Magnolia Petroleum Co. v. Ouart

1947 OK 117, 192 P.2d 698, 200 Okla. 258, 1947 Okla. LEXIS 774
CourtSupreme Court of Oklahoma
DecidedApril 8, 1947
DocketNo. 32002
StatusPublished
Cited by15 cases

This text of 1947 OK 117 (Magnolia Petroleum Co. v. Ouart) 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
Magnolia Petroleum Co. v. Ouart, 1947 OK 117, 192 P.2d 698, 200 Okla. 258, 1947 Okla. LEXIS 774 (Okla. 1947).

Opinions

BAYLESS, J.

The Magnolia Petroleum Company has appealed from a judgment decreeing C. J. Ouart and Leila Ouart a 7/48ths interest and Eva F. Hunter a 5/95ths interest in the %th royalty in the lease in controversy and a money judgment for their prorata part of the royalty funds impounded by Magnolia at the date of trial. The interests of other persons were determined by the judgment, but we are concerned only with the controversy between Magnolia and the parties named above.

This controversy involves the interpretation of an oil and gas lease, Producer’s Form 88, executed by the Ouarts in 1938. The lease described an entire 40-acre tract of land, although the Ouarts only owned an undivided in[259]*259terest in the west half of this tract, which fact was known to Magnolia. Magnolia took five separate leases covering all or part of the land involved at various times during the year 1937 and the first half of 1938. Three of these leases, including the Ouarts’ lease, described the entire 40-acre tract. One of the leases described “all interest in entire 40-acres”, and the remaining lease covered a part of the west half of the 40-acre tract. Three of these leases, including the Ouarts’ lease, were to “remain in force for a term expiring April 23, 1942, and as long thereafter as oil or gas or either of them is produced from said land by lessee.” The leases provided for a delay rental of $1 per acre. The last delay rental, in the sum of $5.84, was paid to the Ouarts in April, 1941. The receipt on the bottom of the rental check provided:

“In full payment of: Rental for twelve months, payable 9 day of May, 1941, on forty acres covered by oil and gas lease recorded in . . .”

In August, 1941, Magnolia drilled a producing oil well in the southeast ten acres of the 40-acre tract. Shortly thereafter .they drilled a well in the northeast quarter of the 40-acre tract which was not a commercial producer. Magnolia accepted division orders signed only by those owning royalty in the southeast ten acres and we assume it paid the %th royalty to such owners for a period of time at least, until payment was suspended, although there is no proof of such payment in the record. On July 8, 1942, C. J. Ouart filed an action in the district court of Pottawatomie county, No. 19062, against Magnolia, alleging the execution of the lease covering the described 40-acre tract, the interest owned by him in the west 20 acres of the tract, that there had been no development on the west 20 since the execution of the lease, that Magnolia had obtained a large producing well in the southeast ten acres, and that same had drained oil from under his property. He asked to have the lease canceled and to recover damages for drainage. Magnolia’s answer admitted the execution of the lease and plaintiff’s ownership in the west 20 acres; but alleged it had kept plaintiff’s lease in full force and effect by making developments thereon, pleading in detail the drilling of the two wells mentioned above, denying the allegation of drainage and that it would be prudent or profitable

“to further drill any other oil or gas well on any portion of said premises at this time, or was so at any time prior thereto; . . . that by reason of the facts ... stated it has fulfilled all of its duties toward plaintiff under the terms of said contract, which is still in full force and effect.”

Ouart’s reply was in the nature of a general denial of all affirmative allegations contained in Magnolia’s answer.

At the commencement of the trial Ouart’s attorney stated to the court that he adopted Magnolia’s theory that the lease covered the entire 40-acre tract. He orally amended his petition and prayer to show that he was entitled to a portion of the royalty from production from the southeast ten acres. The following discussion then took place:

“The Court: Do you have any stipulation now to make as to what ownership of land the plaintiff has in that 40? Mr. Crump: We haven’t stipulated, and they are estopped from showing it, because under their answer they state the lease covers the whole of said 40 acres. I will read the answer. If that is not true, they are out on a limb and they are now estopped. They say the lease covers the entire 40, and we adopt their theory.”

Magnolia did not at that time or any subsequent time offer to surrender or terminate Ouart’s lease, but has steadfastly maintained that the lease covering the entire 40-acre tract remained in full force and effect by reason of development and production in the southeast ten acres. On March 29, 1943, the court rendered judgment in favor of Ouart, decreeing him to be the owner of an undivided 7/48ths interest in the [260]*260oil, gas, and mineral rights under said lease, and decreeing a money judgment for production prior to the date of trial. A motion for new trial was filed but not acted upon. A few weeks later Magnolia filed a separate action, cause No. 19337, in the nature of a stakeholder’s suit, alleging the aforesaid production, that payment of the royalty had been suspended because of conflicting claims, and praying the court to determine who should be legally entitled to share in the royalty payments. The answer of the Ouarts alleged they were entitled to %th royalty as provided in the various leases in the proportion that their individual ownership bore to the entire 40 acres covered by the leases. They pleaded the judgment in cause No. 19062 rendered March 29, 1943, and prayed that their interests be determined in accordance with said judgment. Magnolia’s reply denied that Ouarts were entitled to receive any royalty since production was not had from their land, stating that the contemporaneous leases, including the Ouarts’ lease, were not communitization or unitization leases but were separate, individual leases of individual owners of portions of the 40-acre tract; that both parties had so construed the contract; and that the Ouarts, by their acquiescence with full knowledge of the facts as to production and distribution, were now estopped from claiming any interests in the royalty.

The Ouarts’ lease contained the following provisions:

“To deliver to the credit of the lessor, free of cost in the pipe line to which he may connect his wells, the equal % part of all oil produced and saved from the leased premises.
“If said lessor owns a less interest in the above described land than the entire and undivided fee simple estate therein, then the royalties and rentals herein provided for shall be paid the said lessor only in the proportion which lessor’s interest bears to the whole and undivided fee”.

The parties stipulated as to most of the facts involved. The following is quoted from the stipulation:

“It is further stipulated and agreed that the Magnolia Petroleum Company paid the rental on said oil and gas lease on or before the 9th day of May, 1939, 1940, and 1941, in the amount of $5.84 per annum, a photostatic copy of said Magnolia Company vouchers showing payment of said rentals being attached hereto marked ‘Exhibit E-l’ and made a part hereof.”

After hearing all the evidence the court, on its own motion, consolidated the two cases. It then rendered judgment, which for practical purposes was the same as the judgment rendered in cause No. 19062, and Magnolia has appealed from the latter judgment.

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Cite This Page — Counsel Stack

Bluebook (online)
1947 OK 117, 192 P.2d 698, 200 Okla. 258, 1947 Okla. LEXIS 774, Counsel Stack Legal Research, https://law.counselstack.com/opinion/magnolia-petroleum-co-v-ouart-okla-1947.