Brenimer v. Cockburn
Brenimer v. Cockburn
Opinion of the Court
Plaintiffs brought this action for an adjudication that their interest in oil and gas produced from leased lands located in Big Horn County, Wyoming, was in the nature of an overriding royalty. All the defendants except Fox
“In consideration of the sum of $10.00 and other good and valuable considerations R. T. Goldsworthy,*823 Herald L. Baker, A. F. Goldsworthy, M. B. Cockburn, and Grant H. Bag-ley, Grantors, hereby sell, assign, transfer and convey to C. J. Abrams [W. K. McGlothlin] one percent (1%) of all the oil and gas hereafter developed or discovered in the lands located in Big Horn County, Wyoming, particularly described in the oil and gas leases issued by the United States listed on Exhibit ‘A’ attached hereto and made a part hereof, pursuant to the Operating Agreement dated the 10th day of March, 1953, wherein L. J. Peterson . and E. S. Cassidy are first parties and M. B. Cockburn is second party, or any other operating agreement hereafter made or entered into by the Grantors or any of them relating to the development of said lands or any part thereof for oil and/or gas.
“Grantors warrant that said M. B. Cockburn will perform completely each and every term, provision and condition of the Operating Agreement dated the 10th day of March, 1953, to be by him performed.”
Thereafter the defendant Fox acquired the Cockburn, et ah, interest, with knowledge of the Abram and McGlothlin assignments.
The plaintiffs challenge the judgment on the ground that the language of the assignments is unambiguous, and that as a matter of law, the instruments grant and convey to each of them an overriding royalty of 1% in all the oil and gas produced from the leased premises, with no obligation to contribute to the cost of production.
The trial court seemed to be of the view that the working interest agreement held by Cockburn, et al., was of such a nature that they could not assign or convey anything except an interest therein. But clearly, an overriding royalty may be carved out of a working interest in an oil and gas lease, and satisfied out of the oil attributed to that working interest. Oldland v. Gray, 10 Cir., 179 F.2d 408, certiorari denied 339 U.S. 948, 70 S.Ct. 803, 94 L.Ed. 1362; Phillips Petroleum Co. v. Oldland, 10 Cir., 187 F.2d 780, certiorari denied 342 U.S. 816, 72 S.Ct. 30, 96 L.Ed. 617; Keegan v. Humble Oil & Refining Co., 5 Cir., 155 F.2d 971; Wright v. Brush, 10 Cir., 115 F.2d 265; Cities Service Oil Co. v. Geolograph Co., 208 Okl. 179, 254 P.2d 775; Halbert v. Hendrix, 121 Ind.App. 43, 95 N.E.2d 221; Tennant v. Dunn, 130 Tex. 285, 110 S.W.2d 53. See also Summers, Oil and Gas, Vol. 3, §§ 554, §§ 555. Cockburn, et al., through their operating agreement, owned a 50% working interest in the production from the leasehold. Out of this interest, they could assign and convey an overriding royalty. Summers, Oil and Gas, Vol. 3, § 556; Wright v. Brush, supra.
We conclude from the unambiguous language of the assignments, giving the words their ordinary meaning, that Cockburn, et al., conveyed to Abrams and McGlothlin each, a 1% overriding royalty in all of the oil and gas produced from the leasehold under the provisions of the working agreement, or other agreements made pursuant thereto, free from any cost of production.
The judgment is reversed and the cause remanded, with instructions to enter judgment for the plaintiffs in accordance with the views herein expressed.
. Defendants Cockburn, R. T. Goldsworthy, Baker, A. F. Goldsworthy, and Bagley, will be referred to herein as “Cockburn, et al.”
. Subsequent to the delivery of the assignments, C. J. Abrams died, and the plaintiffs Charles J. Brenimer and James R. Brenimer, as Executors of his estate, joined with McGlothlin in bringing this action.
. The court found: “That R. S. Fox had actual or constructive notice at the time he accepted the 50% interest assignment; that G. J. Abrams and W. K. McGloth-lin were owners of a 2% interest in and to said leasehold. That he can not now be heard to complain that he was a purchaser without notice of said 2% outstanding interest.” There is substantial evidence to support this finding.
. Plaintiffs state in their brief that “The only question properly before the Court is the construction of Plaintiffs’ Exhibits 1 and 2 which are identical. If they create overriding royalty interests the judgment should be reversed. If they create working interests tbe judgment should be affirmed.”
. Wycol Petroleum Company owned the oil and gas leases issued by the United States. Peterson and Cassidy entered into a working agreement with Wycol, whereby they acquired a 75% interest in the leases and were required to develop the same. Cockburn executed an agreement with Peterson and Cassi-dy whereby he assumed their development obligations for a 50% interest. The interest created by this agreement was divided equally among the five members of the Cockburn, et al. group.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.