Stroud v. D-X Sunray Oil Co.

1962 OK 240, 376 P.2d 1015, 17 Oil & Gas Rep. 787, 1962 Okla. LEXIS 515
CourtSupreme Court of Oklahoma
DecidedNovember 7, 1962
Docket39533
StatusPublished
Cited by5 cases

This text of 1962 OK 240 (Stroud v. D-X Sunray 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
Stroud v. D-X Sunray Oil Co., 1962 OK 240, 376 P.2d 1015, 17 Oil & Gas Rep. 787, 1962 Okla. LEXIS 515 (Okla. 1962).

Opinions

BERRY, Justice.

The parties who appear here in the same relative position as in the trial court, will be referred to herein as they appeared in said court or by name.

As of February 8, 1927, Maddie Gaines, deceased, owned the NE/4 of Sec. 34, T. 11N, R. IE, Logan County, Oklahoma. On said date she conveyed an undivided one-half of the minerals underlying the W/2 of the described quarter to T. F. Chrystal (20 acres under SW/4 of NE/4). In this conveyance Mrs. Gaines reserved the executive rights to lease and to take rentals and bonuses under the then-subsisting oil and gas lease and future leases; T. F. Chrystal was granted a non-participating royalty interest only. Mr. Chrystal subsequently assigned a portion of his mineral interest to others. The interest so originally acquired by Mr. Chrystal and those presently owning said interest will he referred to herein as "Chrystal interest”.

On March 10, 1927, Maddie Gaines conveyed to Tom Slick, Inc., one-fourth of the minerals underlying the W/2 of NE/4 (10 acres under SW/4 of NE/4). The owners of said interest are not parties to this appeal and in fact make no claim adverse to that asserted by plaintiffs, who are the heirs and successors of Maddie Gaines.

Prior to January 12, 1952, the oil and gas lease covering the land at the time Maddie Gaines conveyed the aforementioned nonparticipating royalty interest to Mr. Chrystal expired. On said date Maddie Gaines executed and delivered to Van-Grisso Oil Company, hereafter referred to as “Van-Grisso”, an oil and gas lease covering the

S/2 of NE/4. This lease contained a so-called entirety clause, which read thusly:

“13. If the leased premises shall hereafter be owned in severalty or in separate tracts, the premises, nevertheless, shall be developed and operated as one lease and all royalties accruing hereunder shall be treated as an entirety and shall be divided among and paid to such separate owners in the proportion that the acreage owned by each such separate owner bears to the entire leased acreage. There shall be no obligation on the part of the lessee to offset wells on separate tracts into which the land covered by this lease may be hereafter divided by sale, devise, or otherwise, or to furnish separate measuring or receiving tanks * * *.” (Emphasis supplied.)

This lease provided that owners of minerals should receive as royalty of the accruals from oil or gas produced and sold.

As of date of execution of the mentioned lease, Maddie Gaines owned and continued to own until her death, all of the minerals under the E/2 of NE/4 and an undivided one-fourth of the minerals under the remainder (W/2 of NE/4) of the quarter, together with the right to lease the Chrystal interest (200 acres under SW/4 of NE/4).

Maddie Gaines’ spouse, at the time the mentioned conveyances were made, also executed same.

In January, 1952, those owning or possessing authority to grant oil and gas leases covering the mineral interest so conveyed to Tom Slick, Inc., executed and delivered such leases to Van-Grisso. The only minerals described in said leases were those underlying the SW/4 of NE/4. While no controversy exists as to said leases, we note that it was stated in the entirety clause of same that “If the leased premises are now or shall hereafter he owned in sever-alty” all royalties accruing shall be treated as an entirety, etc.

Van-Grisso, following execution and delivery of the lease in controversy, obtained a purported ratification of same by Mr. [1018]*1018Chrystal and those to whom he had conveyed an interest in the minerals that he had acquired from Maddie Gaines.

Van-Grisso caused a test well for oil and gas to be drilled on the SE/4 of NE/4 which well was completed as a commercial producer. Subsequently, such a well was drilled on the SW/4 of NE/4, which was also completed as a commercial producer. It appears that D-X Sunray Oil Co. purchased oil produced from the wells.

The well first above mentioned has produced and will produce a greater amount of oil than the well last mentioned. This apparently gave rise to the claim of the Chrystal interest that the entirety clause heretofore quoted and their ratification of the lease served to pool production from the S/2 of NE/4, save production from the SE/4 of NE/4 attributable to the 10-acre mineral interest acquired by Tom Slick, Inc. As a result of said claim, plaintiffs caused the instant action to be filed.

Following trial of case to the court, it was found and held in substance that while plaintiffs, as the heirs of Maddie Gaines, owned all of the minerals under the SE/4 of NE/4, the entirety clause of the lease in controversy which covered the S/2 of said NE/4, together with ratification of the lease by the Chrystal interest, served to pool all royalty production attributable to minerals owned by plaintiffs and those owned by the Chrystal interest. It was found and held that plaintiffs should take 50/80ths of the royalty and the Chrystal interest should take 20/80ths thereof. Since the owners of the mineral interest conveyed to Tom Slick, Inc., would not share in the production from the well on the SE/4 of NE/4, the judgment served to reduce the royalty payable on production from said well to 70/80ths of the stipulated J4th royalty. Thusly, the lessee benefited.

From order of the trial court denying plaintiffs’ motion for new trial which was directed to the mentioned judgment, plaintiffs perfected this appeal.

It is settled law in this jurisdiction that in absence of agreement or circumstances showing an intent to pool royalty for benefit of all the owners of land covered by an oil and gas lease, the royalty belongs to the owner in severalty from whose land the oil is produced. See Seal et al. v. Banes et al., 183 Okl. 203, 80 P.2d 657, and Peerless Oil & Gas Co. v. Tipken, 190 Okl. 396, 124 P.2d 418. It is of further significance to note that the last cited case deals with a joint lease and not the leasing of non-participating royalty.

Defendants argue that an intent on the part of Maddie Gaines to pool royalty production attributable to the Chrystal mineral interest and her mineral interest under the S/2 of NE/4 is evidenced by the entirety clause of the lease which covered the referred-to interests. We are unable to agree.

Wording of the entirety clause to the effect that “If leased premises shall hereafter be owned in severalty or in separate tracts” made clear that it did not apply to minerals then owned in severalty but applied only to minerals subsequently severed from the fee by a conveyance by Maddie Gaines or her successor in interest. In Webster’s Third New International Dictionary the word “hereafter” is defined in part as “after this; after this in order or sequence”.

In Summers Oil and Gas Per. Ed., Vol, 3A, Sec. 609, p.

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Stroud v. D-X Sunray Oil Co.
1962 OK 240 (Supreme Court of Oklahoma, 1962)

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Bluebook (online)
1962 OK 240, 376 P.2d 1015, 17 Oil & Gas Rep. 787, 1962 Okla. LEXIS 515, Counsel Stack Legal Research, https://law.counselstack.com/opinion/stroud-v-d-x-sunray-oil-co-okla-1962.