Nisbet v. Midwest Oil Corporation

1968 OK 115, 451 P.2d 687, 32 Oil & Gas Rep. 457, 1968 Okla. LEXIS 425
CourtSupreme Court of Oklahoma
DecidedJuly 23, 1968
Docket42750
StatusPublished
Cited by10 cases

This text of 1968 OK 115 (Nisbet v. Midwest Oil Corporation) 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
Nisbet v. Midwest Oil Corporation, 1968 OK 115, 451 P.2d 687, 32 Oil & Gas Rep. 457, 1968 Okla. LEXIS 425 (Okla. 1968).

Opinion

LAVENDER, Justice.

This appeal involves a judgment in favor of the defendant-lessee and against the plaintiff-lessor in an action wherein the primary relief sought by the plaintiff was recission of an oil and gas lease for alleged fraud on the part of the defendant in obtaining the execution of the lease by the plaintiff.

For some time prior to July 20, 1959, the plaintiff had been, and on that date was, the owner of an undivided five-eighths interest in and to the East Half of the Southeast Quarter of Section 15, Township 6 North, Range 21 East, in Latimer County, State of Oklahoma, and in and to the minerals and mineral rights (except coal and the by-products thereof) therein and thereunder.

On or about July 15, 1959, the plaintiff, who resided in Houston, Texas, received a long-distance telephone call from Mr. John A. Croom of the defendant’s land department in Fort Worth, Texas, about leasing her interest in this land to the defendant company, and on the same day, or the next day, a Houston lease broker who ad *690 mittedly was authorized by the defendant corporation to obtain a lease from her called on the plaintiff at her home and talked about such a lease for a primary term of five years. He told her that the going bonus for leases in the area was from $25 to $40 per acre but that the company would pay $50 an acre, and she told him that others had offered her “production payments” of $5,000.00 to be paid out of a ⅜2 overriding royalty. At her suggestion, he left with her a blank copy of of the printed form of lease proposed to be taken — a “Texas Producers 88-Pooling July 58” form, which is printed on both sides of one sheet of paper — for her to examine. He returned on July 20, 1959, with copies of the same printed form with the blank spaces filled out to show a date of July 20, 1959, the plaintiff as lessor, the defendant corporation as lessee, the above described property as the leased property, and a primary term of five years from date, and having a paragraph typed on a losenge attached at the bottom of the front page of the form which provided for a ⅜2 overriding interest until lessor received $5,000. In addition lessor was to receive the usual ⅛ of oil or gas produced.

Paragraph 7 of the lease form provided, in pertinent part, that:

“7. * * * In case of cancellation or termination of this lease for any cause, Lessee shall have the right to retain under the terms hereof, around each oil or gas well producing, shut-in, being worked on or drilling hereunder, the acreage allocable to each such well for maximum allowable under the rules and regulations of any regulatory body, or absent such rules and regulations, 40 acres around each oil well and 320 acres around each drilling or gas well, to be designated by Lessee.” (Emphasis supplied.)

And paragraph 11 of the lease form provided that:

“11. Lessee is granted the right and power at any time, and from time to time, to pool and combine the leased premises, or any portion thereof, with other land, lease or leases, for the purpose of forming one or more units for the development and production of oil or gas. This right may be exercised either before or after drilling operations have been commenced or production of oil or gas, or both, has been obtained on any land included in such unit. Units may include either oil or gas or may be limited to one or more subsurface strata. No unit need conform in size or area with another unit, and the formation of one unit shall not preclude the formation of others. Each unit shall comprise a single contiguous tract. No oil unit shall exceed forty (40) acres in surface area and no gas unit shall exceed three hundred twenty (320) acres in surface area, each plus a tolerance of ten (10%) percent thereof; provided that, should governmental atithority having jurisdiction prescribe or permit the formation of larger units for maximum allowable production, any unit created hereunder may conform substantially in size with those so prescribed or permitted. Regardless of the actual location of drilling or production operations on a unit, the effect of the formation of such unit shall be that drilling operations on, or production of, oil or gas from such unit shall constitute and be considered as being performed on the leased premises under the terms hereof and the production of oil or gas from such unit shall be apportioned among the several tracts comprising the unit so that there shall be allocated to the tract in the unit which is covered by this lease such portion of the total production from the unit as the number of surface acres of the leased premises included in the unit bears to the total number of surface acres comprising the unit. The royalties and production payments, if any, payable hereunder on the production from such unit, shall be computed only on that portion of the production so allocated to the tract included in the unit which is covered by this lease and the rights and obligations of the parties hereto shall be *691 determined solely by this lease and not by a lease pooled herewith. * *

(Emphasis supplied.)

Because of the plaintiff’s objections to such provisions in the lease, the lease broker, using a ruler and pen, drew lines through the portions of paragraphs 7 and 11 of the lease form which are emphasized by italicizing above. The lines drawn through these provisions did not make them illegible.

Also, at the request of the plaintiff, the following paragraph, copied from another lease in the possession of the plaintiff, was typed onto the losenge attached at the bottom of the front page of the lease form, by the lease broker:

“It is expressly understood that this lease covers only oil, gas and its liquified products, and sulphur. Wherever the term ‘other mineral or other minerals’ appears in this lease it shall be construed as meaning ‘the liquified products of gas, and sulphur.’ ”

The plaintiff signed the lease form as so revised, and the lease broker, as a notary public, took her acknowledgement. A. draft drawn by him against the defendant corporation in favor of the plaintiff in the amount of $2,500.00 to cover the agreed bonus of $50.00 per acre was paid in due course.

Except with respect to the conversations between the plaintiff and Mr. Croom and between the plaintiff and the lease broker, mentioned above, the pertinent facts are, for the most part, either admitted by the pleadings or are covered by a written stipulation of the parties.

The delay rentals due the plaintiff, in accordance with the terms of the lease, on July 20, 1960, July 20, 1961, and July 20, 1962, were duly and timely paid by the defendant.

About May 5, 1959, drilling had been commenced on the defendant’s “Raymond F. Orr Well #1” in the Southwest Quarter of Section 8, Township 6 North, Range 22 East, in Latimer County, less than four miles from the plaintiff’s land involved herein (and the evidence discloses that she knew about such drilling operations at the time of the above mentioned negotiations), and on or about June 28, 1959, gas, in commercial quantities, was encountered in the Red Oak Sand Formation between the approximate depths of 7180 feet and 7355 feet.

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Bluebook (online)
1968 OK 115, 451 P.2d 687, 32 Oil & Gas Rep. 457, 1968 Okla. LEXIS 425, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nisbet-v-midwest-oil-corporation-okla-1968.