Hubbard v. Stotts

1935 OK 74, 42 P.2d 489, 171 Okla. 205, 1935 Okla. LEXIS 146
CourtSupreme Court of Oklahoma
DecidedJanuary 29, 1935
DocketNo. 24042.
StatusPublished
Cited by4 cases

This text of 1935 OK 74 (Hubbard v. Stotts) 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
Hubbard v. Stotts, 1935 OK 74, 42 P.2d 489, 171 Okla. 205, 1935 Okla. LEXIS 146 (Okla. 1935).

Opinion

*206 PER CURIAM.

The defendants in error C. A. Stotts and Hattie Stotts, hereinafter designated as plaintiffs, brought this action against the plaintiff in error, C. H. Hubbard, hereinafter designated as Hub’ bard, and against other parties, for the cancellation of an oil and gas lease covering certain lots in Tappan Heights addition to Oklahoma City.

The evidence discloses that the lease in question was executed by the plaintiffs, as lessors, to the Shield Petroleum Company under date of April 9, 1930, and covered a primary term of two years from date, and as long thereafter as oil or gas should be produced in paying quantities. The J. H. Gwin Drilling Company acquired an interest in the lease from the Shield Petroleum Company, and thereafter became insolvent and a receiver was appointed for said company. After the Gwin Company commenced work on the well, labor and materialmen’s liens were filed on behalf of various other defendants. On December 20, 1930, the United Oil & Utility Company procured from the receiver an assignment of the Gwin Company’s interest in the lease, upon its agreement to i>ay all the unpaid claims, amounting to about $25,000. On January 31, 1931, the well having then reached a depth of about 4,200 feet, the United Oil & Utility Company made a contract with Hubbard to drill the well to completion at 6,500 feet. I-Inbbard drilled the well down to 5,800 feet, and on March 16, 1931, the United Oil & Utility Company having failed to meet the payments specified in the contract, and having failed to furnish necessary casing, Hubbard ceased work on the well, and later filled the hole with mud. He left his drilling equipment on the property.

On June 20, 1931, plaintiffs notified the United Oil & Utility Company and the Shield Petroleum Company that they must resume drilling operations on or before July 1, 1931, in default of which suit would be commenced to cancel the lease, and upon their failure to resume such drilling operations, such suit was actually commenced on July 7, 1931.

The United Oil & Utility Company formally disclaimed any right, title or interest in the leased premises in open court, and it was admitted that said company and the J. H. Gwin Drilling Company were both insolvent as of March 16, 1931. The United Oil & Utility Company did not pay the outstanding claims of the Gwin Company as required by the order of court approving the receiver’s assignment, and on January 9, 1932, the district court of Pottawatomie county, Okla., canceled the conditional assignment on account of such failure to pay such claims. The judgment herein complained of was rendered March 9, 1932, and the lease expired by its own terms on April 9, 1932, since it was not productive, of oil or gas.

Hubbard claimed a balance of $25,604.14 to be due him under his contract, and claimed a lien against the oil and gas lease, the materials and equipment on the premises, and the uncompleted well. The judgment limited Hubbard’s recovery to $20,-000, with interest and attorney’s fees, and established and foreclosed the liens of the various lien claimants, including Hubbard, against the oil and gas lease and the materials thereon, but denied Hubbard’s claim to a lien upon the uncompleted hole, or well, after the date of the expiration of the primary term of the lease. There was no casing or equipment in the uncompleted well itself. The court further held that the liens of the Garber Tool Company and others, who had furnished labor and materials under contracts with the Shield Petroleum Company or the Gwin Company, were prior and ¡superior to the lien of Hubbard, who claimed under a contract with the United Oil & Utility Company.

The defendant, Hubbard, complains that the trial court erred as follows:

“First, in refusing to extend Hubbard’s Hen to the uncompleted well after the ex-pira! ion of the primary term of the lease.

“Second, in limiting Hubbard’s recovery under his contract to the sum of $20,000, with interest and attorney’s fees.

“Third, in decreeing the liens of the Garber Tool Company and others to be prior and superior to the lien of the defendant, Hubbard.”

The evidence clearly discloses that Hubbard had no contract with the plaintiffs, and that the plaintiffs had never authorized said company to act as their agents. We therefore have squarely presented this question:

“Can a drilling contractor under a contract with a purported lessee acquire a lien upon an uncompleted well, as distinguished from the materials and equipment thereof, extending beyond the term of the lease?”

The right of Hubbard to a lien is governed by the provisions of section 7464, C. O. S. 1921, as amended (section 10978, O. S. 1931), which provides in part as follows:

“Any person * * * who shall, under con *207 tract * * * with the owner of any leasehold for oil and gas purposes * * * perform labor or furnish material * * * shall have a lien upon the whole of such leasehold. * s[c

Hubbard contends that this statute gives him a lien upon the uncompleted well, or hole, and the oil or gas which may thereafter be produced therefrom, in the event it is thereafter completed as a producing well, notwithstanding the fact that the lease; has expired, while plaintiff -Stotts contends that the lien is limited to the interest in the lease or in the real estate owned by the parties with whom Hubbard contracted, to wit, the United Oil & Utility Company and associates.

It is elementary that the owner of the oil and gas leasehold estate would have no right, after the expiration of the lease, to the uncompleted well, or hole in the ground, nor to any oil or gas which might at any time thereafter be produced from the land covered by the lease. In fact, we do not understand that counsel for Hubbard contend otherwise.

We are of the opinion that this court heretofore defined the above-mentioned lien statute as contended for by plaintiff Stotts. In Muller v. Campbell, 97 Okla. 91, 222 P. 980, this court held:

“Any person who furnishes materials and labor in the construction of a drilling rig or derrick on the premises to a party who is given possession of said premises under and by virtue of an executory contract to have an interest assigned him in the oil and gas lease covering same from the lessee thereof, has a lien upon the equitable interest of the assignee in said contract together with the drilling rig in the construction of which material and labor were used, under section 7464, Comp. St. 1921.”.

In Aldridge v. Johnson, 132 Okla. 257, 270 P. 322, the facts were that the landowner, Niven, entered into a contract with Dunmeyer affecting certain mining property, by the terms of which, under certain conditions, he agreed to execute and deliver a mining lease on the real estate. Dunmeyer sold and assigned the contract to Byrd, and thereafter Dunmeyer and Byrd assigned same, together with the lease, to Johnson. In pursuance of the contract Niven executed and delivered the lease to Dunmeyer. Johnson employed labor and purchased materials under a contract with Aldridge, such labor and materials being necessary for the operation of the property.

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Bluebook (online)
1935 OK 74, 42 P.2d 489, 171 Okla. 205, 1935 Okla. LEXIS 146, Counsel Stack Legal Research, https://law.counselstack.com/opinion/hubbard-v-stotts-okla-1935.