SUPERIOR OIL CO. v. GRIFFITH, ET AL

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Docket Number

No. 38414.

Judges

Lee, J. (specially concurring).

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SUPERIOR OIL CO. v. GRIFFITH, et al.

On the original submission:

Wells, Thomas, Wells Smith, for appellant.

I. There is substantial evidence to support the finding of the Board in order No. 234-50 that the lands comprising Units 37 and 50 had theretofore been duly and legally established as drilling units. Secs. 4(1), 9(b), 10(a), Chap. 256, Laws 1948; Chap. 220, Laws 1950; Sec. (d), Chap. 305, Laws 1936, (Sec. 6140(d), Code 1942); Placid Oil Co. v. North Central Texas Oil Co., 19 So.2d 616.

II. Drilling Units 37 and 50 were established after notice and hearing as required by law. Secs. 9(b), 10(a), Chap. 256, Laws 1948; Caruthers v. Panola County, 205 Miss. 403, 38 So.2d 902, 905; 31-A Texas Jurisprudence 746, Oil and Gas, Sec. 426; Railroad Comm. v. Humble Oil and Refining Co., 101 S.W.2d 614; Shell v. Railroad Comm., 137 S.W.2d 797; Railroad Comm. v. Shell, 164 S.W.2d 773; Sun Oil Co. v. Potter, 182 S.W.2d 923; Rabbit Creek Oil Co. v. Shell Petroleum Corp., 66 S.W.2d 737; Croxton v. State, 97 P.2d 11; Palmer Oil Co. v. Phillips Petroleum Co., 231 P.2d 997; Placid Oil Co. v. North Central Texas Oil Co., 19 So.2d 616, 622; Ohio Oil Co. v. Kennedy, 28 So.2d 504; Everett v. Phillips Petroleum Co., 51 So.2d 87.

III. The State Oil and Gas Board had jurisdiction to order integration of all separately owned interests in and to the gas underlying the lands comprising Units 37 and 50 and to require that said lands and interests in each unit be developed and operated as a single gas drilling and producing unit. Sec. 10(a), Chap. 256 Laws 1948; Chap. 220, Laws 1950.

A. There was an established drilling unit.

B. There were two or more separately owned tracts within the drilling unit.

C. The parties did not agree to integrate their interests.

D. The order requiring integration will prevent waste or avoid the drilling of an unnecessary well.

IV. The Board properly held that Units 37 and 50 had been established even though all statutory requirements may not have been met.

V. For the Board to hold that Units 37 and 50 had not been established would be to deny appellant those rights guaranteed it by the Constitution of the United States and the State of Mississippi. Secs. 14, 16, 17, Mississippi Constitution; Amendments XIV, V, United States Constitution; Bernstein v. Bush, 177 P.2d 913; Article I, Sec. X, United States Constitution.

Livingston Livingston, and Hall Callender, for appellees.

I. The record conclusively shows that Unit No. 37 has never been legally established as a drilling unit and that the State Oil and Gas Board was without jurisdiction to order compulsory pooling of separately owned tracts therein. 3 Summers Oil and Gas, Perm. Ed., p. 486, Sec. 601; Koenig v. Calcote, 199 Miss. 453, 25 So.2d 763; Moore v. Grillis, 205 Miss. 865, 39 So.2d 505; Sinquefield v. Valentine, 159 Miss. 144, 132 So. 81; Chism v. Hollis, 152 Miss. 772, 118 So. 713; Lloyd's Estate v. Mullen Tractor Equipment Co., 192 Miss. 62, 4 So.2d 282; Chap. 220, Laws 1950; Chap. 117, Laws 1932; Chap. 154, Laws 1934; Chap. 305, Laws 1936; Secs. 7(b), 9(b), Chap. 256, Laws 1948; 12 Am. Jur. 267; South Mississippi Airways v. Chicago Southern Airlines, 200 Miss. 329, 26 So.2d 455; Jefferson County v. Grafton, 74 Miss. 435, 21 So. 247; 36 L.R.A. 798, 60 Am. St. Rep. 516; Pike County v. Bilbo, 198 Miss. 775, 23 So.2d 530; G. S.I.R. Co. v. Railroad Comm., 94 Miss. 124, 49 So. 118; State Oil Gas Board v. Superior Oil Co., 202 Miss. 139, 30 So.2d 589; Sec. 829, Code 1942; Bruce v. Ohio Oil Co., 169 F.2d 709; Knight v. Chicago Corp., 183 S.W.2d 666; Mueller v. Sutherland, et al., 179 S.W.2d 801; Dailey v. Railroad Comm., 133 S.W.2d 219; Pickens v. Ryan Consol. Petroleum Corp., 219 S.W.2d 150; 19 Am. Jur. 818; Gift v. Love, 164 Miss. 442, 144 So. 562, 86 A.L.R. 63; Eastman Oil Mills v. State, 130 Miss. 63, 93 So. 484; Humble Oil Refining Co. v. Trapp, 194 S.W.2d 781.

II. The record conclusively shows that Unit No. 50 has never been legally established as a drilling unit and that the State Oil and Gas Board was without jurisdiction to order compulsory pooling of separately owned tracts therein. Standard Oil Co. v. Crane, 199 Miss. 69, 23 So.2d 297; Sec. 12(a), Chap. 256, Laws 1948; California Co. v. State Oil Gas Board, 27 So.2d 542; Sec. 9(c), House Bill 80; Dailey v. Railroad Comm., 133 S.W.2d 219.

III. No complete cause of action for compulsory unitization of appellees' separately owned tracts existed at the time of commencement of this action. Sec. 10(a), Chap. 256, Laws 1948; Chap. 220, Laws 1950; Jackson County v. Meaut, 185 Miss. 235, 189 So. 819; Ashcraft v. Board of Supervisors, 204 Miss. 65, 36 So. 820; Forman v. Mississippi Publishers Corp., 195 Miss. 90, 14 So.2d 344; Miller v. Fowler, 200 Miss. 776, 28 So.2d 837.

IV. The State Oil and Gas Board lost jurisdiction of docket No. 99-50-9, when it failed to render its final order within thirty days after the hearing was concluded. Sec. 7(f), Chap. 256, Laws 1948.

V. The final order entered by the State Oil and Gas Board in docket No. 99-50-9 violates the constitutional guaranties against the impairment of the obligations of contracts. 2 Summers Oil and Gas, Perm. Ed., 301; Gulf Refining Co. v. Stanford, 202 Miss. 602, 30 So.2d 516; Pryor v. Goza, 172 Miss. 46, 159 So. 99; Gas Ridge, Inc. v. Suburban Agricultural Properties, Inc., 150 F.2d 363; Baldwin v. Blue Stem Oil Co., 106 Kan. 848, 189 P. 920; Berline v. Waldschmidt, 156 P.2d 865; 31-A Texas Jurisprudence (Oil Gas) 285-6; California Co. v. State Oil Gas Board, 200 Miss. 849, 27 So.2d 542; Brown v. Humble Oil Refining Co., 83 S.W.2d 935, 99 A.L.R. 1107; Dailey v. Railroad Comm., 133 S.W.2d 219; Railroad Comm. v. Magnolia Petroleum Co., 130 Tex. 484, 109 S.W.2d 967; Gulf Land Co. v. Atlantic Refining Co., 131 S.W.2d 73; Pickens v. Ryan Consolidated Petroleum Corp., 219 S.W.2d 150.

VI. Appellees' response to contentions made in appellant's brief. Secs. 9(b), 10(a), Chap. 256, Laws 1948; Brown v. Humble Oil Refining Co., 83 S.W.2d 935, 99 A.L.R. 1107; Frost-Johnson Lbr. Co. v. Sallings Heirs, 91 So. 207; Liles v. Texas Co., 166 La. 293, 117 So. 229; Wright v. Imperial Oil Gas Products Co., 177 La. 482. 148 So. 685; Louisiana Act No. 225 of 1936; Chap. 220, Laws 1950; Placid Oil Co. v. North Central Texas Oil Co., 19 So.2d 616; Mueller v. Sutherland, 179 S.W.2d 801; Ohio Oil Co. v. Kennedy, 28 So.2d 504; Everett v. Phillips Petroleum Co., 51 So.2d 87; Crichton v. Lee, 209 La. 561, 25 So.2d 299; Bernstein v. Bush, 177 P.2d 813; Brown v. Humble Oil Refining Co., 93 S.W.2d 935, 99 A.L.R. 1107; Dailey v. Railroad Comm., 133 S.W.2d 219; Griffis v. Martin Oil Co., 127 Miss. 606, 90 So. 324; Lee v. Memphis Pub. Co., 195 Miss. 264, 14 So.2d 351.

Appellant in reply.

I. Appellees have no right of appeal. Davis v. Shemper, (Miss.), 50 So.2d 143; Lindheimer v. Illinois Bell Telephone Co., 292 U.S. 151, 176, 54 S.Ct. 668; In re Schwartz, 89 Fed. 2d 172; Thomas and Betts Co. v. Electrical Fittings Corp., 100 F.2d 403; 5 C.J.S. 223, Sec. 1510; 3 Am. Jur. 423, Sec. 874.

ON SUGGESTION OF ERROR AND AS TO UNIT 50. Livingston Livingston, and Hall Callender, for appellees.

I. The State Oil and Gas Board has exclusive jurisdiction to make a conservation order; the courts have power only to affirm or reverse an order made by the Board.

In connection with their appeal from the integration order to the circuit court of Jefferson Davis County, the appellees filed an assignment of error and among other errors the appellees assigned the error of the Board in ordering the integration of interests in 20 acres of noncontiguous lands. The circuit court reversed and remanded the order upon other grounds assigned by appellees.

The court has no power or jurisdiction to make a conservation order, that power being vested exclusively in the State Oil and Gas Board. Sec. 12(a), Chap. 256, Laws 1948, provides that on appeal to the circuit court from a rule, regulation or order entered by the Board "the said circuit court may affirm such rule, regulation or order, or reverse same for further proceedings as justice may require." The statute does not authorize the court to approve a part of the order and disapprove the remainder, thereby creating a different order from that made by the Board. A conservation order is an entirety; the court cannot affirm a part and reverse and remand a part.

Under the facts in this record can it be said that this was a scrivener's error? We think not. Should the appellees be compelled by process of this Court to pay the enormous cost of a scrivener's error — if it were such an error — repeatedly made by appellant, when the appellees specifically brought the discrepancy to the attention of the Board and of the appellant during the trial? We can see no fairness in this.

If the discrepancy was a scrivener's error, as said by the Court, we nevertheless believe that only the State Oil and Gas Board has the power to correct the error. For the Court to change the Board's order in any particular is to make a new and different order, and there is no such power in the Court. And, particularly, in this instance, the Court has no power to approve and affirm the integration of interests in 300 acres of land, because the established unit must contain 320 acres of land. We earnestly submit, with deference, that the Court should have affirmed the judgment of the lower court in reversing and remanding the order, because it is only in that way that the error — if it be an error — may be properly corrected by the Board, the author of the order. The Court in its opinion said that "other means of correction are readily available", but we must confess that we have been unable to find in the authorities any other means of correction. Appellant's able counsel were apparently unable to find any authority for correcting the order by any other means, for they certainly cited none in their briefs; and it is significant to note that the Supreme Court did not cite in its opinion any authority for correcting the order by other means. The appellant has not undertaken to correct the order by any other means and the order has stood as the Board entered it, until this Court issued its opinion withholding approval of a part of the order. We respectfully submit that the only lawful and orderly means by which the vice in the order can be eliminated is by remanding the order to the State Oil and Gas Board with directions to correct the discrepancy.

The circuit court had no jurisdiction, on review of the order of the Oil and Gas Board, to take any action other than to affirm the order or reverse it for further proceedings by the Board as justice may require. This was explicitly held in California Co. v. State Oil Gas Board, 27 So.2d 542.

In Texas the regulatory body having jurisdiction over the oil and gas industry is the Texas Railroad Commission. In that state the remedy to test the validity of an order issued by the Commission is an independent suit. In Texas, as in Mississippi, the court has no power to write a new order for the Commission. 31-A Texas Jurisprudence, Sec. 437, p. 772.

We respectfully submit that when the Supreme Court struck down a part of the order but undertook to affirm the remainder, it thereby wrote a new order for the Commission, and one which the Commission itself could not have written, because its rules and regulations prescribed the size of gas units to be 320 surface contiguous acres. Brown v. Humble Oil Refining Co., (on rehearing), 87 S.W.2d 1069, 101 A.L.R. 1393; Corzelius v. Harrell, 143 Tex. 509, 186 S.W.2d 961; Chenoweth v. Railroad Commission, 184 S.W.2d 711.

1. Oil and gas — integration order — noncontiguous lands.

The lands integrated into a gas drilling unit must be contiguous, so that an integration order, which includes 20 acres of noncontiguous land in the unit, renders the order invalid as to the entire unit in question.

2. Oil and gas — integration order — number of acres per drilling unit.

A drilling unit for gas must consist of not less than 320 acres, unless the granting of an exception was justified, and the unit must consist entirely of contiguous land, hence when a drilling unit is attempted to be established by adding to 300 acres of contiguous land 20 noncontiguous acres, the order is invalid as to the entire unit.

3. Oil and gas — integration order — amendment or substitution on appeal — administrative law.

In the situation outlined in the foregoing headnote, the courts on appeal will not amend or modify the order of the Oil and Gas Board by striking out the noncontiguous 20 acres, and substituting therefor 20 acres of contiguous land, since such power rests exclusively with the administrative agency, besides which the extent of the authority of the courts on appeal from such an order is to affirm or reverse.

4. Oil and gas — integration by agreement.

The Oil and Gas Board has no authority to integrate noncontiguous land into a drilling unit, and the parties may not, by any form of consent, confer any such jurisdiction.

5. Oil and gas — reversal of integration order — rights of party in interest to further proceedings before Oil and Gas Board.

When an integration order has been reversed because 20 acres of noncontiguous land was included in the 320 acre drilling unit, the reversal will be without prejudice to the right of any party in interest in the 300 acres to institute further proceedings before the Oil and Gas Board to obtain a valid order of integration of the lands and leases in the unit, although he may have no interest in the noncontiguous 20 acres erroneously included or in the 20 acres necessary and proposed to be substituted.

Headnotes as approved by McGehee, C.J.

The original opinion was as follows:

Alexander, J.

This case involves a forced pooling of gas Units 37 and 50 in the Gwinville field. The lands of appellees had been under mineral leases which contained no pooling agreements. These appellants contested the integration order of the Oil Gas Board.

The petition to integrate the leases of appellees was filed shortly before the expiration of their respective primary terms but the order of integration was entered afterwards.

Appellees in their answer to the petition before the Board, joined in the prayer for integration but on condition that it be declared or assumed that the pooling order integrated them as unleased lands, or otherwise expressed, as lands upon which the mineral leases had expired. In this and other respects the facts and contentions are the same as those found in Hutchins v. Humble Oil and Refining Company, Miss., 59 So.2d 103. For the reasons stated therein and in Superior Oil Company v. Foote, Miss., 59 So.2d 85 we must reverse the judgment of the circuit court and uphold the order of the Board, but likewise without adjudicating the effect of such order upon the nature or extent of the rights of the respective owners.

We take note of the alleged error in the description of a twenty-acre strip of land incorporated in the order as being in Unit 50 which was properly described in the plat filed with the Board and the joint operating contract as being the "West 20 acres of the NE 1/4 of Section 32" in Township 9 N, Range 18 W, Jefferson County, Mississippi, but was erroneously described in the order as the "East 20 acres" etc. The latter description covers a wholly disconnected parcel and was improper and clearly a scrivener's error. We take no action thereon except to withhold approval of that part of the order. Other means of correction are readily available and such oversight was in no way prejudicial to the appellees who did not own the east 20 acres as described. Moreover, neither the appellant, as lessee of the latter tract nor the lessors thereof, are claiming any share in the production from Unit 50.

Reversed and judgment here.

McGehee, C.J., and Roberds, Holmes, Arrington and Ethridge, JJ., concur.

Hall and Kyle, JJ., being disqualified, took no part.

McGehee, C.J.

When the former opinion was rendered in the above styled cause on May 26, 1952, Miss., 59 So.2d 104, our attention was engaged primarily with the questions discussed in Superior Oil Company v. Foote, Miss., 59 So.2d 85, 844, and Hutchins v. Humble Oil Refining Company, Miss., 59 So.2d 103. There were six cases, including the instant case, and the two cases above mentioned that were decided at that time.

This case involved both Units 37 and 50 in the Gwinville Oil Gas Field. The decisions in the Hutchins and Foote cases, supra, were controlling on the question of whether these two units had been established to the extent of conferring upon the State Oil Gas Board the jurisdiction to entertain the petition for compulsory integration. They were also controlling as to the legality of the integration order as to Unit 37, above mentioned, and would have been controlling as to the legality of Unit 50 except for the factual situation set forth in the last paragraph of our former opinion.

The Suggestion of Error filed by the appellees, B.C. Griffith et al., does not challenge the correctness of the former opinion in holding that the integration order of Unit 37 was valid. These appellees had appealed to the circuit court from the decision of the State Oil and Gas Board as to both Units 37 and 50 and that court reversed the decision of the State Oil and Gas Board and rendered a judgment setting aside the integration order as to both of these units. This action rendered it necessary for the appellant, Superior Oil Company, to prosecute this appeal. We reversed the action of the circuit court as to both units in our former opinion, and in effect reinstated the integration orders of the State Oil Gas Board as to both units. We have concluded, after a study of the briefs filed both pro and con on the Suggestion of Error, that we were in error in reversing the circuit court and rendering a judgment here in favor of the Superior Oil Company as to the validity of the integration order so far as Unit 50 is concerned, and for the following reasons:

The correct description of the lands that were to have been included in the 320 acres to comprise Unit 50 is the "NW 1/4 and the West 20 acres of the NE 1/4 of Section 32; SE 1/4 of SE 1/4 and S 1/2 of NE 1/4 of SE 1/4 of Section 30 and S 1/2 SW 1/4 of Section 29-T9N-R18W, Jefferson Davis County, Mississippi." The lands were so described on the plat filed and approved by the State Oil Gas Board, as well as in the operating agreements and the recorded designation of the unit prior to the filing of the petition for compulsory integration. These were the lands to which the Board assigned the allowables for each month since February 1950, and were evidently the lands that the appellant, Superior Oil Company, intended to describe in its petition for integration and in the notice published to the interested parties prior to the order of integration appealed from, but by inadvertence that portion of the description hereinbefore set forth reading "and the West 20 acres of the NE 1/4 of Section 32" was described in the petition for integration, and in the notice published in that behalf, and also in the integration order of the Board as "the East 20 acres of the NE 1/4 of Section 32." That 20 acres of the NE 1/4 of Section 32 is contained in Unit No. 59, and it is asserted in the brief of the Oil Company and not controverted in the brief of the appellees that there is a producing gas well located on such 20 acres in Unit 59, and that this 20 acres is noncontiguous to the remaining 300 acres described in the integration order of Unit 50.

The field rules for the Gwinville Oil and Gas Field provide that: "A gas well must be located on a drilling or producing unit consisting of not less than 320 surface contiguous acres upon which no other drilling or productable well in the same pool is located". (Italics ours.) These rules were promulgated by the Board pursuant to the authority of a legislative enactment. (Hn 1) Moreover, it is conceded by the appellant Oil Company that the Board is without authority to integrate noncontiguous lands into the same unit.

It follows that the integration order describing this noncontiguous East 20 acres of the NE 1/4 of Section 32 as a part of the 320 acres that were to form unit 50, instead of describing therein the West 20 acres thereof, was beyond the power of the Board to make, and that the integration order as it relates to Unit 50 is therefore invalid.

It will be noted that in the last paragraph of our former opinion, when referring to the inclusion of this noncontiguous 20 acres in the integration order, we said [59 So.2d 105]: "We take no action thereon except to withhold approval of that part of the order." (Hn 2) We have now concluded that we are in error in affirming the order as to 300 acres and withholding our approval as to 20 acres since it was necessary that the unit be 320 acres unless the granting of an exception was justified, and in this instance the conditions for an exception did not exist.

The theory and philosophy of the spacing rules and regulations adopted by the Board, and the finding of the Board, is that one gas well will efficiently drain an area of 320 contiguous acres on which the well is located. The said East 20 acres is located one-half mile away from the remaining 300 acres, and it is conceded in the brief of the appellant Oil Company that the said East 20 acres is entitled to participate in the production from the well located thereon in Unit 59, and it can not therefore be legally a part of Unit 50 with the right to participate, according to the record, in the production from the well on the said unit.

(Hn 3) But we are asked by the appellant to modify the order of the State Oil Gas Board so as to include therein the West 20 acres of the NE 1/4 of Section 32 instead of the East 20 acres thereof. To do this would amount to the adoption of an integration order by this Court, and one different to that entered by the State Oil Gas Board. Moreover, no petition for integration has asked the Board to integrate the West 20 acres into Unit 50 and no published notice in that behalf has been given as required by Section 7(b), Chapter 256, Laws 1948. As to our lack of authority to substitute a different integration order for that entered by the Board, see 31-A, Texas Jurisprudence, Section 437, p. 772, and Brown v. Humble Oil Refining Company, 126 Tex. 296, 87 S.W.2d 1069, 101 A.L.R. 1393, holding that such power rests exclusively with the administrative agency.

Furthermore, Section 12(a), Chapter 256, Laws of 1948, provides that on appeal to the circuit court from an order entered by the Board "the said circuit court may affirm such rule, regulation or order, or reverse same for further proceedings as justice may require." We are of the opinion that this is likewise the extent of our authority on appeal here from such order.

(Hn 4) It is further urged by the appellant that appellees are not in position to complain about the error for the reason that they admitted in their answers that Unit No. 50, as designated and approved by the Board (prior to the filing of the petition for integration), consisted of the lands described in the petition and that the appellees joined in the prayer of the petition for the integration. The fault with this contention is that the appellees could not validly agree to the integration of noncontiguous land. They could not by agreement confer such jurisdition upon the Board. In joining in the prayer for integration, the appellees did so on condition that the integration order would deal with the land as being unleased where the primary terms of the leases had expired prior to the entry of such order. But this qualification in the answer is mentioned for the sake of the record and not as being material to the decision of the question involved on this Suggestion of Error.

As to the admissions contained in the answers of the appellees in the foregoing respect, the record discloses that at the hearing before the Oil Gas Board counsel for the appellees called attention to the fact that "There is a discrepancy as to 20 acres of land in Section 32 as being included in Unit No. 50 * * *", and whereupon counsel for the appellant stated "We would like to ask permission to amend if that is correct." No response was made by the Chairman of the Board and no amendment was ever made, and the discrepancy was assigned for error afterwards in the appeal of the appellees to the circuit court, and was again urged in defense of the appeal to this Court. Even if it be true that counsel for the appellees should have gone into further detail by pointing out what the discrepancy consisted of, and that the petition for integration and notice published had described a noncontiguous 20-acre tract as a part of the 320 acres to be integrated, this would not do away with the fact that this Court can not now substitute another 20 acres in the integration order, especially where such other 20 acres were not mentioned in the petition for integration or in the notice published in that behalf.

(Hn 5) We therefore adhere to the former decision wherein we reversed the decision of the circuit court and entered a judgment here for the appellant Oil Company as to the validity of the integration order for Unit 37, and we withdraw our former opinion to the extent that the same reverses the order of the circuit court wherein that court had reversed the order of the State Oil Gas Board as to the integration order of Unit 50, and we now affirm the action of the circuit court as to said Unit 50 and remand the cause without prejudice for such further proceedings before the State Oil Gas Board that any person interested may desire to institute for obtaining a valid order of integration of the lands and leases in said unit, it being our opinion that the appellees, or at least the appellee, Mrs. Mabell G. Magee, have a sufficient interest in having Unit 50 legally integrated as to be entitled to raise this issue of discrepancy, even though none of the appellees own any interest in either of the 20 acres in regard to which the error occurred.

The costs on this appeal will be taxed one-half against the appellant and one-half against the appellees.

Suggestion of error sustained to the extent stated in the foregoing opinion.

All judges concur except Hall and Kyle, JJ., who, being disqualified, took no part.

Lee, J. (specially concurring).

In view of the fact that the appellees joined in the prayer for integration, which they obviously had the right to do, I concur in the result reached.

The opinion on the suggestion of error was as follows:

SUPERIOR OIL CO. v. GRIFFITH, et al.

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