Eagle Oil Co. v. Sinclair Prairie Oil Co.

105 F.2d 710, 1939 U.S. App. LEXIS 4761
CourtCourt of Appeals for the Tenth Circuit
DecidedJune 29, 1939
DocketNo. 1817
StatusPublished
Cited by13 cases

This text of 105 F.2d 710 (Eagle Oil Co. v. Sinclair Prairie Oil Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Eagle Oil Co. v. Sinclair Prairie Oil Co., 105 F.2d 710, 1939 U.S. App. LEXIS 4761 (10th Cir. 1939).

Opinion

PHILLIPS, Circuit Judge.

A tract of land containing 100 acres was allotted to Andrew Sewell, a Creek Freedman, as his surplus allotment, and patent duly issued therefor. On April 27, 1904, Sewell executed and delivered to the Success Oil & Gas Company1 an oil and gas lease2 covering such land. The term of the lease was 10 years, and, should minerals be found in paying quantities, so long thereafter as the Success should deem it profitable to operate the lease. The lease reserved a one-tenth royalty in Sewell, and was duly recorded on May 14, 1904.

On June 14, 1904, Sewell conveyed the land by warranty deed to the Bradley Realty Bank and Trust Company.3 On October 10, 1904, the Bank executed and delivered an oil and gas lease 4 covering the land to the Southern Oil & Land Company.5 The lease reserved to the Bank a one-tenth royalty. It provided that if oil and gas should be found in paying quantities, the lease should continue so long as the Southern, its successors or assigns,, should deem it profitable to operate the property.

On January 16, 1905, the Bank conveyed the land by warranty deed to John W. Graves.

On December 22, 1905, Graves executed and delivered to Creek Oil Company6 an oil and gas lease 7 covering the land. The lease reserved to Graves a royalty of one-eighth and provided that it should run for a term of 15 years and so long thereafter as oil or gas should be found in paying quantities, but not to exceed a term of 25 years. After the execution of this lease, Graves conveyed an undivided one-half interest in the mineral rights to other persons.

In the early part of 1906, Success entered upon the land under its lease and commenced the erection of a derrick for the purpose of drilling for oil and gas. About March 1, 1906, Creek removed the partially constructed derrick of Success and proceeded to erect a derrick of its own on the land. Shortly thereafter, Success brought a suit against Creek in the District Court of the United States for the Western District of the Indian Territory. Creek filed a cross-complaint. Each asserted the validity of its own lease and challenged the validity of its adversary’s lease.

On May 27, 1907, a decree was entered in the suit adjudging that the Graves lease was valid and subsisting and quieting Creek’s title as against Success. The lessors not being parties to the suit, the decree was not an adjudication as between Sewell and Success with respect to the Success lease and Graves and Creek with respect to the Graves lease. Both parties appealed from the decree and upon the advent of statehood the appeals were lodged in the Supreme Court of Oklahoma. While the appeals were pending, Creek and Success entered into a compromise agreement whereby Creek agreed to pay to Success “for all its right, title and interest in and to the oil and gas in the * * * land the sum of Sixty-five Thousand ($65,000.00) Dollars.” The agreement stipulated that $30,000 was to be paid in cash and the balance out of oil runs. The agreement further stipulated “the parties hereto mutually agree for the consideration hereinabove stated to dismiss their respective appeals of said cause as the same now stands upon the docket of the Supreme [712]*712Court of the State of Oklahoma.” The appeals were dismissed in accordance with the stipulation and the cash payment and deferred payments were paid. Division orders were executed to carry out the agreement with respect to the deferred payments' to be paid out of oil, by Success and its assignee, Tyrrell, and' certain of the deferred payments to Tyrrell, as Success’ assignee, were paid by the Prairie Oil & Gas Company, a Kansas corporation.8

Graves commenced an action in the District Court of the United States for the Western District of the Indian Territory to cancel the Southern lease. Thereafter, on May 31, 1906, Graves and his coowners entered into an agreement with Southern. The agreement recited the Southern lease, that the validity thereof was contested by Creek, and the pendency of the action brought by Graves. It provided that Graves should dismiss his action, that neither Graves nor any of 'his coowners should maintain any action to cancel the Southern lease for any cause then or thereafter existing, that any determination of the respective rights of the several lessees made by decree of court or by agreement among the lessees should be binding upon Graves and his coowners, and that in the event the Southern lease should be determined to be, the first valid and subsisting lease the royalty reserved thereunder should be increased from one-tenth to one-eighth.

On July 21, 1906, Graves and his co-owners entered into a contract with Success whereby they agreed that in the event the Success lease should be adjudged to be the first valid and subsisting lease, or recognized by agreement of the parties to be the first valid and subsisting lease, then the royalty reserved in such lease should be increased from one-tenth to one-eighth. It further stipulated that Graves and his coowners should not institute or participate in, directly or indirectly, any action or suit which might in any way injure the rights or claims of Success.

On July 20, 1906, Southern assigned its lease to Creek for a consideration of $5,000. By such assignment and the compromise agreement with Success, Creek acquired all the right, title, and interest in the three leases, the royalty reserved by agreement of the parties having been made equal under each of the three leases. Creek continued to operate the property until July 22, 1909, when it executed and delivered an assignment to the Kansas Prairie of the “leasehold interests and rights of * * * Creek * * * in and upon (here was inserted a description of the land here involved) and sometimes known and designated as the John W. Graves lease.”

On July 19, 1913, Graves entered into a contract with the Kansas Prairie authorizing it to extract casinghead gas from the land for a consideration of one-eighth of the gross receipts from such casinghead gas produced therefrom. This contract was unlimited as to time.

On March 30, 1932, the Kansas Prairie assigned all its right, title, and interest in and to the leases and the casinghead gas contract to the Prairie Oil Company, a Delaware Corporation.9

On April 1, 1932, the Delaware Prairie assigned to the Sinclair Prairie Oil Company, a Maine corporation,10 all its right, title, and interest in and to the leases on the land and the casinghead gas contract.

On October 27, 1932, the Commonwealth Oil & Gas Company, formerly the Kansas Prairie, executed and delivered to Sinclair assignments specifically covering the Southern and Success leases.

Graves died testate February 9, 1932. At the time of his death he was the owner of an undivided one-half interest in the oil, gas, and other minerals in and under the land. He left a last will and testament which was duly admitted to probate by which he devised such land to Elda Audrey Haskell. Up to the date of his death Graves continued to accept royalties from the Kansas Prairie. During the period of the administration of his estate, his personal representative continued to accept royalties from the Kansas Prairie and its successors. After the estate was closed, Haskell continued to accept royalties from Sinclair.

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Bluebook (online)
105 F.2d 710, 1939 U.S. App. LEXIS 4761, Counsel Stack Legal Research, https://law.counselstack.com/opinion/eagle-oil-co-v-sinclair-prairie-oil-co-ca10-1939.