Continental Oil Co. v. Elks National Foundation

MR. JUSTICE WEBER delivered the Opinion of the Court. This is an application for a writ of supervisory control under Rule 17, M.R.App.P. It follows a summary judgment by the District Court for the Sixteenth Judicial District, Fallon County, which adjudicated the ownership of the working interest in an oil and gas lease. We accept supervisory control and reverse the judgment of the District Court. The issue is whether this Court should issue a writ of supervisory control to determine the extent of Continental Oil Company’s ownership in the oil and gas lease. This case was before the Court previously as Gunnip v. Continental Oil Co. (Mont. 1986), [223 Mont. 141,] 727 P.2d 1315, 43 St.Rep. 1605. That opinion sets forth the complicated history of the ownership of the working interest in the NVi of the NW'/i of Section 8, Township 7 North, Range 60 East. In all discussion in this opinion, we are referring to that working interest. In the Gunnip opinion, this Court indicated the ownership of the working interest, as established in the previous judgments relating to the property, as follows: half of the NVfeNWVi in H.W. McDonald, subject to a 1962 ratification agreement with Continental Oil Company (Continental), and the other half of the N14NWV4 in Frank Gunnip. Gunnip, 727 P.2d at 1316. The Court remanded the case to District Court for joinder of essential parties and “to assess Continental’s interest considering potential application of adverse possession, waiver and estoppel.” Gunnip, 727 P.2d at 1317. The plaintiffs in the present case trace their ownership in the NV&NWV4 to conveyances from H.W. McDonald subsequent to the 1962 ratification agreement. The effect of the 1962 ratification agreement was argued on remand. The District Court ruled that the intent of the parties to the ratification was that Mr. McDonald conveyed to Continental one half of his interest in the NV&NWV4. It ruled that the ownership of the NVfeNW^ is as follows: one half in Frank Gunnip and his assigns, one fourth in plaintiffs, and one *440 fourth in Continental. Continental filed a notice of appeal to which plaintiffs objected because certification had not been obtained from the lower court as required by Rule 54(b), M.R.Civ.P. We allowed an opportunity for the lower court to certify its partial summary judgment, but the court declined to do so. Continental now asks this Court to exercise its power of supervisory control. At oral argument, counsel for plaintiffs joined in the request that this Court determine the interest of Continental in the NV4NWV4. Frank Gunnip and his assign Robert Schwinn, who were formerly plaintiffs, have obtained separate counsel and have been redesignated by the lower court as defendants. They have filed a third-party complaint below, asserting their right to one half of the working interest in the NVfeNWVi. In their brief to this Court, they take no position on the application for supervisory control but ask that their one half interest in the working interest in the NV&NWV4 be acknowledged. Should this Court issue a writ of supervisory control to determine the extent of Continental’s ownership in the oil and gas lease? Our caselaw has set forth the standard to be employed in determining whether supervisory control under Rule 17, M.R.App.P., is warranted. Supervisory control is proper to control the course of litigation when the lower court has made a mistake of law or willfully disregarded the law so that a gross injustice is done and there is no adequate remedy by appeal; also, to prevent extended and needless litigation. State Highway Com’n. v. District Ct., Thirteenth J.D. (1972), 160 Mont. 35, 42-43, 499 P.2d 1228, 1232. As the opinion in Gunnip stated, the 1962 ratification agreement signed by Mr. McDonald provided that: “. . . the undersigned, H.W. McDonald, does hereby ratify, adopt and confirm said assignment, in all things with the same force and effect as if the undersigned had been named the assignor therein and had duly executed and delivered said assignment to Continental Oil Company. “For the same consideration, the undersigned does hereby transfer, assign, set over and convey unto Continental Oil Company an undivided one-half (V2) interest in the oil and gas lease above described Gunnip, 727 P.2d at 1316. The plaintiffs argued here, as they did before the District Court, that the ratification is ambiguous so that a court must look beyond the four corners of the document to inter *441 pret it. The Court was not persuaded by that argument in Gunnip, nor is it now. We stated: “There remain unresolved issues of material fact regarding the interest of Continental. Although McDonald conveyed an ‘undivided one-half interest’ in the Lease under the ratification agreement, Continental admits in its brief that it did not treat its 50% interest in the NVá of the NWVi as being derived solely from McDonald until judgment no. 4062 was entered. In 1964 McDonald assigned undivided interests to Huntley, Iverson, and Larson. Huntley, Iverson and Larson have claimed under this assignment adverse to the interest Continental now claims under the ratification agreement. A trial must be held to assess Continental’s interest considering potential application of adverse possession, waiver and estoppel.” Gunnip, 727 P.2d at 1317. In the above quotation, this Court recognized that the ratification conveyed an “undivided one-half interest” in the lease. Then, as now, we found no ambiguity in the ratification agreement. We remanded so that adverse possession, waiver, and estoppel could be considered as theories under which Continental might have subsequently lost or forfeited any portion of its one-half interest. The District Court ignored this Court’s opinion and reconsidered the effect of the ratification agreement. We therefore grant supervisory control. We have considered all materials and evidence submitted by plaintiffs, including copies of certain oil division orders and correspondence between Continental and plaintiffs’ attorney. We have considered whether those might support a theory of adverse possession, waiver, or estoppel against Continental. However, we find nothing to indicate that Continental has relinquished its claim to any portion of one half of the working interest in the NVfeNWVi. The documents reflect Continental’s mistaken reliance, at that time, on the validity of interests claimed by Vernon Eide and J. Von De-Linde. This ended after the 1970 judgment voiding the conveyance to Mr. Eide and Mr. Von DeLinde and vesting ownership in Gunnip. See Gunnip, 727 P.2d at 1316. Plaintiffs contend that the documents demonstrate that Continental relied upon a conveyance to it from Mr. Eide and Mr. Von DeLinde. We do not accept that contention. The mere statement in the letters and division order of a supposed interest held by Eide and Von DeLinde is not enough to establish a loss of interest conveyed to Continental from H.W. McDonald. The documents also indicate that Mr. Huntley and two *442 other McDonald assigns held interests in the lease. They do not name the grantor of any of the interests, however. The documents uniformly show Continental’s claim to one half of the working interest. We conclude that plaintiffs have failed to present substantial evidence to support a theory of adverse possession, waiver, or estoppel against Continental. We therefore reverse the District Court. We hold that Continental owns an undivided one-half interest in the working interest in the NVfcNWVi. We further hold that Mr. Gunnip and his assigns own the remaining half of the working interest in the NVfcNWVi. We remand to the District Court for entry of judgment establishing the ownership of the working interest in the NVfcNWV4 and for such further proceedings as are necessary in conformity with this opinion. MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, HUNT and McDONOUGH, and the HON. LEONARD H. LANGEN, District Judge, sitting for MR. JUSTICE GULBRANDSON and MR. CHIEF JUSTICE HASWELL, retired, sitting for MR. JUSTICE SHEEHY concur.