Dooley v. Hall Cordes

1967 OK 203, 434 P.2d 289, 29 Oil & Gas Rep. 272, 1967 Okla. LEXIS 487
CourtSupreme Court of Oklahoma
DecidedOctober 3, 1967
Docket40955
StatusPublished
Cited by11 cases

This text of 1967 OK 203 (Dooley v. Hall Cordes) is published on Counsel Stack Legal Research, covering Supreme Court of Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dooley v. Hall Cordes, 1967 OK 203, 434 P.2d 289, 29 Oil & Gas Rep. 272, 1967 Okla. LEXIS 487 (Okla. 1967).

Opinion

BLACKBIRD, Justice:

This case is a sequel to Panhandle Eastern Pipe Line Co. v. Isaacson (10th Cir.) 255 F.2d 669; and many of the facts stated in the cited opinion, promulgated May 7, 1958, form a part of the factual background of this case.

There the court upheld the title of M. E. Isaacson, sole surviving trustee of the Mary Phyllis Neal Trust to a term mineral interest, to which he had succeeded, that was created in a reservation by the grantors in a special warranty deed executed and delivered on August 13, 1941, by O. F. Neal and Marie O. Neal, his wife, to one Elmer Hall (thereafter deceased) and describing lands in the Eastern portion of Section 21, and other land in Section 22, Township 6 North, Range 22 East of the Cimarron Meridian in Beaver County, Oklahoma.

Against the claims of Elmer Hall’s heirs (and/or their representatives, or the parties deriving their claimed title through them) that the deed reservation’s primary 15-year term had expired before the “production”, referred to in said reservation, had occurred, the court there held that the “tapping” of a natural gas common source of supply in the lower Morrow Sand by the drilling and completion of a well called the “No. 1 Kiser”, on a lease owned by United Producing Company (a stranger to that action), covering other land in Section 22, extended said reservation beyond its primary term, and into an indefinite secondary term, under its “thereafter” provisions, in view of the circumstances there shown, including the entry of a Corporation Commission order well spacing and communitiz-ing all of the land in Section 22, into one drilling and spacing unit.

.After the promulgation of the above described opinion in Isaacson, supra, up *291 holding his title, Howard C. Johnson, in early June, 1958, assigned an undivided one-fourth interest in his lease to each of three persons, one of whom was David L. Dooley, the plaintiff in error herein.

Thereafter, in October, 1959, production ceased in the No. 1 Kiser well, on the strength of whose character as a “producer’, the court, through Isaacson, supra, had, as aforesaid, held Isaacson’s term mineral interest, and Johnson’s lease from him, to be extended and/or subsisting.

Less than a year later, The Texas Company, hereinafter referred to as “Texaco”, which (as revealed in Isaacson, supra) had, in September, 1955, obtained from the Elmer Hall heirs one lease on their undivided J^ths mineral interest in the SE}4 of Section 21, supra, for a primary term, evidently of only five years, and which, later in February, 1956, in apparent anticipation of Isaacson’s mineral interest expiring at the end of its 15-year primary term on August 13, 1956, obtained, from the same lessors, another such lease — to commence that date — on an additional, or the remaining, undivided one-fourth mineral interest in the same land, began to make plans for the drilling of an exploratory well on said quarter section, presumably to forestall its said leases from expiring at the end of their primary terms.

In fulfillment of its plans, Texaco was instrumental in forming what was called the “C. K. Hall Unit” for the purpose of drilling and operating such a well, referred to as the “C. K. Hall Unit Well”, on said quarter section. This was followed by Texaco’s obtaining the execution, by other lease owners in said section, of the “C. K. Hall Unit Operating Agreement”, dated September 1, 1960, naming it (Texaco) as the unit operator. The effect of David L. Dooley’s entering into this Operating Agreement with Texaco was one of the main issues in the present quiet title action, commenced by the Elmer Hall heirs, in the trial court early in 1961, after the C. K. Hall Unit well was completed as a commercial gas producer from the upper Morrow Sand, on November 6, 1960, and the Corporation Commission had entered an order on December 16, 1960, establishing 640-acre drilling and spacing units for this new common source of supply.

In the pleadings Texaco (which the Hall heirs’ petition named as a defendant in this case) filed, it revealed (in substance) that communitization of all mineral interests in Section 21, under the Corporation Commission’s spacing order and the plan of distribution of the C. K. Hall Unit’s production contemplated in the operating agreement, would make 3.125% of the lessees’ share of said Unit’s total production attributable to Dooley’s (claimed) interest.

Viewing Texaco’s answer, cross-petition and “cross claim” as a whole, it may be said that it did not rely upon resisting the claim of the Hall Heirs to all of the landowners’ ⅛⅛ mineral interest under the quarter section (on the ground that the term royalty created in the Neal-Hall deed’s reservation had expired upon the cessation of production in the No. 1 Kiser well) but that it merely took the position that if those plaintiffs’ claims of title to the entire lessors’ share of said quarter section’s mineral estate were upheld, then the court should also uphold its oil and gas leases from them; and Texaco prayed that its title to the “working interest” in said mineral estate, or leasehold, be quieted.

In his answer to the Hall heirs’ petition, Dooley relied upon the fact that the C. K. Hall Unit well was completed in September, before the No. 1 Kiser well was plugged on November 8, 1960, to continue the life of his lessor’s (Johnson’s) term royalty, and to support his lease interest, upon application of the principles adhered to in Isaacson, supra. In his answer to Texaco’s Cross-Petition and “cross-claim”, Dooley incorporated the allegations of his answer to the Hall heirs’ petition, by reference, and further alleged that he “started negotiating with Texaco, Inc. in connection with” his lease interest as early as June 14, 1960, long before the Kiser No. 1 well was abandoned; that these negotiations 'culminated in the C. K. Hall Operating Agreement; *292 “that in view of the recognition hy Defendant, Texaco, Inc., of this Defendant’s leasehold interest, and because of the fact it owned the lease * * * referred to in its Cross-Petition and Cross-Claim, a fiduciary relationship existed between the Defendant, David L. Dooley and the Defendant Texaco, Inc., whereby it became the duty of the Defendant Texaco, Inc., to protect his said leasehold interest and participating working interest; and that should plaintiffs prevail herein said Defendant Texaco, Inc., is bound by * * * (the operating agreement) * * * and is estopped to deny the validity of said operating agreement and the 3.125% interest after payout on the Hall Unit No. 1 well attributable to this answering Defendant.”

This case was tried by the court upon stipulated facts, and documentary evidence introduced, in accord with agreements reached at a pre-trial conference.

In the final judgment the trial court thereafter entered, in December, 1963, it upheld the title of the Hall heirs to the entire landowners’ mineral interest in the SE}4 of Section 21, supra, and Texaco’s title to the oil and gas leases it had obtained from them; and, among other things, said judgment released Texaco from any obligation to Dooley under the C. K. Hall Unit Operating Agreement, and enjoined him from asserting any right, title or interest by reason thereof.

After the overruling of his motion for a new trial, Dooley, sometimes hereinafter referred to as “appellant”, perfected the present appeal on original record.

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Bluebook (online)
1967 OK 203, 434 P.2d 289, 29 Oil & Gas Rep. 272, 1967 Okla. LEXIS 487, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dooley-v-hall-cordes-okla-1967.