TIDAL OIL CO. v. FULLERTON-STUART LBR. CO.

TIDAL OIL CO. v. FULLERTON-STUART LBR. CO.
1929 OK 234
278 P. 330
137 Okla. 58
Case Number: 18402
Decided: 06/04/1929
Supreme Court of Oklahoma

TIDAL OIL CO. et al.
v.
FULLERTON-STUART LBR. CO.

Syllabus

¶0 Oil and Gas--Partnership--Essentials of Mining Partnership--Relation Nonexistent if Intended to Take Effect in Future.
A mining partnership or joint adventure cannot exist unless there is a co-operation among the parties in the development of a lease for oil and gas, each agreeing to pay his part of the expenses and to share in the profits and losses. Where it is the intention of the parties that a partnership is to become effective upon the happening of a certain contingency, or is to take effect at a future day, the relation of partners does not exist. Irelan v. Smoot, 132 Okla. 270, 270 P. 29.

Commissioners' Opinion, Division No. 2.

Error from District Court, Creek County; Fred A. Speakman, Judge.

Action by L. P. Gowland against the Harmack Petroleum Company, the Tidal Oil Company, the Tidal-Osage Oil Company, the Fullerton-Stuart Lumber Company, and others. Judgment for the Fullerton-Stuart Lbr. Company against the Tidal Oil Company and the Tidal-Osage Oil Company on cross-petition. Defendants Tidal Oil Company and Tidal-Osage Oil Company appeal. Reversed and remanded, with directions.

Y. P. Broome and Randolph, Haver, Shirk & Bridges, for plaintiffs in error.
William M. Matthews, for defendant in error.

HERR, C.

¶1 This suit was originally brought in the district court of Creek county by L. P. Gowland against the Harmack Petroleum Company and others to recover for labor performed in drilling an oil and gas well on the north half of the southwest quarter of section 6, township 14 north of range 7 east in Creek county, and for foreclosure of his laborer's lien in and to a certain leasehold estate therein, which, it was alleged, the said Harmack Petroleum Company owned. The Tidal Oil Company and the Tidal-Osage Oil Company were made parties defendant.

¶2 The Fullerton-Stuart Lumber Company was subsequently made a party defendant. Said company filed its cross-petition against plaintiff and defendants Harmack Petroleum Company, Tidal Oil Company, and the Tidal-Osage Oil Company, in which it alleged that said defendants were indebted to it in the sum of $ 3,329.05 for material furnished said parties in drilling a well on said leasehold; and further alleged that it had a lien against said leasehold therefor. It was also alleged that there existed a mining partnership between plaintiff and said defendants in developing the lease. The prayer was for judgment against plaintiff and all defendants for the amount of its claim and for foreclosure of its lien. The decree went in its favor. Defendants Tidal Oil Company and Tidal-Osage Oil Company appeal.

¶3 It appears that on April 24, 1924, defendants Tidal Oil Company and the Tidal-Osage Oil Company, then being the owners of an oil and gas lease in and to said premises, entered into a drilling contract with plaintiff Gowland whereby said Gowland agreed to drill a well thereon of sufficient depth to test what is known as the "Wilcox sand." Said well, under the contract, was to be drilled at the expense of Gowland, and, as compensation therefor, said Gowland was to receive a one-half undivided interest in and to said lease upon completion of said test. An assignment of said one-half undivided interest was executed by defendants Tidal Oil Company and the Tidal-Osage Oil Company, which assignment was, under the terms of the contract, placed in escrow in the National Bank of Commerce of Tulsa, Okla., with instructions to said bank to deliver the same to Gowland upon completion of said test well. Gowland subsequently assigned said contract to Harmack Petroleum Company, which company, in turn, entered into a contract with Gowland for the drilling of said well. The original contract contains the following provision:

"After the completion of said first test well, Tidal Oil Company shall have the management and control of the future development and operation of said lease, and all expenses incurred in the subsequent development and operation of said lease shall be borne one-half by first party and one-half by second party."

¶4 The Harmack Petroleum Company became insolvent and the test well was never completed, and the assignment above mentioned was, by the bank, returned to the defendants Tidal Oil Company and the Tidal-Osage Oil Company.

¶5 It is admitted that cross-petitioner furnished material, in the amount claimed, to defendant Harmack Petroleum Company for the purpose of drilling this well. It is not clear, however, whether the same was furnished under contract with plaintiff or with defendant petroleum company. It is clear, however, that the same was not furnished under contract with defendants Tidal Oil Company and the Tidal-Osage Oil Company, or either of them. Neither of these companies was a party to the contract, nor was any material furnished by cross-petitioner at their request, or at the instance or request of either of them.

¶6 It is contended by cross-petitioner that the contract entered into between plaintiff and defendants Tidal Oil Company and the Tidal-Osage Oil Company, by its terms, creates a mining partnership between the parties, and that, therefore, the parties were jointly liable to cross-petitioner for the material furnished. This contention has been decided adversely to it in the cases of Carson v. Waller, 127 Okla. 186, 260 P. 72; Jones v. Sinclair Crude Oil Purchasing Co., 130 Okla. 182, 266 P. 439; Irelan v. Smoot, 132 Okla. 270, 270 P. 29.

¶7 In the case last cited, this court was called upon to construe a contract containing practically the same provisions as are contained in the contract in the case at bar. It was there held that the same did not constitute a mining partnership.

¶8 The above cases are controlling and decisive of the question here presented. Judgment should be reversed, and the cause remanded, with directions to enter judgment in favor of defendants Tidal Oil Company and the Tidal-Osage Oil Company.