Phillips Petroleum Co. v. Sheel

1952 OK 167, 243 P.2d 726, 206 Okla. 330, 1 Oil & Gas Rep. 879, 1952 Okla. LEXIS 594
CourtSupreme Court of Oklahoma
DecidedApril 23, 1952
Docket34935
StatusPublished
Cited by4 cases

This text of 1952 OK 167 (Phillips Petroleum Co. v. Sheel) 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
Phillips Petroleum Co. v. Sheel, 1952 OK 167, 243 P.2d 726, 206 Okla. 330, 1 Oil & Gas Rep. 879, 1952 Okla. LEXIS 594 (Okla. 1952).

Opinion

PER CURIAM.

This action was brought by plaintiff, George Sheel, the owner of 160 acres of land in Osage county, against Phillips Petroleum Company, operator of an oil and gas lease on the property, to recover damages for the death of three head of cattle belonging to plaintiff. The cattle were killed by the pump jacks with which defendant operated its wells. The trial court denied defendant’s motion for a directed verdict and submitted the cause to a jury, which returned a verdict for plaintiff. Defendant appeals.

The sole question presented is whether, under the provisions of the oil and gas lease held by defendant, and the rules and regulations governing the operation of such leases, promulgated by the Secretary of the Interior, plaintiff was entitled to recover for the death of the cattle without proving any negligence on the part of defendant. The trial court instructed the jury that under the oil and gas mining lease and the rules and regulations of the Department of the Interior governing oil mining operations in Osage county, the oil lessee was liable to the surface owner for damages occasioned by its oil operations, if the jury found that said operations were the proximate cause of the damages complained of, thus, in effect, instructing the jury to return a verdict for plaintiff, if the death of his cattle was due to the oil operations of defendant, regardless of the negligence or lack of negligence on the part of defendant in conducting such operations.

The oil and gas lease under which defendant operated was made in 1925, by the Osage Tribe of Indians, upon a form prescribed by the Secretary of the Interior. It was approved by the Secretary. As to damages resulting from operations, in so far as is pertinent to this case, it provided as follows:

“During operations the lessee shall pay all damages for the use of the surface, other than that included in the location and tanksites, all damages to any growing crops or any improvements on the lands and all other damages as may be occasioned by reason of operations. Such damages shall be apportioned among the parties interested in the surface, whether as owner, lessee, or otherwise, as the parties may mutually agree or as their interests may appear. If the parties are unable to agree concerning damages, the same shall be determined by arbitration, but nothing herein contained shall be construed to deny to the surface owner or lessee the right to appeal to the courts without the consent of the Secretary of the Interior, in the event he is dissatisfied with the amount of damages awarded him.”

Plaintiff acquired title to the land long after the defendant had drilled its wells thereon and, at the time he purchased, the wells on the lease were *332 being operated by pump jacks, which were the same or of identical form with those used by defendant at the time the cattle were killed in 1949. Plaintiff purchased the land in 1933, but his cattle suffered no injury from the operations of the defendant prior to 1949.

The regulations promulgated by the Secretary of the Interior covering the operation of oil and gas leases, provided as follows:

“No operations shall be permitted upon any tract of land until a lease covering such tract shall have been approved by the Secretary of the Interior, or such operations specifically authorized by him.
“32. Approved oil and gas leases provide in part:
“During operations the lessee shall pay all damages for the use of the surface, other than that included in the location and tanksite, all damages to any growing crops, or any improvements on the lands and all other damages as may be occasioned by reason of operations.”

Then followed the other provisions contained in the preceding quotation from the lease.

They further provided for written notice of damages to be served upon the oil and gas lessee or the party in charge of the lease and in connection with said notice contained the following provision:

“It is not intended by this requirement to limit the time within which action may be brought in the courts to less than the ninety-day period allowed by section 2 of the act of March 2, 1929, but it is intended to provide for an early examination of the property damaged by all parties interested to the end that the best possible evidence, much of which due to the nature of the damages or the property damaged, will be gradually obliterated and completely lost with the passage of time, bo preserved for the board of arbitration or the court in event of failure of the parties to settle the claim by arbitration.”

The regulations also provide that on receipt of complaint from a surface owner, the Superintendent of the Osage Agency may require the oil lessee to inclose slush pits, earthen tanks and reservoirs for salt water and other refuse within a fence. The oil and gas lease expressly provides that it is subject to regulations now or hereafter prescribed by the Secretary of the Interior, all which are made a part of the lease.

It was the contention of defendant in the court below, and it contends in this court, that that portion of the lease and regulations providing for payment by the oil lessee of “all other damages as may be occasioned by reason of operations” was intended to apply only to damages in the nature of those specifically set forth in the lease and regulations immediately preceding such provisions, and that it was not the intent of the Secretary of the Interior, in promulgating either the lease or the regulations, that damages to cattle should be included therein. We are inclined to agree with this contention.

In Midland Oil Co. v. Ball, 115 Okla. 229, 242 P. 161, the plaintiff asserted liability for pollution of his water supply by the escape of salt water from the pits of the operating lessee. In that case defendant contended that there had been no compliance with the terms of the lease or the regulations of the Secretary of the Interior providing for arbitration of disputed damage claims. In this connection we said:

“We think this contention may be dismissed with the statement that no provision appears to have been made in the lease, or regulations of the Secretary, for settling claims against the lessee for damages occasioned by the escape of salt water or base sediment on the lands other than with the surface owners or their lessees, or for damages other than to the surface of the land itself. It is conceded that there is no specific provision for the settlement of damages to live stock in the circumstances of this case.”

*333 The significant statement in this case is that there was no provision for settling claims for damages “other than to the surface of the land itself.” We •consider this significant for the reason that the provision for settlement by arbitration in the lease and regulations applies to all claims for damages arising from the operation of the leases. To the same effect is Indian Territory Illuminating Oil Co. v. Carter, 177 Okla. 1, 57 P. 2d 864.

In the recent case of Mid-Continent Petroleum Co. v. Rhodes, 205 Okla. 651, 240 P. 2d 95, in the supplemental opinion on rehearing, we said:

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Related

Bell v. Phillips Petroleum Co.
1982 OK 28 (Supreme Court of Oklahoma, 1982)
Mullendore v. Sohio Petroleum Co.
438 F.2d 1099 (Tenth Circuit, 1971)
Mullendore v. Sohio Petroleum Company
438 F.2d 1099 (Tenth Circuit, 1971)
Phillips Petroleum Co. v. Sheel
1953 OK 132 (Supreme Court of Oklahoma, 1953)

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Bluebook (online)
1952 OK 167, 243 P.2d 726, 206 Okla. 330, 1 Oil & Gas Rep. 879, 1952 Okla. LEXIS 594, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phillips-petroleum-co-v-sheel-okla-1952.