Fife v. Thompson, 288 Ark. 620, 708 S.W.2d 611 (1986)

April 28, 1986 · Arkansas Supreme Court · 85-311
288 Ark. 620, 708 S.W.2d 611

Marie Farris FIFE and Marvin FIFE, Her Husband v. Clarence C. THOMPSON

85-311

708 S.W.2d 611

Supreme Court of Arkansas

Opinion delivered April 28, 1986

Compton, Prewett, Thomas & Hickey, P.A., for appellants.

W.H. Armstrong, for appellee.

*621Steele Hays, Justice.

Clarence Thompson, appellee, acquired oil and gas leases to twenty acres of Ouachita County Arkansas, with the exception of a 1 /8th mineral interest belonging to Marie Fife, appellant. Though unable to obtain a lease from Mrs. Fife, Thompson began drilling operations and the well was completed as a producer in January, 1984. It has produced oil at a rate of several barrels a day since its completion.

Thompson filed suit against Mrs. Fife to impress a lien on her 1 /8th interest, less 1 /8th of 1 / 8th royalty, for the costs of drilling and operating the well, a total of $168,683.40, and for future operating costs. Mrs. Fife does not contend that Thompson’s costs are excessive, rather she claims he is a willful trespasser and that she is entitled to the value at the surface of all minerals attributable to her interest, plus $25,000 punitive damages. The chancellor held that while Thompson and Mrs. Fife were not technically co-tenants, their status was tantamount to co-tenancy and that Thompson was entitled to a lien upon 7 / 8ths of Mrs. Fife’s 1 /8th mineral interest until her proportionate share of the expenses is satisfied.1 Mrs. Fife has appealed. We believe the chancellor was correct.

*622The rule in a majority of jurisdictions holds that a lessee of the majority of mineral owners is entitled to remove the minerals, accounting to the non-leasing owner for his proportionate share, less the reasonable costs of producing the minerals at the surface. Williams & Meyers, Oil and Gas Law, § 502, pp. 572 and 573. The rationale for this principle doubtless rests on the fact that oil is capable of being removed by others and if an owner in common were free to block the removal of the oil, a valuable asset could be lost entirely to its owners.

Summers, Oil and Gas, § 38, p. 138 states:

In the previous section it was shown that in a majority of the jurisdictions in this country where the question has been raised, a co-tenant of lands containing oil and gas is privileged to take oil and gas therefrom without the consent of his co-tenants, but is under a duty to account to them for their share of the minerals taken after deducting the cost of production. . .The Courts have usually found, whether they were dealing with the co-ownership of land or the co-ownership of a separate mineral estate, sufficient reasons upon which to conclude that in either situation a co-tenant should be privileged to produce oil and gas, subject to a duty to the other co-tenants to account to them for their share of the minerals, less the reasonable cost of production.

Our own cases have embraced this rule, Ashland Oil and Refining Co. v. Bond, 222 Ark. 696, 263 S.W.2d 74 (1953):

It is a rule well established and plainly just that when one tenant in common has drilled a producing oil well upon the common property, he must be given credit for his reasonable expenses upon being required to account to his co-tenants for the oil withdrawn from the land. Prairie Oil & Gas Co. v. Allen, 8th Cir., 2 F.2d 566, 40 A.L.R. 1389; New Domain Oil & Gas Co. v. McKinney, 188 Ky. 183, 221 S.W. 245; Earp v. Mid-Continent Petroleum Corp., 167 Okla. 86, 27 P.2d 855, 91 A.L.R. 188; Paepcke-Leicht Lbr. Co. v. Collins, 85 Ark. 414, 108 S.W. 511; Burbridge v. Bradley Lbr. Co., 218 Ark. 897, 239 S.W.2d 285.

That statement of law was affirmed in McMillan, Trustee v. *623Powell, 235 Ark. 934, 362 S.W.2d 721 (1962).

The decree is affirmed.

Purtle, J., not participating.