Walton v. Atlantic Richfield Co., 4078

• Decision Date: 04 October 1972
• Docket Number: No. 4078,4078
• Citation: 501 P.2d 802
• Parties: Paul T. WALTON et al., Appellants (Plaintiffs below), v. ATLANTIC RICHFIELD COMPANY, Appellee (Defendant below).
• Court: Wyoming Supreme Court

Page 802

501 P.2d 802

Paul T. WALTON et al., Appellants (Plaintiffs below), v. ATLANTIC RICHFIELD COMPANY, Appellee (Defendant below).

No. 4078.

Supreme Court of Wyoming.

Oct. 4, 1972.

Raymond B. Whitaker, Casper, for appellants.

Hunter L. Johnson, Jr., Denver, Colo., Houston G. Williams of Wehrli & Williams, Casper, for appellee.

Before McINTYRE, C. J., and PARKER, McEWAN, and GUTHRIE, JJ.

Mr. Justice GUTHRIE delivered the opinion of the court.

This is an appeal prosecuted by Paul T. Walton, Kearns-Tribune Corporation, and Jerome B. Guinand, plaintiffs below, from a judgment entered in their favor in the sum of $1351.28, which they claim is insufficient and is based upon an incorrect measure of damages. In the court below, upon motion for summary judgment, an order was entered granting such motion on the question of liability; and the matter of damages was tried to the court, resulting in the judgment of which appellants complain. This controversy arose upon the following factual background.

Appellants sought damages for breach of a contract provision which appears in an assignment of an oil and gas lease from the United States covering certain lands in Campbell County, Wyoming, as follows:

'If assignee shall desire to surrender and release said lease to the United States before said lease terminates by operation of law of the lease terms, Assignee will accordingly give notice to Assignor at least thirty (30) days prior to the rental or expiration date, and if within fifteen (15) days thereafter, Assignor, or any one of them, shall notify Sinclair that such lease as to the lands included in the notice be reassigned to Assignor, then Assignee will, without warranty, reassign such lease to Assignor (or to such of them as so desire reassignment); but, if within such fifteen (15) days from date of notice, Assignor shall fail to notify Assignee that Assignor (or any of them) so desire reassignment, Assignee may, if it so desires, surrender to the United States such lease as to the lands described in such notice.'

The above provision was contained in an assignment of the subject oil and gas lease under date of July 3, 1963, wherein these appellants assigned the lease to Sinclair Oil and Gas Company, the predecessor in interest of Atlantic Richfield Company, appellee here and defendant below. The effective date of the base lease was December 1, 1959. Sinclair paid $3.00 per acre for the assignment of this lease and appellants reserved unto themselves an overriding royalty of 2 1/2 percent. The original lease was for a five-year term which was extended for an additional five years so that the primary lease term expired on November 30, 1969. Appellee and its predecessor paid a yearly rental during this entire term. There was in effect a regulation of the Department of Interior at the time of the expiration of this lease which would permit a lease to be segregated or separated into two leases if an assignment was made of a portion of the land in the original lease. When this was accomplished the lease for both portions, i. e., that retained and that assigned, was extended for two years from the effective date of the assignment and of course for so long thereafter as oil and gas or either of them was produced. This regulation applied only to leases issued prior to September 1, 1960.

On September 11, 1969, some two and one-half months prior to the expiration date of the assigned lease, inquiry was made by appellant Walton's office asking if the lease was to be extended by partial assignment and if so to whom and what acreage was covered thereby. The letter further advised that the subject lease and other leases would expire on November 1, 1969, unless extended by production, drilling, or partial assignments. On the bottom of this letter appellee advised that assignments had been filed and upon approval the lease would be extended for two years. On October 16, 1969, Walton made further inquiry advising of the expiration of the lease unless a partial assignment was filed and asked if such assignment were to be filed.

Appellee did give a partial assignment to Robert Haynie, which assignment was timely filed, but this was not approved by the Bureau of Land Management because of his failure to execute the request for approval of assignment which appears on the reverse of the assignment form. The Bureau notified Haynie of its refusal to approve this assignment, that it was too late to refile such assignment on November 4, 1969, and that unless there were drilling operations commenced thereon or production secured the lease would expire November 30, 1969. The lease did in fact expire and was obtained by another person.

Thereafter appellants filed suit claiming the sum of $114,309 as damages, based upon a claimed value of $100 per acre for the lands covered by the leases. After entry of the order decreeing liability as against appellee and the trial on the question of damages with the result earlier mentioned, appellants prosecuted this appeal. Rather than make our own summary we shall set out from appellants' brief the basis of this appeal:

'1. The trial court erred in its finding that plaintiffs' sole loss was the loss of their 2 1/2% overriding royalty since the plaintiffs also lost the lease which should have been reassigned to them. Consequently, the measure of damages should have been the value of the overriding royalty plus the value of the lease at the time it was lost.

'2. That since both parties approached the lawsuit thinking and contending that the damage to the plaintiffs was the loss of the lease plus the override and tried the lawsuit on that theory, the Court acted erroneously in its finding that the loss was only that of the override.'

No attack is made upon the judgment or findings herein except as before noted. The findings in this case are full and set out in some detail the basis of the court's decision. The court specifically found:

'3. In accordance with the memorandum opinion of this Court made and entered May 10, 1971, pursuant to which the Court's order made and entered May 21, 1971, was entered, the reassignment clause contained in the assignment of July 3, 1963, approved effective September 1, 1963, from Paul T. Walton and others to Sinclair Oil & Gas Company, is not applicable to the facts of this case upon the ground and for the reason that the defendant did not desire to surrender and release said lease, but desired to keep it and attempted to do so by obtaining an extension of two years through the process of assigning a portion of the acreage to another party, and that said lease expired by reason of the fact that through inadvertence and carelessness of such other party the request for approval of the assignment was not signed by such other party and the United States refused to approve the same, and the...