Title: Baker v. Hugoton Production Co.
Citation: 181 Kan. 214, 310 P.2d 889
Docket Number: 40,382
State: Kansas
Issuer: Kansas Supreme Court
Date: May 11, 1957

181 Kan. 214 (1957)
310 P.2d 889
E.V. BAKER, Appellant,
v.
THE HUGOTON PRODUCTION COMPANY, a Corporation, and A.V. YOUNGREN and GLADYS YOUNGREN, Appellees.
No. 40,382

Supreme Court of Kansas.
Opinion filed May 11, 1957.
Dale M. Stucky, of Wichita, argued the cause, and A.E. Kramer and Bernard E. Nordling, both of Hugoton, and Howard T. Fleeson, Homer V. Gooing, Wayne Coulson, Paul R. Kitch, Donald R. Newkirk, Robert J. Hill, Gerrit H. Wormhoudt, Theodore C. Geisert and Philip Kassebaum, all of Wichita, were with him on the briefs for the appellant.
J.S. Brollier, of Hugoton, argued the cause, and Paul A. Wolf, of Hugoton, was with him on the briefs for A.V. Youngren and Gladys Youngren, appellees. Ray H. Calihan, Logan N. Green, Daniel R. Hopkins and Ray H. Calihan, Jr., all of Garden City, were on the briefs for The Hugoton Production Company, appellee.
The opinion of the court was delivered by
PRICE, J.:
The question in this case involves the construction of a written instrument designated as "Sale of Oil and Gas Royalty."
More specifically, the basic question is whether production on a part of the 3630 acres covered by the instrument during its primary term perpetuated or extended the grantee's interest as to 680 acres included therein on which there was no development or production until after the expiration of the primary term.
The trial court answered the question in the negative and plaintiff grantee has appealed.
Material portions of the instrument in question executed by defendants Youngren read:
*215 "SALE OF OIL AND GAS ROYALTY.
"KNOW ALL MEN BY THESE PRESENTS:
(Descriptions omitted.)
"Witness our hands this 11th day of August, 1930.
*216 Through various conveyances and transfers, plaintiff Baker, in 1938, became the owner of the undivided one-fourth interest covered by the instrument.
There is no dispute as to the facts, and the case was tried upon the pleadings and stipulation of the parties. The various leases on the lands covered by the instrument at the time of the conveyance were apparently later released, there being no development or production under any of them. New leases were later executed by plaintiff and defendants. Each lease covered only a portion of the lands described in the instrument. Ultimately, various portions of the lands were separated and through unitization agreements were separated and placed in ten different gas-producing units. Only two of the units consisted entirely of lands described in the instrument. Eight of the ten units contained some lands described in the instrument, and other lands in which neither plaintiff nor defendants claim an interest. Royalty from gas production in each unit is attributable only to the lands within the unit, and is payable only to the owners of royalty or mineral interests in the unit. Each unit is autonomous, is completely separate and independent, and gas production from a unit does not extend or perpetuate the leases on any other unit.
Gas was being produced, and plaintiff and defendants were receiving royalty, from seven of the ten units on and prior to the expiration date (July 5, 1950) of the primary term of the instrument, and there is no question about plaintiff's right to continue to receive royalty from those seven units. The leases on the remaining three units covering 680 acres, they being the ones in controversy, are owned and operated by defendant production company, and since this controversy arose the company has paid into court the disputed gas royalties to be disbursed by order of the court to the party or parties entitled thereto. In other words, insofar as this dispute is concerned, defendant production company is an innocent bystander.
Plaintiff Baker contends that production of gas on seven of the units, or any of them, during and continuing to the end of the primary term of the written instrument, operated to extend or perpetuate his interest as to the 680 acres on which there was no development or production until after the expiration of the primary term, and he claims ownership of one-fourth of the gas royalties from that acreage. Defendants deny plaintiff's claim and contend that as to *217 the 680 acres plaintiff's rights were extinguished by the fact that no development or production was had on such lands during the 20-year primary term.
At the time the case was decided the trial court filed a memorandum opinion, and as it clearly sets forth the issues and the reasons for the decision, we quote it in full:
(describes 3,630 acres of land.)
In harmony with the court's memorandum, judgment was entered quieting title to the mineral interest in question on the 680 acres in defendants Youngren as against plaintiff Baker, and directing the clerk of the court to pay accrued royalties which had been paid into that office by defendant production company, to defendants Youngren.
Plaintiff's motion for a new trial being overruled, he has appealed.
*221 Despite the various arguments and contentions made, the entire matter narrows down to the question of what is a practical interpretation and construction of the written instrument involved. It is conceded by the parties that the identical or a similar question has never been before this court. Cases somewhat analogous from other jurisdictions are cited, but, at best, they are merely persuasive. In its memorandum decision the trial court held the instrument to be unambiguous and, following the general rule mentioned in Brungardt v. Smith, 178 Kan. 629 [Syl. 4], 290 P.2d 1039, stated that the intention of the parties must be gleaned from the four corners of the instrument when construed as a whole. We are in accord with that statement and approach to the question.
As was observed by the trial court, Baker, the grantee, acquired the right to execute new leases covering his interest if those existing at the time of the conveyance were forfeited or cancelled. He had the right, which he exercised, to determine what part of the lands under which he owned minerals would be leased, the terms of such leases and the lands to be included in each lease. As contended for by defendants, we think the fact the lands described in the conveyance were subject to various leases and that production might have been obtained under any one or all of them during their primary terms and during the primary term of plaintiff's interest, is important in determining the intention of the parties. The lands in question were subsequently divided into new units by other leases and agreements. Timely production under any one of those leases would have perpetuated that lease and plaintiff's interest in the lands covered by such lease. Had the parties intended, as contended for by plaintiff in this action, it would have been a simple matter to have expressed such intention by including in the instrument a recital to the effect that production on any portion of the lands described would perpetuate and extend plaintiff's interest on all of the lands, even though royalty from a specific producing lease was attributable only to the lands covered by such lease. They did not do so. We agree with the trial court that each oil and gas lease on any part of the entire tract covered the minerals and mineral rights of both parties, but only on the lands described in each particular lease.
A point is made of the fact that on October 30, 1952, the parties executed an agreement which modified a previously executed gas unitization agreement. This matter was adequately and properly covered in the trial court's memorandum and, as indicated, was for *222 the purpose of correcting the acreage description and was executed for the benefit of lessee defendant production company, and is not to be construed as a recognition of rights claimed by plaintiff in this action.
Considerably more on the subject could be said but it would be largely repetitious of what is contained in the trial court's memorandum. Various contentions made by plaintiff have not been overlooked or ignored, but, in view of our conclusion, require no discussion. We think the trial court correctly analyzed the questions presented and arrived at a correct conclusion.
The judgment is therefore affirmed.