Court Opinion

ID: 9632143
Source: CourtListenerOpinion
Date Created: 2023-08-22 11:04:16.297135+00
Date Added: 2024-06-11T12:29:43.874717
License: Public Domain

HODGES, Justice
(dissenting).
I disagree with the majority’s adaptation of the facts in the present case to the fol*90lowing principles of law as expounded therein:
“Cotenant owners of an estate in lands stand in a relation to each other of mutual trust and confidence, and neither will be permitted to act in hostility to the other in reference to the joint estate; and a distinct title acquired by one will ordinarily inure to the benefit of all.”
In this case we have two distinct properties or oil and gas leases. The ownership of one lease is held by the plaintiff and defendants. The ownership of the other lease was owned by Amerada, then subsequently assigned to the plaintiff. The fact that the Corporation Commission has entered a spacing order joining the two tracts as a unit does not alter the relationship of the owners in the two tracts.
The assignment by Amerada of its 80 acre lease to plaintiff, Rex Oil Co. is not adverse or hostile to the other 80 acre lease which is owned by the plaintiff and defendant. The plaintiff did not acquire an adverse title, but an additional interest in a separate lease. The interest of Amerada in its lease was not converted into a hostile or adverse title by inclusion of that lease with the original lease in a single spacing unit by the Corporation Commission. The defendants will ultimately recover the same share of production that they would have received had not the spacing unit been created. Instead of being entitled to participate in the production of ⅛⅛ of the working interest in an 80 acre lease, the defendants, by virtue of the spacing order will be entitled to a total participation in production of Vieih of the working interest in a 160 acre unit. In fact, with this conservation practice and the sharing of expenses of development and production by the unit owners, it may well be that the defendants’ share of production under the unit will be greater. Such lease was therefore not hostile or adverse to the interest of the defendants.
The evidence does not disclose a mining partnership or joint venture between the plaintiff and defendants, and the trial court found that their relationship was one of cotenancy. There is no privity or fiducial relationship between cotenants. Taylor v. Brindley, 10 Cir., 164 F.2d 235. But even assuming a fiduciary relationship between the plaintiff and defendants, the claim of the defendants must fail. If a fiduciary relationship existed, it arose out of the 80 acre lease in which they had a common ownership, and not out of the 80 acres assigned by Amerada to plaintiff. The duties and obligations of a fiduciary necessarily relate to the property or interests common to the parties. British American Oil Producing Co. v. Midway, 183 Okl. 475, 82 P.2d 1049. The spacing order of the Corporation Commission did not create a cotenancy or a fiduciary relationship between the plaintiff and defendants. Wakefield v. State, Okl.Cr., 306 P.2d 305; Amis v. Bryan, 185 Okl. 206, 90 P.2d 936.
The cases cited by the majority which declares that a fiduciary cannot acquire an interest or title which is hostile, adverse or antagonistic are not in point. An examination of those cases show that the adverse, hostile or antagonistic title or interest acquired by the fiduciary was in or to the same property or property right held by the one entitled to fidelity from the fiduciary. Such is not the case here.
The majority opinion points out that plaintiff paid no money for Amerada’s lease and that the assignment was given by Amerada in lieu of Amerada paying one-half the cost of the well and that it would be unfair and inequitable to allow the plaintiff to retain all of the interest in this lease. The obvious answer to this argument is that the parties were free to bargain and entered into any legal and binding contract they chose. Amerada could have even assigned the lease to the plaintiff as a gift. However, the consideration given for the lease by the plaintiff *91was adequate considering the risks involved. At the time of the assignment the potential of the unit was not proven. In fact, the well had been shut down and plugged because of a lack of market. Apparently Amerada was willing to assign this lease to the plaintiff for an override interest because they calculated that the income from the well would not justify the cost of their proportionate share. The plaintiff was willing to assume this risk.
In my opinion this case should be treated the same as if Amerada had-not assigned its interest. Before the assignment of the lease to the plaintiff, Amerada was obligated to pay its proportionate cost of drilling the well, together with the production cost, if they were to participate in the income of the well. By acquiring Amerada’s lease and its right of participation in the income of the well, plaintiff has also elected to assume its obligations for cost of development and production. Inasmuch as the defendants will benefit by the payment of these costs regardless of whether Amerada or the plaintiff owns the lease, the assignment cannot be considered to be hostile, adverse or antagonistic to the interest of the defendants.
It is grossly unfair to permit these defendants to “lay in wait” and reap the benefits of a risk which only the plaintiff was willing to assume. The defendants had owned their l/ith interest for over five years without any returns from their investment. The well was shut down, and plugged because of a lack of market. In an effort to make a market for this well, the plaintiff also acquired leases in property surrounding the unit. The plaintiff went to considerable expense, effort and risk to develop a field which would create a commercial market. As a result, the interest of the defendants has been enhanced and made productive. The plaintiff took no advantage of the defendants. The same opportunity and information was available to the defendants. The defendants did not assume any risks and expended no effort or money for the development of this market. They should not now be rewarded for their inactivity.
I respectfully dissent.
I am authorized to state that BLACKBIRD and LAVENDER, JJ., concur in the views herein expressed.