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Constantin v. Martin

October 14, 1954

E. CONSTANTIN, JR., APPELLANT,
v.
M. G. MARTIN, M. J. BARRIS, CLARA LEE BARRIS, WARREN S. BLUFSTON, HANNA K. BLUFSTON, H. S. BLUFSTON, IDA BLUFSTON, LENA BURK, WILLMAR A. CHULOCK, AARON W. CHULOCK, M. M. GOLDMAN, DOROTHY GOLDMAN, S. F. GOLDWYN, MILDRED GUTTMAN, EDITH MARKS, ARTHUR M. HOLLAND, ANN HOLLAND, HARRY E. HOLLAND, MAX G. HOLLAND, LILLIAN HOLLAND, GOLDIE JAMESON, LESTER JAMESON, SAM KARLOV, BERNARD MARKS, REBECCA MARKS, HOWARD A. MARTIN, CHESTER ROSENTHAL, THELMA ROSENTHAL, J. L. ROVIN, BERTHA ROVIN, NETTIE SCHACHTMAN, MICHAEL SHEPARD, ALTA W. SHEPARD, DAVID TURNHEIM, ANNA T. KOHN, DOYLE WATSON, LORENE WATSON, GILBERT SCHECHTMAN, HORTENSE G. SHEPARD, PHILIP SHEPARD AND SHELL OIL COMPANY, APPELLEES.



Phillips

Before PHILLIPS, Chief Judge, PICKETT, Circuit Judge, and RITTER, District Judge.

PHILLIPS, Chief Judge.

On February 23, 1949, M. G. Martin and Kenneth A. Ellison, being then the owners of oil and gas leases covering the SW 1/4 and the W 1/2 of the SE 1/4 of S. 18, T. 10 N., R. 20 W., entered into a contract with Constantin, by the terms of which Martin and Ellison agreed to assign to Constantin such oil and gas leases, in consideration of Constantin drilling a well on the tract of land covered by such leases. The contract provided that there should be reserved to the assignors "an undivided 5/14ths of the leasehold estate (being equivalent to 5/16ths of the 8/8ths gross production), and" that "all of the oil, gas and other minerals produced, saved, and sold from said premises and creditable to the interest reserved" should "be delivered by the Assignee to the Assignors free and clear of all costs of developing, equipping and operating said properties, so that said reserved interest" would "be in the nature of a perpetual overriding royalty; but" that "there" would "be deducted from the sale of production to said reserved interest all gross production taxes and other taxes assessed or assessable by proper governing authorities except as hereinafter provided." That the "Assignee" should "have the right to deliver Assignors' share of said products to the pipeline or lines to which it may connect the wells located upon said leasehold tracts." That "Assignors" should "be entitled to receive direct payment for their share of the products sold, and joint division orders or contracts of sale" would "be executed by each of the parties. Provided that upon reasonable notice (not less than thirty days) to Assignee, Assignors" should "have the right to receive in kind or to separately dispose of their share of such production and receive the proceeds therefor, if proper facilities are provided by Assignors in which to receive such production."

Constantin drilled the well and thereafter, on June 14, 1949, Martin and Ellison and their respective wives executed and delivered to Constantin an assignment of such leases, containing the reservation of the overriding royalties in the exact terms provided in the contract. Thereafter, and by mesne assignments, portions of the royalty reserved to Martin and Ellison were transferred to the appellees, other than Martin. The appellees are hereinafter referred to as Martin and others.

On October 27, 1950, the Oklahoma Corporation Commission, by its order, made pursuant to Title 52, Ch. 3b of the Oklahoma Session Laws, 1945, 52 O.S.Supp.1949 ยง 286.1 et seq., created the Elk City Huxbar Sand Conglomerate Unit, composed of 81 tracts, which included the leases referred to above, designated as Tracts 1, 2 and 3.

The Commission, after due hearing, established a plan of unitization. The pertinent provisions of the plan read as follows:

"Definitions

"* * * (e) 'Oil and Gas' shall not only refer to oil and gas as such in combination one with the other, but shall have reference to oil, gas, casinghead gas, casinghead gasoline, gas distillate, or other hydrocarbons, or any combination or combinations thereof, or any one thereof, which may be found in or produced from the Unit Area.

"(f) 'Unit Production' shall mean and include all oil and gas produced from the Unit Area * * * regardless of the well or tract within the Unit Area from which the same is produced.

"(g) 'Lessee' shall mean any owner, in whole or in part, of an oil and gas lease or any unleased mineral interest, who * * * has the right, except for this Plan of Unitization, to explore, develop, and operate a separately owned tract for oil and gas.An owner of an overriding royalty interest, * * * who does not have the right to develop and operate, shall not be regarded as a Lessee.

"(h) 'Unit Operator' shall mean and refer to the lessee designated to carry on and conduct the unitized operations within the Unit Area * * *.

"(i) 'Oil and Gas Rights' shall mean and include the right to explore, develop, and operate lands within the Unit Area for the production of oil and gas, to reduce the same to possession or to share in the production so obtained or the proceeds thereof.

"(k) 'Unit Expense' shall include any and all cost, expense, or indebtedness incurred by the Unit or Unit Operator as authorized by this Plan of Unitization or the order of the Commission creating the Unit.

"V.

"General Powers ...


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