Hillyer v. Pan American Petroleum Corp.

225 F. Supp. 425, 1963 U.S. Dist. LEXIS 8090
CourtDistrict Court, N.D. Oklahoma
DecidedDecember 20, 1963
DocketCiv. No. 5178
StatusPublished
Cited by2 cases

This text of 225 F. Supp. 425 (Hillyer v. Pan American Petroleum Corp.) is published on Counsel Stack Legal Research, covering District Court, N.D. Oklahoma primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Hillyer v. Pan American Petroleum Corp., 225 F. Supp. 425, 1963 U.S. Dist. LEXIS 8090 (N.D. Okla. 1963).

Opinion

BOHANON, District Judge.

This is a diversity action filed in the United States District Court for the Northern District of Oklahoma. A jury was waived and the case tried to the Court on the question of liability only.

Plaintiff Vincent L. Hillyer is a citizen of the State of California, and the plaintiff Manuchehr Riahi is a citizen of the Nation of Iran. Defendant Pan American Petroleum Corporation is a Delaware Corporation, with its principal place of business in Tulsa. Pan American Petroleum Corporation and Pan American International Oil Company so far as this action is concerned are one and the same corporation, both being wholly owned subsidiaries of Standard Oil Company of Indiana. The matter in controversy exceeds the sum of $10,-000, exclusive of interest and costs.

Hillyer at the times relevant herein was the husband of Princess Fatima, the sister of the Shah of Iran. Subsequently they have been divorced. Riahi was a prominant businessman in Iran whose wife was the sister of the-wife of Prince Abdorreza, a half-brother of the Shah.

National Iranian Oil Company, generally referred to as “N. I. O. C.,” was at all times relevant to this action wholly owned by the Government of Iran and was its designated oil company and agent for the handling of the oil interests of that Nation.

Some time prior to September, 1956, one Mr. Morrow, who was one of the principal shareholders of Cuban American Oil Company, advised a Mr. Klein, who was also a principal stockholder of Cuban American Oil Company, that through Hillyer and his associates there was a possibility for a responsible American oil company to negotiate an oil exploration and development contract with the Government of Iran, through National Iranian Oil Company. Morrow set about to see if an arrangement could be worked out between Cuban American Oil Company with a responsible American oil company and the Government of Iran whereby Cuban American Oil Company could receive a carried working interest out of any interest which a responsible American oil company might receive in a deal negotiated for an exploration contract. An effort was made by Hillyer to interest other major oil companies in Iranian oil but with no success.

Klein, during the month of September, 1956, having been informed by Morrow that the time was opportune to work out a deal in Iran, called to inquire if defendant would be interested in negotiating for an oil exploration and development contract. Klein thereafter advised Mr. Solliday, who was the Executive Vice President of the defendant, that he and Morrow had contacts through Hillyer with the Shah of Iran and they felt it very possible that defendant could obtain a very favorable oil development contract in Iran covering many thousands of square miles upon certain terms and conditions not here pertinently relevant.

Klein proposed to Solliday that they should go to Iran and attempt to negotiate such a contract, and if one was obtained Cuban American Oil Company would receive a 15 per cent carried working interest. Solliday agreed to go to Iran, but there was no agreement reached between Cuban American and the defendant concerning a carried working interest.

During the month of October, 1956, Solliday, Klein, Morrow and one R. O. Mitchell, a geologist in the employment of the defendant, went to Tehran, Iran, to explore the possibilities of a contract covering lands favorable for oil production and while there they, together with Hillyer, had meetings with the Shah and [427]*427some of the members of the Board of Directors of the National Iranian Oil Company; and as a result of these meetings, Solliday and other parties learned of the general requirements necessary to obtain an exploration contract. These terms at the time were not acceptable to the defendant and purported negotiations were discontinued. At this time in the negotiations, Solliday understood that Hillyer and Riahi were to receive a one-half interest in whatever interest Cuban American was to receive from any negotiated oil exploration contract, but there was no agreement in writing reached at the time as to this percentage.

The negotiations between all of the parties up to this stage contemplated the procurement of an oil exploration contract with the Nation of Iran by private negotiations, and Cuban American Oil Company was to receive, as a commission, a certain carried working interest, and from this working interest Hillyer and Riahi were to receive one-half of the commission to be paid by defendant to Cuban American Oil Company. During this period of time the actual contractual relationship between the parties was between the defendant and Cuban American Oil Company, on one hand, and Cuban American Oil Company and plaintiffs on the other hand, and Hillyer and Riahi were looking to Cuban American Oil Company for their compensation.

In March of 1957, Hillyer and Riahi requested of the defendant a written agreement, by-passing Cuban American Oil Company, setting forth the interest they were to receive from defendant as a result of a negotiated contract for oil exploration with the Nation of Iran. Plaintiffs desired this written agreement for several reasons, among which was to show to certain influential persons that such an agreement existed, and these persons would be assured of being paid a certain portion of the proceeds of the contract, if obtained. Pursuant to this request, the defendant sent to plaintiffs a letter agreement dated April 5, 1957, and which was accepted by the plaintiffs. This letter is set out in full as follows:

“PAN AMERICAN PETROLEUM CORPORATION

Tulsa, Oklahoma

April 5, 1957

Mr. Manuchehr Riahi and

Mr. William Wagner

P. O. Box 1202

Tehran, Iran

Gentlemen:

This is to confirm our verbal understanding reached during my visit to Iran in October, 1956.

Our Company agrees to have you represent us in Iran in working out an agreement with the Iranian Government and the Government owned and designated company for the development of oil and gas in Iran generally on the following terms:

1. The Government of Iran is to receive approximately 50% of the net operating profits in the form of royalties and income taxes.

2. The Government owned and designated company will be invited to participate to the extent of a 25% working interest. In other words, on the basis we are proposing, the Government and its company together would receive 62%% of the net operating profits and Pan American Petroleum Corporation (Standard Oil Company of Indiana) and its associates would receive the remaining 37%% of the net operating profits.

3. If Pan American Petroleum Corporation enters into such an agreement with the Iranian Government, you will receive a carried interest equal to 3.75% of the full working interest our Company and associates acquire in the deal, subject, of course, to payment of taxes and royalty to the Iranian Government.

[428]*428Assuming that the Iranian Government will get 50% of the net, this would then give you 1.875% of the net profit, or 5% of our net profit. It is our mutual understanding that Cuban American Oil Company will receive the other 5% of our net, or 1.875% of the total net.

If Pan American Petroleum Corporation does not enter into such an agreement with the Iranian Government, Pan American Petroleum Corporation shall have no obligations to you or Cuban American Oil Company.

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225 F. Supp. 425, 1963 U.S. Dist. LEXIS 8090, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hillyer-v-pan-american-petroleum-corp-oknd-1963.