MULLENDORE v. MINNEHOMA OIL CO.

MULLENDORE v. MINNEHOMA OIL CO.
1926 OK 360
246 P. 837
114 Okla. 251
Case Number: 14061
Decided: 04/13/1926
Supreme Court of Oklahoma

MULLENDORE et al.
v.
MINNEHOMA OIL CO. et al.

Syllabus

¶0 Oil and Gas--Construction of Lease Silent on Rights in Casing-Head Gas--Liability of Lessee to Lessor for Conversion.
Where the lessor in an oil and gas lease grants the premises for the sole and only purpose of mining for oil and gas, reserving to himself as royalty one-eighth of the oil and a specified sum in money per year for gas produced from a gas well, the contract means oil in its ordinary acceptation and gas from a gas well as same is ordinarily understood, and such lease contract makes no disposition of the volatile substance found in oil wells commonly called casing-head gas, and when under such lease contract the lease owner appropriates same to his own benefit by a sale thereof or a use not disclosed as being fairly within the intention of the parties, he is liable to the fee owner for its value as for conversion. Where suit it brought under such state of facts against the lease owner and one to whom he has sold the casing-head gas for the value thereof, his recovery is limited to the value of the product converted, and cannot be enlarged to the net value of the commercial product into which it is made.

Error from District Court, Pawnee County; Valjean Biddison, Judge.

Action by E. C. Mullendore against the Minnehoma Oil Company and others. Judgment for plaintiff and certain defendants for less than sued for, and they appeal. Reversed, with directions.

McCollum & McCollum, Ames, Lowe, Richardson & Cochran, S. C. Bloss, and W. C. Mullendore, for plaintiffs in error.
C. H. Rosenstein, for defendant in error Minnehoma Oil Company.
McGuire & Marshall, for defendant in error Oklahoma Petroleum & Gasoline Company.
J. D. Johnston, Hagan & Garvin, John Rogers, Edgar A. deMeules, Owen Owen, Alvin Richards, J.
H. Hill, John R. Ramsey, and W. P. Z. German, amici curiae.

BRANSON, V. C. J.

¶1 The plaintiff herein was E. C. Mullendore. The cause was tried on an amended petition, which, while ingeniously drawn, its allegations, together with its prayer, are somewhat involved, in this, that facts are pleaded on which a recovery as for conversion might be had, but it goes further and prays for ultimate profits made out of the product manufactured from the gas converted.

¶2 The judgment of the trial court was against the defendant Minnehoma Oil Company, and the Oklahoma Petroleum & Gasoline Company, in favor of the plaintiff, E. C. Mullendore, and Jennie Mullendore, R. F. Mullendore, and D. D. Mullendore, named as defendants. This judgment was in the sum of $ 1,000 plus, and was apparently rendered on the theory that the defendant Minnehoma Oil Company, as assignee of the lease from the original lessee, was liable for one-eighth, as royalty, of the value of the casing-head gas, as the royalty clause of the oil and gas lease contract was interpreted by the trial court. Subsequent to the lease, the plaintiff, by purchase, had become the owner of the fee; the defendant Minnehoma Oil Company, by assignment, the owner of the lease. The defendant Oklahoma Petroleum & Gasoline Company, by contract with the said lease owner, had received the casing-head gas produced on the premises from oil wells, and had paid the said lease owner therefor the sum of $ 8,217.42. Before the purchase of the fee by the plaintiff, but after the execution of the lease, D. L. Mullendore, R. F. Mullendore, and Jennie Mullendore, by purchase, had acquired from the then fee owner "an undivided one-sixteenth of all the oil * * * and also an undivided half of all the money derived by the lessor from gas wells upon the described lands."

¶3 As stated above, the allegations of plaintiff's petition might be construed as seeking relief for conversion of the casing-head gas sold as aforesaid by the lease owner to its codefendant, the Oklahoma Petroleum & Gasoline Company, for the sum aforesaid, and by the latter defendant manufactured or distilled into gasoline. But when interpreted in the light of the briefs filed by the plaintiff in this court, it appears that the plaintiff is not contented to rest his recovery upon the conversion of the casing-head gas, but, in addition thereto, seeks a recovery for the value of the ultimate product made therefrom. In his brief he insists upon such double recovery, for that therein he recites that he has elected to waive the conversion and to sue the said defendants for accounting, not for the value of the casing-head gas as taken, at the time and place it was taken, but for the value of the benefits received by defendants by reason of their wrongful acts. In truth and in fact, from other parts of the brief, the conclusion is impelled that plaintiff seeks both the value of the casing-head gas at the time and place it was taken, and also the benefits defendant received which he seeks to have measured by the value of the manufactured product, to wit, the gasoline into which the casing-head gas was distilled. He insists upon a judgment measured by the receipts for the latter by the defendant Oklahoma Petroleum & Gasoline Company on authority of Weems v. Melton, 47 Okla. 706, 150 P. 720, and Farmers' Bank & Trust Co. v. Sheffler, 78 Okla. 44, 186 P. 479, and Nation v. Planters & Mechanics Bank, 29 Okla. 819, 119 P. 977.

¶4 Passing for the moment this contention and reverting to the record, we find that the granting clause of the oil and gas lease conveyed the premises for the sole and only purpose of mining and operating for oil and gas, and the lease further reserved to the lessor, first, one-eighth of all the oil produced and saved from the leased premises, and second, $ 60 per year for the gas from each and every gas well drilled on the premises, the product of which is marketed and used off the premises. In other words, the reservation for the benefit of the fee owner was two fold; first, of the oil, and second, money for gas taken from a gas well. It must be noted that while the granting clause conveys the premises for the purpose of mining and operating for oil and gas, such granting clause is all but immediately followed by a reservation to the lessor of so much of the oil and so much of the gas. Taking them together, we are constrained to believe that the parties contracted as to oil in its ordinary acceptation, and as to gas taken from a gas well as ordinarily understood, and that there was no meeting of the minds of the parties as to that volatile substance commonly known to come from an oil well and technically referred to as casing-head gas.

¶5 The record and the briefs are elaborate as to what the substance referred to as casinghead gas in reality is. They throw no more light on its nature than was presented to the court in the case of Mussellem et al. v. Magnolia Petroleum Co., 107 Okla. 183, 231 P. 526, and we deem that what we said there as to the same sufficeth here. In the said Mussellem Case the lease contained a third clause which provided the fee owner's payment for gas taken from an oil well, and the holding therein turned upon said contractual provision. Such clause, however, is not a part of the instant contract.