Opinion ID: 168824
Heading Depth: 3
Heading Rank: 3

Heading: The Turner Farmout: Tracts 6 and 7

Text: 15 In May 1962, Mr. Luthy offered to assign two tracts covered by the Lease to Charles R. Turner, with drilling to commence on or before June 15, 1962. After Mr. Luthy's death, the Bank, Mrs. Luthy, Mr. Butt, and Defiance Coal reaffirmed the offer — with a later drilling date — in a letter signed by each of them. Turner accepted the offer. 16 Two other transactions related to this farmout occurred over the next year, each with the individual written assent of the Bank, Mrs. Luthy, Mr. Butt, and Defiance Coal. In February 1963, the parties executed a letter amending the farmout per Mr. Turner's request. In July 1963, the parties executed a new offer to Mr. Turner, which he accepted. 17 Two years later, the parties engaged in further dealings with Mr. Turner. In September 1965, Mr. Turner wrote a letter to a trust officer at the Bank in which he reported that he had discussed a trade with Mr. Paul Butt, on acreage owned by the Luthy Group. Id. at 387. On October 28, 1965, the Bank, in its capacity as executor and testamentary trustee of the Luthy estate, independently assigned the entire interest in Tracts 6 and 7 to Mr. Turner; in return, Mr. Turner assigned an overriding royalty to the Bank equal to 1/8 of all production. This transaction ignored the beneficial interest holders but, on May 25, 1970, they ratified it by signing a Ratification and Amendment to Agreement stating, in part: 18 Whereas, prior to [the] Assignment to Turner, the Bank owned official legal record title to [the Lease], but the equitable or beneficial title to [the Lease] was actually owned an [sic] undivided 1/3 interest each by said Bank, Defiance, and Butt, and said Mapel (formerly Cyrene Luthy) as her community property owned ½ of the 1/3 beneficial interest of the Bank, and said Defiance, Butt and Mapel did not sign or ratify said Assignment by the Bank to Turner and they now desire to correct said matter.... 19 Now, therefore, ... Defiance, Butt and Mapel hereby adopt, ratify and confirm said Assignment dated October 28, 1965 ... and do hereby convey all of their title in said lease as to said land to Charles R. Turner.... 20 Id. at 395. In addition, the document assigned to each of the beneficial owners a 1/16 share of the overriding royalty interests in production occurring on the tracts.