State Ex Rel. Marland v. Phillips Petroleum Co.

PER CURIAM. This is an action commenced by the State of Oklahoma, on the relation of E. W. Marland, then Governor, against the Phillips Petroleum Company, to recover the value of the accrued royalty from four oil and gas wells drilled on state-owned property, known as the “Parkway Tract.” The state-owned land consists of the parkway and streets in Lincoln boulevard south of 19th street and immediately west of blocks 10, 11, 18, and 19, Lincoln Terrace addition, in the city of Oklahoma City, Okla. The State Board of Public Affairs, purporting to act under the provisions of article 4, chap. 20, S. L. 1935, advertised for bids for a lease covering said tract. The advertisement for bids stated that the land would be leased to the highest and best bidder for a royalty of one-fourth of the oil and gas produced, or its market value, and would be let on a bid form and leased on a lease form then on file with the secretary of the board. The lease form was referred to in the advertisement, made a part thereof, and contained the following provisions: “Lessor agrees that this lease and the land covered thereby may be consoli-lated, jointly operated and developed with any other adjacent lease or leases covering any tract, or with any other lands, if required by the lessor and upon such terms as may be required by the lessor (and may be so consolidated, jointly operated and developed by lessee if permitted by lessor), such development and operation to be the same as if lessor and the owners of said other leases or tracts of land had entered into a joint lease covering the land so consolidated in the first instance.” The notice stated that bids would be received up to January 15, 1937, and was first published about December 23, 1936. The bid of Harper and Turner, a partnership, was accepted. A lease on the form mentioned was executed to Harper and Turner, dated February 3, 1937. Shortly thereafter a number of owners of lots in the four blocks in Lincoln Terrace addition delivered a letter to the State Board of Affairs in which, after reciting a number of things which had been done in the course of development for oil and gas on state-owned lands surrounding the Capitol Building, they called attention to their claim that drilling for oil on the Parkway Tract would greatly damage and depreciate the value of their adjoining property, and certainty of drainage of oil and gas from under their premises. This letter was in effect an application for consolidation of their property or leases thereon with the lease on the Parkway Tract on terms which they asserted they had been informed would be agreeable with the State Board of Affairs, including division of the one-fourth royalty on a basis of five-eighths thereof to the state and three-eighths to the lot owners in said four blocks, and concluded with a statement to the effect that unless consolidation could be speedily agreed upon they would resort to the courts in an effort to protect their rights. On or about February 20, 1937, a number of owners of tracts in said blocks in Lincoln Terrace addition executed oil and gas leases covering their respective lots to Sunray Oil Company. On February 20, 1937, the State Board of Public Affairs executed and delivered a letter addressed to the Sunray Oil Company, owners of tracts in blocks 10, 11, 18 and 19, in Lincoln Terrace addition, and the owner of the oil and gas lease on State Parkway property, in part as follows: *631 “You have requested that leases upon lots in Blocks 10, 11, 18 and 19, Lincoln Terrace Addition to Oklahoma City be permitted to be consolidated with the lease upon the State Parkway property. “We have considered the application for consolidation; and in view of the larger drainage area which would be obtained for the State wells upon the Parkway by consolidation with the lots in Blocks 10, 11, 18 and 19, in Lincoln Terrace Addition to Oklahoma City, Oklahoma, we hereby agree that leases upon lots in said blocks may be consolidated with the State Parkway leases, upon the following terms: “ (1) The one-fourth royalty provided in the State Parkway lease shall be divided as follows: “A. Five-eighths thereof shall be paid to the State Board of Public Affairs for the State of Oklahoma. _“B. Three-eighths thereof shall be set aside to the leased area of Blocks 10, 11, 18 and 19, in Lincoln Terrace Addition to Oklahoma City, Oklahoma, and paid to the owners of the lots therein agreeing to the consolidation in the proportion that the area of each lot bears to the total area leased in said Blocks. “(2) It is understood that no wells shall be drilled for oil or gas upon any part of Blocks 10, 11, 18 and 19, Lincoln Terrace Addition to Oklahoma City, Oklahoma, but oil and gas shall be taken from underneath the same by drainage. “Yours very truly, “State Board of Public Affairs of the State of Oklahoma “By L. M. Nichols, Chairman, “A. W. Horton, Vice Chairman” “Attest: “Paul P. Colvert, Secretary, “(Seal)” Each of said leases executed by lot owners, after reciting the execution of the Parkway lease and its purported authority to consolidate, and further reciting that the “... State Board of Public Affairs of the State of Oklahoma has in writing consented to the consolidation of said State Parkway lease with leases on lots in blocks ten (10), eleven (11), eighteen (18) and nineteen (19) in Lincoln Terrace addition to Oklahoma City, Oklahoma, which consent is hereby referred to and made a part hereof as if set out in full herein: ...” contained the following provisions: “. . . Now Therefore, lessor herein agrees that this lease and the land covered thereby may be consolidated, jointly operated and developed with the State Parkway lands above described, and with any other lots in said Blocks Ten (10), Eleven (11), Eighteen (18) and Nineteen (19) in Lincoln Terrace Addition to Oklahoma City, Oklahoma, leased to lessee herein, the same as if the State Board of Public Affairs of the State of Oklahoma and the owners of the lots executing leases to the lessee had entered into a joint lease covering the lands so consolidated in the first instance, it being agreed that the drilling of a well upon any part or portion of said consolidated lands shall constitute and be a full compliance with the terms and covenants of this lease, express or implied, relating to drilling operation hereunder, regardless of where offset wells may be hereafter drilled....” It appears that the British American Company became the owner of a three-fourths interest in the Parkway lease and the Sunray became the owner of a one-fourth interest therein. Phillips Petroleum Company was the purchaser of the oil produced under said lease. Later the Attorney General, in an opinion concerning proposed consolidation of other state land, in effect advised the board that consolidation of the Parkway tract with the lots in said four blocks was not authorized by the Legislature after the Parkway lease had been executed. By a later opinion he advised the board that no valid consolidation could be made. As a result the State Board of Affairs declined to execute a division order based upon consolidation agreement as claimed by the lot owners. Demand was made for payment of the value of the full one-fourth royalty interest to the state. Phillips Petroleum Company, the purchaser, apparently took the position that *632 a valid consolidation agreement had been entered into and refused to accept a division order providing that the full one-fourth royalty be paid to the state. Thereupon this action was commenced ,to collect the full amount. The British American Company and the Sunray Company intervened. The owners of a number of lots in said blocks intervened, and after issues were joined, the cause was tried to the court, resulting in a judgment to the effect that the state was entitled to receive five-eighths of the one-fourth royalty interest reserved in the Parkway lease, and that the individual lot owners in said blocks 10, 11, 18 and 19 were entitled to receive three-eighths of the one-fourth royalty, with certain provisions for lot owners who had not executed leases on their lots. Pending trial below it appears that the Phillips Petroleum Company, under a stipulation, paid to the state the accrued value of oil produced to that time based upon the five-eighths of one-fourth thereof, and has since been and is now paying that part of the value of the oil produced from said wells to the state. Judgment was entered in favor of the state and against Phillips Petroleum Company for interest in the sum of $4,-127.10. From the judgment and decree adverse to the claim of the state, plaintiff appeals. Phillips Petroleum Company by cross-petition in error appeals from the judgment against it for interest. The appeal of the state involves the question of whether the proceeds of the three-eighths of the one-fourth royalty provided in the lease covering the Parkway tract, retained and held by the Phillips Petroleum Company, should be paid to the state or to the owners of the lots in blocks 10, 11, 18 and 19 in Lincoln Terrace addition to Oklahoma City. The question presented requires examination of the acts of the Legislature authorizing the State Board of Public Affairs to. lease the Parkway tract for oil and gas development. The state contends that article 4, chap. 20, S. L. 1935, is the law and the only law under which the Board of Affairs leased the Parkway tract, and that said act did not authorize the Board of Affairs to sell an oil and gas lease thereon in such a manner as to permit the agreed royalty to be divided with others. Defendants in error contend that said act did give the Board of Affairs authority to advertise and sell the oil and gas lease with the consolidation provision therein and to consolidate or communize that lease with leases on other property and divide the royalty accordingly; that said act had been given departmental construction to that effect by the State Board of Public Affairs and the Attorney General, and that article 6, chap. 20, S. L. 1937, page 26, relates to the same subject matter and is in pari materia and not inconsistent with the 1935 act, and is supplemental thereto and gives express authority to consolidate. Section 1 of art. 4, chap. 20, S. L. 1935, provides: “.. . The State Board of Public Affairs is hereby authorized and empowered to sell and execute oil and gas or mineral leases, . . .' on any such property owned by the state, upon the basis of the retention of at least one-eighth (1/8), plus cash bonus, of the royalty in such leases. Such board shall advertise any such lease or leases or drilling contracts for sale for a period of at least twenty-one (21) days in a legal newspaper published and of general circulation in the county where said lands are located and shall award the same to the highest and best bidder; providing that all bidding shall be under sealed bids. The Board of Affairs is authorized to promulgate such additional rules and regulations as may be deemed necessary. All monies derived from the sale of such leases and royalties, or accruing from any other contract so made, shall be converted into the General Revenue Fund of the State. The Parkway tract here involved is within that class of lands held in Lund v. Nichols et al., 177 Okla. 65, 57 P. 2d 592, as being, under the control of the State Board of Public Affairs, and said *633 board was authorized by section 1, art. 4, chap. 20, S. L. 1935, to advertise and sell oil and gas leases thereon, under the terms, conditions, and regulations therein set forth. Authority to lease the Parkway tract is apparently conceded. Bids were opened on January 15,1937, and thereafter the bid of Harper and Turner was determined to be the highest and best bid. But the lease was not executed until February 3, 1937. In the meantime, on January 22, 1937, article 6, chap. 20, S. L. 1937, being Senate Bill No. 49, 16th Legislature, was approved by the Governor with the emergency clause. That act deals specifically with the tract of land here mentioned and none other. Section 1 of said act reads: “.. . The State Board of Public Affairs is hereby authorized and empowered to advertise, sell and execute an oil and gas lease or leases upon the- following described state-owned lands constituting a portion of the State Capitol grounds, to wit: ... In advertising, selling and executing such lease or leases, such board shall follow the provisions and requirements of art. 4, chap. 20, S. L. of Oklahoma, 1935; and such board may provide for the consolidation of such lease or leases with a lease or leases upon other lands under such terms as such board may determine. . . .” Section 2 of said act repeals article 2, chap. 65, S. L. 1935, not material here, and then provides: “. . . and all other acts or parts of acts, in conflict herewith, are hereby expressly repealed; . . .” Section 3 provides: “... The lands described in section one of this act shall be under the exclusive control and jurisdiction of the State of Oklahoma and the zoning and drilling regulations of any municipality of this state shall not apply thereto....” Plaintiff contends that the act of January 22, supra, has no connection whatever with the January 15, 1937, sale of said Parkway lease, and is not pertinent here. As stated before, defendants in error contend that the act of January 22, 1937, supra, relates to the same subject matter covered by the 1935 act, is not inconsistent therewith, but supplements the authority given by the board under the 1935 act; and that the two acts are in pari materia and should be considered together in arriving at the intention of the Legislature. The general rule is that statutes in pari materia are those which relate to the same person or thing or to the same classes of persons or things or which have a common purpose; that in the construction of a particular statute, or in the interpretation of its provisions, all statutes relating to the same subject or having the same general purpose should be read in connection with it as together constituting one law. 59 C. J. 1042-46. In Board of County Commissioners of Creek County v. Alexander, State Treas., 58 Okla. 128, 159 P. 311, it is held: “It is a cardinal rule in the construction of statutes that the intention of the Legislature, when ascertained, must govern, and that to ascertain the intent all the various provisions of legislative enactment upon the particular subject should be construed together and given effect as a whole. . . . Subsequent legislative enactments may be considered as an aid in the interpretation of prior legislation upon the same subject.... When it is apparent that a strict interpretation of a particular statute, construed alone, would defeat the intention of the Legislature as shown by other legislative enactments, which relate to the same subject, and which have been enacted in pursuance of and according to a general purpose in accomplishing a particular result, such construction should not be adopted. . . .” So we have this situation: Bids were advertised by the State Board of Affairs for the State Parkway tract under the provisions of the act of 1935. Bids were opened and the bid of Harper and-Turner was accepted as being the highest and best bid. But before the lease was executed, the act of January 22, 1937, became effective. This act not only *634 gave specific authority to the Board of Affairs to advertise, sell, and execute an oil and gas lease or leases upon the Parkway tract, but it further provided that in advertising, selling, and executing such lease or leases, the board should follow the provisions and requirements of the act of 1935, but for the provisions of section 58, art. 5 of the Constitution of Oklahoma, Okla. St. Ann., as to encumbrances, etc., postponed operation and effect of the Act of 1937, supra, until 90 days after the adjournment of the Legislature. Riley v. Carico, 27 Okla. 33, 110 P. 738. Undoubtedly at the time of the contract of consolidation entered into by the State of Oklahoma and the lot owners of Lincoln Terrace, the Act of 1937, supra, could be viewed and should have been examined to determine the power and authority of the Board of Affairs as existing under the legislative Act of 1935, supra. It then gave the board specific authority to provide for the consolidation of such lease or leases with a lease or leases upon other lands under such terms as such board might determine. It then provided that the lands described therein (the Parkway tract) should be under the exclusive jurisdiction of the State of Oklahoma, and that the zoning and drilling regulations of any municipality of the state should not apply thereto. The act of 1935 and the act of January 22, 1937, certainly relate to the same subject and have the same general purpose. Under the general rule stated in 59 Corpus Juris, supra, and the rule announced in Board of County Commissioners of Creek County v. Alexander, State Treasurer, supra, the two acts are in pari materia and should be read and construed together and given effect as a whole. So far as the power to consolidate the lease with leases on other lands is concerned, the act of January 22, 1937, makes clear and plain the authority which was theretofore considered as implied in the act of 1935. Furthermore, it made plain and positive that the zoning and drilling regulations of the city of Oklahoma City were not to apply to said tract of land. Said act also gave the State Board of Affairs power to decide and fix the terms under which consolidation might be effected. Reading the two acts together as affecting the authority of the board to enter into a consolidation agreement, that power existed at the time the lease on the Parkway property was executed and at the date of the so-called consolidation agreement thereunder the State Board had the right and power to determine or fix the terms of consolidation. The terms so fixed provided that no well or wells were to be drilled on blocks 10, 11, 18, and 19. It then becomes unnecessary to discuss the applicability of the zoning and drilling regulations of Oklahoma City. These regulations could never apply unless and until application is made to drill a well on some part pf the land embraced with the said blocks. Plaintiff contends that if it be conceded that authority for consolidation existed, the consolidation proposed and submitted by the board called for consolidation with leases on all and not merely a portion of the lots in blocks 10, 11, 18, and 19. This contention is not sustained for the reason that the terms of consolidation provided that the one-fourth royalty provided for in the lease should be divided five-eighths thereof to the state and three-eighths shall be set aside to the lease owners of blocks 10, 11, 18, and 19, and said owners of lots therein agreeing to consolidation, in the proportion that the area of each lot bears to the total leased area in said blocks. This, clearly shows that consolidation was intended only with leases on lots whose owners agreed to the consolidation. At that time owners of 31 of the 37 lots had executed leases. How many had at that time agreed to consolidation does not appear. The way was left open for others to lease and agree to the consolidation. At the date of the trial all the owners, with the possible exception of one, had *635 leased and consented to the consolidation or expressed a willingness so to do. A serious question is presented under the contention of plaintiff that plat restrictions in the certificate of dedication of Lincoln Terrace addition prevent lots here mentioned from being consolidated or communized for oil and gas development. In this connection plaintiff cites Southwest Petroleum Co. et al. v. Logan and Southwest Petroleum Co. et al v. Swindall et al., 180 Okla. 477, 71 P. 2d 759, wherein it is held: “A valid restriction that ‘all lots in this plat are restricted to residences only’ prevents the use of such property for the drilling of oil and gas wells.” The actions there involved were to obtain an injunction to prevent drilling operations on certain lots in certain blocks of said addition. This court specifically declined to discuss the question of whether the leases held by the Southwest Petroleum Company were void. Plaintiff cites Cash v. Beveridge, 183 Okla. 310, 82 P. 2d 665, as the most important decision bearing upon the question here presented. Therein we affirmed the trial court in refusing to require communizing of block 21, Lincoln Terrace addition, with block 3, Second State Capitol addition, not within Lincoln Terrace. But in the opinion it is stated: “We base our affirmance, not upon the bar of plat restrictions, but by reason of the exercise of a discretion as to area to be attached.” The plaintiff in that action was the owner of lot 4 in block 21, Lincoln Terrace. Counsel for plaintiff herein calls attention to certain language in the body of the opinion wherein it is said: “Plaintiff does not contend that he could enter into a lease, or in any way subject his land to the ordinary rights of a lessee. At no time since the property was platted and dedicated could he have done so.” Plaintiff asserts that by this holding it is made clear that no lot owner involved in this case has ever had authority to execute a valid oil and gas lease on his lot or to in any way subject his land to the ordinary rights of a lessee. In that case the right of the owner of the lot in block 21, Lincoln Terrace addition, to execute a valid oil and gas lease thereon was not involved. It does not appear that he had executed an oil and gas lease. It was not necessary then to decide whether a valid lease could have been executed. There was no lease and no application to drill on any lot in said block 21. So what was there said with reference to the power to execute a valid lease is obiter dictum. That a lot owner in Lincoln Terrace could not subject his land to the ordinary rights of an oil and gas lease to the extent of drilling an oil and gas well thereon was decided in Southwest Petroleum Co. v. Logan and Southwest Petroleum Co. v. Swindall, supra. We adhere to the rule there announced. But we are not now willing to say that no valid oil and gas lease could be executed by any of the owners of lots in Lincoln Terrace addition under any circumstances. Plaintiff asserts that the “lease or leases upon other lands,” as used in the act of January 22, 1937, supra, meant only leases which would permit the lessees to enter upon the leased premises and to drill for oil thereon. The only land available for consolidation with the Parkway lease was the lots in said blocks 10, 11, 18, and 19. The Legislature must have had that land in view when the law of January 22, 1937, was enacted. This is clearly indicated, so far as the State Senate is concerned, by a Senate Resolution adopted by the State Senate on February 19, 1937, whereby the Senate approved the plan to communize the Parkway tract with the territory located directly east of the Parkway tract in Lincoln Terrace addition, with a division *636 of the one-fourth royalty on the basis of three-eighths to the lot owners and five-eighths to the state, provided it be done under the supervision of the board of adjustment of Oklahoma City. This was not a joint resolution; was not approved by the House of Representatives nor the Governor, and therefore did not have the force and effect of law, but it does throw some light on the intent of the Legislature, or at least the Senate, in adopting the act of January 22, 1937, which bill originated in the Senate. Plaintiff contends that there was no valid consolidation or communization for the reason that the provisions relating to consolidation set forth in the form of lease under which bids were called for and the form of lease actually used in leasing the Parkway tract were not followed. The contentions made, as we understand the position of the Attorney General, are: “(1) That because the Parkway lease provided that the ‘Lessor agrees that this lease and the land covered thereby may be consolidated, jointly operated and developed with any other adjacent tract or with any other lands ... upon such terms as may be required by the lessor... such development and operation to be the same as if a joint lease had been entered into in the first instance,’ and, “ (2) Because the Parkway lease provided: ‘In the event of such consolidation, in computing the square foot acreage, any portion of the lands herein described which may be used for street, passageway or highways, shall be considered within the square foot acreage covered by this lease, and computation shall be made accordingly, and any portion of any tract consolidated herewith, which may be so used for public purposes shall be excluded from the acreage of such tracts and computation shall be made accordingly.’ ” And because the alleged consolidation agreement provides for a division of the one-fourth royalty, five-eighths to the state and three-eighths to the owners of lots in said blocks agreeing to the consolidation, and without reference to the proportional square foot area of the respective tracts or parcels of land, the consolidation agreement conflicts with the provisions of the lease and is therefore void. These contentions are untenable. We have herein pointed out that the zoning and drilling regulations of the city could only be operative when an application was presented for a permit to drill a well on lands within the U-7 zone. After the act of January 22, 1937, became effective the Parkway tract was without the jurisdiction and control of the city under its zoning and drilling regulations, if it had ever been subject thereto. No permit was necessary and the city board of adjustment had no authority whatever over said tract. The act of January 22, 1937, supplemented the act of 1935, and authorized consolidation or communization with a lease or leases on other lands under such terms as the State Board of Public Affairs might determine. The very purpose of consolidation or communization of oil and gas leases covering different lots, tracts, or parcels of land is to enable the owners or lessees to develop the property for oil without requiring a well to be drilled on each separate lot, parcel, or tract; and to determine for themselves how many wells should be drilled and where same should be located, so as to produce the oil and gas with less expense, and to divide the proceeds equitably and in such proportion as they deem advisable. The Board of Affairs was authorized to determine the terms under which consolidation should be effected, and to provide as one of the terms that no well should be drilled on the Lincoln Terrace lots. This would have been true had there been no plat restrictions prohibiting drilling on said lots. The fact that such restrictions did exist did not deprive the board of power to require that the wells be drilled on the Parkway tract. Good and sufficient reasons may well have existed for such requirements without regard to plat restrictions. The provision for dividing the one-fourth royalty, five-eighths to the state *637 and three-eighths to the lot owners of Lincoln Terrace consenting to consolidation, was another express authority given by the act of January 22, 1937, supplementing whatever authority the board had under the 1935 act. Furthermore, there is nothing in the record to show that the square foot area theory was not in substance complied with. Casual examination of the exhibits, without accurate computation of the square foot area of the two tracts, discloses that the area of the lots on Lincoln Terrace, which had been leased, not including any streets, comprises substantially three-eighths and the Parkway tract, including streets, comprises substantially five-eighths of the total area involved. The next contention made by the plaintiff is that there was no valid consideration for the consolidation agreement. It is asserted: (1) That by said agreement the state did not obtain freedom from competing wells on lots in said blocks because plat restrictions prevented such drilling; (2) that it did not obtain increased drainage, since drilling thereon was not only prohibited by plat restrictions but by the express terms of the leases executed by the respective owners; and (3) that the state did not obtain immunity from liability for damages suffered by the owners of said lots from drilling operations on the Parkway tract, because the state is immune both from suit and from such liability. Defendants in error contend that there was a good consideration for the consolidation agreement in that the owners of the lots in said blocks waived and surrendered: (1) The right to drill for oil and gas on said blocks; (2) the right to institute suit to prohibit drilling on the State Parkway property; (3) the right to institute suits for damages, except for negligence, by reason of the drilling of wells on the Parkway property; and (4) the right to obtain waiver of restrictions in Lincoln Terrace addition from all property owners in said addition in order to drill on said blocks. If the surrender of all or any of these alleged rights constituted a good consideration, then the claim of the plaintiff of no consideration must fail. We must consider this question under circumstances and conditions existing at the time rather than under circumstances and conditions which later developed. Section 9440, O. S. 1931, 15 Okla. Stat. Ann. § 106, defines a good consideration as: “Any benefit conferred, or agreed to be conferred upon the promisor, by any other person, to which the promisor is not lawfully entitled, or any prejudice suffered or agreed to be suffered by such person, other than such as he is at the time of consent lawfully bound to suffer, as an inducement to the promisor, is a good consideration for a promise.” Section 9441, O. S. 1931, 15 Okla. Stat. Ann. § 107, further defines a good consideration as: “An existing legal obligation resting upon the promisor, or a moral obligation, originating in some benefit conferred upon the promisor, or prejudice suffered by the promisee, is also a good consideration for a promise, to an extent corresponding with the extent of the obligation, but no further or otherwise.” From the time bids for the lease on the Parkway tract were advertised down to the date of the alleged consummation of the consolidation agreement, there was a heated contest over the right of owners of property in Lincoln Terrace addition to drill for oil and gas thereon. Many of the owners, some 60 per cent, or more, according to the evidence, including some of the owners of lots in said blocks, were insisting on the right to drill notwithstanding plat restrictions. Other owners contended that no such drilling should be permitted, because the resultant depreciation in the value of their property, the inconvenience, noise and noxious vapors, etc., necessarily incident to oil field development, would far outweigh any benefits, and because plat restrictions prohibited such use of the property. The Logan and Swindall Cases were pending. The district court in the Logan Case, supra, on January 11, 1937, held that *638 plat restrictions prohibited drilling on the Lincoln Terrace addition. But that case as well as the Swindall Case was appealed to this court and final decision of that question was not made until September 14, 1937. So at the time there was a claim being asserted in apparently good faith of the right to drill on Lincoln Terrace addition property. But the state was not a party to that controversy. The state had never, so far as the record shows, opposed the right of the owners or any one of the owners of lots in that area to drill for oil and gas thereon. Defendants in error present the rule stated in Fenner et al. v. Sparks, 170 Okla. 556, 39 P. 2d 27, to the effect that a doubtful or disputed claim honestly and in good faith asserted, arising from a state of facts upon which a cause of action can be predicated, with reasonable belief of the party asserting it, may constitute a good consideration for a compromise and settlement, although it may subsequently develop that such claim was unfounded. This rule is not applicable. But it would seem that the consolidation agreement did give rise to a moral if not a legal obligation on the part of the state originating in some benefit, or at least a supposed benefit, to the state in the consummation of the consolidation agreement. Attention is here called to a part of the language used in the letter of the State Board of Affairs of February 20,1937, addressed to the Sunray Oil Company and owners of tracts in blocks 10, 11, 18, and 19, and the owner of the oil and gas lease on the State Parkway property. It reads in part: “You have requested that leases upon lots in Blocks 10, 11, 18 and 19, Lincoln Terrace Addition to Oklahoma City be permitted to be consolidated with the lease upon the State Parkway property. “We have considered the application for consolidation; and in view of the larger drainage area which would be obtained for the State wells upon the Parkway by consolidation with the lots in Blocks 10, 11, 18 and 19, in Lincoln Terrace Addition to Oklahoma City, Oklahoma, we hereby agree that leases upon lots in said blocks may be consolidated with the State Parkway lease, upon the following terms”: Then follows paragraph 1 of the terms which provides for division of the royalty as above set forth. Then follows paragraph 2 of the terms, as follows: “(2) It is understood that no wells shall be drilled for oil or gas upon any part of Blocks 10, 11, 18 and 19, Lincoln Terrace Addition to Oklahoma City, Oklahoma, but oil and gas shall be taken from underneath the same by drainage.” The benefit considered as flowing to the state was “the larger drainage” area which would be obtained by the state. The obligation it undertook to assume in return for such benefit was to permit the consolidation, and one of the conditions was that no wells should be drilled for oil or gas on any part of blocks 10, 11, 18, and 19. Accordingly the owners of some 31 lots executed oil and gas leases, which expressly provided that no wells were to be drilled thereon. By this arrangement the state was assured of the increased drainage area, regardless of how the question of the right to drill on Lincoln Terrace addition should ultimately be decided. The State Board of Affairs was in effect contracting against a possible future holding of the court that the plat restriction did not prohibit drilling on Lincoln Terrace addition, including the four blocks mentioned. It was afterwards held that plat restrictions prohibited such drilling, but in view of the possibility existing at the time that the ultimate decision might have been the other way, it would seem that there was at least a moral obligation on the state to carry out its part of the agreement, sufficient to constitute a good consideration. As to the surrender of the right to institute suit to prohibit drilling on the Parkway tract, the plaintiff urges that the state being immune from suit, the lot owners had nothing of that nature to-surrender or waive. This may be true as to any suit against the state itself, but the-state’s lessees were not immune from such a suit. Action could have been *639 brought against them, which if successful would have been effective to prevent such drilling. So to that extent the lot owners did surrender or waive some right which they might have had to test the right of the state to permit its lessees to drill. Refraining from bringing a suit may furnish a consideration. 13 C. J. 344. The rule as to whether the claim must be an actual valid claim, or only a claim of doubtful validity, is not uniform. The majority rule is stated in 13 C. J. 346, as follows: “The principle followed in perhaps the majority of cases is that one has a right to sue where his claim is reasonably doubtful, and that forbearance to enforce a claim which might reasonably be thought doubtful is a sufficient consideration, on the ground ‘that reality of the claim which is given up must be measured, not by the state of the law as it is ultimately discovered to be, but by the state of the knowledge of the person who at the time has to judge and made the concessions.’ ” Cases are cited from many jurisdictions in support of that rule. A more liberal rule supported by cases cited from a number of jurisdictions stated in 13 C. J. 347, is: “A third view is that one has a right to sue when he believes that he has a good cause of action, that it is enough if plaintiff can show that at defendant’s request he forebore to prosecute a claim which he believed to be well founded, and that it is no answer to show that the claim was not well founded or was not even reasonably doubtful.” Under the facts and circumstances existing at the time, we hold that there was good consideration in support of the consolidation agreement. There was no error in upholding the consolidation or communization agreement. By its cross-appeal Phillips Petroleum Company assigns as error the action of the trial court in rendering judgment in favor of the state for interest on the sum representing five-eighths of the one-fourth royalty accrued from and after June 2, 1937. Although the state claimed the entire one-fourth royalty, its ownership of three-eighths of said one-fourth was disputed. The trial court was under the impression that interest was due the state on the sum representing the five-eighths, aforesaid from the time the same became payable, and rendered judgment accordingly. The general rule is that in order to stop the running of interest, tender of the principal debt must be made at the proper time and place. 33 C. J. 241, § 146. If interest is to be avoided in such case, the debtor must tender the entire amount due. Tender of a lesser sum will not relieve him of interest on the amount tendered. Krauss v. Potts, 53 Okla. 379, 156 P. 1162. The tender must be unconditional and in an amount sufficient to cover the demand. Muldoon v. Hostuttler, 96 Okla. 288, 222 P. 513. In Krauss v. Potts, above, the court held as follows: “The tender of a less sum than is actually due will not prevent the running of interest thereafter on the whole principal, as though tender had been made.” And in the Muldoon Case we held: “In order to successfully plead a tender of payment in an action upon a money demand, the tender must be unconditional, and must be of such amount as to cover the demand.” The uncontradicted evidence shows that Phillips Petroleum Company was ready and willing at all times to pay the state the full amount representing five-eighths of the one-fourth royalty accrued. It suggested a stipulation between all the parties to clarify the claims of ownership in the royalty; it submitted a division order, but the state failed or refused to take any part in these matters; at no time did it manifest an interest in an attempt to agree upon a payment of the five-eighths of the one-fourth. Nor was there any indication of a desire or willingness on its part to accept a tender of the five-eighths had such tender actually been made. The state’s demand was the full one-fourth royalty at all times. There is no evidence *640 that it ever relinquished that demand or indicated a willingness to alter the same. In those circumstances it was impossible for the company to make an unconditional tender of the demand. The state’s demand was all the royalty. A tender of a lesser sum would have been a conditional tender. There was no legal duty on the part of the company to tender all the demand. And an actual tender of the ñve-eighths could have been accepted only conditionally on the part of the state. That is evident in the light of the claims of the other parties'. And it is clear that the state at no time would have accepted a tender of the ñve-eighths except on conditions special to itself. It was not the obligation of the company to make a tender with conditions suitable to the state, especially in the absence of a demand specifying the conditions. It has been said that a formal tender is not dispensed with by a mere assertion, without more, of a claim in excess of the actual amount due, for a tender of the proper sum might be accepted. Curtis v. Wilson, 181 Okla. 23, 72 P. 2d 383; 62 C. J. 660. But that rule is ordinarily applied only where there is a dispute between the debtor and creditor as to the amount due. It cannot apply in cases like the instant one where third parties are claiming a specified portion of the amount demanded, and it is also made to appear conclusively that a tender of the portion not claimed by the third parties will be accepted only on condition that such acceptance shall not prejudice the creditor’s claim to the balance of the amount demanded. The debtor is under no obligation to make such a conditional tender, and in fact is without power to make such a tender in the absence of consent of the third party claimants. It is not the debtor’s duty to bring the claimants to an agreement concerning their legal rights. The judgment against the Phillips Petroleum Company for the interest is therefore reversed. All the Justices concur in the affirmance of the judgment on the appealed cause, except WELCH, C. J., and OS- BORN and ARNOLD, JJ., who dissent. All the Justices concur in the reversal of the judgment on cross-appeal, except WELCH, C. J., and RILEY and ARNOLD, JJ., who dissent.