Hamilton v. Empire Gas & Fuel Co.

230 P. 91, 117 Kan. 25, 1924 Kan. LEXIS 382
CourtSupreme Court of Kansas
DecidedNovember 8, 1924
DocketNo. 25,171
StatusPublished
Cited by4 cases

This text of 230 P. 91 (Hamilton v. Empire Gas & Fuel Co.) 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
Hamilton v. Empire Gas & Fuel Co., 230 P. 91, 117 Kan. 25, 1924 Kan. LEXIS 382 (kan 1924).

Opinion

The opinion of the court was delivered by

Harvey, J.:

This is a suit by lessors of certain oil and gas leases to enjoin the lessee from using the “thief test” on oil'in tanks on the leased premises, and from turning oil under such test into pipe lines for treatment elsewhere, and for a decree requiring defendant to use the heating and steaming plants on the leased premises before turning the oil into the pipe lines. It was tried to the court, who made [26]*26findings of fact and conclusions of law. Judgment, the nature of which will be more fully set out, was rendered for plaintiffs, and the defendant has appealed. There are three cases against the same defendant, involving three leases owned by defendant parties, but the allegations as to injuries sustained and the relief sought are identical. They were consolidated for trial in the court below and here, and may be treated as one.

The petition, after alleging that the plaintiff is the owner of the land, that a lease was executed, a copy of which is attached, and that defendant by proper assignment is now the owner and holder of the lease, recites:

“5.. The defendant, The Empire Gas and Fuel Company, has drilled a number of wells on the land covered by said oil and gas lease and said wells are producing large quantities of oil. That one of the conditions of said lease is that there shall be delivered to the plaintiff free of cost in pipe line a one-eighth (%) part of all oil produced and saved from said premises. The condition being in words and figures as follows:
“ ‘To deliver to the credit of the first party, his heirs, or assigns, free of cost, in the pipe line to which it may connect its wells, the equal one-eighth part of all oil produced and saved from the leased premises.’
“6. The defendant, Empire Gas and Fuel Company, erected and maintained on said leased premises a treating or steaming plant for the purpose of treating the oil obtained from, the wells drilled thereon and removing therefrom water and basic sediment before turning the same into the pipe-line connections, and said treating or steaming plants were operated for the purpose of ascertaining with some degree of accuracy the amount of merchantable oil produced from wells, and in conformity with conditions of lease aforesaid put in pipe line connecting with wells the merchantable oil, out of which the plaintiff was to receive one-eighth of oil produced and saved from the premises. That said testing or steaming plants were fairly well designed to test the production of merchantable oil, and the plaintiffs received up to the 1st of August, 1920, his checks for one-eighth, the royalty of oil turned into pipe line connecting with the wells from the treating and steaming plant.
“7. On or about the 1st of August, 1920, the defendant, the Empire Gas and Fuel Company, breached the terms and conditions of its contract of lease, as aforesaid, closed down and abandoned the use of its treating and steaming plant and resorted to another and different method, known as the ‘thief test’; the ‘thief’ being an instrument with a cup or trap which is let down into the bottom of tank and brings up a cup of oil, then to the center and last to the top. These tests are ground out and an estimate is made therefrom of the amount of oil in each tank. By the method of estimating the plaintiff has been greatly reduced in his one-eighth royalty, the amount of his one-eighth of the production falling immediately to a lesser amount, which varies and is uncertain, and hence cannot be placed with any degree of accuracy, but as a total for each month the one-eighth interest of the plaintiff has diminished [27]*27one-sixth (%) without there being any diminution in the production of the wells on said lease, the decrease being due to the inaccurate tests and estimates hereinbefore pleaded as the ‘thief test.’ In violation of the conditions of its contract of lease as aforesaid, the said defendant turned the nnsteamed oil into its own pipe line and earned the same to the Boyer tank farm in Butler county, Kansas, where it treats said oil by some method unknown to the plaintiff, but well known to the defendant, thereby placing the plaintiff in a situation where he can by no system of gauging keep an account of the amount of oil produced from wells and pumped into tanks and from tanks turned into connecting pipe line. By this method the defendant has failed to account for plaintiff’s royalty, and placed it beyond the reach of plaintiff to know or ascertain his rights in the premises — the amount of oil produced or turned into connecting pipe lines. As a result of this method there has been a great loss in pipe-line runs. There is no way that the plaintiff can gauge his interest or protect the same, to the plaintiff’s irreparable loss and damage.
“8. That during the months of August and September and up to and including October 11th, 1920, there was in the tanks of said leased premises, pumped from the wells thereon, twenty-eight thousand two hundred twenty-three barrels of oil as shown by the gauge of said tanks, as plaintiff is informed and believes. That during said time the defendant, Empire Gas and Fuel Company, has only accounted to the plaintiff for twenty-four thousand eight hundred ten and 3%oo (24,810.36) barrels in said tanks turned into pipe lines, thereby showing an actual loss of three thousand four hundred twelve and ®%oo (3,412.64) barrels of oil in which the plaintiff has a one-eighth royalty interest, thereby entailing upon the plaintiff a loss of fourteen hundred ninety-three and %oo dollars ($1,493.03), which would be his one-eighth of said oil as royalty at $3.50 per barrel, the standard price of said oil as published by the Prairie Oil and Gas Company.
“9. Plaintiff is informed and believes, and so alleges the fact to be, that the methods adopted by the defendant in the testing, estimating and treating of oil taken from the land of the plaintiff is unjust, inaccurate and problematical in results. The methods adopted by the defendant to produce the result as aforesaid, and consequent loss to the plaintiff of fourteen hundred ninety-three and ?loo dollars ($1,493.03) in two months, are not known to the plaintiff, and hence cannot be described with accuracy, but are well known to the defendant, its agents and employees. There has been no appreciable diminution in production of oil from wells. The treating and steaming plants erected by the defendant on the leased premises of the plaintiff are standing with full equipment for treating oil produced from the wells thereon. In the use of said treating and steaming plants the plaintiff was able to keep fairly accurate account of the amount of oil produced, treated and turned into pipe line. The abandonment of said treating plants by the defendant leaves the plaintiff where he can keep no account or do anything to guard his interest or protect his one-eighth royalty, and is compelled to receive, without any knowledge of amount, the figures furnished by the defendant, which figures are based upon the inaccurate tests as hereinbefore pleaded. They result in an actual loss to the plaintiff, as hereinbefore stated, of fourteen hundred ninety-three and %oo dollars ($1,493.03), his share in the way of royalty in the three thousand [28]*28four hundred twelve and 6%oo barrels of oil lost and unaccounted for. The plaintiff has no adequate remedy at law to protect him in damage.

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Cite This Page — Counsel Stack

Bluebook (online)
230 P. 91, 117 Kan. 25, 1924 Kan. LEXIS 382, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hamilton-v-empire-gas-fuel-co-kan-1924.