NO. 87-66 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

SOMONT OIL COMPANY, INC., 

a Montana corporation, 

Plaintiff and Respondent, 

-VSJOHN KIEHL MUTTER and PEGGY FAYE 

NUTTER, 

Defendants and Appellants. 

APPEAL FROM: District Court of the Ninth Judicial District, 

In and for the County of Toole, 

The Honorable Robert Holter, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Ralph T. Randono and Daniel Donovan, Great Falls, 

Montana 

For Respondent: 

Marc G. Buyske; Anderson, Beatty & Lee, Shelby, 

Montana 

Submitted on Briefs: Aug. 13, 1987 

Decided: October 6, 1987 

Filed : 0 (3 6 - 1987, 

Clerk 
Mr. Justice John Conway Harrison delivered the Opinion of the 

Court. 

This appeal arises from a bench trial which occurred in 

the Ninth Judicial District on June 17 and 18, 1986, and 

thereafter by deposition, before the Honorable Robert M. 

Holter. The District Court issued a judgment supported by 

findings of fact and conclusions of law on December 18, 1986. 

Judgment was rendered in favor of plaintiff-respondent Somont 

Oil Company, Inc. ("Somont"). Defendants John and Peggy 

Nutter appeal. We affirm. 

This appeal involves the parties' rights and 

obligations under an agreement to develop and operate a 

mineral interest on a parcel of land in Toole County, 

Montana. The Nutters own 80% of the mineral rights to the 

tract of land in issue. Respondent Somont claims the 

remaining 20% of the mineral rights. Additionally, Somont 

claims it is the proper lessee of one-half of the Nutters' 

mineral interests as assignees of a mineral lease executed by 

the Nutters to a third party. The sequence of events and 

pertinent facts in this case are fairly complex. 

The original owner of the land involved was Anna Kenny 

who received ownership through a patent from the United 

States Government. Anna Kenny is now deceased. In 1920, 

Anna Kenny leased the mineral interests underlying the land 

to Gordon Campbell. Anna Kenny reserved a landowner's 

royalty interest and the lease was structured to remain in 

force for twenty years or for so long after that period that 

oil was produced from the land in commercial quantities. In 

1922, Anna Kenny conveyed an interest to Stevenson Associated 

Royalties Company ("Stevenson"). In that conveyance, Kenny 

granted Stevenson 20% of her royalty payments under the lease 
to Campbell. Additionally, Stevenson received a reversionary 

interest in 20% of the minerals in the event the Campbell 

lease was ever forfeited or cancelled. 

Campbell eventually assigned his lease interest to 

Texaco, Inc. Texaco developed and maintained oil wells on 

the property but eventually ceased production. Texaco later 

abandoned the lease and filed a release on March 13, 1981. 

According to the terms of the lease with Campbell and the 

grant to Stevenson, 80% of the interest in the minerals 

underlying the land have reverted to the successors of Anna 

Kenny, while the remaining 20% reverted to the successors of 

Stevenson. 

Upon Anna Kenny's demise, Marie Kenny succeeded to her 

interest in the land. In 1974, Marie Kenny conveyed the 

property to defendants John and Peggy Nutter. The contract 

for deed was recorded on January 2, 1976. A warranty deed 

executed by Marie Kenny was filed on February 20, 1981. By 

virtue of the conveyance and Texaco's abandonment of their 

mineral lease, the Nutters claim 80% of the mineral rights to 

the land. 

Despite the conveyance to the Nutters, Marie Kenny 

conveyed an oil and gas lease on the same land to Somont in 

September of 1979. Because of the conveyance to the Nutters, 

both parties agree the lease from Marie Kenny to Somont is 

void. Somont filed a release of the void lease in August of 

1984. 

The remaining 20% mineral interest originally granted 

to Stevenson by Anna Kenny in the form of a reversionary 

interest follows a lengthy chain of title. We will discuss 

this chain of title more fully under the third issue raised 

by appellants. Suffice it to say that in 1980 Somont claimed 

title to this 20% mineral interest by instruments with the 
personal representatives of one L.R. Baily, holder of 

one-half of the 20% interest, and the personal representative 

of one A.H. Raymond, holder of the other one-half. 

Subsequently, Somont began oil exploration and development on 

the property. 

On March 6, 1981, the Nutters and Buffalo Jump Oil and 

Gas, Inc. ("Buffalo Jump"), a Montana corporation, entered 

into an oil and gas lease and a supplemental agreement to 

operate the mineral interests belonging to the Nutters. 

Appellant John Nutter and the president of Buffalo Jump, 

Chris Owen, negotiated the agreement. On May 1, 1981, 

Buffalo Jump assigned its interest in the Nutter lease and 

agreement to Rimrock Drilling Company ("Rimrock"). Rimrock 

is a partnership consisting of Chris Owen and Norman 

Eberhardt as partners. Rimrock subsequently developed oil 

wells which produced oil in commercial quantities. John 

Nutter assisted in the oil operation and the District Court 

found that he acted in the capacity of an employee rather 

than a joint operator. The result was that both Somont and 

Rimrock were simultaneously developing oil well operations on 

the land. Each operation maintained separate storage tanks 

and pipelines. 

On February 1, 1984, Rimrock assigned its interest in 

the Nutter lease to Somont. The Nutters and Somont 

subsequently engaged in a dispute regarding their rights and 

obligations in developing and operating the oil pumping 

operation. Somont alleged John Nutter padlocked oil 

production equipment located on the property and sold 

approximately $5,000 of crude oil produced by Somont. Somont 

sought a declaratory judgment to clarify and determine the 

rights and obligations of Somont and the Nutters pursuant to 

the lease agreement between Buffalo Jump and the Nutters. A 
complaint was filed with the District Court on March 22, 

1984. 

A preliminary hearing was held on March 30, 1984 and a 

stipulation was created dictating the oil operations until 

the time of trial. The stipulation directed a joint 

operation in which Somont would conduct the actual day-to-day 

operations subject to a right of inspection by the Nutters. 

Somont was to pay a portion of the gross proceeds of the 

operation into a special account established by the court 

pending the outcome of the litigation. An order directing 

the scope and contents of the stipulation was apparently 

signed on March 30, 1984, but was not filed until November 7, 

1985 after a dispute arose between the parties while acting 

under the stipulation. Somont alleged that as a result of 

omissions and contradictory actions by the Nutters, it 

refused to make the scheduled payments. Following a hearing 

on November 7, 1985, the District Court issued findings of 

fact and an order stating that the order directing the 

stipulation was still in effect and Somont was ordered to 

make the payments. 

The case was tried on June 17 and 18, 1986, and 

additional evidence was taken in July by deposition. On 

December 18, 1986, the District Court issued findings of 

fact, conclusions of law, and an order. The contested issues 

were resolved in favor of Somont. 

The District Court concluded that as a result of the 

assignment from Rimrock to Somont, Somont held all of the 

rights and obligations of Buffalo Jump and Rimrock under the 

agreement entered March 6, 1981. 

The District Court directed that Somont would continue 

to conduct the day-to-day operations in developing the 

mineral estate. It required Somont to operate "in a manner 
consistent with good practices in the oil and gas industry 

and in conformance with the rules and regulations of the 

Board of Oil and Gas Conservation for the State of Montana." 

The Nutters were given the right to inspect the operations at 

any time, but were prohibited from interfering with the 

operations without the consent of Somont or a court order. 

Somont was required to provide the Nutters with monthly 

statements indicating gross production from the property, 

royalties paid, taxes paid, and operational and development 

costs. 

Appellants have raised three issues for our 

consideration on appeal: 

(1) Did respondent Somont acquire contract rights to 

develop and manage the mineral operations pursuant to the 

"Nutter-Buffalo Jump" contract? 

(2) If Somont did acquire contract rights, did the 

District Court properly interpret the rights and obligations 

of the parties under the contract? 

(3) Does Somont properly hold a 20% mineral interest 

in the property on a leasehold basis? 

We will consider each issue separately. First, 

however, we must note that the standard of review on appeal 

is that the District Court's findings of fact will not be 

disturbed unless they are clearly erroneous. Rule 52(a), 

M.R.Civ.P. Further, respondent cites a statement made by 

this Court which is applicable under these circumstances: 

In a nonjury trial, the credibility of 

witnesses and the weight of their 

testimony are matters for the District 

Court to determine. The sufficiency of 

the evidence must be reviewed from the 

perspective most favorable to the 

prevailing party. The District Court's 

findings and judgment are presumed 

correct and will not be overturned unless 
the appellant meets the burden of proving 

with a preponderance of evidence that 

they are wrong. Merely showing the 

evidence establishes reasonable grounds 

for reaching a different conclusion is 

insufficient to reverse the District 

Court findings. Lumby v. Doetch (1979), 

183 Mont. 427, 431, 600 P.2d 200, 202. 

Frank L. Pirtz Const. v. ~ardin Town Pump (Mont. 1984), 692 

P.2d 460, 462, 41 St.Rep. 2366, 2368. 

I. SOMONT ' S CONTRACT RIGHTS 

In March, 1981, the Nutters and Buffalo Jump entered an 

oil and gas lease along with a supplemental agreement to 

operate the mineral interests belonging to the Nutters. 

Buffalo Jump assigned the lease to Rimrock on May 1, 1981, 

and Rimrock then assigned the lease to Somont on February 1, 

1984. The Nutters allege that the original contract with 

Buffalo Jump was too vague to constitute a contract. The 

Nutters contend the Buffalo Jump agreement was merely "an 

agreement to agree" and not a binding contract. Therefore, 

they argue, the later assignment to Somont is invalid. 

The agreement entered between Buffalo Jump and the 

Nutters on March 6, 1981, consisted of two documents: (1) a 

standard form oil and gas lease with certain portions deleted 

and other portions added; and (2) a supplemental agreement 

consisting of six pages. The oil and gas lease was 

specifically made subject to the supplemental agreement. The 

supplemental agreement provided the parties would enter a 

formal operating agreement after two wells were drilled. The 

"formal operating agreement" was to "embody and embrace all 

of the terms and conditions necessary to cope with all 

information, data, and knowledge which has been acquired from 

the drilling of the first two wells . . . " Although Rimrock 
subsequently drilled eight wells, the parties never entered 

into a formal operating agreement. The Nutters contend the 

agreement actually entered contained almost no specifics and 

that the parties merely agreed to reach various future 

agreements. As examples, the Nutters state the document 

states they will determine the locations of additional oil 

wells and the terms of the formal operating agreement in the 

future. The Nutters contend the result is that the agreement 

with Buffalo Jump was not a binding contract, but simply an 

"agreement to agree." 

As a general rule, the terms of a contract must be 

reasonably certain. See, Bishop v. Hendrickson (Mont. 1985), 

695 P.2d 1313, 1314, 42 St.Rep. 259, 260. However, it is 

also true that "if the material elements are stated in 

general terms, all the details or particulars need not be 

stated." McNabb v. Norine (1983), 204 Mont. 330, 335, 664 

P.2d 927, 930. 

Respondent Somont points out a number of specific items 

that were part of the agreement, including: 

[Tlhat the mineral interest of the 

Nutters would be developed by Buffalo 

Jump at no personal expense to Nutters; 

that a certain number of wells would be 

drilled within a specific period of time; 

that the wells would be drilled to test a 

particular geological formation; that 

after Buffalo Jump recovered certain 

specific development and operational 

costs, Buffalo Jump and Nutters would 

share the net profits from production on 

an equal basis; that equipment actually 

contributed by a party, would belong to 

such party; that Buffalo Jump would 

perform all office and administrative 

work necessary to production; that any 

landowner's royalty interest owned by 

either party would be paid as all other 

landowner's royalty and not count toward 
the owner's share of net profits; and, 

that the agreement could be "amended and 

changed from time to time in accordance 

with the agreement of the parties." 

The agreement included the subject matter of the contract, 

the division of profits, payment of operating expenses, and 

certain references to the time frame involved. Admittedly, 

the agreement does not include every item that might have 

been included in regards to the actual operational aspects. 

However, "a contract is not invalid simply because it does 

not contain all the provisions or conditions the parties 

might have incorporated into it." Wilkerson v. School 

District No. 15, Glacier County (Mont. 1985), 700 P.2d 617, 

621, 42 St.Rep. 745, 749. 

An additional reason why the Buffalo Jump-Nutter 

agreement is a valid contract is because the Nutters 

performed under that agreement as if it were valid. Until 

Somont received the assignment of the lease in February of 

1984, Rimrock drilled and completed eight wells without any 

objection from the Nutters as to whether the agreement was 

valid. "Part performance under an agreement may remove 

uncertainty and establish that a contract enforceable as a 

bargain has been formed." Restatement (Second) of Contracts 

34 (2) (1979) . The parties performed under the agreement 

for nearly three years and such performance strongly 

indicates a valid contract existed. Therefore, we conclude 

that performance under the agreement combined with the actual 

terms provided demonstrate the existence of a valid contract. 

In the alternative, the Nutters contend that if a valid 

contract existed it was personal in nature and therefore 

nonassignable. The Nutters state they entered the Buffalo 

Jump agreement relying on the particular personality and 

skill of those people operating the Buffalo Jump corporation. 
It is contended that the personal nature of the agreement is 

evidenced by the fact that several points were left to future 

mutual agreements by the parties: well locations, 

arrangements for developing wells, and the terms of an 

operating agreement. The Nutters allege they entered the 

agreement based on an estimate of the personalities of each 

party and their ability to work comfortably together. The 

Nutters conclude that when Rimrock assigned the agreement to 

Somont without their permission they were deprived of the 

benefit of their bargain. 

We recognize that rights arising under a contract are 

generally assignable unless the contract prohibits 

assignment. See, Standard Sewing-Machine Co. v. Smith 

(1915), 51 Mont. 245, 248, 152 P. 38, 39. The assignment is 

not prohibited by the Buffalo Jump-Nutter agreement. The 

supplemental agreement is silent as to assignments and the 

lease document appears to contemplate the possibility of 

assignment by making a reference to the lessors "heirs, 

successors and assigns." 

Despite the fact that the agreement does not prohibit 

assignment, the Nutters point out that an exception to the 

general rule is when a contract is personal in nature and an 

assignment would deprive a party to the contract of the 

benefit of his bargain. We agree that a contract may be so 

personal in nature that the assignment of rights and 

delegation of duties under the contract should be prohibited. 

As stated by the Supreme Court of California: 

The terms and purpose of a contract may 

show, however, that it was intended to be 

nonassignable. Thus the duties imposed 

upon one party may be of such a personal 

nature that their performance by someone 

else would in effect deprive the other 

party of that for which he bargained. 
The duties in such a situation cannot be 

delegated. (Citation omitted.) Rights 

likewise cannot be assigned if the 

assignment would materially impair the 

nonassigning party's chance of obtaining 

the performance he expected. (Citation 

omitted. ) 

Farmland Irrigation Co. v. Dopplmaier (Cal. 1957) , 308 P. 2d 

732, 740, 741. The Restatement (Second) of Contracts 

g 317(2) (1979) similarly recognizes that the assignment of a 

contractual right should be prohibited if 

(a) the substitution of a right of the 

assignee for the right of the assignor 

would materially change the duty of the 

obligor, or materially increase the 

burden or risk imposed on him by his 

contract, or materially impair his chance 

of obtaining return performance, or 

materially reduce its value to him . . . 

Likewise, the Restatement addresses the delegation of a duty 

and states: 

(2) Unless otherwise agreed, a promise 

requires performance by a particular 

person only to the extent that the 

obligee has a substantial interest in 

having that person perform or control the 

acts promised. 

Id. at g 318 (2). 

With the above rules in mind, we agree with respondent 

Somont in that the duties imposed on Buffalo Jump "were not 

so unique in the oil and gas industry as to involve a degree 

of trust and confidence singularly personal to the 

contracting parties. " We reach this conclusion by examining 

a number of factors. As noted, the supplemental agreement 

fails to prohibit any assignment or delegation, and the lease 

itself appears to contemplate the possibility of assignment. 

The agreement actually was assigned from Buffalo Jump to 
Rimrock on May 1, 1981. None of the parties involved 

objected to the assignment and Rimrock continued oil 

production for nearly three years without any objection. 

Although Buffalo Jump and Rimrock appear to be related 

entities, the assignment indicates that assignments were not 

prohibited. We affirm that the contract was assignable. 

The Nutters also challenge the District Court's 

conclusion that the Nutters were estopped from alleging the 

contract with Buffalo Jump was invalid. Since we have 

already considered appellants' argument regarding the 

invalidity of the agreement and decided the agreement was a 

valid assignable contract, this issue need not be discussed. 

11. INTERPRETATION OF RIGHTS AND OBLIGATIONS UNDER THE 

CONTRACT. 

The supplemental agreement to the Buffalo Jump-Nutter 

contract indicates that the parties would operate the oil 

operation as joint operators. The District Court concluded 

that the agreement was ambiguous as to who should conduct the 

day-to-day operations of the property. The District Court 

found the ambiguity was compounded because Mr. Nutter acted 

as an employee and not a joint operator. In resolving the 

conflict between the parties, the court directed Somont to 

conduct the daily operations and granted the Nutters a right 

of inspection: 

Somont shall continue to conduct the 

development and operation of the mineral 

estate underlying the Et of Section 15 in 

a manner consistent with good practices 

in the oil and gas industry and in 

conformance with the rules and 

regulations of the Board of Oil and Gas 

Conservation for the State of Montana. 

Nutters have the right to inspect such 

operations at any time but may not 
physically interfere with the operations 

unless they have Somont's consent or 

unless they have an order of the Court. 

Conclusions of Law dated December 18, 1986 at 8. The Nutters 

contend they are entitled to a joint operator status in the 

day-to-day operations. Additionally, they request the power 

to make decisions regarding the daily operations if the 

parties are unable to agree. 

We agree with the District Court that the agreement is 

not entirely clear as to who will conduct the actual daily 

operations. The agreement does indicate that the Nutters and 

Buffalo Jump are to be joint operators, but also seems to 

imply that the daily operations are to be performed by 

Buffalo Jump. For example, Buffalo Jump is given the task of 

performing the necessary administrative functions, 

determining the capability of commercial production, and 

paying development and operation costs. Evidence was 

presented demonstrating that when Mr. Nutter worked on the 

oil operations he did so as an employee rather than a joint 

operator. Mr. Nutter himself gave the following testimony: 

Q: I refer you back to testimony that 

was given with reference to your working 

on the east half of Section 15, Township 

35 N, Range 2 W, and you did work on that 

lease after the Buffalo Jump Oil and Gas 

lease was executed, signed and delivered? 

A: Yes. 

Q: In what capacity? 

A: At different times I did different 

things. I worked on the rig when we were 

drilling the wells. 

Q: Were you an employee? 

A: Supposedly, yes. 
Q: And, were you supposed to be paid for 

that? 

A: Yes. 

We conclude that the District Court decision to grant 

Somont the authority to conduct the daily operations subject 

to a right of inspection by the Nutters is correct. Despite 

this conclusion, the Nutters retain a significant amount of 

control over the oil operations in that they have the right 

to inspect the operations at any time; receive monthly 

statements from Somont indicating gross production, royalties 

paid, taxes paid and operational and development costs; and 

to request and receive an explanation of any specific 

development and operational cost item they question. 

Additionally, the District Court order requires Somont to 

follow good practices within the industry and to conform with 

applicable state regulations and rules. 

111. SOMONT'S 20% MINERAL INTEREST. 

Somont asserts it holds a valid lease to the remaining 

20% mineral interest for the parcel of land in question. 

This lease interest is derived from a lengthy chain of title 

and originated when Anna Kenny granted Stevenson Associated 

Royalites Company a 20% reversionary interest in the mineral 

estate in 1922. 

In 1926, Stevenson conveyed the interest by warranty 

deed to Sunburst Oil and Refinery Company. That deed 

purported to transfer "any and all interest . . . to real 

estate. . . in the State of Montana." Sometime during the 

1930s, Sunburst became insolvent. In October of 1939, a 

federal court order authorized Sunburst's receiver, John 

Hamilton, to transfer Sunburst's assets. Hamilton 

transferred the property interest by deed to V.B. Carlson in 
1939. That deed purported to convey "all and singular of the 

undesignated and unknown assets . . . wherever situated 

within the state of Montana." V.B. Carlson conveyed the 

interest to L.R. Baily by quitclaim deed in March of 1940. 

That deed purported to convey "every species of real property 

. . . which Grantor owned or claimed to own within Toole 

County, Montana. " The remaining transfers in the chain of 

title purport to transfer the interest acquired from Carlson 

and no legal description is offered. L.R. Bailey made a 

conveyance of one-half of his interest by quitclaim deed in 

May of 1947 to Hazel Deschon. That same month, Hazel Deschon 

transferred her interest to A.H. Raymond by quitclaim deed. 

In 1980, Somont obtained a lease interest on the entire 20% 

by entering an oil and gas lease with both L.R. Baily's 

personal representative and A.H. Raymond's personal 

representative. 

The Nutters claim Somont's lease is invalid because the 

deeds within the chain of title were too vague and indefinite 

to pass marketable title, and several deeds failed to include 

any description of the land involved. The District Court 

examined the deeds comprising the chain of title and 

concluded they were sufficiently definite. The majority rule 

is "that a deed describing land as a the grantor's 

property or a his property in a certain locality is not 

defective or void for want of a sufficient 

description . . . " 23 Arn.Jur.2d Deeds $ 59 (1983). See 

also, Wilson v. Boyce (1875), 92 U.S. 320, 325, 23 L.Ed. 608, 

610. We agree with the District Court and find that the 

deeds were sufficiently definite. Moreover, we note that 

several of the deeds refer specifically to oil and gas 

interests and royal.ties. 
Finally, the Nutters claim the chain of title is 

defective because there is no evidence in the record to 

establish John Hamilton's authority to act as a receiver. 

However, a review of the District Court file demonstrates 

that an order issued by the United States District Court, 

District of Montana, granted Hamilton the authority to act as 

receiver and convey assets of Sunburst Oil and Refining 

Company. Therefore, this contention is without merit. 

For the foregoing reasons we affirm the decision of the 

District Court. 

We concur: