Edmonston v. Home Stake Oil & Gas Corp.

762 P.2d 176, 243 Kan. 376, 101 Oil & Gas Rep. 254, 1988 Kan. LEXIS 179
CourtSupreme Court of Kansas
DecidedJune 14, 1988
DocketNo. 61,759
StatusPublished
Cited by2 cases

This text of 762 P.2d 176 (Edmonston v. Home Stake Oil & Gas Corp.) is published on Counsel Stack Legal Research, covering Supreme Court of Kansas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Edmonston v. Home Stake Oil & Gas Corp., 762 P.2d 176, 243 Kan. 376, 101 Oil & Gas Rep. 254, 1988 Kan. LEXIS 179 (kan 1988).

Opinions

The opinion of the court was delivered by

Holmes, J.:

This case is before the Kansas Supreme Court on a certified question from the United States Court of Appeals for the Tenth Circuit pursuant to the Uniform Certification of Questions of Law Act, K.S.A. 60-3201 et seq. The question as presented by the certifying court is:

“When a term mineral interest in several tracts has been conveyed by a single instrument and one of those tracts has been unitized under the Kansas Compulsory Unitization Act, Kan. Stat. Ann. 55-1301 et seq., is the entire mineral interest [377]*377extended by the unitized production or only the interest in the tract included within the unit?”

As pointed out by the Court of Appeals, the facts are stated in the United States District Court opinion. Edmonston v. Home Stake Oil & Gas Corp., 629 F. Supp. 620 (D. Kan. 1986). For convenience, a plat or map of the area involved is attached as an appendix to this opinion. The Hon. Patrick F. Kelly, speaking for the United States District Court for the District of Kansas, stated the facts which are pertinent to the question before this court as follows:

“This is a quiet title action concerning three-quarters of a section of land, the North Half (N/2) and Southeast Quarter (SE/4) of Section 31, [Township 29 South, Range 18 West] in Kiowa County, Kansas. Defendants own a defeasible term mineral interest, an undivided % interest in and to all oil, gas and other minerals in the entire three-quarters tract. Plaintiff Edmonston purchased title to the tract in 1979, succeeding to the original grantors’ reversionary rights against the defendants. The dispositive issue is whether defendants’ defeasible term mineral interests in the entire tract were extended by a Kansas Corporation Commission compulsory unitization order, which included only a portion of the tract, followed by off-tract production on the unitized acreage. . . .
“. . . Defendants’ interest originated in a written instrument designated ‘Sale of Oil and Gas Royalty’, dated June 12, 1956, which provided the interest was to continue ‘for a period of the next ten years from June 11, 1956 and as long thereafter as oil and/or gas is produced from these premises or the property is being developed or operated.’ Notwithstanding its designation as a ‘Royalty’, that instrument was a mineral deed granting a base or determinable fee in the oil, gas and other minerals in place. Baker v. Hugoton Production Co., 182 Kan. 210, 212, 320 P.2d 772 (1958). The parties agree defendants’ interest arising from that instrument is a defeasible term mineral interest.
“In 1962, within the 10-year primary term of defendants’ interest, the Lewis ‘C’ Well was drilled and completed on the SE/4. The well produced oil and/or gas in paying quantities until plugged and abandoned on April 7, 1973. The parties agree the development, production and operation of the Lewis ‘C’ extended beyond the primary term defendants’ term mineral interest in the entire tract, the SE/4 and the N/2 of Section 31. Baker v. Hugoton Production Co., 182 Kan. 210, Syl. ¶ 1, 320 P.2d 772 (1958).
“Pursuant to the Kansas Compulsory Unitization Act, K.S.A. 55-1301 et seq., on May 24, 1968 the Kansas Corporation Commission (KCC) ordered unitization of the Nichols Pool in Kiowa County. The unitized area included the SE/4, but not the N/2, of Section 31. The KCC order incorporated by express reference the plan of unitization agreed upon by the necessary 75% of the royalty, term and working interest owners of the Nichols Pool. (R. 10, Ex. C, p.3.) Paragraph 3.4 of that plan provided operations or production anywhere on the unit shall be considered as operations or production in each tract within the unit, the effect [378]*378being to 'continue in effect each lease, term royalty, or other agreement as to all lands covered thereby just as if such operations had been conducted and a well had been drilled on and was producing from each tract.’. . . The KCC terminated the Nichols Unit effective November 20, 1984.
“After the Lewis ‘C’ Well on the SE/4 was plugged in 1973, no producing oil well or gas well was physically located on the N/2 of Section 31. . . .
“At no time after the Lewis ‘C’ Well was plugged on April 7, 1973, has any producing oil well or gas well ever been physically located or drilled upon the SE/4 of Section 31.” 629 F. Supp. at 621-22.

The district court held that the statutory unitization of the Nichols Pool extended the defendants’ defeasible term mineral interests only as to the SE/4 which was included in the unit. We agree.

Although not pertinent to the question now before us, we point out that there were two original mineral deeds, each covering a one-fourth term mineral interest. Plaintiffs in this action sought to quiet title to one-half of the minerals and not just one-fourth. As both instruments were identical and executed on the same date, the opinion of Judge Kelly applies equally to each conveyance and the reversionary interests thereunder.

At the outset we note the parties and the trial court correctly characterized the instruments before the court as mineral deeds which conveyed a base or determinable fee in the oil and gas in place. Wilson v. Holm, 164 Kan. 229, 234, 188 P.2d 899 (1948).

In Wilson v. Holm, a quiet title action brought by a reversioner, this court set out certain rules pertaining to defeasible term mineral interests of the type at issue here. The court stated that “the ultimate test as to whether an estate created by a deed has terminated depends entirely upon its own provisions,” and that the “deed must be construed in accord with the intent and purpose of the parties after it has been examined in its entirety.” 164 Kan. at 239.

This court has consistently followed the rule, asserted in Wilson v. Holm, that the instrument which creates a defeasible term mineral interest is controlling on the question of whether the interest has terminated. See Parkin v. Kansas Corporation Comm’n, 234 Kan. 994, 677 P.2d 991 (1984); Short v. Cline, 234 Kan. 670, 676 P.2d 76 (1984); Classen v. Federal Land Bank of Wichita, 228 Kan. 426, 617 P.2d 1255 (1980); Friesen v. Federal Land Bank of Wichita, 227 Kan. 522, 608 P.2d 915 (1980); [379]*379Klippel v. Beinar, 222 Kan. 681, 567 P.2d 867 (1977); Smith v. Home Royalty Association, Inc., 209 Kan. 609, 498 P.2d 98

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Bluebook (online)
762 P.2d 176, 243 Kan. 376, 101 Oil & Gas Rep. 254, 1988 Kan. LEXIS 179, Counsel Stack Legal Research, https://law.counselstack.com/opinion/edmonston-v-home-stake-oil-gas-corp-kan-1988.