Opinion ID: 1376199
Heading Depth: 1
Heading Rank: 2

Heading: the sweetheart gas bill

Text: Samson argues several propositions of error regarding the trial court's interpretation and application of relevant statutes. A brief review of these statutes, 52 O.S.Supp. 1985, § 540 and 52 O.S.Supp. 1983, §§ 541-47 is necessary before considering Samson's arguments. Sections 541 through 547 were enacted together by the legislature as one act which has come to be known as the Sweetheart Gas Bill. [5] The purpose of the bill, as stated in § 541, is to protect the rights and correlative rights of all interest owners of natural gas wells, affording each the opportunity to extract and sell their proportionate share of gas. Section 542 entitles each owner of a mineral interest in a gas producing well to share ratably in the revenues from the sale of the gas produced by the well and requires the operator of the well to give written notice to the owners of their right to have the operator market their gas for them. Similarly, §§ 543-45 govern the sales of gas under contracts and the accounting of gas sales, and § 545 directs the distribution of proceeds from sales under the provisions of § 540. Section 540 calls for proceeds from the sale of gas to be paid to persons legally entitled thereto within six months after the date of first sale. Proceeds from any subsequent sales must be paid to the owners within sixty days of the end of the calendar month within which the gas was sold. The provision further reads: Provided, however, that in those instances where such proceeds cannot be paid because the title thereto is not marketable, the purchasers of such production shall cause all proceeds due such interest to earn interest at the rate of six percent (6%) per annum, until such time as the title to such interest has been perfected. 52 O.S.Supp. 1985, § 540(A). Subsection D of § 540 provides for a 12% interest rate on unpaid revenues when the owners have marketable title.
Samson first argues the Maxwells were not owners in the gas well until July of 1985 when the district court quieted title in them. Since they were not owners in the well, Samson concludes that § 542 does not apply to them and they are not entitled to proceeds from gas produced prior or to that month. It is well settled that title to real property vests immediately in the heirs upon the death of an intestate. Cassina v. Jones, 340 P.2d 482 (Okla. 1959); Smyth v. Smyth, 198 Okla. 478, 179 P.2d 920 (1947); Davis v. Morgan, 186 Okla. 30, 95 P.2d 856 (1939). Smyth further holds that although vesting immediately, title is not absolute until determination of heirship and final distribution is had. 179 P.2d at 923 (citing U.S. v. Drummond, 144 F.2d 375 (10th Cir.1944), aff'd, Drummond v. U.S., 324 U.S. 316, 65 S.Ct. 659, 89 L.Ed. 969 (1945)). In U.S. v. Drummond , the Tenth Circuit explained that although the heir is the owner of the property, they are not entitled to possession until all debts are satisfied and an order issued directing distribution of the property to them. Hence, the holding in Smyth that title is not absolute merely means that the heir is not entitled to enjoy all of the benefits of ownership until final distribution. As such, under the law of descent and distribution, the Maxwells, as heirs, are considered owners of the property. In Seal v. Corporation Commission, 725 P.2d 278, 293 n. 33 (Okla. 1986), we construed the term owner as used in 52 O.S.Supp. 1983, §§ 542(A) and (D) to mean parties who have a right to take their share of production in kind or to separately dispose of their share. Since the Maxwells were the rightful owners under probate law, they were entitled to the proceeds of any gas sales from the Kinnikin # 1 well after heirship was officially declared by the district court in July of 1985. Additionally, prior to the 1985 order, the Maxwells were owners although not entitled at that time to all of the benefits of ownership. Having been determined the proper heirs of the property, the Maxwells were entitled to those benefits which included proceeds from gas sales from the Kinnikin # 1 well both before and after the order of heirship.