Williams v. Phillips Petroleum Co.

Citation453 F. Supp. 967
Decision Date19 May 1978
Docket NumberCiv. A. No. 76-254-P.
PartiesWoodrow Wilson WILLIAMS, Herman Lathan, Ora Dee Scarbrough, Seig M. Coaker, on behalf of themselves and all others similarly situated, Plaintiffs, v. PHILLIPS PETROLEUM COMPANY, a corporation, Defendant, and Wiley Fairchild et al., Defendants in Counterclaim.
CourtU.S. District Court — Southern District of Alabama

COPYRIGHT MATERIAL OMITTED

Christopher G. Hume, III, Mobile, Ala., S. J. Laurie, Chatom, Ala., for plaintiffs.

Broox G. Holmes and Edward G. Hawkins, Mobile, Ala., for defendant.

Harry H. Riddick and Oliver J. Latour, Jr., Mobile, Ala., for defendants in counterclaim.

OPINION AND ORDER

PITTMAN, Chief Judge.

This 28 U.S.C. § 1332 diversity action concerns the reformation of a mineral right and royalty transfer deed. The plaintiffs, representatives of a class, are the heirs and assignees of the heirs of Jessie R. Williams (also known as Jesse R. Williams) who died in 1970. Arnold Grenn, Wiley Fairchild, Rodney Fairchild, C. D. Fairchild and William Wallace Alfred, defendants in interpleader (hereinafter interpleader defendants or Grenn, et al.) are the assignees under said mineral right and royalty transfer deed from Jessie Williams to Arnold Grenn, dated April 16, 1970 (hereinafter Williams-Grenn deed), conveying an undivided fractional interest in and to all the oil, gas and other minerals described in said instrument.

This action was initiated by plaintiffs against Phillips Petroleum Company to release the royalties held in suspense by them attributable to 8.315 mineral acres, which had been placed in line for payment to plaintiffs. Phillips Petroleum Company filed a Counterclaim for Interpleader against plaintiffs and Grenn, et al., filed a Claim in Interpleader and a cross-claim against plaintiffs seeking reformation of the Williams-Grenn deed. Phillips Petroleum Company was dismissed as a party to the action by stipulation of all parties and by paying the royalties attributable to .815 acres to plaintiffs' class, thereby leaving a balance of 7.5 mineral acres held in suspense.

I. Factual Background

Jesse Williams (Williams) in 1963 was the owner of large tracts of land in Washington County, Alabama. Rumors were circulating in Chatom, the county seat, that oil was subject to discovery in various parts of the county. In December 1963, Williams leased oil and gas drilling rights to large tracts of his land in Section 20 to Brooks and Bianchi. In return for the lease, the lessees agreed to pay Williams or his heirs or assigns oil and gas royalties. By way of assignment, Phillips Petroleum, which at one time was a defendant and plaintiff in interpleader in this action but was later dismissed, presently owns the drilling rights relevant to this action in Section 20 purchased in 1963 by Brooks and Bianchi. Drilling by Phillips on this Section 20 property began on March 24, 1970, at what is named the Williams AA well. At that time, however, it was not definitely known whether oil existed in the area of operations. In March 1970, about when the drilling by Phillips began on the Williams AA well, Grenn, et al., as speculators, were searching in Washington County, Alabama, for mineral interests to purchase at $100 an acre. They offered to purchase mineral acres from Williams at this price. Grenn, et al., or their agents, traced title to Williams' mineral acres. Grenn, et al., intended to purchase and mistakenly determined that Williams owned a fractional interest in certain portions of land totaling 55 mineral acres. Grenn represented to Williams that the latter owned a total of 55 mineral acres in certain tracts described in a deed prepared by Grenn and presented to Williams. Williams was offered $150.00 per acre.

Grenn read to Williams some, but apparently not all, of the deed which was a form "Mineral Right and Royalty Transfer" deed. Williams was allegedly informed that he was conveying an undivided fractional interest in 55 mineral acres in Section 20, then under lease to Phillips Petroleum Company. On April 16, 1970, Williams marked the deed in execution of the document (he was unable to write). The reading and signing were witnessed by both Williams' brother and interpleader-defendant Wallace Allred's brother. The agreement was notarized.

Plaintiffs claim fraud was perpetrated by the grantees by inducing Williams to enter into a mineral deed at a time when he was not mentally aware of the consequences of his act. Mr. Williams, at the time of the conveyance, was in his 80's, and, for all practical purposes, blind. Payment by Grenn, et al., for the 55 acres at $150.00 was by a draft that was payable beginning ten days after the date of the transaction.

Williams died five months later on September 16, 1970. The remaining mineral interests owned by Williams in Section 20 descended to his heirs, the plaintiffs in this action. On November 20, 1970, the State Oil and Gas Board found the Williams AA well to be a producing well and certified all of Section 20 to be a producing zone.

In March 1971, Wallace Allred, attorney for the grantee and his principals, notified Howard Scott, attorney for Williams during his lifetime, and executor of his estate, of the failure of title to 7.5 mineral acres from the deed of April 1970. The disputed 7.5 mineral acres contained in the conveyance that was prepared by the grantee did not belong to Williams at the time he purported to convey this interest. Scott offered to refund the payment applicable to the 7.5 mineral acres ($1,125.00), but since the area was found to be productive, the offer was turned down and Grenn, et al., asked for conveyance of an unclouded 7.5 mineral acres. This request was turned down by Scott.

On January 6, 1975, an attorney for the Fairchild's wrote Phillips Petroleum Company and made a claim to 8.315 mineral acres covered by the Williams AA Lease. The royalties attributed to said 8.315 acres had been set up by Phillips for payment to the plaintiffs. As a result of the Fairchild's attorney's letter of January 6, 1975, Phillips Petroleum Company placed the royalties which had been set up for pay to the plaintiff's class and attributable to said 8.315 acres in suspense. On January 8, 1975, interpleader-defendants made another claim to additional acreage under the Williams AA Lease. Phillips furthermore filed a counterclaim in interpleader naming as defendants the heirs of Williams (original plaintiffs) and Grenn, et al., as the parties interested in the stake.

Grenn, et al., cross-claimed against plaintiffs for conveyance of 7.5 mineral acres as well as for reformation of the deed to reflect this conveyance. Plaintiffs also filed a cross-claim against Grenn, et al., for slander of title, damages and attorney fees. A non-jury trial was held and the court adopts the following conclusions.

II. Legal Conclusions
A. Reformation
1. Alabama Law of Equitable Modification of Agreements.

Grenn, et al., seek reformation of the 1970 Williams-Grenn deed to reflect what they contend to be the true intent of the parties. They contend the true intent of the parties was to convey a full 55 mineral acres, and therefore they are entitled to reformation of the instrument to include an additional 7.5 mineral acres. Some exploration of the history and bounds of ownership is necessary before this court can properly resolve the issues.

More than fourteen years ago, Williams granted David K. Brooks and John H. Bianchi an oil, gas and mineral lease (hereinafter called "Williams AA Lease") dated December 12, 1963, which covered certain lands in Section 20, Township 6 North, Range 4 West, Washington County, Alabama. The Williams AA Lease was recorded in Book 133, page 126 in the office of the Probate Judge of Washington County. By the terms of the agreements, Williams retained a one-eighth royalty interest in the leased mineral acres.

In the Williams-Grenn deed in 1970, Williams conveyed to Grenn the undivided mineral interest to any mineral rights he may have retained or which may have arisen out of the 1963 deed to Brooks and Bianchi, including the royalty interest he retained in the parcels described in the Williams-Grenn deed of 1970.

The 1970 deed, prepared by Grenn, contained a faulty description of the land conveyed. Partial title failure came about because the grantor Williams did not have good merchantable title to 7.5 mineral acres of the overall 55 conveyed. The Williams-Grenn deed attempted to grant the following interests in mineral acreage which Williams did not possess: one-eighth interest in and to 1.25 net mineral acres as S.W. ¼ of S.E. ¼ of S.E. ¼ of Section 20, Township 6 North, Range 4 West; one-eighth interest in and to 1.25 net mineral acres as S.E. ¼ of N.E. ¼ of S.E. ¼ of Section 20, Township 6 North, Range 4 West; one-half interest in and to 5 net mineral acres as N.E. ¼ of S.W. ¼ of N.E. ¼ of Section 20, Township 6 North, Range 4 West.

On September 16, 1970, Williams died. Through conveyances made prior to his death and by death, Williams' mineral interests encompassed by the Williams AA Lease devolved to the plaintiffs' class and to the defendants in counterclaim. It is undisputed that through grantor Williams the plaintiffs' class now owns 75 mineral acres in Section 20.

Phillips Petroleum Company had acquired the Williams AA Lease through mesne assignments from Brooks and Bianchi. Phillips spudded the Williams AA well on March 24, 1970, on a forty-acre drilling unit comprising the S.E. ¼ of the S.E. ¼ of Section 20, Township 6 North, Range 4 West, Washington County, Alabama. The well was completed prior to November 20, 1970.

By Order No. 70-17 of November 20, 1970, the State Oil and Gas Board of Alabama (1) found that the productive zone of the Williams AA well and all strata productive of hydrocarbons correlated with said zone constituted a separate and distinct gas producing pool in the Chatom field; and (2) enlarged the drilling unit for...

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    • 23 Diciembre 2010
    ...retreading that ground here. 30.The only case that Mortensen cites in support of his "research" is Williams v. Phillips Petroleum Co., 453 F. Supp. 967 (S.D. Ala. 1978), as to which he provides no explanatory verbiage. As to slander of title, the Williams decision states that "[a] good fait......
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    ...Lathrop, 94 Cal. 56, 29 P. 329 (1892)." In such a case, an error in drafting establishes mutuality of mistake, Williams v. Phillips Petroleum Co., 453 F.Supp. 967 (S.D.Ala.1978); Fidelity Service Ins. Co. v. A.B. Legg & Sons Burial Ins. Co., 274 Ala. 94, 145 So.2d 811 (1962); and it is imma......
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    ...Duckett v. Lipscomb, 287 Ala. 668, 255 So.2d 12 (1971). An error in drafting establishes mutuality of mistake. Williams v. Phillips Petroleum Co., 453 F.Supp. 967 (S.D.Ala.1978); Fidelity Service Ins. Co. v. A. B. Legg & Sons Burial Ins. Co., 274 Ala. 84, 145 So.2d 811 (1962). In such a cas......
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    ...The defendant's reliance upon the defense of no mutuality of mistake is misplaced, as a close reading of Williams v. Phillips Petroleum Co., 453 F.Supp. 967 (S.D.Ala.1978), aff'd, 614 F.2d 293 (5th Cir.1980) (applying Alabama law) reveals. The plaintiff here is not seeking reformation of an......
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