Wickham v. Gulf Oil Corp.

• Decision Date: 27 January 1981
• Docket Number: No. 52871,52871
• Citation: 623 P.2d 613,1981 OK 8
• Parties: Kenneth WICKHAM, Jr. and Nannette Crane Wickham, Appellants, v. GULF OIL CORPORATION, Gasanadarko, Ltd., and Inexco Oil Company, Appellees.
• Court: Oklahoma Supreme Court

Page 613

623 P.2d 613

1981 OK 8

Kenneth WICKHAM, Jr. and Nannette Crane Wickham, Appellants, v. GULF OIL CORPORATION, Gasanadarko, Ltd., and Inexco Oil Company, Appellees.

No. 52871.

Supreme Court of Oklahoma.

Jan. 27, 1981.

Appeal from District Court of Roger Mills County; Charles M. Wilson, District Judge.

The appellants, Kenneth Wickham, Jr. and Nannette Crane Wickham, bring this appeal from the District Court of Roger Mills County, the Honorable Charles M. Wilson, presiding. Plaintiffs sought to remove a cloud on their title consisting of certain leasehold interests held by appellees. Appellants contended 52 O.S.1971 § 87.1(b) applied to contractual interests created prior to the effective date of the statute. The trial court sustained appellees' demurrers to the petition and thereafter dismissed the action. Appellants perfect this appeal.

AFFIRMED.

Thomas J. Kenan, George, Kenan, Robertson & Lindsey, Oklahoma City, for appellants.

Michael C. Smith, Tulsa, for appellee Gulf Oil Corp.

McAfee, Taft, Mark, Bond, Rucks & Woodruff by Judson S. Woodruff, Philip D. Hart, Oklahoma City, for appellees Gasanadarko, Ltd. and Inexco Oil Co.

HARGRAVE, Justice.

In 1967, Kenneth Wickham owned 2,552 acres of land scattered over nine miles in nine sections in Roger Mills County, Oklahoma. Mr. Wickham was an incompetent and had as his guardian Charles Hamilton. Mr. Hamilton, acting on behalf of Mr. Wickham, agreed to lease to Gulf Oil Corporation (Gulf Oil), co-appellee, the 2,552 acres for oil and gas purposes and executed on November 8, 1967, in favor of the appellee, a ten-year primary term oil and gas lease. Pursuant to this lease, Gulf Oil assigned undivided interests in the property to Gasanadarko, Ltd. (Gasanadarko) and to Inexco Oil Company (Inexco), co-appellees.

In 1969, Mr. Wickham died and his mineral interests in the 2,552 acres were acquired by devise by his widow, Nannette Crane Wickham, and his son, Kenneth Wickham, Jr., the appellants.

In 1977, during the final year of the primary term of the appellees' lease but before any drilling activities had been commenced on the leased lands, the Oklahoma Legislature enacted Enrolled Senate Bill No. 7 to amend the Oklahoma Spacing Law, 52 O.S.1971, § 87.1. While the bill made two major changes, only one, Section 87.1(b) is involved in this litigation. Section 87.1(b) states:

In case of a spacing unit of one hundred sixty (160) acres or more, no oil and/or gas leasehold interest outside the spacing unit involved may be held by production from the spacing unit more than ninety (90) days beyond expiration of the primary term of the lease. 52 O.S.Supp.1980 § 87.1(b).

After Senate Bill No. 7 was enacted on May 27, 1977, but before the primary term of the lease expired in November, the appellees began drilling a well located in Section 26, 15 North, 23 West, one of the nine sections named in the lease. Although the lease expired before the completion of the drilling of the well, the lease contained provisions that allowed the lessee appellees "the right to drill to completion with reasonable diligence and dispatch (1) any well commenced within the terms of this lease ..." and that "(i)f oil, gas or any other minerals ... be found in paying quantities in any such well, this lease shall continue and be in force with like effect as if such well had been completed within the (primary term) ...."

More than ninety days after the expiration of the primary term of the lease, the Oklahoma Corporation Commission, on application of the appellants, held a hearing on March 30, 1978, and issued Order No. 139580 which established Section 26-15N-23W as a 640 acre drilling and spacing unit for the production of gas and gas condensate from the sands or formations in which the appellees' well was being completed.

Pursuant to this order, Mrs. Wickham and her son demanded that the appellee oil companies execute and deliver to them a release of all interests in the lands named in the November 8, 1967, lease except Section 26-15N-23W. The appellees refused and thereby allegedly caused, the appellants contend, a cloud on the appellants' title to the mineral interests in the leased property. Thereupon the Wickhams brought an action on June 8, 1978, in the District Court of Roger Mills County, Oklahoma, asking that title to the 1,912 acres of leased land lying outside of the established spacing unit (Section 26-15N-23W) be quieted in their favor; that they be given possession of the 1,912 acres; and that the appellees' oil and gas interests in the 1,912 acres be adjudged to have expired. The Wickhams grounded their petition on the fact that more than ninety days had elapsed since the primary term of the 1967 lease had expired and that Senate Bill No. 7 prohibited the holding by production of any lands outside the 640 acre spacing unit in which the appellees' well was located after such a ninety day period.

The appellee oil companies demurred to the appellants' petition, Gasanadarko and Inexco demurring generally and Gulf Oil demurring specially. Gulf Oil alleged that Section 87.1(b), if applied to the Corporation Commission's order of March 30, 1978, and to the appellees' leasehold interests created prior to the Section's enactment, would violate both State and Federal Constitutional provisions which prohibit the enactment of any law which impairs contractual obligations. U.S.Const. Art. I, § 10; Okla.Const. Art. II, § 15.

On August 22, 1978, at the hearing on the demurrers, the appellees also advanced the argument that retroactive application of Senate Bill No. 7 would violate the due process clauses of the State and Federal Constitutions. The trial judge, the Honorable Charles M. Wilson, sustained the demurrers and granted the appellants twenty days in which to amend their petition. Upon the appellants' failure to amend, the trial judge, in an order dated October 16, 1978, dismissed the case

on the ground that Section 87.1(b) ..., which became effective May (27), 1977 ... was not applicable to oil and gas leases already existing at the time such statute became effective, or if applicable to such leases was unconstitutional and void insofar as made applicable to such leases.

Whereupon the appellants on October 17, 1978, perfected an appeal to this Court. The appellants' first contention on appeal is that the Oklahoma Legislature intended the provisions of Senate Bill No. 7 to apply retrospectively to its date of enactment to oil and gas leases such as the 1967 lease involved in this litigation oil and gas leases existing at the time the bill was enacted.

This determination of a legislative intention of retroactive application is based on the appellants' theory of statutory construction and is advanced without benefit of judicial or statutory authority. The appellants argue that the Legislature by re-enacting Title 52, Section 87.1 in its entirety "rather than by the simpler method of referring only to the two sentences in the former statute that were altered and by adding the new subsection (b)," underscored "its intention that the amended portions of the Spacing Law (be) on an equal footing with the already existing provisions." The appellants further contend that the absence of express language in the statute that the provisions apply only prospectively negates any contrary interpretation of legislative intention.

While this Court agrees with the appellants that legislative intent is of paramount importance in the determination of a statute's retrospective or prospective application and that it is the object of this Court to ascertain the legislative intent guided by principles of statutory construction, Lau v. Nelson, 92 Wash.2d 823, 601 P.2d 527, 529 (1979), the Court disagrees with the appellants' interpretation of such principles and with their contention that such principles lead to the conclusion that the legislature intended Section 87.1(b) to apply to leases existing at the time the section was enacted.

The Court's decision is based on general principles of statutory construction as evidenced in the following discussion. Although the factual situations of the caselaw authority vary, the basic principles derived therefrom are nonetheless applicable in the resolution of the case at bar.

As a rule, "(s)tatutes are generally presumed to operate prospectively." Scott Paper Company v. City of Anacortes, 90 Wash.2d 19, 32, 578 P.2d 1292, 1299 (1978). However, this presumption does not defy rebuttal if the purposes and intention of the Legislature to give a statute a retrospective effect are expressly declared or are necessarily implied from the language used. State v. Ward, 189 Okl. 532, 538, 118 P.2d 216, 223 (1941) (citing Good v. Keel, 29 Okl. 325, 327, 116 P. 777, 777 (1911)). An examination of the language contained in ...