Poafpybitty v. Skelly Oil Co.

1966 OK 105, 442 P.2d 324
CourtSupreme Court of Oklahoma
DecidedMay 24, 1966
DocketNo. 40777
StatusPublished

This text of 1966 OK 105 (Poafpybitty v. Skelly Oil Co.) 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
Poafpybitty v. Skelly Oil Co., 1966 OK 105, 442 P.2d 324 (Okla. 1966).

Opinion

PER CURIAM:

This is a suit by the restricted Indian heirs of a member of the Comanche tribe of Indians to whom, as allottee, a tract of land in Stephens County was conveyed by a trust patent from the United States, in which the plaintiffs seek to recover from the defendant, Skelly Oil Company, lessee under a departmental oil and gas lease, royalties on gas which the plaintiffs allege the company permitted to escape and go to waste from the land. From a judgment of the District Court of Oklahoma County sustaining the demurrer of the defendant to the amended petition of the plaintiffs and dismissing the cause on their refusal to plead further, this appeal was prosecuted.

In the amended petition the plaintiffs alleged that they are the owners and in possession of a quarter section of land in Stephens County, said land being held in trust for them by the United States Government under the General Allotment Act of February 8, 1887, said lands being under the jurisdiction and control of the Secretary of the Interior acting by and through the Area Director of the Bureau of Indian Affairs and the Commissioner of Indian Affairs; that on May 28, 1947, the plaintiffs, as lessors, executed and delivered to the defendant, Skelly Oil Company, as lessee, a departmental oil and gas lease which was approved by the Acting Commissioner of Indian Affairs of the United States Department of the Interior, for a primary term of ten years, which expired June 27, 1957, same to continue as much longer thereafter as oil and/or gas is produced in paying quantities from said land. A copy of the lease was attached to and made a part of the petition.

Plaintiffs further alleged that during the year 1956 the lessee drilled seven oil and gas wells on said land, all of which wells were completed as commercial producers; that shortly after the wells were completed demand was made by the plaintiffs on the lessee to market the gas being produced and flared from said wells, there being a gas line operated within a half mile from said land; that the defendant lessee failed and refused to exercise reasonable diligence in the prevention of waste of said gas as required by the lease, but, instead permitted the gas to escape and become wasted, contrary to the terms of the lease, causing the plaintiffs to lose their royalty from said escaping gas in the sum of $114,-000.00, for which they prayed judgment.

Plaintiffs further alleged that they are the real parties in interest and that the United States is trustee for their benefit, and that the United States has consented to instituting this action by the plaintiffs and has authorized the plaintiffs to employ attorneys for the prosecution of the case.

The lease provides that the lessee shall pay to the Secretary of the Interior a royalty consisting of 12i/2% of the value or amount of all oil, gas, natural gasoline and all other hydrocarbon substances produced and saved from the leased land, save and except oil and/or gas used by the lessee for development and operation purposes on the leased premises, which shall be royalty free; that lessee shall furnish the Secretary of the Interior monthly statements showing the amount, quality and value of all such products produced and saved from the leased premises during the preceding calendar month; that the leased premises and wells, producing operations, improvements, machinery, and fixtures on said lease and connected therewith, and all books and accounts of the lessee shall be open at all times for the inspection of [326]*326any duly authorized representative of the Secretary of the Interior; that the lessee shall exercise reasonable diligence in drilling and operating wells for oil and gas purposes, and shall carry on all operations in a good and workmanlike manner in accordance with approved methods and practice having due regard for the prevention of waste of oil and gas developed on the land; shall carry out at its expense all reasonable orders and requirements of the oil and gas supervisor of the Department of the Interior relative to the prevention of waste and preservation of the property and the health and safety of workmen; that it shall abide by and conform to any and all regulations of the Secretary of the Interior now or hereafter in force relative to the lease; that the Secretary of the Interior may impose restrictions as to time or times for the drilling of wells and as to 'the production from any wells drilled when in his judgment such action may be necessary or proper for the protection of the natural resources of the leased land and the interests of the Indian lessor. The' lease gives the Secretary of the Interior the right to declare the lease null and void, after notice and hearing, for violation of any of the terms and conditions of the lease before restrictions are removed, “provided that after restrictions are removed the lessor shall have and be entitled to any available remedy in law or equity for breach of this contract by the lessee.”

The plaintiffs argue the case under two propositions:

1. That as beneficial owners of the land and lessors they have the right to maintain this action, notwithstanding the fact that as Indian Citizens they hold equitable title under a Trust Patent and the lease was required to be approved by the Commissioner of Indian Affairs, citing 42 C.J.S. Indians § 8, page 653; Smith v. Northern Pacific R. Co., 57 Mont. 14, 186 P. 684, 686; Sadler v. Public National Bank and Trust Co. of New York, 10 Cir., 172 F.2d 870; Bonnet v. Seekins, 126 Mont. 24, 243 P.2d 317; Brown v. Anderson, 61 Okl. 136, 160 P. 724; Choctaw and Chickasaw Nations v. Seitz, 10 Cir., 193 F.2d 456.

2. That as such beneficial owners, they have the right to maintain this action without joining the United States, which holds the land as trustee for them, citing Bush v. Missouri State Life Ins. Co., 86 Okl. 182, 207 P. 317; Smith v. Burt, 150 Okl. 34, 300 P. 748; Siniscal v. United States, 9 Cir., 208 F.2d 406.

The defendant argues the case under four propositions, but we believe its first proposition is decisive in its favor, which is that under the express terms of the lease and the regulations of the Secretary of the Interior made pursuant to law and which must be read into the lease, the plaintiffs are precluded from suing or recovering in this action.

The defendant calls attention to numerous rules and regulations promulgated by the Secretary of the Interior dealing with such departmental oil and gas leases, which have the force and effect of law, and of which the Federal and State courts take judicial notice. Diehl v. Phillips Petroleum Co., 376 P.2d 203 (Okl.); Seber v. Spring Oil Co., D.C., 33 F.Supp. 805. The regulations so prescribed among other things, define the duties of the supervisor, who is a representative of the Secretary of the Interior, under directions of the Director of the United States Geological Survey, in supervising and directing oil and gas operations. Among such regulations that are pertinent to the questions here involved are those appearing at 7 F.R. 1433-4135-4140 and Title 30, Code of Federal Regulations (CFR), January, 1966 Revision, in part, as follows:

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Related

Choctaw and Chickasaw Nations v. Seitz
193 F.2d 456 (Tenth Circuit, 1952)
Siniscal v. United States United States v. Siniscal
208 F.2d 406 (Ninth Circuit, 1953)
Bonnet v. Seekins
243 P.2d 317 (Montana Supreme Court, 1952)
Diehl v. Phillips Petroleum Company
1962 OK 236 (Supreme Court of Oklahoma, 1962)
Sadler v. Public Nat. Bank & Trust Co. of New York
172 F.2d 870 (Tenth Circuit, 1949)
Seber v. Spring Oil Co.
33 F. Supp. 805 (N.D. Oklahoma, 1940)
Bush v. Missouri State Life Ins. Co.
1922 OK 183 (Supreme Court of Oklahoma, 1922)
Brown v. Anderson
1916 OK 902 (Supreme Court of Oklahoma, 1916)
Smith v. Burt
1931 OK 378 (Supreme Court of Oklahoma, 1931)
Smith v. Northern Pacific Ry. Co.
186 P. 684 (Montana Supreme Court, 1919)

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Bluebook (online)
1966 OK 105, 442 P.2d 324, Counsel Stack Legal Research, https://law.counselstack.com/opinion/poafpybitty-v-skelly-oil-co-okla-1966.