Phoenix Oil Co. v. Mid-Continent Petroleum Corp.

1936 OK 250, 60 P.2d 1054, 177 Okla. 530, 111 A.L.R. 504, 1936 Okla. LEXIS 412
CourtSupreme Court of Oklahoma
DecidedMarch 17, 1936
DocketNo. 25933.
StatusPublished
Cited by11 cases

This text of 1936 OK 250 (Phoenix Oil Co. v. Mid-Continent Petroleum Corp.) 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
Phoenix Oil Co. v. Mid-Continent Petroleum Corp., 1936 OK 250, 60 P.2d 1054, 177 Okla. 530, 111 A.L.R. 504, 1936 Okla. LEXIS 412 (Okla. 1936).

Opinion

PER CURIAM.

This appeal is prosecuted by the Phoenix Oil Company, a corporation, plaintiff in error, plaintiff below, to reverse a judgment of the district court of Tulsa county, wherein Mid-Continent Petroleum Corporation, defendant in error, defendant below, obtained a judgment sustaining its demurrer to the petition of the plaintiff in error and dismissing its petition with prejudice. Parties will be hereinafter referred to as they appeared in the trial court.

The assignments of error false but one proposition, namely, as to whether the petition stated facts sufficient to constitute a cause of action, or causes of actions, in fav- or of the plaintiff. By its action, plaintiff sought to recover the sum of $75,000 for the alleged failure of the defendant to drill a certain well on certain lands in accordance with the terms of a certain contract dated, entered into’, and executed on the 20th day of August, 1926, by and between Omar Oil & Gas Company, a corporation, former name of the plaintiff, and Cosden Oil & Gas Company, a corporation, alleged predecessor of the defendant. This contract was attached to the petition as an exhibit and was made a part of said petition.

The contract is as follows (omitting the first, fifth, 'and seventh paragraphs of the stipulation and the acknowledgments as not material to the issues presented) ;

“This agreement made and entered into on this 20th day of August, 1926, by and between Omar Oil & Gas Company, a corporation, organized and existing under and by virtue of the laws of the state] of Delaware, duly licensed to transact business in the stale of Oklahoma, with its principal office in Pittsburgh, Pennsylvania, party of the *531 first part, and Cosden Oil & Gas Company, a Delaware corporation, party of the second part.

“Witnesseth: That whereas, first party is the owner of good, valid and subsisting oil and gas mining lease in Pottawatomie county, Okla., covering and embracing the following described land, to wit:
“East half of northwest quarter of (E. 2 N. W. 4) section 14, township 7 north range 4 east, except a certain tract comprising 1% acres out of northwest corner 210 feet east and west and 315 feet north and south,
“Now, therefore, it is agreed between the parties hereto as follows: * * *
“(2) Upon acceptance of first party’s title, second party agrees to pay unto first party the sum of fifteen thousand ($15,000; dollars, whereupon first party shall execute and deliver unto second party good and valid assignment conveying unto second party an undivided one-half interest in and to the leasehold above described. As part consideration for the said assignment second party hereby further agrees to pay to the first party an additional bonus of fifteen thousand ($15 000) dollars, payable out of first oil run to the credit of the second party from oil produced from said lease; said additional bonus to be payable when and as oil is produced to the credit of second party; provided, however, that the second party shall be" relieved, pro tanto, from this obligation when, and if said lease ceases to produce oil in paying quantities. Second party agrees to fully protect the leasehold estate in so far as drilling requirements are concerned, limited to this extent, however, that the first well is to be drilled by the second party free of cost to first party, completed into the tanks, in event said first well produces oil in commercial quantities. Any and all wells drilled subsequent to the first well shall be paid for by the respective parties hereto in the proportion to their ownership in and to the leasehold premises.
“(3) If said first well which is to be drilled by second party free of cost to first party, should be nonproductive, then second party may salvage as their own property all the materials used in said well. If, however, such free well to first party produces oil or gas, or either of them, in paying quantities, then said first party shall become the owner of an undivided one-half interest in and to all the material and equipment necessary to produce said well.
“(4) Second party shall have charge of the development and operation of said lease, and first party shall be liable unto second party for all just and reasonable operating costs, and ,all development costs laid out in the drilling of all wells except the first well, which is to be drilled by second party free of cost to first party. * * *
“(6) First party agrees to pay unto second party a reasonable overhead charge in connection with the development and operation of said premises. The additional bonus of $15,000, herein provided for to be paid by second party unto the first party shall be paid only out of oil, and if the lease dees not produce sufficient oil to the credit of second party, to fully pay the $15,-000 bonus to first party, then such obligation shall be extinguished, and it is further agreed between the parties hereto that it is the sense and spirit of this contract that the second party shall not be compelled or obligated under the terms heredf to operate and develop the property for the sole purpose of paying the bonus into the first party when such property cannot reasonably be construed as producing oil in paying quantities. * * *
“(8) When it becomes necessary in order to protect the lease, or justifiable to start drilling operations upon said leasehold premises, and said second party locates its Number One well, which is hereby designated as the well to be drilled free of cost to the first party said second party shall drill said well to a sufficient depth to test the Wilcox sand found in the locality of this lease at approximately 4,000 feet unless such free well to first party produces oil in paying quantities at a lesser depth.
“All of the terms, conditions, stipulations and covenants and agreements herein contained shall extend to and be binding upon the respective parties hereto, tlieir heirs, personal representatives, successors and assigns.
“In witness whereof, the parties hereto have caused this agreement to be executed in duplicate on! the day and year first above written.
“Omar Oil & Gas Company,
“By N. F. Clark, President,
“(First Party).
“Attest John B. Fritz, Secretary. (Seal)
“Cosden Oil & Gas Company,
“By J. O. Denton, Vice-President.
“Attest: A. D. Kneale, Asst. Secretary.
(Seal.)”

The execution of the above contract was duly acknowledged1 by N. F. Clark, president of Omar Oil & Gas Company.

The oil and gas mining lease referred to in the above contract was a Producers Form 88, Special No. 0, I-tepublican Press, Tecumseh, being made and entered into on the ISth day of September, 1923, by and between Charles W. Williams and wife, Ella J. Williams, lessor, and O. F. Cashdollar, lessee, covering the land described In the contract, supra, for a period of ten years and con *532

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1936 OK 250, 60 P.2d 1054, 177 Okla. 530, 111 A.L.R. 504, 1936 Okla. LEXIS 412, Counsel Stack Legal Research, https://law.counselstack.com/opinion/phoenix-oil-co-v-mid-continent-petroleum-corp-okla-1936.