Court Opinion

ID: 5145040
Source: CourtListenerOpinion
Date Created: 2022-01-02 01:25:00.250804+00
Date Added: 2024-06-11T08:24:43.387749
License: Public Domain

On Rehearing.
HURST, C.J.
(specially concurring on rehearing). I agree that the appeal as to Hunter should be dismissed. I also agree that the judgment in favor of Mr. and Mrs. Ouart should be affirmed, but for reasons other than those stated in the majority opinion.
The arguments largely revolve around these questions: (1) Under the issues made by the pleadings and evidence, did the court have jurisdiction to award the Ouarts royalty in addition to the full % royalty awarded to the owners of the mineral interest in the southeast 10 acres on which the producing well is located? (2) Should the Ouart lease be construed to give the Ouarts a royalty of 7/48 of the oil and gas produced from any portion of the 40 acres covered by the lease, despite the fact that they owned no mineral interest in the east 20 acres? And, (3) should the judgment awarding the owners of the mineral interest in the southeast 10 acres a full % royalty be modified by deducting therefrom the royalty interest awarded to the Ouarts? I think the first two questions should be answered in the affirmative and the third in the negative.
The mineral rights in the 40-acre tract here involved are owned by many persons. Some own fractional interests in the entire 40 acres while others own fractional interests in part only of the 40 acres. Some own fractional interests of less than one acre. After it acquired the leases, Magnolia Petroleum Company acquired interests in the entire 40' acres, and two individuals own interests in the entire 40 acres. Eleven persons or corporations own the mineral interest in the southeast 10 acres, thirteen own the mineral interest in the northeast 10 acres, eight own mineral interests in the west of 7 % acres of the west half of the 40 acres, and 10 own mineral interests in the east 12% acres of the west half of the 40 acres. Ouart owns a half interest in the west 7% acres and a sixth interest in the east 12% acres of the west half of the 40 acres, making his interest equal to 5.84 acres or 7/48th of the 40-acre tract, but he owns no interest in the east 20 acres.
During the years 1937 and 1938, the Magnolia Petroleum Company procured five separate leases, four covering the entire 40 acres and one covering the east 12% acres of the west half of the 40 acres. All were on Producers 88 *263forms, but some varied slightly from others. The leases contain substantially the same terms.
The lease by Ouart and wife covered the entire 40 acres, and was executed on May 9, 1938, and was for a term expiring April 23, 1942, and as long thereafter as oil or gas is produced “from said land by lessee”. It obligated the lessee to deliver to the lessors “the equal one-eighth part of all oil produced and saved from the leased premises,” subject to this diminution clause:
“If said lessor owns a less interest in the above described land than the entire and undivided fee-simple estate therein, then the royalties and rentals herein provided for shall be paid lessor only in the proportion which lessor’s interest bears to the whole and undivided fee.”
Ouart was permitted to testify, over plaintiff’s objections, that Mr.' Duna-way, the agent of plaintiff who aided in closing the deal for his lease, told him that the interests in the 40 acres were so small and varied that the lease on the 40 acres would have to be taken as one lease and that is why the leases were made to expire on the same date, and “we would share and share alike”, and “I would get one-eighth in all the royalty relating to the whole interest”. Mr. Fisher, another lessor, testified that Dunaway told him that his interest would be paid “according to the royalty 1 owned in the forty”. Mr. Hunter, a lessor who also represented the Magnolia in securing leases on the land, testified that he told Ouart that “he would get his proportionate part of the royalty regardless of where the well was drilled”, and “we thought we were signing community leases”.
1. Appellant argues that, under the issues made by the pleadings and the stipulation signed by the parties and filed at the commencement of the trial, the court was without power to award a royalty of more than one-eighth to the owners of all the mineral interests, and that its judgment awarding to Mr. and Mrs. Ouart 7/48 of the one-eighth royalty in addition to the full one-eighth royalty awarded to the owners of the mineral interest in the southeast 10 acres was beyond its jurisdiction. It bases this contention largely upon this clause in said stipulation:
“It is further stipulated and agreed by the parties hereto that the plaintiff had a right to institute this action as a stakeholder of the funds claimed by the defendants and have the court decree the interest of each in said funds tendered by the plaintiff, representing the one-eighth (%) royalty interest of the oil produced on the land described in plaintiff’s petition.”
I do not believe this stipulation can be construed to mean that the Ouarts could not insist that in any event they were entitled to 7[/48 of the royalties from production from any portion of the lease. In their answer in this cause (No. 19337) they referred to the judgment that had been rendered in cause No. 19062 and alleged that they were entitled in this cause to 7/48 of all royalties from production from the 40 acres covered by their lease. They introduced oral testimony, after - the stipulation was filed, to the effect that they were led to believe by appellant’s representative at the time the lease was executed that they would receive such royalty.
Appellant contends that this is an interpleader suit and that it is merely a stakeholder. Aside from the question of the effect of the order of consolidation, I think this contention is without merit. In strict interpleader, the plaintiff is a mere disinterested stakeholder, and the contest is strictly between the claimants to the fund. 15 R.C.L. 226; 30 Am. Jur. 220; 48 C.J.S. 55; Guaranteed State Bank v. D’Yarmett, 67 Okla. 164, 169 P. 639. The appellant does not meet this requirement. It claims % of the royalty by reason of the ownership of its mineral interest. It paid out the full one-eighth royalty to the owners of the mineral interest in the southeast 10 acres up to May 1, 1943, and cannot be a stakeholder as *264to that part of the royalty, and it objects to paying out any further royalty accruing prior to May 1, 1943. In its petition, appellant asked general equity relief, and in its reply to the answer to the Ouarts it denied that they were entitled to any share of the royalty from the oil and gas produced from the southeast 10 acres, and asked that they be estopped from claiming an interest in the same and that it have such legal and equitable relief to which it may be shown entitled. Cause No. 19337 was, at most, one in the nature of interpleader. 48 C.J.S. 42; 30 Am. Jur. 224; Bank of Earlsboro v. J. E. Crosbie, Inc., 182 Okla. 327, 77 P. 2d 547.
Appellant asked that cause No. 19062 be consolidated with this cause. This request was at first denied, and appellant excepted to the denial, but later and after the evidence was all in the court on its own motion ordered the two cases consolidated, and appellant excepted to that order. Appellant, in its petition in error, assigned this action as error but does not here urge it. The sole issue in No. 19062 at the time judgment was therein rendered was whether appellant owed Ouart 7/48 of the one-eighth royalty by reason of production from the southeast 10 acres. This was also the issue made by the answer of the Ouarts and the reply of appellant thereto in No. 19337. The judgment previously rendered in cause No. 19062 was in effect superseded and lost its vitality by the judgment in the consolidated cause, from which this appeal was taken. It follows that by its motion to consolidate the appellant treated this action as one other than strict interpleader, and the court, by its order of consolidation, likewise so treated it. The effect of the consolidation was to give the court the power to try the consolidated cause the same as if the pleadings in the two causes had been filed in one cause, and to preserve the issues in No. 19062 unaffected by the stipulation. 1 C.J. 1135; 1 Am. Jur. 480.
It follows that the court had jurisdiction to decide the controversy between appellant and the Ouarts, made by their pleadings in both cases, as to the construction to be placed upon the Ouart lease and that the stipulation did not deprive the court of this jurisdiction.
2. The appellant contends that ordinarily the royalty due from production of oil and gas belongs to the owner of the land on which the well is drilled, and since the lease from Ouart and wife contains no entirety clause (Eason v. Rosamond, 173 Okla. 10, 46 P. 2d 471) or communitizing clause (Thomas v. Ley, 177 Okla. 150, 57 P. 2d 1186) this rule should be applied in the instant case, and that the court committed error in admitting evidence to the effect that the parties intended and understood that each owner should share in the royalties in the proportion that his interest bore to the entire and undivided fee of the 40 acres, thereby varying the terms of the written lease. It cites the following cases to support such contentions Kimbley v. Luckey, 72 Okla. 217, 179 P. 928; Pierce Oil Co. v. Schacht, 75 Okla. 101, 181 P. 731; Galt v. Metscher, 103 Okla. 271, 229 P. 522; Carlock v. Krug, 151 Kan. 407, 99 P. 2d 858; Eason v. Rosamond, 173 Okla. 10, 46 P. 2d 471; Brazell v. Brown, 169 Okla. 623, 38 P. 2d 17; Peerless Oil & Gas Co. v. Tipken, 190 Okla. 396, 124 P. 2d 418; Seal v. Banes, 183 Okla. 203, 80 P. 2d 657; Investors Royalty Co. v. Lewis, 185 Okla. 302, 91 P. 2d 764; and Louisiana Canal Co. v. Heyd, 189 La. 903, 181 So. 439, 116 A.L.R. 1260.
These cases are not in point. They involved controversies between joint lessors, or between lessors and their grantees, or between grantor and grantee of the fee as to the division or ownership of the royalties. In some of them the lessor sold a part of the leased premises after the lease was made, and the question in dispute was as to the ownership of the royalties or mineral *265interests in the separate tracts after the leased premises were divided. Others involved joint leases by owners of contiguous tracts. Others involved leases containing entirety or commun-itizing clauses. Others involved the parol evidence rule. None of them involved controversies between the lessor and the lessee as to the amount of royalty due from the lessee to the lessor under the terms of the lease contracts, as here. The Ouart lease was signed only by Mr. and Mrs. Ouart, and there is no controversy between them as to a division of the royalties. None of the parties cites a case involving separate leases by the owners of undivided interests in a part only of the leased premises.
The question here relates to the meaning of the Ouart lease. It is not one of dividing the royalties between lessors, as argued by the appellant. There are two reasons why, in my opinion, the Ouarts are entitled to 7/48 of the one-eighth royalty.
a. When the Ouart lease is considered from its four corners, without reference to the oral testimony and the other circumstances contained in the record, and settled rules of construction are applied, it should be so construed. The diminution clause, above quoted, is couched in broad language and covers a situation where the lessor owns an undivided interest in a portion only of the leased premises as well as where he owns an undivided interest in the whole of the leased premises.
The only fair construction to be placed upon the lease is that the parties intended and understood that the terms “leased premises”, “said land”, and “above described land,” used in the lease, referred to the entire 40 acres, the only land described in the lease, and not merely the west 20 acres, and the drilling of a well at any location on the 40 acres continued in effect the lease on the portion in which lessors owned an interest, as contended by the appellant in cause No. 19062, and it would follow that the lessors are entitled to receive royalty from production obtained from any portion of the leased premises in the proportion that their interest bears to the whole and undivided fee of the 40 acres. Otherwise, the lease would be unfair to the lessors.
The rule is that in construing contracts the courts favor that construction which will make them fair to both parties, rather than a construction that will make them oppressive, inequitable and unreasonable. 12 Am. Jur. 791; 13 C.J. 540.
The construction which I would place upon the Ouart lease gives effect to the well established rule that doubt, if any, as to the meaning of an oil and gas lease will be resolved in favor of the lessor and against the lessee. New State Oil & Gas Co. v. Dunn, 75 Okla. 141, 182 P. 514; Garfield Oil Corp. v. Champlin, 78 Okla. 91, 189 P. 514; 24 Am. Jur. 551.
The evidence introduced on behalf of the defendants, above referred to and of which appellant complains, was consistent with this construction, and appellant was not harmed by such evidence.
b. When the oral testimony and other circumstances in evidence are considered along with the terms of the lease, it seems clear that the parties intended to communitize the separate interests in the 40-acre tract and treat it as an entirety. Otherwise, why did those who joined in the four leases on the 40 acres do so, when some of them owned undivided interests in a portion only of the 40 acres? Why did Magnolia procure leases under such circumstances, over a period of more than a year, several of them for terms ending at the same time? The presumption is that the lessors desired a wider spread so that, as was subsequently found to be true, if part was productive and part not productive, each would realize something from the royalty. And the presumption is that the lessee desired *266to avoid drilling more wells than would reasonably develop the 40 acres. In Peerless Oil & Gas Co. v. Tipken, above, we laid down the rule that, when the separate owners of two contiguous tracts join in one lease on the two tracts, the presumption will be indulged that they intended that the royalty should be apportioned to them in the proportion that the acreage of each bears to the entire tract, unless a contrary intention or agreement is shown. Why should this same presumption not obtain when the owners execute separate leases, embodying substantially the same terms and covering the entire tract, as was done in the instant case? Why should the owner of a separate tract include his neighbor’s land with his land in one lease, if such was not his intention? And why should the leasee take such a lease if he did not intend it to have such effect?
Appellant offered no evidence as to why it included the east 20 acres in the Ouart lease nor did it contradict the testimony introduced by Mr. and Mrs. Ouart. It states that the inclusion of the east 20 acres in the Ouart lease was inadvertently done, but it did not seek to reform the lease and it offered no evidence in support of such contention, which is made for the first time in this court. The fact that it took three other leases on this land under similar circumstances signed by persons owning an interest in a portion only of the 40 acres negatives such contention.
The appellant urges that the theory on which the trial court decided the case was erroneous and not in accordance with the issues made by the pleadings and evidence. This argument has reference to the finding of the court that Mr. and Mrs. Ouart were entitled to 7/48 of a one-eighth royalty “for damages for offset drainage ... to be awarded in the nature of a bonus.” But the rule is that if the trial court reaches the correct result and assigns an erroneous reason for his decision, this court will not disturb the judgment. Witt v. Garrod, 187 Okla. 14, 101 P. 2d 619; Ringer v. Byrne, 183 Okla. 46, 80 P. 2d 212. As pointed out above, the result reached is consistent with a proper construction of the Ouait lease.
3. In its petition, in the trial of the case, and in its briefs filed in this court, appellant has consistently stated and contended that the full one-eighth royalty should be paid to the owners of the mineral interest in the southeast 10 acres. Said owners filed an answer admitting the allegations of plaintiff’s petition that they were entitled to the full one-eighth royalty, and I do not find where plaintiff filed a reply to such answer. Plaintiff did not ask to recover from such owners any of the royalty paid to them prior to May 1, 1943. The result is that none of such owners, other than appellant which owns a 3/16 mineral interest in the entire 40 acres, has filed a brief in this court. However, in a recent brief in support of its petition for rehearing appellant argues that, if this court should not agree with its contention that the Ouarts are entitled to no royalty out of the production from the southeast 10 acres, the amount allowed them should be taken from the one-eighth awarded the owners of the mineral interest in the southeast 10 acres and their share reduced accordingly. Under the circumstances just stated, I am of the opinion that this request comes too late.
For the foregoing reasons, I concur in the result reached by the majority.