Petition for Writ of Certiorari — Muth v. Aetna Oil Co.

IN THE

Supreme Court of the United States

Ocroser Term, 1950.

JOHN J. MUTH,

Petitioner-Appellant below,

vs.

AETNA OIL CO., JOHNSTON DRILLING CO., INC.,

FRED J. KECK, IDA F. KECK, ARTHUR OETH,

ROBERT OETH, JAMES A. BOLAND, OLLIE HUSK,

Respondents-Appellees below.

PETITION FOR WRIT OF CERTIORARI.

To the Honorable, the Supreme Court of the United States:

Your petitioner, John J. Muth, hereinafter designated as

plaintiff, respectfully prays that a writ of certiorari issue

to review and reverse the decision and judgment of the

United States Court of Appeals for the Seventh Circuit

entered in the above entitled cause on May 8, 1951, and

represents as follows:

Bee FE aE IID GREE RE, > MST ESM A NIT OME ROS GR SD TIEN DOES I

I.

SUMMARY STATEMENT OF THE MATTER

INVOLVED.

1. On August 7, 1950, the United States District Court

for the Southern District of Indiana, Evansville Division,

rendered a judgment against the plaintiff in the above cause

of action, wherein plaintiff, in a variety of forms (Com-

plaint, R. 3-14, 17-19, 20-40), sought relief against the de-

fendants because of their wrongful conduct in depriving

plaintiff of his rights in an oil and gas lease which he

and the defendants, Arthur Oeth and Robert Oeth, had

obtained from the defendants Fred J. Keck and Ida F.

Keck, as landlords, on December 22, 1947, and in which

lease the plaintiff, at the time of its execution, acquired a

one-half interest, and said Oeths acquired the other one-

half interest. The cause was referred to a special master,

who, after hearing the evidence, made findings of fact and

conclusions of law which, in the main, were approved by

the trial court, judgment was rendered against the plain-

tiff, and from which plaintiff appealed to the United

States Court of Appeals for the Seventh Circuit; the

court of appeals affirmed on May 8, 1951. (Court of Ap-

peals opinion, R. 519.) No petition for a rehearing was

filed in the court of appeals.

2. Jurisdiction is founded on diversity of citizenship

and amount in controversy, and the trial court found and

concluded that it had jurisdiction of the parties and the

subject matter. (Findings 2 and 3, R. 461, 462, Conclusion

1, 474.)

3. On October 6, 1947, the defendants, Arthur Oeth _

and Robert Oeth, then operating a business under the un.

incorporated firm name of The Oeth Drilling Company,

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as parties of the first part, entered into a partnership

agreement with the plaintiff, John J. Muth, as party of

the second part, wherein such grrties mutually agreed to

associate themselves together in securing oil and gas

leases, royalties and drilling contracts in territory that

the anticipated depth of oil or gas production was suit-

able for the capacity of a Type, or Model No. 71, Star

Drilling Machine, and designated equipment, or other rig,

if the partnership should acquire additional rigs, said Star

Drilling Machine being equipment then owned by the Oeths,

and in said partnership agreement Oeths agreed to sell a

one-half interest in said Star Drilling Machine to Muth;

‘*All leases or royalties taken for this partnership shc"! be

written in the names of Arthur Oeth and Robert Oeth, as

owners of a one-half interest, and John J. Muth, Sr., as

owner of a one-half interest’’; each partner that performed

labor on the wells or for the company was to receive wages

for labor as though he was a disinterested party; Oeths

agreed to help secure oil and gas leases or royalties and

help run the driliing rig; the drilling rig and equipment

was valued at $4,000 and was to remain the property of

Oeths until such time as the net profits earned by the

rig or the joint efforts of the partnership should equal

such agreed value of $4,000, together with any additional

tools or equipment that might be purchased from time to

time by the partnership; if either party did not wish to

sell his interest in leases or property at a price that was

offered and the other party did wish to sell, the party who

did not wish to sell, agreed to either sell at the price of-

fered or to buy the other parties’ interest at the price of-

fered; either party could cancel the agreement by giving a

thirty days’ written notice to the other, and there should

then be an audit made and after all labor and expenses

had been paid the net profits should be divided and one-

half go to Oeths and one-half to Muth; the agreement

and partnership should not apply to any property of either

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party other than as above stated, and either party had the

right to engage in the same or other lines of business,

separate from the partuership, so long as it was not done

at the expense of the partnership; Oeths were to handle

the funds of the partnership until such time as the prop-

erty had been fully paid out, then there should be a sep-

arate account set up and thereafter all partnership checks

against the partnership funds should be signed by either

of the Oeths and countersigned by Muth; it was agreed

that the partnership should begin as of October 6, 1947,

and efforts should be made to secure desirable oil and gas

leases and drilling deals in areas that were considered

likely for oil or gas production, and an effort made to get

the drilling rig running as soon as practical and to try and

keep it running at a profit. (Plaiutiff’s Exhibit B-2, R.

439-441; Finding 6, R. 463.)

4. The partners, acting pursuant to said partnership

agreement, obtained eight oil and gas leases in Posey and

Vanderburg counties, Indiana, in addition to the lease on

the 67.5 acres owned by Keck (sometimes referred to as

the joint lease), and entered into commitments to the les-

sors in certain of said oil and gas leases; the partners bar

gained for one Jensen drilling rig of capacity to drill

twenty-five hundred to twenty-six hundred feet in addition

to the Star drilling rig of less capacity owned by the part-

nership, but said Jensen Grilling rig was taken over by

defendant Arthur Oeth and not used as contemplated in

the said partnership agreement. (Finding 7, R. 463.) The

Keck lease was acknowledged before a notary public and

recorded in the appropriate recorder’s office. (Finding 4,

R. 462.) At the time of the execution of said lease it

was known to Kecks, the lessors, that the lessees were

partners in the business of taking oil and gas leases (Find-

ing 6, R. 463), and the lessees were designated in such

lease as ‘‘Arthur Oeth and Robert Oeth (owners of one-

half interest, and John J. Muth, Sr., one-half interest).

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(Partnership lease of December 22, 1947, R. 29-41.) The

partnership lease was for the primary term of three years

from date and as long thereafter as drilling operations were

continued; it granted, demised, leased and let exclusively

unto said iessees and assigns, the 67.5 acres of land spe-

cifically described therein, with the exclusive right for the

purpose, among others, of operating for and producing

therefrom oil and gas; it provided for a royalty of 4 to

the lessor; it also provided that if the lessee shall com-

mence to drill a well within the term of this lease, the lessee

shall have the right to drill such well to completion with

reasonable diligence and dispatch, and provided that

‘*This Lease shall terminate in three months and be

null and void as to both parties unless the Lessees or

their assigns shall commence or cease to be commenced

the drilling of a test well and thereafter continue with

due diligence to completion.’’ (R. 35.)

5. On January 3, 1948, Arthur Oeth gave a notice in

writing to plaintiff Muth of his intention to terminate their

partnership on thirty days’ notice, but final settlement of

partnership affairs was not had until July, 1948. (Finding

8, R. 463.)

6. On Mareh 1, 1948, Muth wrote Arthur Oeth that

‘‘The time for the commencing of a well on the Keck

lease is getting short and I would like it if you and

Robert would meet with me the earliest possible date

and see if we can work out a peaceful and satisfactory

dissolution agreement of our jointly owned business.’’

(Finding 7, R. 463.)

A few days thereafter, and without the knowledge of

Muth, Arthur Oeth obtained from Keck, who was his

uncle, a ‘‘top lease’’ for gas and oil on the same land

covered by the joint lease. This top lease

**was an exact copy of the lease of December 22, 1947,

with the exception that the time (for drilling a test

well) was extended thirty or sixty days’’

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(Finding 12, R. 465), and it was executed and delivered

by Kecks to the defendant Arthur Oeth, individually. (R,

189.)

7. The execution of the top lease was without the knowl-

edge of Muth, and was a transaction solely between Fred

J. Keck and Arthur Oeth, which took place about ten days

before March 22, 1948; Muth was never present when Keck

and Oeth dealt with each other concerning such top lease,

Keck testified that after the execution of the Muth-Oeth

lease, and before March 22, 1948, Arthur Oeth came back

to the Keck home and asked Keck to sign a separate lease

to him; that Arthur Oeth then told him he wanted to obtain

not only the one lease, he wanted leases on the three farms

adjoining Keck on the south. (R. 400.) Oe¢eth told Keck

he wanted the top lease from him and if he could get that

he thought he could get the neighbor’s lease; Oeth said

he wanted a lease to himself alone and he said ‘‘I believe

I could get the neighbor’s lease if I could get yours.”’ (R.

97.)

8. Arthur Oeth testified that he and Muth had been to

see one of Keck’s neighbors on the south, a Miss Mesker,

and she refused to sign a lease for them; that he, Oeth,

had gone back to her and asked her to sign and she said

she would sign a lease for him for the reason of Keck get-

ting a well drilled more than anything else, but she said

she would not sign a lease with ‘‘that fellow’s (Muth)

name on it that come over here with you. I don’t like

his looks.’’ (R. 118.) Oeth said he studied the matter

over,—not knowing what to do, and then went and talked

with another of Keck’s neighbors, a Mr. Klucker; Klucker

told him he wouldn’t sign a lease unless he could see Miss

Mesker’s and Keck’s lease, too. (R. 118.) The next day

Oeth said he took his other boy, one that could typewrite,

and a typewriter to Keck’s home. (R. 398, 399.) Arthur

Oeth then told Keck that Miss Mesker would not sign a

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lease for him until she saw Keck’s lease, and Oeth ‘‘asked

Keck if he would stand hitched’’ and ‘‘consent to us copy-

ing that lease over to show Miss Mesker your lease?’’ (R.

118); the Oeth boy then typed from the copy of the Muth-

Oeth lease. (R. 118, 398, 399.) Mr. Keck then signed the

top lease and delivered it to Arthur Oeth. (R. 119.) The

top lease did not contain the name of Mr. M~th, because

Miss Mesker ‘‘didn’t want his name there’’ (R. 148); it

was dated back to December 22, 1947, because Miss Mesker

didn’t definitely know whether Muth’s name was on that

lease of Keck’s or not, but she suspicioned it; Arthur Oeth

dated it back to December 22 to show her Muth had no in-

terest,—so his name wasn’t on it, ‘‘so I (Arthur Oeth)

wanted her to sign the lease.’’ (R. 149.)

Keck knew when he signed that top lease for Arthur Oeth

that he was going to show it to Keck’s neighbors and he

authorized Oeth to show it to his neighbors so he could

get their leases for himself. (R. 400, 401.)

9. When Arthur got his top lease of December 22 from

Keck, he went to talk to Miss Mesker, to get her lease;

he showed her such lease signed by Keck and said to her:

‘*T told her this is a lease on Keck, and then I asked

her to sign; she wanted a lease like Keck and I gave it

to her.’’ (R. 126.)

After Oeth had shown Miss Mesker the top lease signed

by Keck to Oeth in his own name, she consented to sign a

similar lease with him and arranged to meet him at her

lawyer’s office for that purpose at eleven o’clock the next

day. (R. 127.).

10. Additional time for the drilling of the first well

as provided for in the Muth-Oeth lease was granted in the

top lease for a period of sixty or ninety days for the rea-

son that Oeth ‘‘couldn’t get Keck’s copy of his lease and

show Mesker because it was running out shortly, and I

02 AON MRE SEOs aU Lae RUM AT ge Seite

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(Arthur Oeth) was trying to get some time on the Mesker

lease and on the Klucker lease.’’ (R. 147.)

11. Just a short time before March 22, 1948, Keck told

Muth he had given Arthur Oeth a top lease on his land; he

thought it was a good lease; he did not tell Muth that the

time for drilling a test well had been extended thirty or

sixty days by such top lease, and Muth had no knowledge _

of such extension of time. (R. 98, 99, 390.) Arthur Octh

destroyed this top lease (Finding 13, R. 465); he tore it

up on the morning of March 23, 1948. (R. 147.)

12. During the month of March, 1948, wells for oil and

gas were being drilled in the same general vicinity as the

Keck lands, principally by the defendant, The Johnston

Drilling Company, and such wells proved productive of

oil in paying quantities at depths in exess of 2300 feet and

up to 2550 feet. (Finding 10, R. 464.)

13. The plaintiff requested the defendant, Arthur Oeth,

to move his small Star rig onto the Keck property and com-

mence drilling a well; the defendants Oeth refused to

move any rig which they owned onto the Keck farm for the

purpose of drilling and the defendant, Arthur Oeth, de-

clined to attempt the drilling of such well with said Star

rig and so informed plaintiff in the latter part of Febru-

ary, 1948. (Finding 11, R. 464.)

14. The fraudulent scheme thus put in motion by Keck

and Arthur Oeth began to expand. At that time Oeths and

Muth were trying to wind up their partnership affairs,

which included disposition of the Keck lease. (Plaintiff’s

Exhibit B-1, R. 438.) About one week before March 22,

1948, Muth learned that Keck had given Arthur Oeth a top

lease and he went to see Keck and tried to get a copy of it.

Keck told him he had given Oeth the top lease, but Oeth

didn’t leave him any lease or any copy. (R. 316.) Muth

had some arrangements made for financing the well, but

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they did not materialize after it was found out that Ar-

thur would probably cause trouble with the lease. (R. 317.)

15. The Court found that Muth talked with two men

at Mt. Vernon, Indiana, and one man at Mt. Carmel, IIli-

nois, about purchasing his interest in the Keck lease of

December 22, 1947, and the defendant, Arthur Oeth, told

them he had a top lease on the Keck property. This was all

prior to March 22, 1948, (Finding 15, R. 466‘ This find-

ing was based upon the uncontradicted evidence of Joel

Vale and Edward Turner that in the early part of March,

1948, Mr. Muth had talked to them about doing some

drilling under the Keck lease of Muth and Oeth, and Mr.

Muth wanted to sell his interest in such lease to them;

they went and talked to Arthur Oeth in regard to whether

they should buy it, and he told them they shouldn’t buy

it; it would just be a short time and it would be out,

and he told them he and his son had a top lease over, a

top lease on them (R. 153); when they told Oeth that

Muth wanted to sell out completely, Mr. Oeth discouraged

them from buying, and said the lease would be out in a

short i ae, ‘‘that they had an override on this and it would

be theirs in about a week’’. (R. 154.) Mr. Muth told

Vale and Turner that he and Oeth couldn’t get along, they

had a falling out, and if they couldn’t buy Mr. Oeth, he,

Muth, wanted to sell to them; he wanted to sell his part if

Mr. Oeth wouldn’t sell; they asked Oeth about purchasing

an interest and Arthur Oeth said ‘‘That the lease which

Muth had taken on the Keck farm would expire in a short

time, and he had a top lease’. (R. 162, 163.) At that time

Vale and Turner were financially able and willing to drill

on the Keck land if they could have made arrangements

with Muth and Oeth. (R. 164.)

16. After Arthur Oeth got the top lease from Keck,

sometime between the 10th and 15th of March, he talked

with Keck about the lease over at the well on the Nurren-

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burn land (R. 127); he also saw the defendant Ollie Husk

occasionally around the Nurrenburn well and talked with

him (R. 127); Husk knew of the partnership lease of

Muth and Oeth from Keck and he had gone to the record

to see it right after he had seen Mr. Keck about getting

the lease for The Johnston Drilling Co. (R. 262); Keck

had promised Husk he would give him the lease after the

Muth-Oeth lease had expired. (R. 262.)

17. On the 20th or 21st day of March, 1948, plaintiff's

drilling contractor, defendant James A. Boland, employed

a certified engineer to have a survey made of the Keck

premises and to certify the survey showing the location

of the test well and other data and furnish plats thereof

and data for a drilling permit and to furnish bond as the

law required. Said drilling contractor hauled timbers for

leveling the drilling rig and bricks for boiler and other

equipment for commencing the drilling of a test weli on a

farm adjoining the Keck farm. Boland and his son took

the Keystone No. 5$ drilling rig to the premises of Keck

and into the barn lot thereof, a distance of some 700 feet

from the location referred to as ‘‘No. 1 Relocation’’, on

the evening of the 22nd day of March, 1948, around the

hour of seven o’clock P. M., and said drilling rig was left

there in the barn lot until the morning of the 23d day of

March, 1948. The defendant Ollie Husk visited the Keck

farm once during the day of March 22nd and in the even-

ing of said day had a telephone conversation with defend-

ant Keck in which he informed Keck that actual drilling

had to begin under the joint lease before midnight of said

day to validate the lease. (Finding 18, R. 466, 467.)

18. The ground was soft because of heavy rains, and

when the plaintiff and Boland arrived at the Keck farm on

the morning of March 23d, 1948, they found the drilling

rig had settled on one side and required jacking up and

extricating before being moved to the No. 1 Relocation.

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During the progress of this work, defendants Arthur Oeth

and Robert Oeth came to the Keck home and soon there-

after defendant Ollie Husk arrived, and the defendants

Arthur Oeth, Robert Oeth, Fred J. Keck and defendant

Ollie Husk, were all there together, but none of them talked

to Muth or his driller and there was no discussion at that

time about their not having drilled or not being able to

get their drill to the drilling site (R. 392, 393) until after

dinner when, according to Keck’s testimony (R. 383, 394),

Muth and Boland had moved their rig further and he said

it was headed right straight for his brooder-house, and

it was no use for him to tell them to stop because they

wouldn’t do it, and Mr. Husk then said to Keck, ‘‘ You

can stop them by having a legal notice served on them’”’

(R. 394), and Keck replied ‘‘That would be a good way

to get myself into a law suit’’ and he (Husk) said he didn’t

think so, ‘‘We will be back of you’’ (R. 396); thereupon

Oeth, Keck and Husk left the Keck farm in Husk’s auto-

mobile and proceeded to the city of Evansville to the law

office of Joe Vol Butt, who prepared for them a written

notice dated March 23, 1948, directed to James A. Boland

and Mr. John J. Muth, Sr., advising them that they were

then trespassing without right upon the Keck property,

demanded that they leave such property, and notified them

that they would be held responsible for damages for all

their acts in trespassing or in continuing to trespass on

the Keck land. (Plaintiff’s Exhibit K, R. 448.) Husk

took Keck to the attorney to get Muth and Boland stopped

so he could put himself in a position to get the lease (R.

148) ; this notice was signed by Keck and on the afternoon

of March 23 the defendants Oeth and Husk returned with

defendant Keck to the Keck farm whereupon Keck gave

one copy of said notice to Boland and read the notice and

gave a copy thereof to the plaintiff Muth. Before de-

fendant Keck served said notice, the defendants Arthur

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Oeth, and Husk, acting as agent for The Johnston Drill.

ing Co., agreed with the defendant Keck that they would

defend any law suit that might be instituted against him

by reason of any prior leases for oil and gas on said

premises, and with particular reference to the lease of

December 22, 1947, to plaintiff Muth and the defendants

Arthur Oeth and Robert Oeth. (Finding 19, R. 467, 468,

469.)

19. On the 27th day of March, 1948, the defendant Husk

obtained from Kecks an oil and gas lease for The Johnston

Drilling Co., Inc., on the same 67.5 acres of defendant Keck

(Finding 21, R. 470), and The Johnston Drilling Co., Inc.,

by the defendant Ollie Husk, and Arthur Oeth, signed the

indemnifying agreement, which lease and agreement were

prepared by said attorney.

20. On June 2, 1948, defendant Aetna Oil Company

took an assignment of a one-half interest in and to said

lease of The Johnston Drilling Co., Ine., subject to an

overriding royalty of one-sixteenth of seven-eighths inter-

est to an unnamed party, later disclosed to be defendant

Husk. (Finding 22, R. 471.) Such assignment was not

recorded until July 27, 1948. (Finding 23, R. 472.)

21. Prior to the execution of the assignment of an un-

divided one-half interest in and to their lease herein by

The Johnston Drilling Co., Ine., to the Aetna Oil Com-

pany, Attorney Joe Vol Butt was employed by the de-

fendant, the Aetna Oil Company, to examine and pass on

the title to said leasehold for the said Aetna Oil Company.

Said attorney was employed by The Johnston Drilling

Co., Inc., on March 27, 1948, to pass on the title to said

leasehold interest for it. By reason of having represented

all of the defendants to the present suit (except Boland)

in some capacity in connection with the matter of the

lease for gas and oil on the 67.5 acres of defendant, Keck,

said attorney for the various parties was fully aware and

ARS Ty PRS OR tT We 9 IRR Rag LORNA ak ONAN A RMS LOS DE A RTO TET TINE PEEK —

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apprised of all the matters and things connected with said

title and said litigation and the knowledge of such attorney

is imputed to the defendants, The Johnston Drilling Co.,

Inc., and Aetna Oil Company, and was the knowledge of

said companies at the time they acquired their respective

interests in the premises. (Finding 24, R. 472.)

92. The first two wells which were drilled on the Keck

land by The Johnston Drilling Co., Inc., under its lease of

March 27, 1948, were drilled at the locations which had

been selected by Muth’s surveyor for him, and for which

Muth had paid such surveyor $85.00, and such payment

included the making of an application by such surveyor

for the bond and permit. (R. 373-376; Plaintiff’s Exhibit

Z, R. 457.)

23. To the first day of November, 1949, the wells on the

Keck lease had produced 45,406.57 barrels of oil and the

total revenue derived therefrom was $125,776.18. (Plain-

tiff’s Exhibit V, R. 454.) At the time the action was in-

stitute. the Keck lease of December 22, 1947, given to

Oeths and Muth was worth a quarter of a million dollars;

it would have sold for that. (R. 348.)

24. The special findings of fact and conclusions of the

master were filed on March 2, 1950 (R. 460); on March

11, 1950 the plaintiff filed written objections to certain

findings of fact and to the conclusions of law of the special

master (R. 476, 491); the special findings of fact and con-

clusions of law of the court were filed on July 17, 1950

(R. 492, 493); on July 26, 1950, plaintiff filed his written

motion for judgment in his favor and moved the court to

direct the entry of an appropriate judgment for the plain-

tiff against the defendants (R. 494, 499); on August 3,

1950 the defendants filed their motion to strike the motion

by plaintiff for judgment in his favor (R. 499, 500); such

motion to strike was sustained on August 7, 1950 and there-

upon it was considered, ordered, adjudged and decreed that

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plaintiff take nothing by his complaint; that judgment be

entered against the plaintiff and for the defendants, ex-

cept Boland, and that defendants recover their costs (R.

501); notice of appeal was filed on September 2, 1950 (R.

502), together with appeal bond and plaintiff’s statement

of points. (R. 503, 507.)

II.

OPINION BELOW.

There was no written opinion of the district court. The

special findings of fact and conclusions of law of the master

are on pages 460 to 476 of the Record; the court’s findings

of fact and conclusions of law are on pages 492 and 493

of the Record.

The opinion of the Court of Appeals for the Seventh

Cireuit is not reported, but is in the Record on pages 519

to 530.

Il.

BASIS OF THIS COURT’S JURISDICTION.

The judgment of the court of appeals was entered on

May 8, 1951. (R. 530.) No petition for a rehearing was

filed. On May 21, 1951, its mandate was stayed pursuant to

its Rule 25. (R. 531.)

The jurisdiction of this court is invoked under Title 28

United States Code, Section 1254 (1).

This petition is presented in a civil case by the plaintiff

who was and is a party thereto.

EIRP IRE LS MED LILLE ELLY EPG NEL RE LIE LEGS ORIY ED

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awe

STATUTES INVOLVED.

The pertinent statutory provisions of Title 28 United

States Code, Section 1254 (1) are:

‘‘Cases in the courts of appeals may be reviewed

by the Supreme Court by the following methods: (1)

By writ of certiorari granted upon the petition of any

party to any civil or criminal case, before or after

rendition of judgment or decree.’’

Burns Indiana Revised Statutes, 1933 (1951 Repl.), See-

tion 50-430:

‘*On dissolution the partnership is not terminated,

but continues until the winding up of partnership

affairs is completed.’’

Burns Indiana Revised Statutes, 1933 (1951 Repl.), See-

tion 50-421:

‘*Every partner must account to the partnership for

any benefit, and hold as trustee for it any profits de-

rived by him without the consent of the other part-

ners from any transaction connected with the * * *

conduct, or liquidation of the partnership or from any

use by him of its property.’’

Se ae eee nt RIE Ne PRE SG SO > “ nce

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QUESTIONS PRESENTED.

The decision of the United States Court of Appeals for

the Seventh Circuit is in conflict with important decisions

of the Supreme Court of Indiana governing oil and gas

leases in said state and is in conflict with certain other

decisions of the Supreme Court of Indiana on important

questions of local law, including statute law, of the State.

The decision is also in conflict with certain decisions of

other United States Circuit Courts of Appeal on the

same matters.

The questions in point arising on the decision are:

First. Did the partnership between plaintiff Muth and

defendants Arthur Oeth and Robert Oeth to obtain oil

and gas leases and to drill for gas and oil terminate as

to the lease for gas and oil in suit on the giving of notice

by Arthur Oeth to cancel the partnership agreement and

acceptance of the same by plaintiff and before performance

or disposition of the oil and gas leases of the partnership

including the joint lease of the partners with lessor, de-

fendant Keck, here in suit.

Second. Did the execution by lessor Keck of an oil and

gas lease to defendant Arthur Oeth, one of the partuers

in the joint lease, while the partnership lease was in full

force and effect, giving such partner the entire interest in

the leasehold instead of the one-fourth interest he had

under the partnership lease, and giving such individual

partner thirty to sixty days additional time in which to

drill a test well for gas and oil on the premises with the

express consent of lessor Keck to exhibit the same to third

persons as a valid outstanding lease constitute an obstruc-

tion or interference on the part of the lessor with the per-

formance of the covenants of the partnership lease on the

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same premises and whether giving partner Arthur Oeth all

the leasehold in which as partner and co-tenant he had only

a one-fourth interest if he performed the same was not such

an inducement as to lead the favored partner to hold the

drilling rigs of the partnership off the premises until the

time limit for drilling a test well under the partnership

lease should expire, thereupon he would claim the entire

leasehold under the top lease he still retained.

Third. Whether the decision holding valid and proper

the contract of the defaulting partner Arthur Oeth to de-

fend the lessor Keck against any lawsuits growing out of

the joint lease or the top lease, causing the eviction of his

partner Muth from the premises and refusing to let Muth

perform the drilling covenants of the partnership lease,

and thereafter joining with the defendant Johnston Drilling

Company, Inc., in such indemnity agreement to induce the

lessor Keck to execute the third lease for gas and oil to

defendant Johnston Drilling Company, Inc., and thereby

depriving his own partner and co-tenant of the most valu-

able asset of the partnership—the Keck lease—is in con-

flict with important decisions of local law as well as ap-

plicable decisions on the same question of other United

States Courts of Appeal.

Fourth. Whether the holding in the opinion that mere

refraining from interfering in the performance of the

covenants of an oil and gas lease by one partner and co-

tenant constitutes the ‘‘good faith’’ required of either a

partner or co-tenant may be an erroneous declaration of

law applicable to a rapidly growing industry in Indiana,

and in direct conflict with the law governing such relation

in Indiana as well as applicable Federal decisions.

Fifth. Whether in the interpretation of the time clause

for drilling in an oil and gas lease the words ‘‘null and

void’’ are self-executing or require an election by the

lessor to terminate the lease, and whether such lessor him-

oi TREES AR Met OREM og emmepte or ne serra — a PR i Reng

18

self must be without fault and not wrongfully or improperly

influenced, as held by ruling precedents in the law govern-

émge suk alvuses in Mhdiana oil and gas leases, as well as

of the United States Supreme Court.

Sixth. Whether any contracting party who executes an

instrument that is both a conveyance and a contract as

was the joint lease of defendant Keck of December 22,

1947, to plaintiff John J. Muth, one-half interest and to

defendants Arthur Oeth and Robert Oeth, one-half inter.

est, who thereafter grants one such partner and co-tenant

thirty to sixty days additional time in which to commence

the drilling of a test well for gas and oil, definitely and

certainly, as a matter of law, grants such extension of time

in which to perform the drilling covenants of the joint

lease of the partnership, or in such event, irrevocably

waives the provisions of the three months clause in the

partnership lease.

Seventh. Did the grant of the top lease by Kecks to Ar-

thur Oeth in his name alone, which extended the time for the

drilling of a test well thirty to sixty days beyond March

22, 1948, and the use which Arthur Oeth made of the

knowledge and interest which he acquired through such

top lease to prevent Muth from accomplishing the purpose

of his partnership relation with Oeth as to the joint lease

of December 22, 1947, charge the property described in

such top lease with a constructive trust for the benefit of

Muth which may be enforced by him in this litigation?

n. WY es * 1 Re Ra AO TMB, oy W

SSL LEE TP AT LST IE TF el RAR ONT SARTRE, « F ie cal Fe *

19

iRPEASONS .RELTIED ON ROR .ALJIOWANCE OF THE

WRIT OF CERTIORARI.

One.

The decision that the fiduciary relation existing between

Appellant Muth and Appellees Arthur Oeth and Robert

Oeth terminated upon the dissolution of the partnership

is in conflict with the law of Indiana declared in the case

of McKinley v. Long (1949), 227 Ind. 639, 88 N. E. (2)

382, and is further in conflict with the statutory law gov-

erning partnerships in the State of Indiana, providing

that:

**On dissolution the partnership is not terminated,

but continues until the winding up of partnership

affairs is completed.’’

Burns Indiana Revised Statutes, 1933 (1951 Repl.)

Section 50-430.

The decision is further in conflict with the provisions of

Section 50-421, Burns Indiana Revised Statutes, 1933

(1951 Repl.), in that the statute provides as the law of

Indiana that

‘‘every partner must account to the partnership for

any benefit, and hold as trustee for it any profits de-

rived by him without the consent of the other part-

ners from any transaction connected with the * * *

conduct, or liquidation of the partnership or from any

use by him of its property.’’

Two.

The decision that lessor, defendant Fred J. Keck, right-

fully invoked the time limit for commencing the drilling

of a test well for gas and oil on the leased premises is

20

in conflict with the decisions of the Indiana Supreme Court

cited and followed in New American Oil and Gas Company

v. Troyer (1906), 166 Ind. 402, 407-408, requiring the grant-

ing of a reasonable extension of time to perform the drill-

ing clause of an oil and gas lease where the performance

has been hindered or the delay }~. been reasonably in-

duced by lessor’s conduct. When .or, defendant Fred

J. Keck, top leased the entire partnership leasehold to one

partner, defendant Arthur Oeth, at a time when such

partner owned a one-fourth interest only in the joint or

partnership lease for gas and oil, he thereby induced said

partner of plaintiff Muth to withhold the use of partner-

ship drilling rigs for spudding in a well for gas and oil

until the period of three months for beginning a test well

should elapse and then the top lease would take all the gas

and oil rights with thirty to sixty days additional time in

which to begin the test well, lessor, defendant Fred J.

Keck, thereby prevented and blocked the performance of

the drilling clause in the partnership lease and became

estopped to invoke such time limit against the one partner,

plaintiff John J. Muth, who was striving to perform the

same. The decision of the Court of Appeals in this case

is likewise in conflict with the decision upon this question

by the Court of Appeals for the First Circuit in Fred W.

Mears Heel Co., Inc. v. Walley (........ ) 71 Fed. (2) 876,

which affirmed the decision below reported in 4 Fed. Supp.

277, where the court held that a clause in a contract making

it void for failure to perform a condition, is subject to

the legal requirement that the party seeking to avail him-

self of the non-performance must not himself be in default.

Three.

The decision approving the right of lessor, Defendant

Fred J. Keck, to deny he intended to vest lessee, defend-

— eran

=

21

ant Arthur Oeth, with title to the leasehold by executing

the top lease or extend the time for thirty to sixty days

to drill a test well for oil and gas on the leased premises is

in conflict with the decision of the Supreme Court of In-

diana in the case of Preston v. Witherspoon (1886) 109

Ind. 457, 464-465, quoting Cowdrey v. Vandenburgh, 101

U. S. 572, and holding that whether the party executing

a conveyance intended vesting the grantee therein with

title or not, he is estopped to deny such intent if there be

negligence in respect to the duty owing the party injured

thereby.

Four.

Lessor, defendant Fred J. Keck, knew of the partner-

ship when he executed the joint lease of December 22, 1947,

to the partners. He knew it remained unsettled as to their

joint lease on his lands when he granted the second or

top lease of the entire leasehold to the one partner in the

Joint lease, defendant Arthur Oeth. He knew this indicia

of title would be exhibited as valid to third persons and

authorized it, and was bound to its legal effect when claimed

as valid by the lessee, defendant Oeth, to prospective in-

vestors with plaintiff Muth, and the decision approving

lessor Keck ordering plaintiff Muth off the premises as

of midnight, March 22, 1948, is in conflict with the decisions

in Consumers Gas Trust Company v. Ink (1904), 163 Ind.

174, 176, Consumers Gas Trust Company v. Littler (1904)

162 Ind. 320, 327-329, holding that a lessor in an oil and

gas lease will not be permitted to cause the lessee to suffer

from an act which the lessor himself induced. In this

ease inducing defendant Oeth by granting him the whole

lease, instead of holding him to performance with plaintiff

Muth of the joint lease and granting plaintiff’s said partner

and co-tenant Oeth thirty to sixty days additional time in

which to commence drilling a test well for gas and oil

22

on the lease premises. The decision holding the lease null

and void at the end of the three months is in conflict with

the decision of the Supreme Court of the United States in

Steward v. Griffith, 217 U. 8. 323, reciting that the word

‘*void’’ as used in conditions of this character is not self.

executing and is to be considered as voidable to be insisted

upon or waived at the lessor’s choice.

Five.

In approving the acts of defendant Arthur Oeth in break-

ing his contract of partnership to keep the drilling rigs

employed in exploring for gas and oil and joining with

third parties—defendants Ollie Husk and Johnston Drill-

ing Company, Inc.,—to induce the lessor in the joint lease

and in the top lease, defendant Fred J. Keck, to oust his

partner and co-tenant in the joint lease therein, from the

premises, the decision is in conflict with the decision of

the Supreme Court of Indiana in Stevens, et al. v. Reynolds

(1895) 467, 477, holding the relation of co-tenant is one

of trust and confidence and neither can do any act to prejn-

dice or injuriously affect their interest in the common prop-

erty, and abrogates the Indiana rule holding co-tenants as

trustees in dealing with the joint estate. McPheeters vy.

Wright, (1890) 124 Ind. 560; Ryason v. Dunten (1904) 164

Ind. 85.

This decision is further in conflict with the decision of

the Supreme Court of the United States in Denver v. Roane

(1879) 99 U. S. 355, 358, 25 Law Ed. 476, holding that

where partners had jointly undertaken the business in-

trusted to the partnership, all of the parties were under

obligation to conduct it to the end as a duty owed to their

client and to one another.

23

Six.

The decision and holding of the court that the lessor,

defendant Fred J. Keck, after executing a lease for gas

and oil on December 22, 1947, to plaintiff Muth one-half

and to defendants Arthur Oeth and Robert Oeth one-half,

with full knowledge the lessees were partners to take

leases and drill for gas and oil, and thereafter, in the latter

part of February or first part of March, 1948, executing

a second lease for gas and oil on the same premises to one

of the partners, defendant Arthur Oeth, granting him the

entire leasehold and extending the time for drilling a test

well from thirty to sixty days longer than in the joint

lease, and permitting said Oeth to represent said top lease

to be a valid and subsisting lease for whatever purpose,

had the right to hold petitioner to strict performance of

the three months drilling clause of the partnership lease,

is in conflict with the law of Indiana governing perform-

ance of conditions subsequent as declared in Elkhart Car-

works Co. v. Ellis (1887), 113 Ind. 215, holding:

‘‘It would be a flagrant violation of a right to per-

mit the grantee of an estate upon a condition subse-

quent to defeat the action by wrongfully preventing the

performance of the condition, and the law is not sub-

ject to the reproach of permitting such a thing to be

done.’’

Seven.

The Court’s opinion that the lessor in an oil and gas

lease may rightfully require and receive the indemnity

agreement of one partner and co-tenant in a joint lease

to oust from possession of the leasehold premises the

other partner and co-tenant seeking to perform the drilling

covenant, and to give the partnership assets to a third

party upon the absolute refusal of such indemnifying part-

ner to himself perform it, and after lessor had granted to

24

such indemnifying partner and co-tenant a top lease to

the entire leasehold in violation of the joint lease, and of

his duty to the ousted partner, is the approval of an il-

legal agreement, void as against public policy and made

in violation of the trust relation existing between the

partners and co-tenants in the joint lease and conflicts with

the decisions of other Circuit Courts of Appeal as in

Horbach v. Coyle, C. C. A. (1924) 2 Fed. (2) 702, 706-707;

Trice v. Comstock, C. C. A. 8 (1903), 121 Fed. (2) 620, and

of the Supreme Court of the United States in Buffum v.

Peter Barceloux Company (......... ), 289 U. S. 227, 237, 77

Law Ed. 1140.

The case of Trice v. Comstock, C. C. A. 8 (1903), 121

Fed. (2) 620, is cited in the Indiana decisions in the case

of Washington Theatre Co., et al. v. Marion Theatre Cor-

poration (1948), 119 Ind. App. 114, 81 N. E. (2) 688, 692-

693, to sustain the decision holding:

‘‘There is a broad rule of equity grounded upon the

high duty of a trustee or fiduciary to his beneficiary

or correlate which does not permit him to acquire an

interest in the subject matter of the trust to the preju-

dice and detriment of his beneficiary or correlate. A

person acting in a fiduciary capacity including an agent,

corporate officer, or director, who secretly acquires in

his own name, a succeeding or renewal lease on prem-

ises which his principal or his corporation is then oc-

cupying as lessee, in equity, holds such new lease for

the benefit of his principal or his corporation. Under

such circumstances, and especially where, as in the case

at bar, the facts of such agency and fiduciary relation-

ship are at all times known to the lessor, a court of

equity will clearly declare a constructive trust in the

lease for the benefit of the principal or corporation

and may require an assignment of such lease to the

principal or corporation. 32 American Jurisprudence,

Section 991, p. 834; Restatement of Law of Restitu-

tion.’’

mangiedttt i EE

25

The point to which the Trice v. Comstock case (1903)

C. C. A. 8, 121 Fed. (2d) 620, is cited is as follows:

‘*This rule applies whether the lessor would or would

not have renewed a new lease to the principal or cor-

poration, and regardless of whether such principal or

corporation had any legal or equitable interest in the

lease or property which the agent so acquires in his

own name. A general statement of such rule has been

referred to as an ‘inexorable principle’ of the law,

and one which is based upon ‘that sagacious public

policy which, for the purpose of removing all tempta-

tion, removes all possibility that a trustee may derive

profit from the subject matter of his trust, so that one

whose confidence has been betrayed may enforce the

trust which arises under this rule of law.’ ”’

In its statement of plaintiff’s case on page 524 of the

record, the court of appeals says that

‘*Plaintiff’s case must rest on the premise that he

was never legally divested of his interest in the Keck

land, and the premise must be supported by one of two

theories, (1) that plaintiff performed prior to mid-

night March 22, 1948, under the three-month provision

of the joint lease, or (2) that by reason of the so-

called ‘top lease’ given by Keck to Arthur Oeth early

in March 1948, the time for performance under the

joint lease was extended to the same extent as that

provided in the top lease.”’

But plaintiff also seeks entirely different relief; he in-

sists that he is entitled to the establishment of a trust in

his favor against Keck’s land, and an accounting for all

oil that has been removed therefrom since March 22, 1948;

he asserts that the evidence shows, without any contradic-

tion or dispute, that when Arthur Oeth received from

Kecks the top lease early in March, 1948, Oeth and his

son Robert, and Muth, had an undisposed of partnership

asset consisting of the joint lease which had been granted

to them on December 22, 1947, by Keck and his wife, or

PREF Be Gs . ‘ y : RO ee REIS IN AEE MAES WO ET

26

identically the same land which was described in and

leased to Arthur Oeth in the top lease; the partners then

had a written agreement as to how they would dispose of

that asset if they could secure any one who would make

an offer therefor that was satisfactory to either partner

(Plaintiff’s Exhibit B-2, R. 440); that a fiduciary relation

existed between the partners as to such asset when the

top lease was made; that in violation of such partnership

fiduciary relationship, and in violation of Keck’s relation

to Muth as his landlord, he having knowledge of the part-

nership agreement, Keck wrongfully gave to Arthur Oeth

alone a top lease on the land covered by the partnership

lease, gave him an additional thirty or sixty days in which

to drill the test well, and thereupon, Arthur Oeth wrong-

fully used the knowledge and the interest which he thus

acquired by such top lease in fraudulently preventing his

correlate Muth from accomplishing the object of his said

partnership, and a constructive trust was therefore im-

pressed upon the property referred to in such leases in

favor of Muth.

Hight.

(A) In denying plaintiff’s rights and status as a part-

ner and co-tenant under the laws of Indiana with especial

reference to the oil and gas lease in suit, and

(B) In failing to require the exercise of good faith from

lessor, Keck, in dealing with the leasehold as established

by the law of Indiana, and

(C) In declaring the invalidity of the top lease on the

Keck property instead of weighing its evil effect in in-

ducing defendant Oeth to withhold the partnership drill-

ing rigs from the premises as well as using it to frighten

away prospective investors with plaintiff Muth in either

buying his interest or financing the drilling for gas and

oil and

27

(D) In approving the illegal agreement of plaintiff’s

partner with a third party the Johnston Drilling Company,

Inc., to induce lessor Muth to declare the partnership lease

terminated and giving it to said third party, and

(E) In failing to declare a constructive trust in the

premises by reason and because of Oeth’s deal for the top

lease on the same premises with lessor Keck, and using

the said top lease to defeat his partner Muth in perform-

ing the prior joint lease and using his top lease to pre-

vent any investment with Muth in the lease, and joining

with third parties to obtain from Keck the eviction of

his partner Muth from the premises and obtaining for

the Johnston Drilling Company, Inc., the leasehold itself,

Plaintiff is by the decision denied the equal protection

of the law, and the applicability of cardinal principles of

trust law, heretofore declared to be inexorable, denied to

the important relationship of partners and co-tenants in oil

and gas leases in this jurisdiction.

WHEREFORE, your petitioner prays that a writ of certi-

orari issue under the Seal of this Court, directed to the

United States Court of Appeals for the Seventh Circuit,

commanding said Court to certify and send to this Court

a full and complete transcript of the record and of the

proceedings of the said United States Court of Appeals

had in the case numbered and entitled on its docket, No.

10279, John J. Muth, Plaintiff-Appellant vs. Aetna Oil

Company, Johnston Drilling Company, Inc., Fred J. Keck,

Ida F. Keck, Robert Oeth, Arthur Oeth, James A. Boland

and Oliie Husk, Defendants-Appellees, all to the end that

this cause may be reviewed and determined by the Court

as provided for by the Statutes of the United States; and

that the judgment herein of said United States Court of

Appeals for the Seventh Cireuit be reversed by the Court

IES TELL ISIE IAT RA RR ay

and for such further relief as to this Court may seem

proper.

Dated June 23, 1951.

Joun J. Mura,

Petitioner,

By: Wim C. WExzory,

AuBerT Warp,

Counsel for Petitioner,

Mitrorp M. Mier,

Parmer K. Warp,

Of Counsel.

i U

Se

~~~ — +

1 AUG 2

|

IN THE

;

7

Supreme Court of the United States

Ocroper Term, 1950.

No. 147

JOHN J. MUTH,

Petitioner-Appellant Below,

vs.

AETNA OIL CO., JOHNSTON DRILLING CO., ING.,

FRED J. KECK, IDA F. KECK, ARTHUR OETH,

ROBERT OETH, JAMES A. BOLAND, OLLIE HUSK,

Respondents-Appellees Below.

ANSWER TO PETITION FOR WRIT OF CERTIORARI.

Jor Vou Butr,

401 Old National Bank Building,

Evansville, Indiana,

Bert ©. CHEATHAM,

322 Court Building,

Evansville, Indiana,

Curtis C. Popper,

205 Court Building,

Evansville, Indiana,

De Roo Weser,

1 Fourth & Main Building,

Mt. Vernon, Indiana,

Jor S. Harrrexp,

CuHartes H. SparRENBERGER,

705 Hulman Building,

Evansville, Indiana,

Attorneys for Respondents.

THE GUNTHORP. WARREN PRINTING COMPANY, 210 WEST JACKSON, CHICAGO

—_———— #

TF

SO, eae eS ae ee

INDEX.

Summary or THE ARGUMENT.

PAGE

Summary of the matters involved shows findings of

fact are supported by the Record .................. 1

New matter will not be considered on Petition for

EE ech cecceskedcesueedewercaceecaseversws 5

Cases relied upon by Petitioner, as reasons relied on

for allowance of Writ of Certiorari, are not in con-

flict with the decision of the Court of Appeals in this

SOD habteoc ec ewteecteneestopemateessticesings om 5

This Court will not grant Certiorari to review facts... 9

Cases Crrep.

Burnett v. Commonwealth Co. (1932), 287 U. S. 415;

7 B® Teg Serre 5

Comstock v. Group of International Investors (1948),

335 U. S. 211; 68 S. Ct. 1454; 92 L. Ed. 1911 ........ 9

Coreyell v. Phipp (1942), 317 U.S. 406; 638. Ct.291.. 9

Helvering v. Minnesota Tea Co. (1935), 296 U. S. 378;

of 6 SOF Se 8 ee 5

Saltonstall v. Birtwell (1896), 164 U. S. 54; 17 S. Ct.

a Pn hoeaes ks dak ceak dees ¢.csle ab bawaite o 5

U. S. v. Johnston (1925), 268 U. S. 220; 45 S. Ct.

EY Oe OU dat ouch Gh addssvawebes soeesentaae 9

Cases DistincuisHeEn.

Denver v. Roane (1879), 109 Ind. 457; 8 N. EB. 566... .. 7

Consumers Gas Trust Co. v. Ink (1904), 163 Ind. i171;

STE fot icrspubsareeUsushresaswhebeencbes 7

Elkhard Carworks v. Ellis (1887), 113 Ind. 215; 15

Be ae wa eh PAHS ORL EI era 8

Preston v. Witherspoon (1886), 109 Ind, 457; 8 N. E.

gk Pale tt oe tis oe eda ein ia a ie 6

Stevens, et al. v. Reynolds (1895), 143 Ind. 467; 41 N. E.

SE Gah san FASANO NEARS A Chee aed edeeon 7

2

Petitioner has properly set out the disposition of this

- cause in the trial court and in the United States Court of

Appeals for the Seventh Circuit. The agreement of Octo-

ber 6, 1947, between the defendants, Oeth, and Plaintiff,

Muth, is substantially as summarized by petitioner ; but the

terms of such agreement were known only to the parties to

it. and defendants Johnston Drilling Company, Inc., Aetna

Oil Company, and Ollie Husk had neither actual nor con-

structive knowledge of such agreement (R. pp. 341-342;

Finding 25, R. p. 473). Such agreement was not recorded,

and said defendants had no knowledge of the former part-

nership relation existing between the Oeths and Muth (R.

pp. 341-342).

After Arthur Oeth, on January 3, 1948, gave notice to

Muth of his intention to terminate the partnership relation,

after thirty (30) days, pursuant to the agreement, the lease

from Keck of December 22, 1947, remained an asset ae-

quired during the existence of the partnership. But sueh

lease would terminate, according to its own terms, unless

the drilling of a test well was commenced within three (3)

months (or by March 22, 1948) (R. p. 35; Finding 4, R.

p. 462).

Muth and Arthur Oeth made separate attempts to get a

well drilled on the Keck lease by March 22, 1948 (R. pp. 117-

119, 122; R. p. 360). In order to accomplish this, Arthur

Oceth, sometimes with Muth in company, attempted to ob-

tain adjoining leases in order to assemble a drilling block.

In this they exhibited the Keck lease as an inducement to

neighboring owners and as an example of the type of lease

used (R. p. 339; Finding 9, R. p. 463; Finding 11, R. p. 464).

But Muth had the Keck lease in his possession (R. p. 339;

Finding 9, R. p. 493) and in the attempt to obtain a lease on

the Mesker tract and Klucker tract, adjoining the Keck

land, the neighbors had demanded to see what type of lease

Keck had executed (R. p. 118; Finding 12, R. p. 464). The

re s oe eee OT Te Oe: — ete

so-called ‘‘top lease’? was actually an ‘‘exhibit lease’’ pre-

pared from memory on substantially the same form as

the original Keck lease, to exhibit as a lease ‘‘similar to

Keeks’’ (R. p. 126). It was not acknowledged, nor paid for,

nor recorded, nor treated by Oeth or Keck as a subsisting

lease (R. p. 390; Finding 12, R. p. 465). Keck himself in-

formed Plaintiff of such exhibit lease, but explained that it

did not impinge upon the lease of December 22, 1947, and

that Plaintiff’s lease was still good provided timely per-

formance was effected (R. p. 390; Finding 12, 13 and 14,

R. p. 465). Such exhibit lease was used only in an attempt

to gain additional leasehold acreage to induce development

and preserve the lease of December 22, 1947, for Plaintiff

as well as the Oeths (Finding 12, R. p. 465).

With reference to the statement in Numerical Paragraph

14 of the petition that plaintiff requested defendant, Arthur

Oeth, to move a small Star rig on the Keck property and

commence and that defendant Oeth refused so to do: Oecth

refused so to do for the reason that neither Muth nor de-

fendants had the morey with which to start the drilling of

a well and the Star rig was of insufficient capacity to drill

a well to depths in excess of 2,300 feet required to reach the

oil producing formation in that vicinity (Finding 10-11, R.

p. 464).

Beginning with the first sentence of Numerical Para-

graph 14 in Petitioner’s summary, the summary itself is

largely devoted to argument.

The engineer employed by Plaintiff, through Boland, sur-

veyed a location in the northeast ten acres of the Keck land

on March 22, 1948 (R. p. 372). Boland complained that the

location was too rough, and requested a location at a differ-

ent point (R. p. 372). The relocation was not made tiil

March 23, 1948 (R. pp. 370, 392). The engineer was not

requested to apply for a bond or a drilling permit for plain-

tiff (R. p. 371), and it was not his custom to do so unless

CSE a Aika

= oes K mt outs

Ps Ss ait op BRAN

4

specifically instructed so to do (R. p. 373). Boland brought

the cable rig to the barnlot at the Keck farm about dusk on

the evening of March 22, 1948, left the rig against the barn,

talked with no one, and left within ten or fifteen minutes

(R. pp. 392-393). Such rig did not have the needed equip-

ment to drill or to commence drilling; the rig lacked a rope

socket, boiler, wrenches, hand tools, a drill stem, a drilling

bit, and a set of jars, and had insufficient drilling cable (R.

pp. 194-196, 210-211). By the admission of plaintiff’s own

drilling contractor, such rig was not moved to the drilling

location, did not commence the drilling of a well, and was

not even equipped to commence drilling within the time

required by the lease itself (R. p. 217). Plaintiff did not

file the necessary bond with the Conservation Department,

nor obtained any drilling permit (Finding 18, R. p. 467).

Keck did not interfere with the commencement of drilling

or prevent performance by plaintiff (R. pp. 209-210; Find-

ing 26, R. p. 473). Keck’s son even assisted plaintiff in

staking a location by pointing out property lines (R. pp.

204-209). When plaintiff’s contractor complained that he

would have difficulty reaching the location, Keck offered

his assistance in showing a better means of access (R. p.

391). Keck’s sole aim in executing the lease of December

22, 1947, and the lease of March 27, 1948, was to gain

development, and the royalties provided in each lease, for

him were the same (Finding 26, R. p. 473). No indemnity,

verbal or written, was given to Keck at any time prior to

March 23, 1948, and Keck did not notify plaintiff to quit

his premises until Mareh 23, 1948.

Paragraph No. 22 on page 13 of the petition for writ

of certiorari contains an erroneous statement concerning

the fee paid by Muth for surveying ‘‘and such payment in-

cluded the making of an application by such surveyor for

the bond and permit.’’ This statement is in error. The

charge of the surveyor was made for surveying two loca-

OPT TOE OE

_—

5

tions and furnishing one plat and six prints, and did not

include the cost of bond or permit (R. p. 374). The sur-

veyor was not ever requested to apply for a bond or drill-

ing permit for plaintiff, nor did Plaintiff pay for same (R.

p. 371).

OPINION BELOW.

The opinion of the Court of Appeals is now reported at

188 Federal 2d 844.

ARGUMENT IN OPPOSITION TO ALLOWANCE OF THE PETITION

FOR THE WRIT.

Petitioner sets out eight alleged reasons for granting the

writ, each of which will be discussed briefly below.

One.

Petitioner’s first reason relies upon petitioner’s inter-

pretation of an Indiana Statute (Burns Indiana Revised

Statutes, 1933, Section 50-430). An interpretation of this

statute was not presented either to the District Court or to

the Court of Appeals and petitioner now urges this statute

for the first time. The Supreme Court will not consider,

upon certiorari, any question not raised in the lower courts.

Saltonstall v. Birtwell (1896), 164 U. S. 54; 17 S. Ct. 19;

41 L. Ed. 348. Burnett v. Commonwealth Co. (1932), 287

U.S. 415; 53 S. Ct. 198; 77 L. Ed. 399. Helvering v. Min-

nesota Tea Co. (1935), 296 U. S. 378; 56 S. Ct. 269; 80 L.

Ed, 284.

Two.

The second reason relied upon by petitioner for allow-

ance of the writ is the claim that the decision of the Court

of Appeals is in conflict with a decision of the Indiana Su-

preme Court in New American Oil and Gas Company v.

Troyer (1906), 166 Ind. 402, 407-408; and is in conflict with

CATES, PUES ORR S Dah ae ps cee eager oe

6

a decision of the Court of Appeals of the First Circuit in

Fred W. Mears Heel Co., Inc. v. Walley (........... ), 71 Fed. (2)

876.

Each of the above cases is readily distinguishable from

the instant case. The Indiana case involved an oil and

gas lease which could be extended for successive periods

of three months each by the payment of a cash rental. The

lessee paid a cash rental for a period of three months from

March 6, and on the following March 20 the lessor com-

menced his action to cancel the lease and quiet his title.

Since a rental had been paid for a period extending for

almost three months after the lessor sought to cancel the

lease it was held, quite naturally, that the lease could xot

be canceled during a period for which rental had already

been paid. The facts distinguish the case.

The decision from the First Circuit, relied upon by re-

spondent as contrary to the decision of the Court of Ap-

peals in this ease, also involved an entirely different set of

facts. The Fred W. Mears case simply holds that the party

acting to avail himself of the non-performance on his own

must not himself be in default of performance on his own

part. In the instant case no act of performance was re-

quired by Keck. He granted a lease to plaintiff and de-

fendants Oeth subject to the provisions that the same should

terminate unless the lessees commenced drilling by March

22, 1948. Plaintiff did not lose his rights under the lease

due to any act or interference by Keck; plaintiff lost his

lease by failure to comply with its provisions.

Three.

The third reason relied upon by plaintiff is the alleged

conflict between the decision of the Court of Appeals in

this case and the decision of the Supreme Court of Indiana

in Preston v. Witherspoon (1886), 109 Ind. 457. But, this

7

case simply states the doctrine that a bona fide purchaser

will be protected against the claims of the true owner,

where the true owner has placed apparent title in the

person selling to the bona fide purchaser, The Witherspoon

case is not in any way in conflict with the decision of the

Court of Appeals in this case.

Four.

The fourth alleged reason for the writ urged by plaintiff

is that the decision of the Court of Appeals in this case is

in conflict with the decision of the Supreme Court of Indi-

ana in Consumers Gas Trust Company v. Ink (1904), 163

Ind. 174. But, in that case the lessor attempted to work a

forfeiture during a period for which a cash rental had al-

ready been paid and accepted by the lessor. Hence, in that

case it was quite proper to say that the forfeiture was not

self-executing, but that case, on its facts, is not in conflict

with the decision of the Court of Appeals in this case.

Five.

The fifth reason urged by plaintiff for claiming the writ

is that the decision of the Court of Appeals is said to be

in conflict with a decision of the Supreme Court of Indiana

in Stevens, et al. v. Reynolds (1895), 143 Ind. 467, and is in

conflict with the decision of this Court in Denver v. Roane

(1879), 99 U. 8. 355, 358, 25 Law Ed. 476. The facts in

those cases distinguish such cases from the instant case,

for the evidence was, and the trial court found as a fact,

that Oeth did nothing to hinder plaintiff toward drilling

under the lease of December 22, 1947 (Finding 26; R. p.

473).

8

Sia.

Defendants have no quarrel with the doctrine of Elkhart

Carworks Co. v. Ellis (1887), 113 Ind. 215, cited as the

sixth reason for granting the writ. Plaintiff entirely over-

looks the evidence, and the finding of the trial court (Find-

ing 26; R. p. 473) that neither Keck nor Husk hindered

plaintiff and ignores finding (Finding 12; R. p. 464) that

the ‘‘top lease’’ was in fact no more than an exhibit, that

it was obtained by Oeth in an attempt to gain additional

leasehold acreage and thereby preserve the rights of both

plaintiff, and Oeth and that Keck did not, by such top lease,

attempt to oust Muth (Finding 14; R. p. 465).

Seven.

The seventh reason urged by plaintiff refers to the so-

called indemnity agreement. This argument entirely over-

looks the fact that no indemnity, verbal or written, was sug-

gested, offered, or accepted, until after March 22, 1948, the

date by which plaintiff had to perform the provisions of the

lease under which he claimed. Keck, as the fee owner of the

land, and after the time for commencing drilling had ex-

pired under the lease of December 22, 1947, had the right to

demand any indemnity he pleased after plaintiff had failed

to commence drilling, and after plaintiff’s lease had expired.

That Keck demanded such:assurances is not surprising in

view of the threats of litigation made by Boland.

Eight.

The eighth reason urged by plaintiff is simply a summary

of the former reasons, and states the evidence most favor-

able to him, rather than as found by the court.

SUMMARY.

The judgment of the District Court and the decision of

the Court of Appeals were not in conflict with any estab-

lished doctrine of either this Court or the Supreme Court

of Indiana or a decision from another Circuit. The findings

of fact find adequate support in the evidence. It seems to

ve the chief effort of plaintiff to review the evidence and to

restate the findings by culling out those bits of evidence

most favorable to plaintiff. But the evidence has already

been heard by a Special Master, has been reviewed by the

District Judge and has been subject to appellate review by

the Court of Appeals for the Seventh Cireuit. This Court

will accept as correct such findings of fact as have been

made by the District Court and in which the Court of Ap-

peals has concurred, unless such findings are wholly with-

out support in the record. Coreyell v. Phipps (1942), 317

U.S. 406 ; 63 S. Ct. 291. Comstock v. Group of International

Investors (1948), 335 U. S. 211; 68 S. Ct. 1454; 92 L. Ed.

1911. Indeed, Certicrari is not granted for the purpose of

reviewing the evidence and discussing specific facts. U. S.

v. Johnston (1925), 268 U. S. 220; 45 S. Ct. 496; 69 L. Ed.

925.

The findings of fact being amply supported by the evi-

dence, and the judgment of the court flowing logically from

such findings, it is respectfully submitted that the petition

for the Writ of Certiorari should be denied.

Respectfully submitted,

Caries H. SparrENBERGER,

Joe Vou Burt,

Jor S. Harrievp,

Curtis C. PLoprper,

Bert C. Curatuam,

De Roo Weser,

Counsel for Respondents.

PEELS OGL IT IO