Kneller v. Federal Land Bank of Wichita

799 P.2d 485, 247 Kan. 399, 110 Oil & Gas Rep. 473, 1990 Kan. LEXIS 180
CourtSupreme Court of Kansas
DecidedOctober 26, 1990
Docket64,234
StatusPublished
Cited by21 cases

This text of 799 P.2d 485 (Kneller v. Federal Land Bank of Wichita) 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
Kneller v. Federal Land Bank of Wichita, 799 P.2d 485, 247 Kan. 399, 110 Oil & Gas Rep. 473, 1990 Kan. LEXIS 180 (kan 1990).

Opinions

The opinion of the court was delivered by

McFarland, J.:

This is a declaratory judgment action seeking: (1) a judicial interpretation of a defeasible term mineral interest reservation contained in a warranty deed; and (2) a determination that plaintiffs are the owners of the one-half mineral interest in [400]*400dispute. The district court entered summary judgment in favor of the plaintiffs and defendant appeals therefrom.

All parties sought summary judgment. The case was submitted to the court on stipulated facts. There is no claim the case was not ripe for determination on motion for summary judgment. Further, as the matter was determined on stipulated facts and interpretation of a written instrument, de novo review is appropriate. As we held in Stith v. Williams, 227 Kan. 32, 605 P.2d 86 (1980):

“When a case is submitted to the trial court on an agreed stipulation of facts and documentary evidence, this court is afforded the same opportunity to consider the evidence as the trial court. Crestview Bowl, Inc. v. Womer Constr. Co., 225 Kan. 335, 592 P.2d 74 (1979).” Syl. ¶ 1.
“Where the controlling facts are based upon written or documentary evidence by way of pleadings, admissions, depositions, and stipulations, the trial court has no peculiar opportunity to evaluate the credibility of witnesses. In such situation, this court on appellate review has as good an opportunity to examine and consider the evidence as did the court below, and to determine de novo what the facts establish.” Syl. ¶ 2.

The facts may be summarized as follows. On March 6, 1944, defendant Federal Land Bank of Wichita (Land Bank) executed a warranty deed conveying to Moss Jensen a Morton County tract, to-wit:

“The East Half of the Southwest Quarter (E/2 of SW/4) and the West Half of the Southeast Quarter (W/2 of SE/4) of Section Twenty-nine (29), Township Thirty-three (33) South, Range Thirty-nine (39) West of the 6th P.M., containing 160 acres of land, more or less, according to the government survey thereof;
“Excepting and reserving unto party of the first part, its successors and assigns, an undivided 1/2 of all oil, gas and other minerals and mineral rights in, upon and under the above described real estate for a period of twenty years from and after July 30, 1940, and so long thereafter as oil, gas and/or other minerals or any of them are produced therefrom, or the premises are being developed or operated . . .

The deed was duly recorded. Plaintiffs (Stanley Kneller, Kay M. Kneller, and Emerson L. Kneller, Jr.) are successors in interest of Moss Jensen.

On April 19, 1944, Moss Jensen and the Land Bank executed separate oil and gas leases on the tract to T. J. Wagner, Jr., for a term ending April 19, 1954, and as long thereafter as oil, gas, casinghead gas, or any of them are produced. The leases contained [401]*401a provision consenting to unitization. The leases were assigned to D. D. Harrington in 1944. In 1945, the leases were assigned by Harrington to Panhandle Eastern Pipe Line Company.

In 1950, the tract in question became a part of a 640-acre gas production unit. Later the same year Fidler 1-29, a Hugoton gas well, was drilled on the unit but not on the tract herein. Royalties attributable to the tract were paid on the basis of one-half to the Land Bank and one-half to plaintiffs’ predecessor in interest as per the division order.

In 1963, the Jensen lease was assigned by Panhandle Eastern to Anadarko Production Company with the assignor reserving all right, title, and interest in the lease as to the Hugoton gas-producing formation and all interest in the Fidler 1-29 well. Panhandle Eastern assigned its interest in the leases to Pan Eastern Exploration Company in 1971. In 1975, Anadarko drilled a well on the unit, again not on the tract in dispute. This well is producing from the Morrow formation and is known as Fidler A-1. The parties further stipulated Pan Eastern is the current leasehold and working interest owner in the Hugoton gas formation with the leasehold and working interest in all other formations being owned by Anadarko.

We turn now to the royalties paid on the wells. As previously stated, the Land Bank commenced receiving one-half of the royalties attributable to the tract from Fidler 1-29 in 1950 based upon a division order. The latter was issued pursuant to a title opinion. In April of 1976, a title opinion on Fidler A-l was issued to Anadarko stating that the Land Bank no longer owned a mineral interest in the tract based upon our holding in Smith v. Home Royalty Association, Inc., 209 Kan. 609, 498 P.2d 98 (1972). In response thereto, the division order as to Fidler A-l reflected no interest therein being owned by the Land Bank. The stipulated facts further state that Anadarko suspended all royalty payments as to Fidler 1-29 on May 1, 1976. This aspect of the facts is confusing as the stipulated facts clearly stated previously that Anadarko had no interest in Fidler 1-29 from the Jensen lease, the same having been reserved by Panhandle Eastern. The facts make no reference to any assignment of the Land Bank lease to Anadarko. Nevertheless, the stipulation firmly established that from 1976 forward Anadarko was controlling royalty payments on [402]*402both wells. This problem with the facts has no bearing on the outcome of the litigation herein but is mentioned only to avoid giving the impression that the court has stated incomplete or erroneous facts in the opinion.

Anadarko paid all royalties attributable to the tract as to Fidler A-l to the plaintiffs from the date of first production (1976) until 1984 when a new title opinion was issued which determined that Land Bank’s interest in the tract continued under our holding in Classen v. Federal Land Bank of Wichita, 228 Kan. 426, 617 P.2d 1255 (1980). As a result of the title opinion, Anadarko: (1) paid Land Bank royalties suspended on the disputed one-half interest from May 1, 1976, as to Fidler 1-29 and commenced regular payments on new production; and (2) paid Land Bank one-half of royalties attributable to Fidler A-l from first production and commenced regular royalty payments to Land Bank on this well.

On January 15, 1985, Anadarko requested recoupment from plaintiffs on the sums paid to Land Bank for royalties from first production on Fidler A-l. In July 1985, plaintiffs advised Anadarko they were contesting Land Bank’s right to receive royalties attributable to either well and opposed recoupment. Effective July 1, 1985, payment of all royalties attributable to the contested one-half interest was suspended by Anadarko.

The July 1985 complaint by plaintiffs to Anadarko was the first time any of the parties had challenged Anadarko’s or Panhandle Eastern’s payment or nonpayment of royalties attributable to the disputed one-half interest herein. The petition herein for judicial resolution of the ownership of the one-half mineral interest at issue was filed on December 9, 1986.

For its principal issue, appellant Land Bank contends the district court erred in refusing to apply

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Kneller v. Federal Land Bank of Wichita
799 P.2d 485 (Supreme Court of Kansas, 1990)

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Bluebook (online)
799 P.2d 485, 247 Kan. 399, 110 Oil & Gas Rep. 473, 1990 Kan. LEXIS 180, Counsel Stack Legal Research, https://law.counselstack.com/opinion/kneller-v-federal-land-bank-of-wichita-kan-1990.