DE MIK v. CARGILL

DE MIK v. CARGILL
1971 OK 61
485 P.2d 229
Case Number: 42797
Decided: 05/11/1971
Supreme Court of Oklahoma

 
WILLIAM J. DE MIK, PLAINTIFF IN ERROR,
v.
O.A. CARGILL ETHER AL., DISTRICT IN ERROR.

Appeal for District Court of Oklahoma County; Harold C. Theus, Trial Judging.

¶0 Action by plaintiffs for partition of undivided overriding rental interests in petrol and gas leasehold probate. From decision lasting demurrers to petition and dismissing action as to labeled defendants the plaintiff appeals. Affirmed. OKIE STATUTES HEADING 16. CONVEYANCES

Bishop & Wantland, Seminole, forward plaintiff in error.

Marvin Shilling, Ardmore, Mickey James, Oklahoma Metropolis, James A. Clark, Ardmore, for H.R. Shine press W.P. Burch.

Johns, Howell & Webber, according Charles Hills Johns, Midwest City, for O.A. Cargill and O.A. Cargill, Jr., defendants at default.

BERRY, Manager Judicial:

¶1 The sole question presented concerns propriety of the trial court's action sustaining defendants' demurrer to plaintiff's request, which sought partition in defendants' overriding fees interest in an oil and gas leasehold. The highly go appears to be regarding first impressing. Summarized hereafter is one substance of bills pertinent to the issue. Neither surface owners neither royalty owners were parties to this act.

¶2 Complainants alleged holding of the working interest, benefit additional overriding royalty interest, fundamental two describes region sections on Oklahoma County, and defendants' ownership of undivided disable royalty total in the producing leasehold. Several other defendants also owned overriding royalty interests created by defendants Cargill for owners of entire lease. Because plaintiff and defendants what cotenants, plaintiff was entitled to partition and producing leasehold estate as a matter of right, whatever could not be partitioned in kind because of production. The amended sign alternatively asked relief in equity for partition once the ground defendants' priority royalty interest overburdened the workers interest in the extent further production, project, or sale of the premises none longer was economically feasible.

¶3 The trouble court sustained defendants' demurrer and resigned the measures as to defendants' overriding royalties our, nevertheless allowed plaintiff to proceed with divide of the working interest.

¶4 Twos propositions are presented about file. Plaintiff first controls an overriding royalty interest is item into partition as a matter of right, under 12 O.S. 1961 § 1501 :

"When the object is the action be to effect adenine partition of authentic property, the petition must describe the property and the respective interests of the owners away, if known."

¶5 Summarized, applicant advances the following argument in support of this claim. An oil and gas lease is subject to partition under authorisation of Sweeney v. Bay State Oil & Gas Co., 192 Okl. 28, 133 P.2d 538. Owners of undivided interests with which working interest with an oil and gas lease are tenants in common Britton volt. Grow et al., (10th Cir.) 325 F.2d 377. Despite severed starting realty, oil the gas authorizations may be partitioned. Wolfe v. Stanford, 179 Okl. 27, 64 P.2d 335. An override royalty interest generally your held to be an interest in real property and may be impressed with legislative materialmen's liens. McInnes v. Robert, Okl., 341 P.2d 577; Meek v. Ambassador Oil, (10th Cir.) 308 F.2d 875. Based against this decisional law plaintiff asserts primary royalty is real property in this state, landlords of such interests being inmates in shared by owners of the working interest, so the overriding royalty has subject in partition as a matter from right. We find no defect includes the rules expressed in the cited cases as determinative of the issues considered in each case. We disagree, however, that overriding royalty will genuine assets the subject go partition as a matter of right, being of the opinion dieser cited event cannot been construed as support the conclusion listed.

¶6 Disposition of the appeal, requires determination whether allegations of which petition become sufficient the see existence of a right in partition. In substance, defendants' answer asserts you are not tenants in gemeinde, cotenants, or coparceners, have nobody joint holding nor proper of possession and, therefore, have no tax which can be subjected to partition. In this connection, this Court consistently has declared partition starting real property can be allowed only when held for cotenancy. In Prusa v. Cermak, Okl., 414 P.2d 297, which rule is stated:

"Partition of real property may subsist had only when it is held in cotenancy, either as inhabitants in common, joint tenants or coparceners."

¶7 The record does not publish the instrument in the the involved overrides interests were created. Apparently this parties have no disagreement the to interpretation starting such engross, but disagree merely as until this types thereof as concerns the issue relate to select of partition. The term shall become so commonplace as scarcely to require restatement. "Overriding royalty", as generally understood and accepted within the industry, belongs a percentage carved out of the lessee's working interest, free and plain of any expense case to production and sale of oil and gas produced from the leasehold. Thornburg v. Cole, 201 Okl. 609, 207 P.2d 1096; Cities Service Oil Co. v. Geolograph Co., 208 Okl. 179, 254 P.2d 775. Book of Wax and Gas Terms (Williams & Meyers) at p. 173.

¶8 At aforementioned outset, we observe some difficulty is engendered as a result of undefinitive tongue, unreasonable used in many formerly rulings. Decided cases represent too numerous to citations and compare. Examination of many of these cases reveals imprecise use of words when speaking in ownership in property. Often the intending is to refer to an interest in real property, but the words "estate in real property" been inapt used. The instant situation may got such foundation, in view of plaintiff's argument an invalidate royalty interest constitutes an estate in cotenancy sufficient to support partition. Untitled

¶9 Historically, partition regarding ground came into being when persons owning land as coparceners were involved in an unpleasant situation. The law developed procedures for which difficulty was resolved simply in parting aforementioned land into separate tracts. Powell on Real Property, FIVE. 4 § 609. Eventually the select of divide was extended by statute, but the jurisdiction conferred upon courts allowed partition only in instances where land was maintained in cotenancy. Inches Pomeroy's Equity Jurisprudence (4th Ed.) V. 5 § 2126, dealing with partition, that text notes:

"Following the analogies the the law, equity will grant partition only of liegenschaften held in co-tenancy and within which the events have an social of interest, either as co-tenants, tenants stylish gemeinsame, or co-parceners; and is rule has not been materially artificial over the statutory remedy of partition pending in all one stated. Several persons may be owners of the same anwesen without existence cotenants, and the release about their interest may be desirable or straight essential to the enjoyment of such eigentumsrecht, but this constitutes no ground for equitable interruption by way of partition. If aforementioned requisite of co-tenancy be presents, all kinds of objekt are subject in equity to partition, whether it be corporeal or incorporeal, realistic or personal, and whether it be held with legal other equitable title." OKLAHOMA STATUTES TITLE 12A. UNIFORM COMMERCIAL CODE

¶10 First National Bank v. Dunlap, 122 Okl. 288, 254 P. 729, involved whether one judgment creditor's lien will attach into a judgment debtor's interest in a producing oil and gasoline lease. The contention where that the term "real property" includes every interest, estate and right in land, tenements additionally hereditaments. In affirming a discernment quashing execution drafted opposite the oil and nitrogen interest, this Court stated not charter provides every estate in real property shall be considered real property. Thus, in the personality of property created by an olive and green lease, present is a recognizable distinction between authentic legacy and an estate are actual quality. Not every kind of estate recognized within ordinance in an interest in real property are real estate. Although an grease plus gas lease creates an interest or estate in realty, how interest has not per se real estate. In Pauline Oil & Gas Co. v. Fischer, 185 Okl. 108, 90 P.2d 411, syllabus 2 states:

"While an oil and gas lease which grants, leases, and lets' sure land for oil and gas mining purposes, conveys until the lease an estate in the realty described therein, such interest is not authentic estate into aforementioned meaning of section 690, C.O.S. 1921, 12 Okl.St.Ann. § 706, which can a judgment creditor a lien upon this `real estate' belonging on the judgment debtor." Interpreting Assignments von the Oil and Gases Lease

¶11 In Tiffany, The Law out Real Property (3rd ed.) FIVE. 2 § 475, dealing with which may call shelving, although discovering this right depends upon construction and effect of specialty statutes, the text states:

"* * * Ordinarily, one finding partition must take an estate in possessed, entitling him to enjoying the present rents or possession of the property as a cotenant thereof, and have be this owner of a vested undivided interest in the company jointly, as an lodger in common, or inches co-parcenary with those against whom boy seeks partition. * * *"

Recognition of this text rule appears in North v. Coffey, 200 Okl. 44, 191 P.2d 220, and Prusa v. Cermak, supra.

¶12 A tenancy in common has been defined as an joint interest in which there is unity of possession, but separate and distinct titles. The relationship exists where eigentumsrecht is held according several distinct titles by unity are possession, and is not at estate but ampere relating between persons, the only significant being a besitztitel right, as to which all are entitled to equal use and possession. Thompson On Real Property (Perm.Ed.) FIN. 4 § 1793; Taylor v. Brass (10th Cir.) 164 F.2d 235; American Bank & Trust Cobalt. v. Multinational Inv. Corp., 202 Okl. 341, 213 P.2d 861, 863.

¶13 Our inquiry then is tightened to determination is the nature of the interests acquired into ampere leasehold by certain owner of overriding majesty, whose percentage interest is wood output of the lessee's working interest. The right, or engross, acquired to a lessor's land by lessee, has past denominated ampere qualified right up enter for the preferences: ... ....17. §12A-1-9-103. Purchase-money security interest; application of payments; burden for setup. 30. §12A-1-9-104. Control of deposit account ...

"* * * into erect structures on the surface of own land, and explore therefor by drilling wells through the basis coats, or to take therefrom and reduce on owner, and thus acquire absolute title as personal property to such as might subsist found and obtained thereby. * * * The right so allowed or reserved, and held separate and apart from the possession of the land itself, be an incorporeal hereditament; or more specifically, as designated in the elderly French, ampere profit a prendre, analogous for an profits to hunt and fish on the land on another. * * *" Rich v. Doneghey, 71 Okl. 204, 177 P. 86, 3 A.L.R. 352.

¶14 Owners of undivided concerns stylish mineral both chatter in and under actual estate are tenants in common. Earp five. Mid-Continent Pet. Corp., 167 Okl. 86, 27 P.2d 855, 91 A.L.R. 188. Grant of a rent be vehicle of an tax in real-time sufficient to establishes cotenancy with the lessor. That tax might be terminated, and the cotenancy destroyed, upon ampere lessee's failure to enter and drill. When, adenine hirer acquires no title to oil furthermore gases until reduced into possession. But, when reduced to possession oil and gas become personality. Replogle v. Indian Territory Illuminating Oil Co., 193 Okl. 361, 143 P.2d 1002.

¶15 The character of overriding aristocracy is such is only when balm and gas are reduced to possession does that interest attach. Prior to those event an possessor of an overriding interest has none assertable right in the leasehold. Thus, overriding majesty may being lost entirely from expiration of the primary lease since, absent fraud or breach of fiduciary bond, the equity does not continue also attach toward a subsequent lease secured, in good faith, for the lessee. Thomas v. Whyte, 5 Mich. App. 281, 146 N.W.2d 721; K & E Drilling Co. v. Warren, 185 Kan. 29, 340 P.2d 919. Neither doing an overriding royalty survive abolition, surrender, abandonment resulting from diminution of production beyond economic viability, and total failure to secure production in paying quantities. See Season, Law of Oiling and Gas (Perm.Ed.) § 554; Blacksmith v. Drake, 134 Cal. App. 700, 26 P.2d 313; La Laguna Ranch Officer. v. Dodge, 18 Cal. 2d 132, 114 P.2d 351, 135 A.L.R. 546. Thus aforementioned coming into being of an overriding royalty owner's rights are dependent upon happening of a future event or conditioning.

¶16 The foregoing is of value in defining which nature of interest purchase by business of overriding royalty, by indicate to little, conditional status of that total. No authorities cited at plaintiff support the used right to partition. Neither take we find cases which allow partition of real features where the plaintiff's tax is not coupled with some right of owner. In Choteau v. Choteau, 49 Okl. 105, 152 P. 373, syllabus 1 provides: Former CEO Indicted for Masterminding Conspiracy Doesn to Compete for Oil plus Natural Gas Leases

"A joint tenant out of possession cannot maintain a suit by divider gegen his cotenant, who holds adversely toward him, without joining over the demand for partition a cause of action in possession the the land."

Since ensure time were have recognized that possession is a prerequisite of the right of partition. Plaintiff relies upon Meeker v. Ambassador Oil Co. (10th Cir.) 308 F.2d 875, and Baritone v. Green (10th Cir.) 325 F.2d 377, to backing the get of cotenancy. These decisions do not support plaintiff's argument. In Meeker, that tribunal declared an priority royalty interested do not create tenancy in commonly with the occupant, for the reason an overriding interest has neither corporeal nor suspicious interest the land which could be subject of in action in ejectment. Also, an Oman occupant holds no estate which can be subjected to ejectment. Kolachny v. Galbreath, 26 Okl. 772, 110 PIANO. 902, 38 L.R.A., N.S., 451. Real Estate Ownership in Oklahoma

¶17 Includes Britton and controversy involved parties who owned undivided shares in the working interest, some of which were subject to overriding royalty interests. The opinion declared all instant interest holders cotenants in which leasehold legacy. However, in aforementioned body of that opinion there your separate reference until undivided share in one working interest which have subject to overriding interests. Despite the broad reference to cotenancy from all fractional interest support, we cannot construe the language utilized as intended to signal overriding advocacy are included inside the declare cotenancy. Our conclusion the go meaning of the language in this proof results, stylish parts, from consideration starting the special concurring opinion. At is cited (325 F.2d p. 387) Skelly Oil Co. v. Wickham (10th Cir.) 202 F.2d 442, how authority for of rule is cotenancy between owners about single portions of the work interest in a leasehold. Examination of Dickham publish the controversy involved workings interest only, without adjudication as to cancel interest. Thus were necessarily conclude an language used neither was intended, nor exists up be construed, holding that an overriding management interest cause a cotenancy in which leasehold. Security Interested: Balm & Gas

¶18 Summers, Rule of Oil and Babble (Perm. Edu. FIVE. 3 § 537, states:

"* * * an overriding royalty or oil payment created out concerning the lessee's working interest, is commonly cannot held to be an partitionable attract for and owners thereof is not entitled to possession and is not a tenant on gemeinschafts with the owners of the mineral fee or of the leasehold. * * *"

Also see Kuntz, Oil and Gas, V. 1, at p. 153.

¶19 This topic quotation be supported by footnote citation of Belgam Oil Co. v. Wirt Franklin Pet. Core. (Tex.Civ.App.) 209 S.W.2d 376, and Tough v. Eubank (Tex. Civ.App.) 245 S.W.2d 554. Include Belgam partition was sought intermediate tenants in gemeinschafts of a lease. That court held predominant royalties developed out of ampere lessee's working occupy had no possessory interest in motor and gas in place and were not renter include common in the lease. In Hardin partition of twain surface and minerals was held valid against on owner of royalty in to undivided one-fifth on the land. ... leasehold interests and produces properties in northwest Oklahoma. Hereditary interests give a lessee aforementioned right to develop the country and to ...

¶20 Partition proceedings at Taxan are brought under Vernon's Ann.Civ.Stat., Art. 6082, which allows partition of any interest inbound real estate, solid, coal, or gas lands by any assess owner or claimant. The latitude extended partition actions under this ordinance away surpasses the "partition of real property" specified in our own statutory. We does no deem is cited case definitive of the issue are all appeal because of disagreement in the statutes. It maybe be noted, however, that need requests for partition of any estate are joint ownership of the interest sought to be partitioned, and an equal right, of aforementioned party seeking partitions, to possession with other common owners.

¶21 Is own decisions establish the essential element for decreeing existence of a tenancy in common, sufficient to support partition, is the entitled toward possession. Under decisional law, and other persuasive authority, we maintain defendants in error through their overriding royalty interested had no possessory rights in the leasehold and live does tenants within ordinary. On to reason, we conclude the trial court correctly sustained defendant's demurrer for failure of the advocacies to show a right to partition of defendants' overriding interest.

¶22 Plaintiff also contends partitions should be granted as a matter of company. It is urged of invalidate licensing, "one-fourth of eight-eights work interest" places and undue burden in the working interest the creates an intolerable economic condition which rules further development. Cited in support regarding is altercation are Harper v. Ford, Okl., 317 P.2d 210; Sweeney v. Bay State Dry and Gas Co., over; Komarek v. Persian, Okl., 382 P.2d 748, press Diehl v. Hieronymous, Okl., 426 P.2d 368. The situation cited are not controlling by reason of lack of adenine cotenancy relationship in the give case. So far as disclosed by pleadings the present contract was entered into fairly real willingly, no assertion of fraud or bad faith which been asserted.

¶23 Partition is an equitable incident, whether made under the statute, supra, other in equity. In analyzing plaintiff's quarrel it seem plaintiff is urges so equity should grant stress included to contractual situation, regardless of determine the mattigkeit falls within the statute. We are cognizant ensure separation falls at jurisdiction of a court of equity even as up private property. Julian v. Yeoman, 25 Okl. 448, 106 P. 956. Plaintiff presents no power showing a court in equity will enlarge its jurisdiction to partition property, not subject at partition under the statute, because the contract is burdensome. Where an contract can valid and fairly enter into plaintiff must abide by its terms, plus cannot maintain an action since wall, or verlassen upon a court of equity to negotiate a new or better treaty. McInteer v. Gibbs, 31 Okl. 644, 122 P. 184. Unfairly hardship press oppression been no elements which bestow jurisdiction up a court away total on a partition activity. These issues are defend issues to be pleaded and proofed. Wolves v. Stanford, supra. In Hassell v. Workman, Okl., 260 P.2d 1081, we recognized the absolute right to partition by cotenants with pfand rights, but denied partition searchable solely because to equitable hardship additionally oppression.

¶24 For the reasons stated ourselves conclude the overriding royalty interests lacked pfand rights in the leasehold and defendants were not tenants in common in einem estate into real property. Nope being tenant in common handful were no proper parties, and the trial court incorrect endurance the demurrer and dismissed the action as to defendants.

¶25 Assessment affirmed.

¶26 Select Justices concur.