OPALA, Justice.
In this suit for accounting and cancellation of an oil-and-gas lease, four issues are tendered for our decision: [1] If a lessee enters and begins to drill a well with the acquiescence of some but not all cotenants in the mineral estate, is he liable to the nonacquiescing cotenants as a bad-faith trespasser? [2] Is the effective date of the Corporation Commission’s [Commission’s] despacing order dispositive on the issue whether the oil-and-gas leasehold in suit is subject to cancellation for want of production? [3] Did the trial court err in refusing to grant a jury trial and in depriving the mineral owners’ of an opportunity to secure an award of punitive damages? and [4] Did the regulatory orders of the Commission operate effectively to destroy the lessees’ right in property to protect their mineral lease by drilling? We answer all four questions in the negative.
The plaintiffs [owners] are cotenants of an undivided mineral estate in 72 acres of land that is included in a 160-acre oil-and-gas lease which was initially situated within a 640-acre drilling and spacing unit. With its primary term ending
March 8, 1977,
this lease was participating in production from a well located outside the leased premises but within the unit. In November 1976 the owners sought to change the spacing regime from a 640-acre unit to 80-acre units. Ladd Petroleum Corporation [Ladd or lessee], who also was the unit operator, opposed despacing because the proposed 80-acre unit that was to be formed in the area where the owners’ mineral estate was situated would then be left without a producing well. Following a contested hearing, the Commission’s trial examiner recommended, on
March 16, 1977,
that spacing be reduced to 80-acre units. Since this change, if adopted by the Commission, would cause the owners’ lease to terminate for want of production past the primary term, Ladd immediately applied to increase density in the then existing 640-acre unit by drilling forthwith another well within the proposed 80-acre unit that might be formed over the owners’ leased premises. The Commission acceded to this request. The lease was then “farmed out” to L.O. Ward [Ward or lessee] who, on April 7, 1977, commenced drilling a well [the Mullins well] on the owners’ mineral estate. The emergency order was later held to be invalid by an opinion of the Court of Appeals.
The Commission’s April 27, 1977 order (a) changed spacing to 80-acre units and (b) established
December 3, 1976
as the effective date of the order. The latter date coincides with that originally set for hearing the owners’ despacing application. A “correction order,” subsequently issued,
postponed
the effective date of the despac-ing order
from December 3, 1976 to April 27, 1977.
On February 19, 1980, Ward secured from the Commission a well location exception which confirmed the Mullins well as the authorized well for the new 80-acre spacing unit. This order was given retroactive effect from April 27, 1977.
None of these orders was appealed.
In the wake of these events, the lessees, together with two of the cotenants,
took
the position that the lease continued in effect. The owners, on the other hand, regarded the lease as having expired. They brought this suit against lessees (a) to quiet their title to the mineral estate, (b) to secure an accounting for production obtained by the lessees, (c) to assess the damages caused by the lessees’ wrongful entry in trespass, and (d) to cancel the lease because of the lessees’ failure timely to drill a well within the primary term. The case came to trial upon stipulations. The critical issue, as framed and submitted by the parties, was the legal efficacy of the correction order that postponed the effective date of the despacing order.
‘
The district court ruled that (a) the “correction order” was facially void because the Commission lacked jurisdiction to enter it,
(b) the lease had terminated at the end of its primary term on March 8, 1977, and (c) Ward and Ladd were bad-faith trespassers. The decree ordered an accounting for the owners’ pro rata share of the
gross profits
the lessees derived from the well. Lessees, who as bad-faith trespassers were denied credit for their drilling and operating costs,
brought this appeal. The owners counter-appealed. The latter complain of the trial court’s refusal to grant them a trial by jury and hence an opportunity to secure a punitive damages award.
I
THE IMPACT OF REGULATORY ORDERS AND PROCEEDINGS
In their district court suit, the owners tendered the regulatory orders of the Commission as dispositive of the controversy over the termination of the lease for want of production. The lessees, on the other hand, urged they were vigilant in protecting the lease by promptly drilling within the new 80-acre unit.
A.
The Correction Order
The lessees sought by a nunc pro tunc order — entered by the Commission without application, mailed notice, or hearing — to correct the April 27, 1977 despac-ing order by changing its effective date from December 3, 1976, the date initially set for a hearing on despacing application, to April 27, 1977, the date the order was actually entered. The owners launched below a collateral attack on the correction order
as facially void because it undertook
adversely to affect their mineral estate without meeting the minimum standards of due process for adequate notice and adversary hearing.
When acting in its adjudicative capacity, an administrative agency is subject to due process requirements not dissimilar to those which apply to judicial bodies.
A nunc pro tunc order
that
materially affects the rights of a party
is ineffective if it was issued without prior notice and hearing.
We therefore hold that the ex parte correction order which sought to postpone the effective date of the agency’s prior despacing order is facially void. Insofar as Corporation Commission Rule 26(c) is relied upon broadly to justify a noticeless correction process, it suffices to say that the rule may not be invoked when the correction or change to be proposed in the order will adversely affect a party’s interests.
B.
The Retroactive Despacing Order
The trial examiner’s March 16, 1977 report to the Commission recommended that the 640-acre unit be reduced to 80-acre units. Following this recommendation, the Commission entered its despacing order on April 27, 1977 and established December 3, 1976 as its effective date. This was the date initially set for a Commission hearing on the despacing application.
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OPALA, Justice.
In this suit for accounting and cancellation of an oil-and-gas lease, four issues are tendered for our decision: [1] If a lessee enters and begins to drill a well with the acquiescence of some but not all cotenants in the mineral estate, is he liable to the nonacquiescing cotenants as a bad-faith trespasser? [2] Is the effective date of the Corporation Commission’s [Commission’s] despacing order dispositive on the issue whether the oil-and-gas leasehold in suit is subject to cancellation for want of production? [3] Did the trial court err in refusing to grant a jury trial and in depriving the mineral owners’ of an opportunity to secure an award of punitive damages? and [4] Did the regulatory orders of the Commission operate effectively to destroy the lessees’ right in property to protect their mineral lease by drilling? We answer all four questions in the negative.
The plaintiffs [owners] are cotenants of an undivided mineral estate in 72 acres of land that is included in a 160-acre oil-and-gas lease which was initially situated within a 640-acre drilling and spacing unit. With its primary term ending
March 8, 1977,
this lease was participating in production from a well located outside the leased premises but within the unit. In November 1976 the owners sought to change the spacing regime from a 640-acre unit to 80-acre units. Ladd Petroleum Corporation [Ladd or lessee], who also was the unit operator, opposed despacing because the proposed 80-acre unit that was to be formed in the area where the owners’ mineral estate was situated would then be left without a producing well. Following a contested hearing, the Commission’s trial examiner recommended, on
March 16, 1977,
that spacing be reduced to 80-acre units. Since this change, if adopted by the Commission, would cause the owners’ lease to terminate for want of production past the primary term, Ladd immediately applied to increase density in the then existing 640-acre unit by drilling forthwith another well within the proposed 80-acre unit that might be formed over the owners’ leased premises. The Commission acceded to this request. The lease was then “farmed out” to L.O. Ward [Ward or lessee] who, on April 7, 1977, commenced drilling a well [the Mullins well] on the owners’ mineral estate. The emergency order was later held to be invalid by an opinion of the Court of Appeals.
The Commission’s April 27, 1977 order (a) changed spacing to 80-acre units and (b) established
December 3, 1976
as the effective date of the order. The latter date coincides with that originally set for hearing the owners’ despacing application. A “correction order,” subsequently issued,
postponed
the effective date of the despac-ing order
from December 3, 1976 to April 27, 1977.
On February 19, 1980, Ward secured from the Commission a well location exception which confirmed the Mullins well as the authorized well for the new 80-acre spacing unit. This order was given retroactive effect from April 27, 1977.
None of these orders was appealed.
In the wake of these events, the lessees, together with two of the cotenants,
took
the position that the lease continued in effect. The owners, on the other hand, regarded the lease as having expired. They brought this suit against lessees (a) to quiet their title to the mineral estate, (b) to secure an accounting for production obtained by the lessees, (c) to assess the damages caused by the lessees’ wrongful entry in trespass, and (d) to cancel the lease because of the lessees’ failure timely to drill a well within the primary term. The case came to trial upon stipulations. The critical issue, as framed and submitted by the parties, was the legal efficacy of the correction order that postponed the effective date of the despacing order.
‘
The district court ruled that (a) the “correction order” was facially void because the Commission lacked jurisdiction to enter it,
(b) the lease had terminated at the end of its primary term on March 8, 1977, and (c) Ward and Ladd were bad-faith trespassers. The decree ordered an accounting for the owners’ pro rata share of the
gross profits
the lessees derived from the well. Lessees, who as bad-faith trespassers were denied credit for their drilling and operating costs,
brought this appeal. The owners counter-appealed. The latter complain of the trial court’s refusal to grant them a trial by jury and hence an opportunity to secure a punitive damages award.
I
THE IMPACT OF REGULATORY ORDERS AND PROCEEDINGS
In their district court suit, the owners tendered the regulatory orders of the Commission as dispositive of the controversy over the termination of the lease for want of production. The lessees, on the other hand, urged they were vigilant in protecting the lease by promptly drilling within the new 80-acre unit.
A.
The Correction Order
The lessees sought by a nunc pro tunc order — entered by the Commission without application, mailed notice, or hearing — to correct the April 27, 1977 despac-ing order by changing its effective date from December 3, 1976, the date initially set for a hearing on despacing application, to April 27, 1977, the date the order was actually entered. The owners launched below a collateral attack on the correction order
as facially void because it undertook
adversely to affect their mineral estate without meeting the minimum standards of due process for adequate notice and adversary hearing.
When acting in its adjudicative capacity, an administrative agency is subject to due process requirements not dissimilar to those which apply to judicial bodies.
A nunc pro tunc order
that
materially affects the rights of a party
is ineffective if it was issued without prior notice and hearing.
We therefore hold that the ex parte correction order which sought to postpone the effective date of the agency’s prior despacing order is facially void. Insofar as Corporation Commission Rule 26(c) is relied upon broadly to justify a noticeless correction process, it suffices to say that the rule may not be invoked when the correction or change to be proposed in the order will adversely affect a party’s interests.
B.
The Retroactive Despacing Order
The trial examiner’s March 16, 1977 report to the Commission recommended that the 640-acre unit be reduced to 80-acre units. Following this recommendation, the Commission entered its despacing order on April 27, 1977 and established December 3, 1976 as its effective date. This was the date initially set for a Commission hearing on the despacing application.
The retroactive despacing order is challenged as invalid because there is no evidentiary support for giving it retroactive effect. t This argument may not be entertained. It is not directed to the order’s
facial invalidity
— the only basis upon which a district court attack may be sustained. Error that claims an absence of sufficient evidentiary support for a Commission order is barred from district court cognizance as an impermissible collateral attack.
Although the district court- properly viewed the correction order as inefficacious and the despacing order as having taken effect on December 3, 1976, it erred, for the reasons to be stated in Part III of this opinion, in treating this date as dispositive of the controversy over the owners’ claim for cancellation of the lease.
C.
Emergency order authorizing lessees to drill and the Court of Appeals’ reversal of that order
After the trial examiner had recommended that spacing be reduced to 80-acre units, Ladd, on March 31, 1977, applied for an emergency order to increase density in the then existing 640-acre unit by immediate commencement of another well within the proposed 80-acre unit. The emergency order which issued that day was merely provisional. Final disposition of Ladd’s application was to be heard no later than April 27, 1977. Ladd entered into a farm-out agreement with Ward who, on April 7, 1977, commenced drilling operations on the owners’ mineral estate.
The emergency order was later held to be invalid by the Court of Appeals for lack of any evidence to support it. The “settled law of the case”
that emerged from that reversal did not extend beyond invalidation of the challenged
regulatory emergency order
which had authorized the lessees to drill. The Court of Appeals neither reached nor settled in that opinion the critical question here which is how, if at all, the declared invalidity of the emergency order is to affect the lessees’ right
in property
to protect their leasehold by additional production while the agency despacing process remains pending.
D.
Post-reversal order retroactively approving Mullins as the unit well
The despacing order established well location sites for each new 80-acre unit. Since the Mullins well had not been drilled at the site authorized by the despacing order, Ward sought, on October 8, 1979, to cure that defect by securing from the Commission a well location exception. By its February 19, 1980 order the Commission approved the location of Mullins, thus confirming it as the authorized well for the unit. This order was given retroactive effect from April 27, 1977. No appeal was lodged from it.
II
ACCOUNTING-RELATED ISSUES
The owners sought a jury trial and an opportunity to secure a punitive damages award on the grounds that (a) the lessees’ entry on the land was a trespass because it was made under an invalid emergency order and (b) the lessees’ continued presence on the land, after the order had been held to be invalid by the Court of Appeals, constituted bad-faith trespass. The trial court’s adjudication of the lessees’ status as bad-faith trespassers and the award of gross production profits to the owners was clearly grounded upon the correction order’s infirmity and on the application of the retroactive effective date to the despacing regime.
We do not agree that, under the facts of this case, the conclusion reached by the trial court was mandated by the correction order’s invalidation. The impact of regulatory orders need not be inquired into in order to resolve the lessees’ status. This is so because the two cotenants, who had refused to join in the litigation as plaintiffs, demonstrated clearly by their district court answers that they (a) had acquiesced in the lessees entering upon the land to drill the well, (b) had believed the lease was still in effect, and (c) had been accepting royalties from the lessees.
The owners of an undivided interest in a mineral estate are tenants in common. While each of the cotenants may explore for oil and gas on property owned in common without the consent of the other co-owners, none can do so to the exclusion of the other cotenants.
When oil or gas is discovered, the producing eotenants must account to the nonproducing cotenants for the pro rata share of the latter in any net profits derived from the mineral exploration.
The owners argue that the co-tenants’ answers afford no basis for concluding that the cotenants had ratified the lease. This contention is without merit. A technical ratification by a cotenant is not required to prevent a trespass. Mere acquiescence in the existence of a lease and the acceptance of royalties from a lessee, after the expiration of the primary term, can estop a lessor from denying lessee’s title.
The conduct of a lessor also can operate as a waiver of objection to an earlier event.
Measured by these standards and by the fact that the two cotenants here did not seek relief in this suit, the answers of the cotenants clearly demonstrate error of law in the trial court’s conclusion that the lessees had trespassed when they entered upon the land and commenced drilling the Mullins well. We therefore hold that, even though the effective date of the des-pacing order was postponed by a facially void ex parte correction order, the lessees’ entry lacked the attributes of trespass.
Because lessees were not trespassers, it is unnecessary to determine whether their conduct in the various Commission proceedings may have been in bad faith.
Since the well had been drilled with the implied consent of two of the cotenants, the lessees were required to account to the nonconsenting cotenants for only the
net profits
derived from production. The district court hence erred in awarding gross
profits to the owners. Instead, it should have allowed the drilling and operating costs to be deducted.
Because it is readily apparent from the face of the pleadings that the lessees had not trespassed on the owners’ land, the gravamen of owners’ claim was their plea (a) to secure an accounting of the net profits derived from the mineral extraction and (b) to cancel an oil-and-gas lease. The relief sought called for an exercise of equitable cognizance.
Inasmuch as punitive damages are not available in a chancery suit, the owners’ plea for that kind of award was properly denied.
Moreover, when a case is submitted, as here, upon a stipulation which dispenses with the fact issues, trial by jury may be deemed to have been waived.
Still to be resolved is how, and to what extent, the lessees’ right to protect the lease by production from the land threatened with despacing, exercised by drilling begun
before
despacing was established by the Commission’s retroactive order, was affected by (a) the Court of Appeals’ invalidation of the Commission’s
regulatory
order and (b) the agency’s establishment of despacing
via
its retroactive order. This dispositive issue remains unexplored by the trial court’s decree under review.
It was not raised by the parties who erroneously assumed it had been resolved by the “settled law of the case” doctrine. Whether a backdated despacing order is invocable as a basis for destroying a lessee’s opportunity to protect its property by drilling is a public-law issue which we are at liberty to raise
sua
sponte,
III
CANCELLATION-OF-LEASE ISSUES
Both the district court and the parties below mistakenly assumed in this
private-law proceeding
that the retroactive date of the
regulatory despacing order
was conclusive on the cancellation-of-lease controversy and that the trial court’s adjudication of the correction order’s facial invalidity was essential to the declaration that the lease had terminated for lack of production at the end of its primary term. By focusing solely on the impact these regulatory orders had upon the continued vitality of the lease, the trial court overlooked that, while despacing process was in progress, the lessee was
statutorily prohibited
from
drilling in the area sought to be affected by the spacing application.
Since the lessees’ ability to protect their leasehold interest
was statutorily impaired,
they were entitled in equity to a reasonable time — after the impediment had been removed — to commence drilling operations.
The
reasonable time period
within which to drill
could not
commence at a point
anterior to
the Commission’s promulgation of its despacing order — i.e.,
before
the legal obstacle to drilling activity came to be removed. Here, the lessees, because of authority granted them by the emergency order, sought and did begin to drill in advance of this time. As explained earlier, their presence on the land after the emergency order’s invalidation could not be deemed a trespass. The lessees also complied with the necessary regulatory requirements by procuring a location exception order which was made retroactive to April 27, 1977. That order remains in full force and effect. In short,
the Mullins well does stand as an authorized well in the unit.
Because of these factors, the retroactivity of the despacing order cannot operate to deprive the lessees of their vested property rights in the lease.
It was the filing of the despacing application — an act of the owners — that raised the statutory barrier which rendered impossible the lessees’ performance of their contractual obligations under the lease. Since it was the owners' action that prevented performance from being rendered at the time it was due under the terms of the lease, the owners may not take advantage of the lessees’ failure to drill timely.
The trial court’s decree is reversed with directions to render judgment for the lessees on the owners’ claim for cancellation and to proceed with an equitable accounting in a manner not inconsistent with this pronouncement.
DOOLIN, V.C.J., and HODGES, LAVENDER, HARGRAVE, KAUGER and SUMMERS, JJ„ concur.
ALMA WILSON, J., concurs in part and dissents in part.