Court Opinion

ID: 877128
Source: CourtListenerOpinion
Date Created: 2013-06-04 21:11:28.77043+00
Date Added: 2024-06-11T09:07:16.376732
License: Public Domain

No. 80-126
            I$ THE SUPREME COURT OF THE STATE OF MONTANA
             :

                                   1980

THE MONTANA POWER COMPANY,
                               Plaintiff and Appellant,
            -vs-
GAY L. KRAVIK,
                               Defendant and Respondent.

     1 from:    District Court of the Twelfth Judicial District,
                In and for the County of Hill, The Honorable
                B. W. Thomas, Judge presiding.

Counsel of Record:
         For Appellant:
                Jardine, Stephenson, Blewett     &   Weaver, Great Falls,
                Montana
         For Respondent :
                Aronaw, Anderson, Beatty   &   Lee, Shelby, Montana

                              -      --

                               Submitted on Briefs:       August 1, 1980

Filed:    4' 2 7
           16
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.

     Montana Power Company appeals from the judgment entered
March 17, 1980, in the District Court, Twelfth Judicial
District, Hill County, and from the findings of fact and
conclusions of law and the order entered in that case.
     Specifically, the Montana Power Company appeals from
the refusal of the District Court to adopt a certain finding
with respect to its total cost of purchasing gas from lessors
under the decision made by the District Court.     It also
requests a finding by us that the method adopted by the
District Court for determination of market price and procedures
for future adjustments thereof are consistent with a remand
from this Court in a prior appeal.
     The issues arise out of an oil and gas lease executed
in 1967 between Kravik, owner of certain lands in Hill
County, and the Montana Power Company, by which the company
agreed to pay royalties in the amount of "one-eighth (1/8)
of the market price of the gas in its natural state at the
well." The oil and gas lease subsequently became a part of a
pooling agreement, after Montana Power Company completed a
well on the Kravik lands in 1969.    At all times since,
the well has produced natural gas in commercial quantities.
Montana Power Company is the lessee, producer, purchaser and
distributor for all the gas taken from the well.    The gas
does not move in interstate commerce.
     The principal issue before the District Court was the
meaning of the phrase "market price" of the gas produced.
Montana Power Company commenced a declaratory judgment
action in the District Court to have a determination made as
to the meaning of that clause after Kravik demanded increased
                              -2-
payments on gas being produced on his lands.      Kravik counterclaimed
for like relief.     An earlier decision of the District Court
came before us in 1978, and in that case we issued an opinion,
                                  ,         ,
Montana Power Co. v. Kravik (1978) - Mont. - 586 P.2d
298, 35 St.Rep. 1568, setting out instructions to the District
Court for determining "market price" of the gas produced on
the Kravik lands.    On remand, the District Court took further
evidence, established a market price for the natural gas of
$1.75 per thousand cubic feet and provided in the judgment
which is now appealed from that "if the market conditions
change materially, the Montana Power Company and Gay L.
Kravik   . . . should attempt to   agree upon a market price
figure taking into consideration the factors [set out in the
conclusions of law],.   . . and   if an agreement cannot be
reached, the parties are free to come back into Court for a
judicial determination of market price at that time, and the
Court will retain continuing jurisdiction of this controversy
for such purpose."
     The appeal of the Montana Power Company raises two
issues: (1) that the District Court should have adopted an
additional finding to the effect that the prospective costs
to the Montana Power Company and its gas customers of royalty
payments to Kravik and others similarly situated, based upon
the market price of $1.75 per MCF, will amount to approximately
$1,525,000 annually; and, (2) a determination by this Court
that the procedures adopted by the District Court for determining
market price and for future adjustments are consistent with
our remand.
    Montana Power Company contends that the additional
finding should have been adopted by the District Court
because, without objection by Kravik, testimony was admitted
                                  -3-
by stipulation which included a number of exhibits setting
forth an expert's opinion of the estimated increased royalty
costs to the Montana Power Company, assuming a royalty price
as adopted by the District Court.
     Kravik contends that the proposed additional finding is
irrelevant to the issues in the dispute between Kravik and
the Montana Power Company over the meaning of "market price."
     Rule 52(a), M.R.Civ.P.,    requi~stheDistrict Court, in
a nonjury trial, to find the facts specially and state
separately its conclusions of law.     The purpose of the rules
requirement of findings of fact in nonjury cases is three-
fold: (1) as an aid in the trial judge's process of adjudication,
(2) for purpose of res judicata and estoppel by judgment
and, (3) as an aid to the appellate court on review.     Marriage
of Barron (1978),      Mont    . -, 580 P.2d   936, 938, 35
St.Rep. 891, 894.
    Montana Power Company commenced this case alleging in
substance that a dispute existed between it and Kravik as to
the proper interpretation of the words "market price" in
the oil and gas lease, and that a legal determination of
that term was required to instruct the Montana Power Company
in fulfilling its lease obligations.
    Kravik counterclaimed, asking the District Court to
determine the market price for the gas which was produced
from his lands by the Montana Power Company and asking for
some incidental relief.
    Montana Power Company replied to the counterclaim,
setting up laches as to past payments made, and again requesting
the District Court to grant the declaratory judgment relief
prayed for in its complaint.
     Thus, the issues in this case relate solely to the

dispute between Kravik and the Montana Power Company as to
                                 -4-
the meaning of the term "market price" in the oil and gas
lease.   The total cost to the Company of the determination
made by the District Court, taking into consideration all
other lessors with whom Montana Power Company may be purchasing
gas, was not an issue contested in the case before the
District Court, even though the evidence from the expert
went in by stipulation and uncontested by Kravik.       Even
before the adoption of Montana Rules of Civil Procedure,
this Court held in Thompson v. Bantz (1959), 136 Mont. 210,
215, 346 P.2d 982, 985, that where no issue of fact is made
by the pleadings, the court cannot go outside the issues and
make findings upon questions not in dispute.       The same rule
obtains under the Montana Rules of Civil Procedure.       The
District Court was not required to make a finding on a fact
which had no real relevance to the prime issue between
Kravik and the Montana Power Company:       what should the plontana
Power Company pay to Kravik as the "market price" of gas
produced from Kravik's lands under the lease.
    With respect to the second question raised by the
Montana Power Company, whether the District Court conformed
to the remand of this Court in its determination of procedures
for the future setting of market price, there is no objection
by Kravik on appeal.   We find that the District Court properly

provided, by retaining jurisdiction as it has, a method for
the parties to attempt readjustment of their rate of payment,
before further litigation.   As we said in the earlier decision

when this case was before us, "if an agreement cannot be
reached, the parties are always free to come back into court
for a judicial determination   . . ."   586 P.2d at 304.
     The judgment of the District Court is affirmed.
                                        \
W e Concur:

      Chief J u s t i c e
        7
        .,

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