No. 12677 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

19 74 

JOANN ARMSTRONG and R. V. BOTTOMLY, 

Plaintiffs and Respondents, 

-vs - 

HIGH CREST OILS, INC., a corporation, 

Defendant and Appellant. 

Appeal from: District Court of the Twelfth Judicial District, 

Honorable R. D. MePhillips, Judge presiding. 

Counsel of Record : 

For Appellant: 

Crowley, Kilbourne, Haughey, Hanson and Gallagher, 

Billings, Montana 

Cale Crowley argued, Billings, Montana 

For Respondents : 

Hoyt and Bottomly, Great Falls, Montana 

John C. Hoyt argued, Great Falls, Montana 

Submitted: February 26, 1974 

Decided : BPR - 8 1910 

Filed : BPR - 2 1974 
Mr. Justice Frank I. Haswell delivered the Opinion of the Court. 

This appeal is from an order of the district court of 

Hill County granting plaintiffs' motion to alter or amend the 

court's previous order granting summary judgment for defendant. 

From this special order after judgment,defendant appeals. 

Respondents, JoAnn Armstrong and R. V. Bottomly, are 

successors in interest to Lewis H. Armstrong as lessor in an oil 

and gas lease wherein appellant, High Crest Oils, Inc., is lessee. 

On November 24, 1972, pursuant to Montana's Oil and Gas 

Conservation Act, appellant applied for an order creating the 

Bullhook Gas Unit in Hill County, Montana. The lands described 

in the Armstrong lease were included in said unit area. The Commission conducted a public hearing on December 14, 1972. John 

Hoyt, representing the respondent royalty owners, announced his 

presence at the hearing as a protestant to the proposed pooling 

unit. Subsequent to the hearing the Commission rendered its report, made findings of fact, conclusions of law, and issued its 

order creating the Bullhook Gas Unit effective as of the date of 

the hearing. On December 21, 1972, respondent Armstrong filed a 

petition for rehearing with the Commission. Said petition was 

denied by the Commission on January 29, 1973. 

On May 14, 1973, pursuant to section 60-135, R.C.M. 1947, 

respondent Armstrong filed a complaint in the district court of 

Lewis and Clark County for a judicial review of the order of the 

Montana Board of Oil and Gas Conservation Commission creating the 

Bullhook Gas Unit. Subsequently, on June 4, 1973, an amended 

complaint was filed by both respondents as parties in the action. 

On May 16, 1973, respondents filed the instant action in 

the district court of Hill County against appellant lessee. Respondents requested a decree cancelling the Armstrong lease and 

declaring that appellants had no claim of any kind upon the property 
covered by the subject oil and gas lease and for an accounting 

of all gas produced and sold from the subject land located in 

Hill County, Montana. 

Paragraphs IV and V of the Hill County complaint set forth 

the essence of respondents' contentions: 

"That by the terms of the lease set forth and marked 

as Exhibit 'A' executed by the predecessor in interest 

of plaintiffs and assigned by the lessee therein to 

defendant herein the lessee is granted the right and 

power to pool and combine the acreage covered by 

said lease with other land, lease or leases in the 

vicinity thereof at any time, when in lessee's judgment it is necessary or advisable to do so for the 

prevention of waste and the conservation and greatest 

ultimate recovery of oil or gas. Such pooling to 

be in a unit or units not exceeding in area the 

acreage prescribed or required in any federal or state 

law order, rule or reg~lation.~..and the royalties 

shall accrue and be paid to lessor on pooled substances 

produced from any unit in the proportion, but only in 

the proportion, that lessor's acreage interest in the 

land covered hereby and placed in the unit bears to 

the total acreage in the land placed in such unit. 

"That over the objections and protestations of plaintiffs defendant made application to the Montana Oil 

& Gas Conservation Commission for the creation of a 

pooling unit which included plaintiffs land known as 

the Bull Hook Gas Unit and through a high powered, 

hasty presentation induced the Commission to create 

such unit even though the gas unit requested by defendant violated the express terms of its oil and 

gas lease with plaintiffs by providing that royalties 

thereafter accruing to plaintiffs should be paid to 

them as lessors not in the proportion that lessors 

acreage in the land placed in the gas unit bears to 

the total acreage of the land placed in such unit 

but on the contrary defendant placed thousands of 

acres of unproductive land in said gas unit and has 

and is converting plaintiffs share of the gas produced to itself and other persons all in an unlawful 

and fraudulent manner under the guise of a 'gas in 

place' formula directly contrary to the express terms 

and conditions of the attached Oil and Gas Lease as 

set forth in paragraph IV above." 

The order of Montana's Oil and Gas Conservation Commission creating the Bull Hook Gas Unit and the complaints for judicial review of this order filed in Lewis and Clark County pursuant 
to section 60-135, R.C.M. 1947, are included in the Hill County 

court record. 

On August 22, 1973, appellant filed a motion for summary 

judgment in the Hill County action. This motion was argued before the district court. One month after the hearing on the 

motion the court granted the summary judgment. Said order of 

summary judgment was filed on November 15, 1973. 

After the order for summary judgment was entered the 

following actions transpired: 

November 16, 1973, respondents1 motion to alter or amend 

the judgment was served on the appellant together with supporting 

brief. 

November 19, 1973, notice of entry of summary judgment 

was mailed by appellant to respondent. 

November 28, 1973, appellantls brief in opposition to the 

motion to alter or amend judgment was served by mail. 

December 3, 1973, the district court issued its order 

granting respondents1 motion and revoking the courtls previous 

order granting appellant's summary judgment. This special order 

after judgment was filed December 10, 1973. 

No notice calling the motion to alter or amend judgment 

up for hearing was ever served or filed; no order setting the 

motion for hearing was ever made, served or filed; no order continuing the date for hearing the motion was ever made; no hearing 

on the motion was ever held. Eighteen days after summary judgment was filed the district court granted the motion to alter or 

amend judgment. From this special order after judgment, this 

appeal arises. 

Two issues are presented for review: 

(1) Should the summary judgment granted to appellant by 

the district court be reinstated? 
(2) Is the order granting respondents' motion to alter 

or amend judgment null and void for failure of the district 

court to hold a hearing within ten days after said motion is 

served as required by Rule 59, M.R.Civ.P? 

On the first issue respondents' argue that the hearing 

in the district court of Lewis and Clark County to review the 

findings and conclusions of the Oil and Gas Commission will not 

determine the question of whether there has been a violation of 

the terms of the oil and gas lease which is the subject matter 

of the instant action. Respondents contend that the suit against 

the Oil and Gas Commission has nothing to do with whether or not 

the lease between Armstrong and High Crest has been violated so 

as to cause a forfeiture of the leasehold interest in that lease 

by High Crest. 

We agree with respondents' argument that the cancellation 

of the oil and gas lease may be a separate issue upon which another 

court may have jurisdiction. In the case before us, however, we 

cannot subscribe to respondents' distinction of the issues before the two courts. Their arguments present a distinction without a difference. The reasons advanced before the Hill County 

district court for the alleged breach of lease are the alleged 

illegalities in applying for, and the wrongful creation of, the 

Bull Hook Gas Unit, coupled with the alleged wrongful act of 

including the lease of respondents within the Bull Hook Gas Unit. 

These are the same reasons given to the Lewis and Clark County 

district court for reversal of the order creating the unit, and 

the same factual arguments in the brief of respondents in this 

case are also the same presented to the ~ewis and Clark County 

district court. 

The respondents' arguments here are predicated upon the 

invalidity of the Comissionk order. The court having jurisdiction 
over that question is the district court in Lewis and Clark 

County where the challenge to the Commission's order was first 

filed. Any consideration by the Hill County district court of 

these same reasons, arguments and facts is a collateral attack 

upon that judicial review provided in section 60-135, R.C.M. 1947. 

Oil and gas conservation laws and the rules, regulations, 

and orderspromulgated thereunder, have the effect of modifying 

the provisions of existing leases in many respects. This statutory and administrative action is an exercise of the police 

power, and the fact that in some instances the lease may have 

been procured prior to the legislative or administrative pronunciation is immaterial. Sullivan, Handbook of Oil and Gas Law, 

p. 431. In the present case the terms and provisions of the Oil 

and Gas Conservation Act are in fact incorporated in the lease 

to provide pooling of the land in question in accordance with any 

federal or state law, order, rule or regulation. 

Respondent's predicate their argument on violation of 

that provision of the lease which grants to lessee the right to 

pool said leased lands with other land in the vicinity subject 

to certain limitations. This provision of the lease, however, 

is related to one-well pooling as contemplated by section 60-130, 

R.C.M. 1947. It is entirely different from the unitization of 

all leases and all wells in an entire reservoir such as the Bull 

Hook Gas Unit provided in the Board order pursuant to section 

60-131.1, R.C.M. 1947. 

The difference between one-well pooling authorized under 

section 60-130, R.C.M. 1947 and in respondents' lease, and the 

unitization of an entire reservoir under section 60-131.1, R.C.M. 

1947, is illustrated in the following language in Sullivan's 

Handbook of Oil and Gas Law, at p. 308: 

"Under a system of minimum acreage spacing or 

specified drilling units the small tract that 

cannot meet the requirements of the spacing 
rule is denied a well. In order to prevent 

confiscation of the recoverable oil beneath such 

tracts and to give each owner the opportunity 

to produce his fair share thereof, spacing 

statutes and regulations provide for pooling. 

Pooling is the uniting of separately owned, 

small, or irregularly shaped tracts for the 

purpose of integrating the minimum acreage necessary for a drilling unit. It is to be distinguished 

from unitization or unit operations, which is the 

consolidation of all interests in an entire pool, 

or a large part thereof, for the purpose of operating the reservoir as a single producing mechanism." 

(Emphasis added.) 

Application by the appellant to the Montana Oil and Gas 

Conservation Commission for the unitization of a reservoir under 

section 60-131.1, R.C.M. 1947, does not constitute a breach of 

the one-well pooling provision in the lease. Such unitization 

of an extensive reservoir containing multi-leased lands, multiproducing wells, multi-pools, and multi-spacing or drilling units 

is different from the lease provision relating to pooling. 

The presumption in this state is that compliance with 

the Commission's order constitutes fulfillment of lease or contract 

obligations. Section 60-131.8, R.C.M. 1947, provides in part: 

" * * * Operations conducted pursuant to an order 

of the commission providing for unit operations 

shall constitute a fulfillment of all the express 

or implied obligations of each lease or contract 

covering lands in the unit area to the extent that 

such obligations cannot be performed because of the 

order of the commission." 

Section 60-131.3, R.C.M. 1947, sets forth the terms, conditions, and requirements of the commission order. Subsection (1) 

and (3) provide that the commission order shall include: 

"(1) A description of the pool or pools or parts 

thereof to be so operated, termed the unit area, 

but only so much of a pool as has reasonably been 

defined and determined by drilling operations to 

be productive of oil or gas may be included within the unit area. 

in 

"(3) A plan for allocating to each tract/the unit 

area its fair share of the oil and gas produced 

from the unit area and not required or consumed in 

the conduct of the operation of the unit area or 
unavoidably lost. No such plan shall be approved 

by the commission until the commission has considered the relative value that such share of 

production bears to the relative value of all 

of the separately owned tracts in the unit area, 

exclusive of physical equipment utilized in unit 

operations. In so considering such relative value, 

the commission shall weigh thesonomic value of the 

gas to all persons affected as compared to the 

economic value of the oil to all persons affected." 

The Commission's order determining "productive" lands and the 

allocation of oil and gas as provided in subsections (1) and (3) 

respecting respondents' lands within the unit area is the crux 

of the argument in both actions. To permit respondents to bring 

this second action would permit them to circumvent the statutes. 

The order of the Commission to create the Bull Hook Gas Unit 

is res judicata except in the appropriate district court in Montana on judicial review as provided in section 60-135, R.C.M. 

1947. See St. John's Lutheran Hosp., Inc. v. State Bd. of Health, 

161 Mont. 406, 506 P.2d 1378, 30 St.Rep. 249; Polson v. Public 

Service Commission, 155 Mont. 464, 473 P.2d 508. 

On May 14, 1973, respondents properly filed a complaint 

in the district court in Lewis and Clark County for a review of 

the Commission's order. The second action filed two days later 

in Hill County involves the same subject matter, the same lessor, 

the same lease, and the same land. It is nothing more than a 

collateral attack precluded by the first action filed in Lewis 

and Clark County. 

With respect to the second issue we agree with appellant 

that there was a failure on the part of both the respondents and 

district court to comply with the time limitations of Rule 59, 

M.R.Civ.P. Rule 59(f) entitled "Motion to Alter or Amend a Judgment", provides in part: 

" * * * This motion shall be heard and determined 

within the time provided hereinabove with respect 

to a motion for a new trial." 

With respect to the time for hearing on a motion for a new trial, 

Rule 59 (d) provides: 
"Hearing on the motion shall be had within 10 

days after it has been served * * * except that 

at any time after the notice of hearing on the 

motion has been served the court may issue an 

order continuing the hearing for not to exceed 

30 days * * *. 

"If the motion is not noticed up for hearing and 

no hearing is held thereon, it shall be deemed 

denied as of the expiration of the period of 

time within which hearing is required to be held 

under this Rule 59." 

The time and procedural limitations for motions subsequent to judgment set out in Rule 59, M.R.Civ.P., are mandatory. 

Seibel v. Yurick, 136 Mont. 39, 344 P.2d 129. In recent decisions 

by this Court, Gin v. Harrington, 161 Mont. 401, 506 P.2d 1375, 

30 St.Rep. 245; and Leitheiser v. Montana State Prison, 161 Mont. 

343, 505 P.2d 1203, 30 St.Rep. 183, we have reiterated the need 

to make final the judgments of the district court subject to 

appeal that would not unnecessarily lengthen litigation. In Cain 

and Leitheiser we strictly applied Rule 59, M.K.Civ.P., in order 

to put to an end the litigation of those actions. 

We see no reason in this case to prolong the action and 

add the expense of a second appeal. Thus we have answered both 

issues before this Court. 

For the reasons set forth above, the order granting surnmary judgment on November 14, 1973, is reinstated, and the purported order of December 3, 1973, altering and denying the prior 

summary judgment, is reversed. 

Justice 

We concur: 

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Justices