Title: Moncrief v. Harvey

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Moncrief v. Harvey1991 WY 100816 P.2d 97Case Number: 90-122, 90-123, 90-124, 90-125Decided: 07/18/1991Supreme Court of Wyoming
W.A. MONCRIEF, JR.; 
RICHARD W. MONCRIEF AND CHARLES B. MONCRIEF, INDEPENDENT EXECUTORS OF THE ESTATE 
OF W.A. MONCRIEF, DECEASED, APPELLANTS (DEFENDANTS),

v.

M.J. HARVEY, JR., 
APPELLEE (PLAINTIFF).

M.J. HARVEY, JR., 
APPELLANT (PLAINTIFF),

v.

TEXACO INC., APPELLEE 
(DEFENDANT).

TEXACO INC., APPELLANT 
(DEFENDANT),

v.

M.J. HARVEY, JR., 
APPELLEE (PLAINTIFF).

M.J. HARVEY, JR., 
APPELLANT (PLAINTIFF),

v.

W.A. MONCRIEF, JR.; 
RICHARD W. MONCRIEF AND CHARLES B. MONCRIEF, INDEPENDENT EXECUTORS OF THE ESTATE 
OF W.A. MONCRIEF, DECEASED; AND TEXACO INC., APPELLEES (DEFENDANTS).

Appeal from the District 
Court, NatronaCounty, Harry E. Leimback, 
J.

Morris R. Massey of Brown 
& Drew, Casper, for W.A. Moncrief, Jr., Richard W. Moncrief, Charles B. 
Moncrief.

Robert Jerry Hand of Hand 
& Hand, Casper, Richard V. Gose, Las Cruces, N.M., Thomas J. Nance, David S. 
Steefel and Richard G. Wilkins of Holme Roberts & Owen, Denver, Colo., 
for M.J. Harvey, Jr.

Houston G. Williams of 
Williams, Porter, Day & Neville, Casper, and Marvin G. Twenhafel, Texaco 
Inc., Denver, Colo., for Texaco Inc.

Before URBIGKIT, C.J., 
and THOMAS, CARDINE, and MACY, JJ., and ROONEY, J. (Retired).

CARDINE, Justice.

[¶1.]     This consolidated case 
of four appeals presents questions concerning the amount of liability for 
overriding royalty proceeds from a gas well in the Tepee Flats Unit, Natrona County, Wyoming. A series of summary judgment orders 
were entered in favor of M.J. Harvey, Jr. (Harvey) by the district court. In case number 
90-122, the Moncrief executors (Moncriefs) appeal from the trial court's order 
determining royalty proceeds, statutory interest, and attorney fees. In case 
number 90-123, Harvey appeals an order favorable to Texaco 
upon joint and several liability and the application of proceeds to principal 
and interest due. In case 90-124, Texaco appeals from summary judgment entered 
against it. Case 90-125 is a cross-appeal by Harvey.

[¶2.]     We affirm in part and 
reverse in part.

[¶3.]     Moncriefs raise the 
following issues: 

"1. Did the District 
Court err in holding that commitment of the leased lands to the Tepee Flats Unit 
Agreement as authorized by Section 3(c) of the lease was ineffective to subject 
Harvey's 
overriding royalty interest in the leased lands to the unit 
agreement?

"2. Are the provisions of 
W.S. §§ 30-5-301 et seq. applicable 
to a dispute over the amount of production proceeds payable as distinguished 
from a dispute over who should receive the proceeds?

"3. Is the District 
Court's determination that attorneys' fees aggregating $259,996.22 are 
reasonable in amount properly supported?"

M.J. Harvey, in his 
appeal, raises the following additional issues:

"1. Is Defendant Texaco 
jointly and severally liable to Harvey for the 
entire amount of the 5% overriding royalty interest owned by Harvey (the `5% 
Override')?

"2. Does Wyo. Stat. §§ 
30-5-301 to -305 (1977) (the `Royalty Payment Act') apply to Defendant Texaco so 
that Harvey is entitled to recover from Defendant Texaco penalty interest 
thereunder, together with all court costs and reasonable attorneys' fees 
incurred by Harvey in these proceedings?

"3. Should any partial 
payments that have been made by Defendants to Harvey be applied first to accrued interest due on the 
unpaid principal balance of the debt, and second to the unpaid principal balance 
itself, in accordance with the well-established `United States' 
rule, or be applied in some other manner?

"4. Does penalty interest 
at the rate of 18% per year, under Section 30-5-303(a) of the Royalty Payment 
Act, commence to accrue on June 1, 1982, the effective date of the Royalty 
Payment Act, or six months thereafter?"

[¶4.]     Texaco joins in 
Moncriefs' first issue, and raises the following additional issue:

"Is the judgment of the 
District Court contrary to the Wyoming Oil and Gas Conservation 
statutes?"

[¶5.]     The issues raised in 
Harvey's 
cross-appeal, case number 90-125, are encompassed by the issues mentioned above 
and need not be mentioned separately.

[¶6.]     On January 7, 1970, the 
State of Wyoming executed oil and gas lease 
number 70-806 to Judith Walker of Dallas, Texas 
covering the following described property:

SE 1/4 S.E. 1/4 of 
Section 8;

S 1/2 SW 1/4 of Section 
9;

N 1/2 and N 1/2 of the SW 
1/4 of Section 16;

NE 1/4 NE 1/4 of Section 
17

all located in Township 
37 N., Range 86 W. of the 6th P.M., Natrona 
County, Wyoming (hereinafter called 
the Harvey 
lease). The State reserved to itself a one-eighth, or 12 1/2 percent, royalty. 
Judith Walker assigned the lease on January 29, 1970, to M.J. Harvey, Jr. Harvey 
assigned the lease to Texaco on November 1, 1976, reserving to himself a five 
percent overriding royalty interest.

[¶7.]     After acquiring the 
Harvey lease and 
other oil and gas leases in the vicinity, Texaco formed the Tepee Flats Unit. 
All owners of interests in the unit area were invited to join the unit, 
including Harvey. Harvey refused to join the unit.

[¶8.]     The State of Wyoming joined the unit 
by instrument entitled "Approval-Certification-Determination" dated December 6, 
1979. This instrument provided

"[t]hat the said unit 
agreement shall become effective only as to those state lands now or hereafter 
included within the limits of the unit area and as to which the respective 
lessees and the then approved working and royalty interests shall subscribe to 
said agreement."

[¶9.]     On September 11, 1979, 
Texaco and W.A. Moncrief entered into a Farmout Agreement which included the 
Harvey lease and 
other leases held by Texaco. The agreement required Moncriefs to commence the 
actual drilling of a test well within section 16 on or before December 30, 1979. 
(The unitization agreement for the Tepee Flats Unit required the drilling of a 
test well within six months of its effective date.) Upon diligent completion of 
the well, Texaco was to assign to Moncriefs 100 percent of its interest in the 
subject lease within the initial participating area, 50 percent of the remainder 
of the subject lease outside of the initial participating area, and 50 percent 
of the remainder of the Harvey lease lands and other leases Texaco 
owned. Moncriefs were to reassign 50 percent of the working interest in the 
drill site tract to Texaco on payout of the test well.

[¶10.]  The Tepee Flats 16-1 well was completed 
in section 16 on January 13, 1981. Texaco assigned the portion of the lease 
located in section 16 to the W.A. Moncrief on July 8, 1982. This assignment was 
expressly made subject to Harvey's previously reserved overriding royalty 
interest. By another assignment dated July 8, 1982, Texaco assigned 50 percent 
of the remainder of the Harvey lease lands to Moncriefs. The well 
produced until December 1985, when it was shut in.

[¶11.]  By a decision dated June 29, 1982, the 
USGS established a participating area of 1,440 acres for the 16-1 well. This 
area included the lands covered by the Harvey lease. The State took an administrative 
appeal from the USGS order.

[¶12.]  The State of Wyoming and Harvey next 
filed suit in state district court claiming that they were entitled to 12.5 
percent and five percent, respectively, of all production of the 16-1 well, 
rather than to the share of production allocated to the Harvey lease lands under 
the unitization agreement. The State and Harvey 
argued that the Tepee Flats Unit Agreement was not effective as to the Harvey lease lands because Harvey never signed the unit 
agreement.

[¶13.]  Moncriefs and Texaco successfully 
petitioned for removal of the case to federal district court. The State settled 
its claims with Moncriefs in April of 1986. The State withdrew its 
administrative appeal, and this case was remanded to state court for 
determination of the remainder of the issues.

[¶14.]  By decision letter filed December 4, 
1989, the trial court granted summary judgment in favor of Harvey, holding that his 
interest had not been committed to the Tepee Flats Unit Agreement. In subsequent 
proceedings, the court held that Harvey was entitled to receive from Moncriefs 
five percent of all proceeds from the sale of all oil and gas from the well 
since first production. The court also ordered Moncriefs to pay Harvey interest on 
wrongfully withheld proceeds at 18 percent per annum commencing six months from 
the time that the Royalty Payment Act, W.S. 30-5-301, et seq., became operative and at seven 
percent per annum prior to that time since the date of first 
production.

[¶15.]  The parties stipulated to the amount of 
production from the well, the sales credited to Texaco and Moncriefs, and the 
payments by Moncriefs to Harvey. On April 2, 1990, the court entered 
judgment against Moncriefs in favor of Harvey in the amount of $1,462,117.79, of which 
$641,545.89 represented the principal amount due and $820,571.90 represented 
accrued interest. The court entered a separate order of summary judgment against 
Texaco for the difference in royalties paid to Harvey on behalf of Texaco after April 1985 and 
five percent of the proceeds of the 16-1 well credited to Texaco since that 
time, plus interest thereon of seven percent. The parties stipulated to the 
calculation of principal and interest due Harvey from Texaco. The judgment against Texaco 
was in the amount of $26,266.90, representing principal of $20,393.90 and 
interest of $5,873.00. The judgment against Moncriefs provided that any payment 
of the judgment against Texaco would reduce the amount owed by 
Moncriefs.

[¶16.]  The court rejected the 
"United 
States rule" requiring application of sums paid 
first to interest and then to principal. After a hearing on attorney fees, the 
court ordered Moncriefs to pay Harvey's attorney fees in the amount of 
$259,996.22, together with court costs of $25.

[¶17.]  (A note on nomenclature: W.A. Moncrief 
died during the pendency of this litigation. W.A. Moncrief, Jr., Richard W. 
Moncrief, and Charles B. Moncrief are the independent executors of his estate 
and present parties to this appeal. For simplicity's sake, where action in this 
litigation was undertaken by either W.A. Moncrief or his executors, we have 
referred to them as "Moncriefs." With regard to prelitigation documents signed 
by W.A. Moncrief, we referred to him by name as an individual.)

[¶18.]  With the exception of the issue of the 
amount of attorney fees to be awarded to Harvey, all the issues in this case 
were decided as matters of law on motions for summary judgment. With the stated 
exception, we find that there are no genuine issues of material fact and that 
the issues presented for determination concern only questions of 
law.

[¶19.]  When reviewing the trial court's grant of 
summary judgment, we examine the case in the same manner as the trial court, 
treating the motion as though originally before this court and using the 
identical material and information which was presented to the trial court. Baldwin v. Dube, 751 P.2d 388, 390 
(Wyo. 1988). 
The task of this court is identical to that of the trial court and requires a 
dual finding that there was no genuine issue of material fact and that the 
prevailing party was entitled to judgment as a matter of law. Schepps v. Howe, 665 P.2d 504, 506 
(Wyo. 1983). 
When considering questions of law, we accord no special deference to, and are 
not bound by, the district court's decision. Matter of North Laramie Land Co., 605 P.2d 367, 373 (Wyo. 1980).

Harvey's Interest and the Unit 
Agreement

[¶20.]  The Tepee Flats Unit Agreement is a 
unitization plan under the Mineral Leasing Act, 30 U.S.C. § 181, et seq. This Act, which authorizes 
federal lessees and their representatives to formulate a unit plan for 
development of an oil and gas pool or field, provides:

"For the purpose of more 
properly conserving the natural resources of any oil or gas pool, field, or like 
area, or any part thereof * * *, lessees thereof and their representatives may 
unite with each other, or jointly or separately with others, in collectively 
adopting and operating under a cooperative or unit plan of development or 
operation of such pool, field, or like area, or any part thereof, whenever 
determined and certified by the Secretary of the Interior to be necessary or 
advisable in the public interest." 30 U.S.C. § 226(m) (1988).

[¶21.]  The State of Wyoming, by its Board of 
Land Commissioners, may join state leases in unit plans under the Mineral 
Leasing Act pursuant to W.S. 36-6-101(d) (Cum.Supp. 1990), which provides in 
pertinent part:

"The board, on behalf of 
the state, and its lessee or lessees in any such mineral lease are hereby 
further authorized to join, in the interest of conservation and greater ultimate 
recovery of oil and gas, in fair and equitable cooperative or unit plans of 
development or operation of oil and gas pools, with the United States government 
and its lessees * * *."

[¶22.]  The producing well involved in this case 
was drilled pursuant to a voluntary unitization agreement. Where the unitization 
agreements are voluntary, it is strictly up to the interest holders whether they 
execute or refuse to execute and join the unit agreements. A lessee is without 
authority to unitize the royalty interest with other interests without consent 
of the interest owner. 1 Myers, Law of 
Pooling and Unitization: Voluntary-Compulsory § 14.03 at 498 (2nd ed. 1967). 
It is undisputed that Harvey did not sign the voluntary unit 
agreement in this case. He specifically refused to sign a Ratification, Consent 
and Joinder to the unit agreement. When mailed a royalty check by W.A. Moncrief, 
he accepted it only in partial payment of his full five percent royalty interest 
and demanded the balance due, with interest. Thus, Harvey's interest was not committed to the unit agreement, 
unless in some way without Harvey's express consent.

[¶23.]  Moncriefs claim that Harvey gave his consent to 
unitization by the language in the state lease under which he obtained his 
interest. If this is so, assent to the unit agreement itself was not necessary. 
Bruce v. Ohio Oil Co., 169 F.2d 709, 
713 (10th Cir. 1948), cert. denied 
336 U.S. 913, 69 S. Ct. 604, 93 L. Ed. 1077 
(1949). The relevant portion of the state lease reads as follows:

"Section 3. The lessor 
[State of Wyoming] expressly reserves:

* * * * * *

"(c) The right, with consent of the lessee, to commit 
the herein leased lands in a unit or co-operative plan of development, and to 
establish, alter, change or revoke the drilling, producing, and royalty 
requirements of the lease to conform therewith." (emphasis added)

[¶24.]  The question presented is whether, by the 
phrase "consent of the lessee," the State bound itself to obtain consent to 
unitization from a lessee who assigned the lease but retained an overriding 
royalty interest.

[¶25.]  An oil and gas lease is a contract, and 
we interpret it using the doctrines applicable to contracts. State v. Moncrief, 720 P.2d 470, 473 
(Wyo. 1986). 
Our basic purpose in construing or interpreting a contract is to determine the 
intention and understanding of the parties. True Oil Co. v. Sinclair Oil Corp., 771 P.2d 781, 790 (Wyo. 1989). If a contract is in writing and 
the language is clear and unambiguous, the intention of the parties is found in 
the words of the contract. Id. If the contract 
is ambiguous, resort may be had to extrinsic evidence. Id. Whether ambiguity exists is a question 
of law. Id. In this 
case, the lease is clear and unambiguous. When the phrase "consent of lessee" is 
applied to a lessee who assigns the lease but retains an interest, the intent of 
the parties can be ascertained from language used in the lease and established 
as a matter of law.

[¶26.]  Commitment of a tract to unitization 
obviously involves a calculated weighing of the benefits and detriments involved 
in unitizing the subject lands. The parties may have had in mind the risks 
lessee faced by agreeing to unitize its interest or refusing to do so. Cf., Superior Oil Co. v. Roberts, 398 S.W.2d 276, 277-78 (Tex. 1966); California Co. v. Britt, 247 Miss. 718, 154 So. 2d 144, 
148 (1963). The clause provides lessee a voice in assuming (or not assuming) the 
risks of unitization. Thus, it is held that an assignor who retains an 
overriding royalty interest is also entitled to the protection afforded by the 
express or implied covenants of the lease. See e.g., Wes-Tex Land Co. v. Simmons, 
566 S.W.2d 719, 721 (Tex.Civ.App. 1978); Gould v. Schlachter, 443 S.W.2d 764, 765 
(Tex.Civ.App. 1969); Childress v. 
Siler, 272 S.W.2d 417, 420 (Tex.Civ.App. 1954). Harvey did not surrender 
this protection by becoming an assignor.

[¶27.]  We conclude that the word "lessee" as 
used in the unitization clause was intended to cover lessee/assignors who retain 
an interest in the lease. A lessee/assignor who retains an interest is subject 
to many of the same risks as the assignee if the leasehold is unitized without 
his consent. He is entitled to protection of his interest under existing case 
law. We hold that the unitization clause could not unitize Harvey's overriding 
royalty interest without his consent, and his consent was never 
given.

[¶28.]  Next presented is the status of the 
State's attempted unitization of its interests in the Tepee Flats Agreement. Is 
the State's attempt to join the Harvey lease 
lands in the unit void because Harvey did not consent? The answer lies in the 
nature of voluntary unitization. Initially the State asserted a claim that it 
had improperly joined the unit agreement without Harvey's consent. The State then abandoned that 
claim and makes no such argument now. Since the State, Texaco and Moncriefs now 
all consent to joining the unit agreement, their interests were committed 
voluntarily. Harvey is not prejudiced by having the State 
remain part of the unit, so long as he receives payment in the full amount of 
his interest. There being no prejudice to Harvey, there is no reason to disturb the 
State's commitment to the unit agreement or that of the other 
parties.

[¶29.]  Harvey did not consent to unitization of his 
five percent overriding royalty interest, either by signing the unitization 
agreement or by the terms of the original lease. Since well 16-1 is located on a 
leasehold on which Harvey has a five percent overriding royalty interest, and 
since Harvey's interest was not made subject to unitization by his consent in 
either the lease or the unitization agreement, Harvey is entitled to a full five 
percent share of production from the well. We uphold the trial court's entry of 
summary judgment on this issue and on the issue of the amount of unpaid 
royalties due from Moncriefs.

The Oil and Gas 
Conservation Statute

[¶30.]  Texaco argues that holding for Harvey in this case violates the conservation policy of the 
State of Wyoming and specifically contravenes the 
policies inherent in the Wyoming Oil and Gas Conservation Statute, W.S. 
30-5-101, et seq. Our holding, 
however, does not deunitize the lands involved or violate conservation policy. 
It merely awards Harvey his full royalty interest.

[¶31.]  The unit agreement involved here is 
voluntary. Voluntary unit agreements are not per se wasteful simply because they 
require the consent of interest owners. Moncriefs could have sought forcible 
pooling in this instance under W.S. 30-5-110(c) but did not elect to do so. They 
are bound by that choice.

Interest on Production 
Proceeds

[¶32.]  The parties raise various issues 
concerning the applicability of the penalty interest provisions of the Royalty 
Payment Act, W.S. 30-5-301, et seq. 
This section considers the applicability of these provisions to Moncriefs while 
postponing our discussion of their applicability to Texaco.

[¶33.]  The two issues presented are: (1) whether 
the Royalty Payment Act applies to Moncriefs in this situation; and (2) if so, 
from what date should interest be calculated. The Act, which took effect on June 
1, 1982, reads in pertinent part as follows:

"30-5-301. Payment for 
production; time for payment; payor.

"(a) The proceeds derived 
from the sale of production from any well producing oil, gas or related 
hydrocarbons in the state of Wyoming shall be paid to all persons legally 
entitled thereto, except as hereinafter provided, commencing not later than six 
(6) months after the first day of the month following the date of first sale and 
thereafter not later than sixty (60) days after the end of the calendar month 
within which subsequent production is sold, unless other periods or arrangements 
for the first and subsequent payments are provided for in a valid contract with 
the person or persons entitled to such proceeds. Payment shall be made directly 
to the person or persons entitled thereto by the lessee or operator or by any 
party who assumes such payment obligation under any legal 
arrangement."

"30-5-302. Same; interest 
on late payments.

"Any delay in determining 
any person legally entitled to an interest in the proceeds from production shall 
not affect payments to all other persons entitled to payment. In instances where 
payment cannot be made for any reason within the time limits specified in W.S. 
30-5-301(a), the lessee or operator, purchaser or other party legally 
responsible for payment shall deposit all proceeds credited to the eventual 
interest owner to an escrow account in a federally insured bank or savings and 
loan institution in Wyoming * * * which deposit shall earn interest at the 
highest rate being offered by that institution for the amount and term of such 
deposits."

"30-5-303. Same; penalty 
for violation; jurisdiction; costs and fees.

"(a) Any lessee or 
operator, purchaser or other party legally responsible for payment who violates 
the provisions of this article is liable to the person or persons legally 
entitled to proceeds from production for the unpaid amount of such proceeds, 
plus interest at the rate of eighteen percent (18%) per annum on the unpaid 
principal balance from the due date specified in W.S. 30-5-301(a).

"(b) * * * the prevailing 
party in any proceedings brought pursuant to this article shall be entitled to 
recover all court costs and reasonable attorney's fees."

[¶34.]  Moncriefs claim that the Act does not 
apply to them in this instance because it is intended to apply to disputes over 
who should receive production 
proceeds rather than disputes over the amount payable. This dispute clearly 
involves only Moncriefs' failure to pay Harvey the full amount of royalties due and 
whether this failure falls within the provisions of W.S. 
30-5-303(a).

[¶35.]  Our primary purpose in construing a 
statute is to determine the intent of the legislature. Legislative intent should 
be ascertained, as nearly as possible, from the language of the statute viewed 
in the light of its object and purpose. Belle Fourche Pipeline Co. v. State, 766 P.2d 537, 542 (Wyo. 1988).

[¶36.]  The Royalty Payment Act is a remedial 
statute. Such statutes are to be liberally construed to achieve their remedial 
purpose. In re General Adjudication of 
Bighorn River System, 753 P.2d 76, 114 (Wyo. 1988), aff'd 492 U.S. 406, 109 S. Ct. 2994, 106 L. Ed. 2d 342, reh. denied 
492 U.S. 938, 110 S. Ct. 28, 106 L. Ed. 2d 639 (1989); Vigil v. Tafoya, 600 P.2d 721, 724 
(Wyo. 1979). 
In Independent Producers Marketing Corp. 
v. Cobb, 721 P.2d 1106, 1110 (Wyo. 1986), we expressed the remedial purpose 
of this Act as follows:

"The district court's 
application of the Royalty Payment Act in this case is consistent with the 
legislature's obvious intent to stop oil producers from retaining other people's 
money for their own use."

[¶37.]  Although there is no legislative history 
available for this statute, the language of the statute itself clearly 
demonstrates its remedial intent. There is nothing "result oriented" about 
reading this statute as written. A result oriented decision is one which reaches 
a decision contrary to the statute but in accordance with the author's personal 
opinion of perceived justice. This is inappropriate appellate practice which we 
decline to embrace.

[¶38.]  Moncriefs would have us limit the 
application of this statute to protecting interest owners during the pendency of 
a dispute over who should receive the 
proceeds of production. Since this dispute did not involve who, they claim the statute has no 
application. They point to the language of W.S. 30-5-302, wherein it provides: 
"Any delay in determining any person 
legally entitled to an interest in the proceeds from production shall not affect 
payments to all other persons entitled to payment." (emphasis added) Moncriefs' 
reading of W.S. 30-5-302 is overly restrictive. The use of the phrase "any 
person" does not limit the scope of the entire statute.

[¶39.]  The clear language of W.S. 30-5-302 
concerning the duty to escrow disputed proceeds is determinative:

"In instances where 
payment cannot be made for any reason 
within the time limits specified in W.S. 30-5-301(a) [the party legally 
responsible] shall deposit all proceeds credited to the eventual interest owner 
to an escrow account * * *." (emphasis added)

The words "any reason" in 
the statute and escrow provisions establish a clear intent to include disputes 
over the correct amount of payment to 
be made as well as a dispute over the correct payee.

[¶40.]  The Royalty Payment Act also provides 
protection to the legally responsible payor. The payor needs merely to deposit 
the disputed proceeds in an escrow account to avoid paying penalty interest. 
Moncriefs knew that Harvey had never signed the unit agreement and 
that he contested the amount of royalties due. They might have placed the 
contested proceeds into an escrow account and avoided penalty interest. They did 
not do so. We hold, therefore, that the trial court properly determined that 
Moncriefs' failure to pay royalty proceeds to Harvey brought them within W.S. 30-5-301, et seq. and that their failure to place 
the disputed funds in escrow made them liable for interest pursuant to the 
statute.

[¶41.]  Next considered is the date Moncriefs' 
duty to pay 18 percent interest commenced under the Act. This issue arises 
because the date of first sale of gas from the well was on January 13, 1981, and 
the Royalty Payment Act became effective June 1, 1982. The 18 percent penalty 
imposed acts as a disincentive for oil producers wrongfully to hold back royalty 
payments, thereby collecting interest on other people's money. In this case, 
Moncriefs were aware of the "bona fide contract dispute" with Harvey, yet they held back 
his money, thereby reaping the benefit of possession of money. A "good faith" 
exception is incorporated into this statute. It is in the provision which allows 
a producer to place the contested monies in escrow. By doing so, he avoids 
improper gain from proceeds which may not be his to begin with.

[¶42.]  The district court's order awarded 
Harvey interest 
at the rate of seven percent for production prior to December 1, 1982, which was 
for the six months prior to enactment of the statute. Commencing with the 
proceeds derived from the sale of production during September 1982, Harvey was awarded 
interest under the Royalty Payment Act at the rate of 18 percent per year, which 
began accruing December 1, 1982. See, 
1982 Wyo. 
Sess. Laws ch. 27. The Act provides that

"[t]he proceeds derived 
from the sale of production from any well producing oil, gas or related 
hydrocarbons in the state of Wyoming shall be paid to all persons legally 
entitled thereto, except as hereinafter provided, commencing not later than six (6) months 
after the first day of the month following the date of first sale and thereafter 
not later than sixty (60) days after the end of the calendar month within which 
subsequent production is sold * * *." W.S. 30-5-301(a) (emphasis 
added).

[¶43.]  In this case, the "date of first sale" 
from the well occurred prior to the effective date of the statute. In Cobb, we stated that the Royalty Payment 
Act sanction

"is precipitated by the 
payor's failure to pay the proceeds of production at any time more than six 
months after the first day of the first month after the date of first sale. * * 
* The Act is not applied retroactively just because the proceeds happen to be 
generated by production that occurred prior to the Act's effective date." Cobb, 721 P.2d  at 1109.

In Cobb, we upheld the trial court's order 
giving IPMC the benefit of the six-month "grace period" imposing the penalty 
only to the extent that IPMC held the proceeds after December 1, 1982. Cobb, 721 P.2d  at 1110.

[¶44.]  Had the first sale from 16-1 well been 
made in June 1982 rather than January 1981, the Royalty Payment Act would have 
been in effect and the Moncriefs would have had six months after the first day 
of the month following the date of first sale, or until January 1, 1983, to make 
the first payment to Harvey without facing a penalty, and sixty days after the 
end of the calendar month within which the subsequent production was sold 
thereafter to pay without penalty. We see no reason for treating an obligor 
whose obligation began to accrue before the effective date of the Act any 
differently from one whose obligation arose after the Act, so long as the Act is not 
applied retroactively. Allowing the Moncriefs a six-month grace period does not 
lead to retroactive application for the same reason that calculating interest 
after June 1, 1982, on production proceeds unpaid before that date did not in 
Cobb. The Moncriefs are entitled to the same six-month "grace period" that an 
obligor beginning production after June 1, 1982, would receive.

[¶45.]  Since we hold that the first production 
payment was not "due" for purposes of the statute until six months after the 
first day of the month following June 1, 1982, the trial court's order making 
interest accrue commencing with the September 1982 proceeds is erroneous. 
Interest began accruing on the June 1, 1982 proceeds on January 1, 1983, six 
months after the first day of the month following June 1, 1982. We therefore 
modify the district court's order to require interest under the Royalty Payment 
Act from January 1, 1983.

Application of the 
"United 
States Rule"

[¶46.]  The trial court refused to apply the 
United 
States rule to allocate partial payments 
between principal and interest. The United States rule, so called because 
it comes from the federal commercial common law, holds that in applying partial 
payments to an interest-bearing debt, in the absence of an agreement or statute 
to the contrary, the payment should first be applied to the interest due. After 
the interest obligation is satisfied, any remaining payment may then be credited 
to principal. Southern Natural Gas 
Co. v. Pursue Energy, 781 F.2d 1079, 1088 
n. 11 (5th Cir. 1986); 47 C.J.S. Interest 
and Usury § 74 (1982).

[¶47.]  The United 
States rule appears to be the majority rule. It 
has been adopted by several of our sister states. See, e.g., Jorgensen v. Aetna Casualty and Surety 
Co., 769 P.2d 809, 813 (Utah 1988); Security Ins. Co. of Hartford v. Houser, 
191 Colo. 189, 552 P.2d 308, 311 (1976); Landess v. State, 335 P.2d 1077, 1079 
(Okla. 1958). 
The rule is sound and herewith adopted.

[¶48.]  The Moncriefs argue that the rule should 
not apply to this case because their obligation to pay royalty payments was not 
an "interest-bearing debt." The Kansas case of 
Shutts v. Phillips Petroleum Co., 240 
Kan. 764, 732 P.2d 1286 (1987), cert. denied 487 U.S. 1223, 108 S. Ct. 2883, 101 L. Ed. 2d 918 (1988), is persuasive. In Shutts, the Kansas Supreme Court upheld 
application of the rule to payment of interest on suspended royalties which 
Phillips was contractually obligated to pay royalty interest owners, stating the 
interest provisions of the Royalty Payment Act are sufficient to make unpaid 
royalty payments an "interest-bearing debt."

[¶49.]  See also Rissler & McMurry Co. v. 
Atlantic Richfield Co., 559 P.2d 25, 31-32, 34 
(Wyo. 1977), in which we held that liquidated damages may be established and 
prejudgment interest awarded under a contract which furnishes a fixed standard 
sufficient to establish a liquidated damage figure, so long as the debtor 
receives notice of the amount before interest starts to run. The assignments in 
this case put the Moncriefs on notice that Harvey was entitled to a full five percent 
royalty. Rissler stands for the 
proposition that once notice and liquidated damages can be established by 
reference to the terms of a contract, there is an interest-bearing 
debt.

[¶50.]  We distinguish the recent case of State v. BHP Petroleum Co., Inc., 804 P.2d 671 (Wyo. 1991), in which we held that the State could not recover interest 
on unpaid royalties prior to the passage of the Royalty Payment Act on a theory 
of unjust enrichment because BHP was unaware of the deficiency in royalty 
payments until 1987 and promptly compensated the State for those underpayments 
when it became aware of them. BHP was not unjustly enriched since it did not 
withhold payment after learning that the deficiency existed. BHP, 804 P.2d  at 673. In this case, by 
contrast, the Moncriefs were aware of Harvey's failure and refusal to join the 
unitization agreement and of his five percent overriding royalty interest from 
at least the time work began on the 16-1 well. Therefore, they are liable for 
interest prior to the passage of the Royalty Payment Act.

[¶51.]  The order providing for attribution of 
payments to principal and interest is reversed, and the United 
States rule is applied to the 
payments.

Texaco's Joint and 
Several Liability

[¶52.]  Appellant was awarded judgment for the 
full amount of unpaid royalties against Moncriefs. Judgment was against Texaco 
for unpaid royalties based on its portion of the production proceeds. Any amount 
paid by Texaco will reduce the amount owed by Moncriefs. The effect was to make 
each party liable for its proportionate share of the unpaid royalty payments 
based on the amount it received from sales of gas from the well.

[¶53.]  The Moncriefs received their interest, 
rights and duties in the lease by assignment from Texaco. Harvey contends that 
Texaco's assignment to the Moncriefs was in the nature of a "sublease" rather 
than an assignment making Texaco fully liable as a lessee for all the royalty 
payments. Due to the nature of Texaco's retained interest, it is unnecessary for 
us to reach the question of whether the assignment from Texaco to W.A. Moncrief 
was a "sublease." Because the parties have strenuously argued the application of 
"assignment-sublease" principle in the context of the law of oil and gas, 
however, we answer the question presented.

[¶54.]  We have not heretofore had occasion to 
consider whether an "assignor" of an oil and gas lease who retains some interest 
in the lease has made an assignment or a mere sublease. Many courts view such 
assignment as creating a "sublease." See, e.g., Irwin v. Marvel Petroleum Corp., 
139 Mont. 413, 365 P.2d 221, 226 (1961); Halbert v. Hendrix, 121 Ind. App. 43, 95 N.E.2d 221, 223 (1950). We decline the invitation to adopt a blanket application of the 
"assignment-sublease" concept to adjust the rights of interest owners in oil and 
gas cases.

[¶55.]  Commentators on the law of oil and gas 
have long noted that the assignment-sublease concept seems inappropriately 
imported into the realm of oil and gas law, particularly where it leads to 
inequitable results. We agree. See, 
e.g., R. Hemingway, Law of Oil and 
Gas § 9.11 at 505 (2nd ed. 1983); 1 E. Brown, Law of Oil and Gas Leases § 11.04 at 
11-28, -29 (2nd ed. 1990); J. Lowe, Oil 
and Gas Law in a Nutshell 350 (2nd ed. 1988) ("the distinction has been 
largely ignored because it is not recognized by the customs and usages of the 
industry").

[¶56.]  The concept is particularly inapplicable 
in this case, due to the nature of the interest Texaco retained when it made the 
assignments to Moncriefs. Under the Farmout Agreement and the assignments to 
W.A. Moncrief, Texaco retained 50 percent of the working interest in the Harvey lease lands outside 
of section 16. On payout, Texaco would receive back a 50 percent share of the working interest known as a "Back-In 
Interest," in the section 16 lease. Each of these interests is a proportionate share of the leasehold 
estate rather than a mere royalty interest. The concept of a "sublease" 
simply does not fit this situation.

[¶57.]  The rationale employed by the court in Cherokee Resources, Inc. v. Gold Energy 
Corp., 11 Kan. App. 2d 436, 724 P.2d 695 (1986), is more 
persuasive. In that case, Cherokee Resources, the lessee of a 240-acre tract, 
assigned 80 acres to Gold. All of the productive wells were on Gold's 80 acres. 
The Kansas Court of Appeals, although it nominally characterized Gold as a 
sublessee, made Cherokee and Gold each liable for its share of royalty payments 
due the lessor in proportion to the amount of acreage each retained. The court 
stated that "[i]t would seem equitable that the difference should be apportioned 
between the leaseholders in proportion to their percentage of the total acreage 
in the lease." Cherokee, 724 P.2d  at 
698.

[¶58.]  Although in this case the division was of 
the working interest rather than the leasehold acreage, the principle of 
proportionate responsibility is most equitable. We hold, therefore, that the 
trial court properly made each party liable for the royalties due from its 
proportionate share of the leasehold based on production sold from the well. The 
trial court's order making Texaco liable for a proportionate share of the amount 
owed Harvey 
based on its share of sales is affirmed.

[¶59.]  Harvey's other contentions, that privity 
of estate and privity of contract make Texaco jointly and severally liable, 
share the same shaky foundation as the sublease argument and are equally 
inapplicable to the circumstances of this case.

Texaco's Duty to Pay 
Interest under the Royalty Payment Act

[¶60.]  Texaco owns a working interest in a 
proportionate share of the 16-1 well. The question is whether Texaco is a 
"lessee or operator, purchaser or other party legally responsible for payment" 
under W.S. 30-5-303 subject to payment of interest for wrongfully withheld 
proceeds. We think not.

[¶61.]  Recently the legislature added W.S. 
30-5-304(a) (Cum.Supp. 1990), defining terms used in the Royalty Payment Act. 
"Lessee" is defined as:

"(i) `Lessee' means the 
person entitled under an oil and gas lease to drill and operate wells, paying 
the lessor a royalty and retaining the remainder, known as the working interest. 
The lessee pays all costs of production out of his interest, the lessor's 
interest being free and clear of all those costs."

"Operator" is defined 
as:

"(iii) `Operator' means a 
person engaged in the business of drilling and producing wells for oil and 
gas."

 [¶62.] We apply these definitions retroactively to 
this case, because they shed light on the intent of the legislature. Under the 
terms of the Farmout Agreement between Texaco and the Moncriefs, Texaco gave 
Moncriefs the right to drill the 16-1 well. Moncriefs assumed all cost, risk and 
expense of conducting these operations. Under the circumstances, even though 
Texaco retained a proportionate share of the leasehold interest, only Moncriefs 
were "lessees" or "operators" within the limited definitions of W.S. 
30-5-304(a).

[¶63.]  Texaco was not legally responsible for 
the actual remittance of its share of royalties to Harvey. We will not hold 
that the non-executive owner of a working interest is responsible for remittance 
out of its share of the proceeds for purposes of calculating penalty interest. 
Since Texaco was not legally responsible for interest under the Royalty Payment 
Act, it follows, under the rationale in BHP Petroleum, 804 P.2d 671, that it was 
not liable for the seven percent interest ordered by the trial court either. We 
therefore reverse the trial court's order assessing interest against 
Texaco.

Attorney 
Fees

[¶64.]  The Royalty Payment Act also provides 
that "the prevailing party in any proceedings brought pursuant to this article 
shall be entitled to recover all court costs and reasonable attorney's fees." 
W.S. 30-5-303(b). The trial court's order stated that attorney fees should not 
be assessed against Texaco. Harvey was given judgment for attorney fees and 
$25.00 court costs against Moncriefs.

[¶65.]  Harvey claims the Act entitled him to recover 
attorney fees and costs against Texaco. Since Texaco is not an operator, lessee 
or other person responsible for payment under the Royalty Payment Act, Texaco is 
not liable for attorney fees or costs under the Act.

[¶66.]  We affirm the trial court's refusal to 
tax attorney fees and costs against Texaco.

Amount of Attorney Fees 
Awarded against the Moncriefs

[¶67.]  The Moncriefs claim that the award of 
attorney fees is unsupported by findings that the amount awarded was reasonable. 
In UNC Teton Exploration Drilling, Inc. 
v. Peyton, 774 P.2d 584 (Wyo. 1989), we adopted a two-stage analysis 
that the court must follow when determining whether a claim for attorney fees is 
reasonable:

[¶68.]  First, the trial court should apply the 
"lodestar" test, adopted from Hensley v. 
Eckerhart, 461 U.S. 424, 103 S. Ct. 1933, 76 L. Ed. 2d 40 (1983), which is 
summed up in UNC Teton, 774 P.2d  at 
595, as "the product of reasonable hours times a reasonable rate."

[¶69.]  Second, the trial court makes 
discretionary adjustments to the lodestar amount using the following factors 
from Johnson v. Georgia Highway Express, 
Inc., 488 F.2d 714, 718-19 (5th Cir. 1974):

(1) The novelty and 
difficulty of the questions;

(2) the skill requisite 
to perform the legal service properly;

(3) the preclusion of 
other employment by the attorney due to acceptance of the case;

(4) the customary 
fee;

(5) whether the fee is 
fixed or contingent;

(6) time limitations 
imposed by the client or the circumstances;

(7) the amount involved 
and the results obtained;

(8) the experience, 
reputation, and ability of the attorneys;

(9) the "undesirability" 
of the case;

(10) the nature and 
length of the professional relationship with the client; and

(11) awards in similar 
cases.

Cited in UNC Teton, 774 P.2d  at 595.

[¶70.]  Moncriefs claim that the trial court 
failed to follow this analysis in awarding attorney fees against them in this 
case. Evidence was presented in support of the fee award. On February 15, 1990, 
Harvey presented 
an exhibit detailing the fees charged by his attorneys. Counsel for the 
Moncriefs did not object to the reception of this exhibit. 

The exhibit contained an 
extensive affidavit by Richard Gose setting forth his charges in Harvey v. Moncrief. Attached were 
detailed billing statements from Mr. Gose; from Holme, Roberts and Owen; from 
Hand and Hand; and from Ernest Carroll. A lawyer/expert witness for Harvey testified at the 
hearing that the fees charged were reasonable. After the hearing, on February 
20, 1990, Mr. Hand submitted a letter to the district court in which he broke 
down the attorney fee exhibit to show the amount attributable to 
expenses.

[¶71.]  In its decision letter of April 6, 1990, 
the trial court stated:

"It is the Court's 
conclusion that the defendant [sic] met its burden of reasonableness as to the 
above mentioned attorney's fees, and the same are approved * * *."

An order was later issued 
incorporating the decision letter.

[¶72.]  Moncriefs now complain that neither the 
court's decision letter nor its order reflect any consideration of the UNC second-stage factors because no 
specific findings were made on these factors in the decision letter or order. 
Rule 52, W.R.C.P. states:

"(a) General and special findings by court - 
Upon the trial of questions of fact by the court, or with an advisory jury, it 
shall not be necessary for the court to state its findings, except generally for 
the plaintiff or defendant, unless one of the parties requests it before the 
introduction of any evidence * * *."

[¶73.]  Moncriefs made no request for special 
findings with regard to the trial court's award of attorney fees. The trial 
court's order, therefore, sufficiently set forth its holding on the attorney fee 
issue.

[¶74.]  Moncriefs also claim that there was 
insufficient evidence before the trial court to determine the billing rates of 
the attorneys or the hours expended, in order to perform the "lodestar" test. At 
the hearing on attorney fees, Harvey's expert witness testified as follows 
concerning his review of the exhibits:

"Q. In your review of the 
Attorney Fee exhibits, have you noted the hourly rates that are charged by these 
respective persons or attorneys?

"A. I believe I have. Mr. 
Nance charged, I believe it was $210 an hour. David Steefel $175. Mr. Jerry Hand 
approximately $100 to $110. Mr. Gose also in that approximate range. Mr. 
Carroll's, right now I don't remember offhand.

"Q. As a matter of fact, 
he didn't say what they are, did he? The exhibit won't reveal -

"A. What Mr. Carroll 
charged.

"Q. What it 
was?

"A. It could probably be 
computed but I don't recall that right now what his rate was."

[¶75.]  The itemized bills set forth in the fee 
exhibit clearly reveal the hourly rate and hours worked by Mr. Gose and Holme, 
Roberts and Owen. Itemized statements showing the total amount billed and 
services performed were provided for Hand and Hand and Ernest 
Carroll.

[¶76.]  Moncriefs' position appears to be that 
the lodestar test cannot be performed without a breakdown explicitly showing the 
number of hours worked and the hourly fee. We disagree. Where there is other 
evidence, such as an itemization of the work performed and the amount charged 
for specific work, an experienced trial judge can determine whether the lodestar 
test is met or not.

[¶77.]  There was sufficient evidence before the 
trial court for it to perform both steps of the analysis required by UNC Teton. There was no abuse of 
discretion in the result reached. We therefore affirm the trial court's award of 
attorney fees.

Conclusion

[¶78.]  We affirm the challenged orders with the 
exception of those orders or parts thereof denying application of the "United 
States rule" fixing September 1, 1982, as the commencement date for calculation 
of interest owed by the Moncriefs and requiring Texaco to pay interest on unpaid 
royalty proceeds which are reversed, and we remand to the district court for 
entry of a modified judgment consistent with this opinion.

URBIGKIT, C.J., filed a 
dissenting opinion.

ROONEY, J. (Retired) 
filed a dissenting opinion in which URBIGKIT, C.J., joined.

URBIGKIT, Chief Justice, 
dissenting.

[¶79.]  I join in the dissent of Retired Justice 
Rooney in agreement that the free ride given by the majority's decision to M.J. 
Harvey, Jr. is not justified by permitting escape from an oil field unitization. 
Had the fates turned otherwise so that it would have been specifically for 
Harvey's benefit 
to have an interest within the unit whether or not he originally consented, then 
certainly the claim would be inclusion, not exclusion.

[¶80.]  I do not find either documentary 
requirement or general standards in oil production practice which justify the 
majority's decision. An extraordinary additional cost for Wyoming oil and gas 
development will likely result from the veto power now provided to fractional 
overriding royalty interest holders. Properly analyzed, Harvey's assignment ended 
his status under the lease as a lessee of state lands. Under no circumstances 
would I conclude that the base lease demonstrates intent within its proper 
construction for the assignor, who only retained a small overriding royalty 
interest, to remain independently able to determine his separate 
nonparticipation. Consequently, I join Retired Justice Rooney in his cogent 
analysis and conclusion.

[¶81.]  Additionally, I dissent to the majority's 
construction of the 1982 Royalty Payment Act, now the 1989 Royalty Payment and 
Reporting Act. Although the Act as finally presented received an overwhelmingly 
favorable vote in the legislature, it is hardly likely that the same result 
would have been achieved if the legislature had anticipated the provisions would 
extend beyond title dispute concepts providing a retention of proceeds 
requirement to move statutory penal provisions now into other broad issues of 
oil development contractual controversy and court litigation.1

[¶82.]  The severest of penalty, incurred 
attorney's fees and eighteen percent interest, was never reflected by 
phraseology within the Act to include application to participating general 
interest holders with direct disputes about their contractual rights. This 
decision broadly adds the Royalty Payment and Reporting Act as a term to general 
participation, partnership and production agreements now in usage in the 
industry. If the claim is developed to be underpayment of proportionate proceeds 
in value or amount, then this decision adds attorney's fees and eighteen percent 
interest to the successful litigant's prize. Nowhere else in law is such a heavy 
statutory penalty between contracting parties provided when an honest dispute 
might exist. The existence of an honest dispute here can be observed from the 
three to two decision by which the basic issue in contest will be decided in 
this court.

[¶83.]  It is terribly unfortunate that 
legislative history is nearly totally unavailable for understanding the actions 
of the Wyoming State Legislature. Without direction of that history, the result 
and responsibilities of this court may well be result-oriented adjudication far 
removed from what the actual intent of the legislature initially was because no 
other informative basis for statutory intent analysis exists.2 Cf. Allied-Signal, Inc. v. Wyoming State 
Board of Equalization, 813 P.2d 214 (Wyo. 1991), Urbigkit, C.J., specially 
concurring.

[¶84.]  Wyo. Sess. Laws, ch. 27 (1982) was 
significantly extended by Wyo. Sess. Laws, ch. 255 (1989) when the later 
enactment added comprehensive provisions for collection, reporting and 
remittance of royalties. The negative denigration of division orders and the 
affirmative detail for reporting and payment provide no further historical 
evidence that the royalty payment and reporting law was intended to extend to 
basic disputes such as the effect of unitization presented here. Substantively, 
I would concur with the decision of the United States District Court for the 
District of Wyoming in its Order on Motions for Summary Judgment in Prenalta Corp. v. Colorado Interstate Gas 
Co., No. C89-1010-B, (D.Wyo. Aug. 11, 1989). By that order, United States 
District Judge Clarence A. Brimmer provided an accurate analysis of intent to 
apply the statute to "situations where there is difficulty determining a person 
legally entitled to the proceeds from production." Id. at 
13.

[¶85.]  The Royalty Payment and Reporting Act, circa 1989, is punitive legislation 
providing penalties of both attorney's fees and eighteen percent interest. The 
law is generally well settled and specifically in this jurisdiction that the 
scope of punitive legislation and its provisions should not be extended by 
implication. As Justice McClintock in Title Guaranty Co. of Wyoming, Inc. v. 
Belt, 539 P.2d 357 (Wyo. 1975) appropriately recognized, where a 
statute is a penal one it must be strictly construed and

"cannot be extended by 
implication or construction to persons or things not expressly brought within 
its terms, nor to cases not within the letter of the statute; and also, that 
`all doubts as to the constructions are resolved in favor of the 
defendant.'"

Id. at 360 (quoting State v. Thompson, 15 Wyo. 136, 87 P. 433 
(1906)). This standard and uniform rule had its initiation in the early cases of 
People ex rel. School Dist. No. 3 in 
Laramie County v. Dolan, 5 Wyo. 245, 39 P. 752 (1895) and Haines v. Territory, 3 Wyo. 167, 13 P. 8 
(1887). Cogent restatement of their principle can be more recently found in Attletweedt v. State, 684 P.2d 812 (Wyo. 
1984) and Horn v. State, 556 P.2d 925 
(Wyo. 1976).

[¶86.]  I would not extend the Royalty Payment 
and Reporting Act by construction to punish bona fide contract disputants who 
have basic differences about interest rights or royalty requirements as 
differentiated from admitted obligations with dispute only as to who is the 
proper party for an admitted payment.

[¶87.]  In finding that the majority extends this 
punitive legislation by construction far beyond the initial legislative purpose 
or the clearly provided text of its provisions, I respectfully dissent. The 
expansive scope of this Act now provided by the majority's decision reaches 
litigation far removed from a normal royalty owner's protection enactment. See, 
for example, Prenalta Corp., No. 
C89-1010-B, which considers basic pricing and value questions. Likewise involved 
would be value disputes regarding royalty payments.

[¶88.]  For an obvious reason, since I reject 
Royalty Payment and Reporting Act application in this case, I also dissent to 
the reversal of the trial court's decision which did not apply the interest 
application rule. I neither agree nor disagree with the decision to adopt that 
principle for Wyoming usage when it may come up in a proper case as 
comprehensively briefed, but do not approve the present trial court reversal and 
consequent application here within the factual situation of a statutory 
construction determination. Not only has this court extended the royalty payment 
statute by construction far beyond what I perceive the original intent would 
have justified, Allied-Signal, Inc., 
813 P.2d 214 (1991), but now further supplements and extends the statute by 
affixing upon it an interest attribution scheme which affords further penalty 
upon the producer or payment obligor who, in contested royalty rights cases, 
comes to litigative dispute. Mathematically, we add another element of penalty 
to the statutory result. Belt, 539 P.2d 357.

[¶89.]  I would agree with Moncrief that this 
inclusion-exclusion unit agreement dispute did not create in itself an interest 
bearing debt and, consequently, the authorities cited of Southern Natural Gas Co. v. Pursue 
Energy, 781 F.2d 1079 (5th Cir. 1986) and 45 Am.Jur.2d Interest and Usury § 99 (1969) do not 
control. Southern Natural Gas Co. 
related to a jurisdiction which provided a specific statutory interest-principal 
allocation provision which was found by the federal court to be controlling. 
Likewise is Jorgensen v. Aetna Cas. & Sur. Co., 769 P.2d 809 (Utah 1988), 
involving an interest bearing obligation, while Security Ins. Co. of Hartford v. Houser, 
191 Colo. 189, 552 P.2d 308 (1976) and Landess v. State, 335 P.2d 1077 (Okla. 
1958) involve the distinguishable subject of post-judgment interest where 
partial payments on a judgment were made by the judgment debtor in presentation 
of a subject overtly different from a statutorily created penalty which is the 
subject of the present Royalty Payment and Reporting Act.

1 When initially 
introduced as S.F. No. 8, 46th Leg., Budget Sess. (Wyo. 1982) under the 
sponsorship of the Senate, the initial file included reference to unmerchantable 
title with determination to be made in accord with title standards accepted by 
the Wyoming State Bar. S.F. 8 was then significantly rewritten and sponsored by 
both Senate and House members as S.F. 8A, but retained its intrinsic character 
considering in essence stakeholder concepts when disputes about interest 
ownerships might develop. The obvious theory of the law was to foreclose 
economic benefit to the producer in delayed determination of recipients. See 
S.F. No. 8A, 46th Leg., Budget Sess., Digest of Senate and House Journals 
(Wyo. 1982). 
This was the apparent reason for the escrow provision since, as a third-party 
transaction, the escrow was protection for the obligor but would eliminate 
economic benefit in fund retention arising as a perceived conflict in interest 
when title controversies developed which permitted money usage by obligor during 
delayed pay out period.

2 For example, because of 
the nature of its sponsorship, it is possible that some written bill analysis 
statements providing information about the legislation were given for 
distribution on the legislative floor to the membership during debate. Committee 
session handouts may have and probably did exist to provide details and 
statement of purpose. None of this material is retained as a permanent 
legislative record and, consequently, the factual basis upon which passage was 
obtained can only be implied to determine intent as the adjudicatory 
construction of the statute later develops.

ROONEY, Justice, Retired, 
dissenting.

[¶90.]  I cannot agree with the district court 
and with the majority of this court in their determination that the consent to 
unitization by Harvey, as a holder of an overriding royalty 
interest in production of minerals from a lease of state lands, was necessary to 
make such interest subject to the unitization. Harvey had been a lessee of state land involved 
in the unitization, but he ceased to be a lessee when he assigned it to another. 
His retention of a royalty interest left him with only a non-possessory 
interest. The new lessee consented to unitization.

[¶91.]  The majority of the court presents the 
issue before us as follows:

"`The relevant portion of 
the state lease reads as follows:

"`Section 3. The lessor 
[State of Wyoming] expressly reserves:

* * * * * *

"`(c) The right, with consent of the lessee, to commit 
the herein leased lands in a unit or co-operative plan of development, and to 
establish, alter, change or revoke the drilling, producing, and royalty 
requirements of the lease to conform therewith.' (emphasis added)

"`The question presented 
is whether, by the phrase "consent of the lessee," the State bound itself to 
obtain consent to unitization from a lessee who assigned the lease but retained 
an overriding royalty interest.'"

[¶92.]  In addressing this issue, the majority of 
the court acknowledges that "[i]f a contract [lease] is in writing and the 
language is clear and unambiguous, the intention of the parties is found in the 
words of the contract." But it then proceeds to disregard the words of the 
contract and attempts to ascertain that which the parties "may have had in mind" 
and by searching for that implied in the lease.

[¶93.]  The majority of the court acknowledges 
the lease to be "clear and unambiguous." The word "lessee" has a well recognized 
meaning. It is a word in regular usage in everyday activities. The parties do 
not contest the fact that Harvey is no longer the lessee under the state 
lease. This lease is plain in referring only to the "lessee's" consent and not 
to that of others who have an incidental interest in the lease, such as the 
non-possessory interest of Harvey. After recognizing that the intention of 
the parties is to be found in the "words of the contract," the majority of the 
court proceeds to do otherwise.

[¶94.]  In reviewing the rules for construing 
contracts, Justice Thomas stated the following in Shepard v. Top Hat Land and Cattle Co., 
560 P.2d 730, 732 (Wyo. 1977) (emphasis added):

"If the language of the 
contract is plain and unequivocal that language is controlling and the 
interpretation of the contractual provisions is for the court to make as a 
matter of law. The meaning of the instrument is to be deduced only from its language if the terms are 
plain and unambiguous.

* * * * * *

"All the parts of and 
every word in the contract should, if possible, be given effect, avoiding a construction which renders a 
provision meaningless because the presumption is that a particular provision is 
placed there for a purpose."

There is no question but 
that the language of the lease is plain and unequivocal in limiting any required 
consent to unitization to the "lessee," and there is no question that Harvey is no longer a 
"lessee."

[¶95.]  Although asserting otherwise, the 
majority opinion treats the lease as containing an ambiguity. "An ambiguous 
contract is an agreement which is obscure in its meaning because of 
indefiniteness of expression or because of a double meaning being present." Farr v. Link, 746 P.2d 431, 433 
(Wyo. 1987). 
"An `ambiguous contract' is one capable of being understood in more ways than 
one." Bulis v. Wells, 565 P.2d 487, 
490 (Wyo. 
1977). There is no double meaning in the word "lessee." It cannot be understood 
in more ways than one. It says exactly what it says.

[¶96.]  The foregoing is also true when applied 
to the statute authorizing the State through the Board of Land Commissioners to 
enter into a unitization agreement. W.S. 36-6-101(d) provides in pertinent 
part:

"The board, on behalf of 
the state, and its lessee or lessees in any such mineral lease are hereby 
further authorized to join, in the interest of conservation and greater ultimate 
recovery of oil and gas, in fair and equitable cooperative or unit plans of 
development or operation of oil and gas pools, with the United States government 
and its lessees[.]"

If there is any ambiguity 
in the statute, it is one making even the consent of the lessee or lessees 
unnecessary, i.e., reading it to authorize the board to act on behalf of the state and its lessee and lessees, to join, 
etc. And, of course, the Board cannot act by rule, contract, lease or otherwise 
beyond that authorized by statute, such as requiring consent to unitization 
beyond those designated by the statute.

[¶97.]  Of immediate importance of the statute is 
its emphasis on "conservation and greater ultimate recovery of oil and gas" 
through such as "unit plans." These objectives should not be thwarted by 
allowing an outsider, even one with a non-possessory interest, to void or veto 
the "fair and equitable" operation of a unit. Harvey is receiving his fair share of the 
proceeds of the minerals removed from the pool underlying the lands of the unit 
(including the land covered by his former lease). If the well had been drilled 
on land adjacent to this lease, he certainly would accept the fair share now 
paid to him rather than nothing under the contention which he here puts forth. 
And, of course, the state would also receive nothing for its share of the oil 
drained from under this lease. Courts should do equity, and equity requires 
Harvey to be satisfied with that due him under the unit in return for his having 
done no more than obtain a lease of state land which he subsequently assigned to 
another before drilling was commenced.

[¶98.]  Since the other issues on appeal are 
pertinent only if there is an affirmance on this issue, a reversal on this issue 
makes unnecessary consideration of the other issues. I would reverse on this 
issue, and remand the case with instructions to deny plaintiffs' motions for 
summary judgment and to grant defendant's motion for summary 
judgment.

[¶99.]  For these reasons, I respectfully 
dissent.

ORDER DENYING PETITION 
FOR REHEARING

[¶100.]            
This case came before the Court upon the Petition for Rehearing filed by 
appellants, and a Motion for Leave to File Brief as Amicus Curiae and Brief of 
Howard R. Williams as Amicus Curiae, and the Court, having examined carefully 
the file and record, together with the opinion of the Court filed July 18, 1991, 
and being fully informed in the premises, finds that the Motion for Leave to 
File Brief as Amicus Curiae should be granted and that the Petition for 
Rehearing should be denied; and it therefor is

[¶101.]            
ORDERED that the Motion for Leave to File Brief as Amicus Curiae be, and 
the same hereby is, granted; and it is further

[¶102.]            
ORDERED that the Petition for Rehearing filed herein be, and the same 
hereby is, denied.

[¶103.]            
URBIGKIT, C.J., and ROONEY, J. (Retired), would grant 
rehearing.