 14.65 pounds per square inch absolute instead of the lower prices actually paid to Amoco by the purchaser of the gas. The other claim is to determine whether Amoco is entitled to be repaid for overpayments of royalty it made to the plaintiff-landowners during the period from January 1, 1954, through December 22, 1957, pursuant to an 11cents minimum price order of the Kansas corporation commission, and whether Amoco is obligated to account to certain plaintiffs who have already made refunds to Amoco. The trial court rendered judgment for plaintiffs upon all issues in the case, procedural and substantive, and defendant Amoco has appealed.
At the heart of this litigation, which has been a protracted three-sided battle over the years (between Amoco and the Cities Service Gas Company, purchaser of the gas, over price of gas on the one hand, and between Amoco and plaintiffs over royalties on the other) are two writings-the gas purchase contract between Amoco and Cities and the royalty clause in Amoco's leases with plaintiffs. Although, as will be seen later, there are actually forth-eight different forms of royalty clauses in the leases, in somewhat similar language, plaintiffs and Amoco are agreed the royalty clause covering most of the approximately 600,000 acres involved and also that upon which all parties will stand or fall, provides as follows:
"Lessee shall pay lessor monthly as royalth on gas marketed from each well one-eighth (1/8) of the proceeds if sold at the well, or, if marketed by lessee off the leased premises, then one-eighth (1/8) of the market value thereof at the well."
The gas purchase contract dated June 23, 1950, under which Amoco sold the gas to Cities, contained these provisos:
The entire story of this litigation and the contentions of the parties pertinent to determination of this appeal may best be presented by quoting the trial court's findings of fact and conclusions of law, filed July 3, 1973, as follows:
To continue reading
Request your trial-
Lightcap v. Mobil Oil Corp.
... ... I. Background; The Primary Issue ... This case is closely paralled to Waechter v. Amoco Production Co., 217 Kan. 489, 537 P.2d 228 (June 14, 1975), adhered to after rehearing, ... ...
-
Piney Woods Country Life Sch. v. Shell Oil Co.
... ... ) Shell has, and is, improperly charging royalty owners for processing their share of the production from the subject fields at its Thomasville Plant; (2) Shell breached its duty under express and ... provision basing royalty on the amount realized from the sale of such gas, Plaintiffs cite Amoco Production Co. v. First Baptist Church of Pyote, 579 S.W.2d 280 (Tex.Civ.App.1979). The dispute in ... Waechter v. Amoco Production Co., 217 Kan. 489, 537 P.2d 228 (1975) ... 34 Southwest ... ...
-
Mynatt v. Collis
... ... than substantive, in that the remedy only and not the right or obligation is barred ... '" Waechter v. Amoco Production Co., 217 Kan. 489, 519, 537 P.2d 228 (1975) (quoting Rochester American Ins ... ...
-
State v. Davis Oil Co.
... ... 1 and Concamp State No. 2. Associated with the production of oil from the wells is the production of casinghead gas, which is the subject of this appeal. As ... A more nearly comparable case, although not similar in facts, is Waechter v. Amoco Production Co., 217 Kan. 489, 537 P.2d 228, 546 P.2d 1320 (1975) (see also Waechter v ... ...
-
CHAPTER 14 SPECIAL ROYALTY LITIGATION ISSUES: FRAUD, FIDUCIARY RELATIONSHIPS, AND PUNITIVE DAMAGES
...v. Rogers, 112 P.2d 361, 363 (Okla. 1941); Garman v. Conoco, Inc., 886 P.2d 652, 659 n. 23 (Colo. 1994); Waechter v. Amoco Prod. Co., 537 P.2d 228, 248 (Kan. 1975); Rutherford v. Exxon Co. U.S.A., 855 F.2d 1141, 1145-56 (5th Cir. 1988) (Texas law); Amoco Prod. Co. v. Heimann, 904 F.2d 1405,......
-
CHAPTER 3 THE IMPLIED MARKETING COVENANT IN OIL AND GAS LEASES: SOME NEEDED CHANGES FOR THE 80's
...of the operator as well." Id. at 897 (quoting Phillips Petroleum v. Peterson, 218 F.2d 926 (10th Cir. 1954)); Waechter v. Amoco Prod. Co. 217 Kan. 489, 510, 537 P.2d 228, 248 (1975). [139] See, e.g., Sword v. Rains, 575 F.2d 810, 813 (10th Cir. 1978); Nordan-Lawton Oil & Gas Corp. of Texas ......
-
CHAPTER 15 FEDERAL ROYALTY ACCOUNTING FOR DISPROPORTIONATE SALES FROM FEDERAL UNITS AND CORRESPONDING STATE ISSUES (TAKES vs. ENTITLEMENTS)
...159 S.W.2d 472, (1942) 15-73, 15-75W.A. Moncrief, Jr. v. U.S. Dept. of the Int., C87-1070 J (Wyo.) 15-24Waechter v. Amoco Production Co., 537 P.2d 228 (Kan. 1975) 15-61Wakefield v. State, 306 P.2d 305 (Okla. 1957) 15-74Ward v. Corporation Commission, 501 P.2d 503 (Okla. 1972) 15-45, 15-47, ......
-
CHAPTER 9 STRATEGIES AND PROCEDURAL ISSUES IN ROYALTY CASES
...App.—Corpus Christi 1989, writ denied). [113] Craig v. Champlin Petroleum Co., 435 F.2d 933 (10th Cir. 1971); Waechter v. Amoco Prod. Co., 537 P.2d 228 (Kan. 1975). [114] See Texas Oil & Gas Corp. v. Hagen, 31 Tex. Sup. Ct. J. 140, 142 (1987), opinion withdrawn, case settled, 760 S.W.2d 960......