# Brief for the Respondent in Oppositionmm — Phillips Petroleum Co. v. Cabot Carbon Co.

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385610_0693%3A3

## Record

- **Collection:** Supreme Court brief
- **Document type:** Brief for the Respondent in Oppositionmm
- **Published:** January 1, 1954
- **Citation:** 348 U.S. 867

## Text

fice - Supreme Court, W.
FILDYD

SEP 20 1954
HAROLD B. WILLEY, Clerk

“SUPREME COURT OF THE UNITED STATES

Octoper Term, 1954

Prrturrs Perroteum ComMPaANy,

a corporation,
Petitioner,

VERSUS
Casot Carson COMPANY,
a corporation,

4 Roserr M. Ramey,

/ Srreeter B. FLYNN,
735 First National Building,
Oklahoma City, Oklahoma;

Homer D. JOHNSON,
Box 1011,
Pampa, Texas,

Attorneys for Respondent.

71 Franklin Street,
Boston, Mass.;

Ramey, Fiyvnu, Green & ANDERSON,
735 First National Building,
Oklahoma City, Oklahoma.

September, 1954.

Urrensack Typasatrine Co.. 13 SO. WALKER. OKLAHOMA City. PH. FO 8-8780

ie

SUBJECT INDEX

PAGE
Statement of the Case ; Pee 1

The Petition Fails to State Any Ground for Certiorari 7

Answer to Petitioner’s Alleged Reasons for Granting
the Writ ao =. eee 8

The Court of Appeals Applied the Law of Oklahoma
as to the Ownership of Gas in Place olan oa

Conclusion alee

AUTHORITIES

CASES:

American Indian Oil & Gas Co. v. George F. Collins
& Co., 157 Okla. 49, 9 P.2d 438 25
Arizona Grocery Co. v. The Atchison, Topeka and
Santa Fe Railway Co. et al., 284 U.S. 370, 389 9-10, 17
Armour Packing Company v. United States, 209 U:S.
See 24
Atlantic Coast Line R. R. Co. Vv. . Goldsboro, 232 U. S.
SE: MEY sthendshanananionsi , sme ae

Bowles v. Seminole Rock & Sand Co., 325 U.S. 410 18

Carter Oil Company v. State et al., 205 Okla. 374,
ROR NTS ERE CRE EE eR 11
Chicago, Rock Island and Pacific Ry. Co. v. State,
cf Oe OM § OD) ee 10
Cities Service Gas Company v. Peerless Oil and Gas
Company, 203 Okla. 35, 220 P.2d 279 _4, 11,17,
18, 19, 23, 24, 27, 31

——F

a

INDEX CONTINUED PAGE
Cities Service Gas Company v. Peerless Oil and Gas
Company, 340 U.S. 179 - a 4, 30
City of Durant et al. v. Consumers’ Light & Power
Co., 71 Okla. 282, 177 Pac. 361 ane 20, 25
City of Tulsa v. Oklahoma Natural Gas Co., 4 F. 24
399, appeal dismissed 269 U.S. 527. 24
Columbian Fuel Corp. v. Panhandle Eastern Pipe
Line Co., 271 P.2d 773 . oat 17
Consumers Gas Co. v. Corporation Commission, 95
Okla. 57, 219 Pac. 126 . se 25
Eagle-Picher Lead Co. v. voila Gas Co., 112
Okla. 65, 239 Pac. 890 - thie : 25
Gruger v. Phillips Petroleum Company, 192 Okla.
259, 135 P.2d 485 - er a jetaednais:. <n
Henderson Co. v. Mca 300 U.S. 258...
Huddleston v. Dwyer, 322 U.S. 232,237 27
Hudson os Water Co. v. McCarter, 209 US.
349, 357 _ at 24
Louisville & Nashville Railroad Co. v. Mottles, 219
U.S. 467, 482 - sands , panieles 24
Midland Realty a v. Kansas nsaed Power and
Light Company, 300 U.S. 109 _ jaiuiciindaniedaiateans | a

Natural Gas Pipe Line iia of America et al.
v. Corporation Commission of Oklahoma (Court
of Appeals Opinion), 110 F.2d 841, 843 ss—s—s«éG-7
Natural Gas Pipe Line Company of America et al.,
v. Corporation Commission et al. (District Court
Opinion), 114 F.Supp. 953, 956 _ mai 6
Natural Gas Pipe Line Company of America v. . Cor-
poration Commission of Oklahoma, 272 P.2d 425
(not officially reported) ._..._._ 5, 6, 11, 19, 21,
22, 23, 24

a

INDEX CONTINUED PAGE
Natural Gas Pipe Line Company of America v. Pan-
oma Corporation et al., 271 P.2d 354 (not officially

reported ) 5, 14, 19, 24, 27, 28, 29, 31

Palmer Oil Corporation et al. v. Phillips Petroleum
Company et al., 204 Okla. 543, 231 P.2d 997 32

Patterson v. Stanolind Oil and Gas Co. et al., 182
Okla. 155, 77 P.2d 83, affirmed 305 U.S. 376.23, 31-32

Philadelphia B. & W. R. Co. v. Schubert, 224 US.

603, 613-614 24
Phillips Petroleum Company ' Vv. Oklahoma et al., "340

U.S. 190 4, 14-15, 23, 25, 30
Producers Transportation Co. v. Railroad Commis-

sion, 251 U.S. 228 ; eee ndacy
St. Louis-San Francisco Railway Co. v. State, 268

P.2d 845 (not officially reported) 10
Smith v. Corporation Commission, 101 Okla. “254,

225 Pac. 708 10

Southern Oil Corporation v. . Yale Natural Gas Co.. .
89 Okla. 121, 214 Pac. 131, affirmed in 266 U.S. 583 25
Southwestern Light and Power Co. v. Elk _— 188

Okla. 540, 111 P.2d 820... Sees ae
Sproles v. Binford, 286 U.S. 374, 390... 24
State ex rel. Roth v. Waterfield, 167 Okla. 209, “99

P.2d 24 ea ee 25
State of Oklahoma ex rel. v _ Oklahoma Natural Gas

Gon. (6 CLA), BIae GS... 24
Stephenson v. Binford, 287 U.S. 251, he

The Atchison, Topeka and Santa Fe Ry. Co. v. Cor-
poration Commission, 68 Okla. 1, 170 Pac. 1156... 10

Union Dry Goods Company v. Georgia Public Serv-
ice Corporation, 248 U.S. 372, 376... ....-.... 28
United States v. B. & O. R. Co., 333 U.S. 169, 175. sls

Wood Oil Co. v. Corporation Commission, 205 Okla.
I TIE TIE... : cdatoninsssensetoeinemalsannmibtionianonienss sae

ee ee ee a

—jy—
INDEX CONTINUED PAGE
STATUTES:
Gas Act of 1913, Sections 231 and 232, Title 52, OS.
1951 - vince Lavina 31
Laws 1915, Ch. 197, Sec. 4 - intastliinipdiiassineeiicaia aa
een oe oo. 1 SCS 11
Title 52, O.S.A., Para. 231 _ ts eae 29
Title 52, O.S. 1951, Secs. 231 and 233 - mandi 29-30
Title 52, O.S. 1951, Sec. 239 0 gt
MISCELLANEOUS:
“Conservation of Oil and Gas, a Legal nega
Chap. 26, p. 404 by American Bar Association _ 29
Revised Rules of this Court effective July 1, 1954,
Rule 19 of Part V - ps

POOR COPY

—_—s ———. =e eee Ae oe oe es

No. 274

In the

Supreme Court of the United States
OcToBER TERM, 1954

PHILLIPS PETROLEUM COMPANY,
a corporation,
Petitioner,

VERSUS

Casot CARBON COMPANY,
a corporation,

Respondent.

BRIEF OF RESPONDENT IN OPPOSITION TO
PETITION FOR CERTIORARI

For convenience the respondent, Cabot Carbon Com-
pany, will be referred to herein as “Cabot”; the petitioner,
Phillips Petroleum Company, will be often referred to as
“Phillips” and the Corporation Commission of Oklahoma
will be referred to as “Commission.”

STATEMENT OF THE CASE

Petitioner’s statement of the case is erroneous and
misleading in several respects and for this reason we make
a short statement of the material facts.

A , ae es
9 hee 42 ee
are:

Been wimees: ache 1a SEBO, grap

On March 10, 1944, Cabot and Phillips entered into a
contract (R. 31) whereby Cabot agreed to assign certain
designated oil and gas leases then owned by it to Phillips
and to execute to Phillips leases on certain other lands in
which Cabot owned all or part of the minerals.

In Paragraph 4 of the contract (R. 32) it was agreed
that Cabot would reserve an undivided one-fourth of seven-
eighths interest in the natural gas underlying said lands or
in any natural gas which should be produced therefrom
and that Phillips would purchase Cabot’s share of the gas,
when produced, at a price of 4¢ per thousand cubic feet.

The exact wording of Paragraph 4 of the contract
which Phillips has failed to quote in its petition and has
consistently erroneously alluded to indirectly, is as follows:

“4, From the leasehold estates assigned and granted
to Phillips, or any renewals thereof Cabot shall (in
addition to the one-eighth royalty provided in the
leases granted to Phillips on Oklahoma Producers
Form 88) reserve an undivided interest in the natural
gas underlying said lands or in any naturai gas which
may be produced therefrom which shall be free of
development and operating costs and equal to one-
fourth of seven-eights of all the gas produced. Phillips
shall become the owner of the gas when produced and
will account to Cabot for said one-fourth of seven-
eighths of the gas produced at a value of four cents (4¢)
per MCF. The volume of gas produced shall be deter-
mined on the basis of an assumed temperature of sixty
degrees Fahrenheit and an absolute pressure of 16.4
peunds per square inch” (R. 32).}

' Unless otherwise stated, emphasis in quoted material is ours.

cai ats LOMA ANNES SILENT AE HI EE Si

eras. z i cine Mad ne, ie’, ss

POOR COPY

mete ee ~~ =r or tT eee

Ce ”

unin

Neither the contract nor any lease or assignment there-
under labels this interest “overriding royalty.”

As specifically pointed out in the opinions of the Court
of Appeals and the District Court, such reservations were
incorporated in all of the assignments, leases and other
instruments executed by the parties.

On December 9, 1946, the Commission entered its 7¢
price fixing order No. 19514 (R. 60), effective as of Jan-
uary 1, 1947, which, in addition to comprehensive and
elaborate findings, provided:

“That no natural gas shall be taken out of the pro-
ducing structures or formations in the Guymon-

Hugoton field in Texas County, Oklahoma, at a price,

at the wellhead, of less than 7¢ per thousand cubic feet
of natural gas * * *” (R. 67).

At the same time the Commission entered Order No.
19515 (R. 68), which is largely a repetition of Order No.
19514 with the addition that it directs Cities Service Gas
Company to take gas ratably from Peerless Oil & Gas Com-
pany.

On January 17, 1947, Phillips filed an application
(R. 78) with the Commission to vacate Order No. 19514
and so much of Order No. 19515 as applied to Phillips. The
Commission by Order No. 19702 of February 4, 1947, denied
the application (R. 84, 87).

Cities Service Gas Company appealed to the Oklahoma
Supreme Court from Orders Nos. 19514 and 19515. Phillips
also appealed from these orders and from Order No. 19702
denying its application to vacate (R. 94). The cases were

ee ee. oe

consolidated in the Supreme Court of Oklahoma which
affirmed the orders of the Commission and held that the
Commission under its broad regulatory powers had author-
ity to fix the minimum price of gas and that the orders did
not violate either the Due Process and Equal Protection
Clauses of the Federal and State Constitutions or the
Commerce Clause of the Federal Constitution. Cities
Service Gas Company v. Peerless Oil and Gas Company,
203 Okla. 35, 220 P.2d 279.

Phillips and Cities Service Gas Company appealed to
this Court which, in Cities Service Gas Company v. Peerless
Oil and Gas Company, 340 U.S. 179, and Phillips Petroleum
Company v. Oklahoma, et al., 340 U.S. 190, on December
11, 1950, affirmed the judgments of the Oklahoma Supreme
Court.

On May 17, 1951, the Commission, upon the application
of Panoma Corporation, entered Order No. 24745 (R. 91, 94,
95) wherein the Commission stated that it deemed it ap-
propriate to find that when it entered its Order No. 19514

“that it applied to all producers, purchasers and takers
of gas from said field, and that no sales or purchases
of natural gas would be thereafter permitted in the
Guymon-Hugoton field at a price of less than 7¢ per
thousand cubic feet, * * * so that the owners of the
gas within said reservoir, being the lessees and lessors.
and other persons owning an interest in the gas in
place, should at all times from and after the issuance
of said order, receive from the delivery of their gas,
as owners and producers thereof, not less than the
minimum price fixed by the Commission” (R. 91-95).

a

Natural Gas Pipe Line Company of America appealed
to the Supreme Court of Oklahoma from Order No. 24745,
which Court affirmed the order on September 15, 1953.
Natural Gas Pipe Line Company of America v. Panoma
Corporation, et al., 271 P.2d 354 (not officially reported).

On July 29, 1952, the Commission, pursuant to the
application of certain mineral owners in Texas County,
Oklahoma, entered Order No. 26096 (R. 96) increasing the
price of gas in the Guymon-Hugoton field from 7¢ to
9.8262¢ per thousand cubic feet (R. 100).

From this last order appeals were taken to the Supreme
Court of Oklahoma which affirmed the order on April 27,
1954. Natural Gas Pipe Line Company of America v. Cor-
poration Commission of Oklahoma, 272 P.2d 425 (not of-
ficially reported).

On November 28, 1952, Cabot instituted this action
against Phillips in the United States District Court for the
Western District of Oklahoma to recover a money judgment
for the difference between the minimum prices fixed by
the Commission for gas sold by Cabot to Phillips and the
4¢ price specified in the contract.

At the trial of this action Phillips stipulated that it
made no contention herein that Order No. 26096 was
invalid, but called attention to the fact that appeals to
the Supreme Court of Oklahoma were pending by others
than the parties to this suit. The parties referred to were
Natural Gas Pipe Line Company of America, Michigan-
Wisconsin Pipe Line Company and Panhandle Eastern
Pipe Line Company. The three appeals were consolidated in

Bic.

the Supreme Court. Phillips, a defendant in error in each
case, defended and urged the affirmance of the order.
Natural Gas Pipe Line Company of America, et al. v. Cor-
poration Commission, et al., supra. The District Court ren-
dered judgment on June 30, 1953 (R. 13-17) in favor of
Cabot for the full amount of its claim and made findings
of fact and conclusions of law (R. 14-17) and filed a written
opinion (R. 12), 114 F. Supp. 953, 956. With reference to
the contract involved herein the Court said:

“It is apparent from the wording of the original
contract and the leases and assignments executed in
pursuance thereof that the parties intended that Cabot
would retain title to its reserved undivided interest in
the gas until it had been produced, and that Phillips
was to acquire title and ownership only after produc-
tion, when the gas could be measured and Cabot paid
therefor. Cabot and Phillips were joint owners of the
leasehold estate. Phillips contracted to produce the gas
for both and when produced to purchase Cabot’s share
of the gas. It follows that Cabot was a joint producer
and seller, and Phillips, the operator, was a joint
producer and purchaser at the wellhead. The contract
price is, therefore, superseded by the price fixing orders
of the Corporation Commission.”

On appeal the Court of Appeals affirmed the judgment
of the District Court and in its opinion with reference to
the contract (210 F.2d 841, 843) stated:

“The contract between Phillips and Cabot recognizes
a right in Cabot to an interest in the gas in place. In
the contracts and leases the parties treated Cabot as
the owner of the gas. The contract provided that Cabot
would reserve an undivided interest in the natural gas
underlying the lands or any natural gas which would

EET Ge TTL NIE MAET FN OD IOS, GRO TE He OE es eRe CIT We

_— =

be produced therefrom. In the assignment of the leases
which Cabot held it reserved ‘ “unto itself and its suc-
cessors and assigns an undivided interest in the natural
gas underlying the lands covered by this assignment
and produced therefrom equal to one-fourth (1/4) of
seven eighths (7/8) of all gas produced from said
lands * * *.”’ All the conveyances between the parties
recognized such interest in the gas in place and in the
production thereof. Such provisions are wholly incon-
sistent with the premise that Phillips became the owner
of all the gas at the instance of production and that
Cabot had no interest therein. The provision that
‘“Phillips shall become the owner of the gas when
produced” ’ must be considered in context with all the
rest of the provisions of the contract and the various
assignments between the parties. It was no doubt in-
serted to make sure that Phillips should have the right
to all the production from these leases including its
interest therein, as well as the interest of Cabot, upon
payment therefor. When so considered, the practical
effect thereof was to give Phillips the right to receive
Cabot’s interest in the production by paying therefor
the contract price of 4¢.”?

THE PETITION FAILS TO STATE ANY
GROUND FOR CERTIORARI

The petition for certiorari does not set forth any of

the grounds in Rule 19 of Part V of the Revised Rules of

this

Court effective July 1, 1954, in that

(a) The decision of the Court of Appeals is not in
conflict with the decision of any other court of appeals
on the same matter;

* Emphasis supplied by Court of Appeals.

=
The Court of Appeals did not decide:

(b) An important state question in a way in con.
flict with applicable state law;

(c) An important question of federal law which
has not been settled by this Court;

(d) A federal question in conflict with applicable
decisions of this Court;

(e) The Court of Appeals has not so far departed
from the accepted and usual course of judicial pro-
ceedings or sanctioned such departure by a lower court
as to call for an exercise of this Court’s power of
supervision.

ANSWER TO PETITIONER’S ALLEGED REASONS
FOR GRANTING THE WRIT

I.

The first reason alleged by petitioner for granting the
writ is that the Court of Appeals’ decision is opposed to
Order No. 28884 of the Commission made J uly 16, 1954, and
that said order is conclusive upon the federal courts as to
the meaning and application of the price fixing orders.

The application of Phillips and the order of the Com-
mission referred to appear only in the appendix to Phillips’
petition for the writ and are no part of the record in this
case. We are aware of no decision which justifies their
consideration. Should we be mistaken, however, and if it
is proper for Phillips to bring these extraneous matters to
the attention of this Court, we desire to state that the order
has been appealed to the State Supreme Court and to

MONS | TRAP RN ES IT TOS RR Cig NS OER SAR tg

show that it is invalid and of no force and effect for the
following reasons:

(a) On May 24, 1954, after the judgment of the Court
of Appeals had become final and after Phillips had obtained
an extension of time within which to apply to this Court
for a writ of certiorari, Phillips filed with the Corporation
Commission an application for an order construing the
price fixing orders. This, strangely enough, was more than
eight years after the entry on December 6, 1946, of the 7¢
order (No. 19514) which had been superseded by the
9.8262¢ order (No. 26096) effective August 1, 1952.

It is obvious that Phillips sought and the Commission
granted a retroactive order under the guise of construing
the price fixing orders, but Phillips’ real purpose, induced
by desperate hope, was that it might by making use of
such an order persuade this Court to grant the writ.

The cases cited by Phillips under this heading are in-
apposite since the meaning of the original price fixing
orders had already been established by the Oklahoma
Supreme Court and by this Court.

What the Commission seeks to do in its July, 1954,
order is to overrule and nullify the constructions made of
the original order by the Supreme Court of Oklahoma and
by this Court, turn the clock back and make the new order
effective as if it had been entered in December, 1946. The
Commission was wholly without power to enter a new
order modifying and changing its earlier orders and give
them retroactive effect. Arizona Grocery Co. v. The Atchi-

- a
Be
See 7

son, Topeka and Santa Fe Railway Co. et al., 284 US. 370,
389.

The Commission in making the order has actually
attempted to adjudicate contract rights between private
parties, which it has no jurisdiction, power or authority to
do. The Supreme Court of Oklahoma specifically held in
Southwestern Light and Power Co. v. Elk City, 188 Okla.
540, 111 P.2d 820, that the Corporation Commission of Okla-
homa is without jurisdiction or power to enter or enforce
a judgment or order adjudicating contractual rights of the
parties. Other cases to the same effect by the Supreme Court
of Oklahoma are:

—The Atchison, Topeka and Santa Fe Ry. Co. y.

Corporation Commission, 68 Okla. 1, 170 Pac.
1156;

Smith v. Corporation Commission, 101 Okla. 254,
225 Pac. 708;

Chicago, Rock Island and Pacific Ry. Co. v. State,
158 Okla. 57, 12 P.2d 494:

St. Louis-San Francisco Railway Co. v. State,
268 P.2d 845 (not officially reported).

Both the District Court and the Court of Appeals in
construing the contracts between Phillips and Cabot, held
that Cabot owned one-fourth of seven-eighths of the gas in
the reservoir, and as produced, and that Phillips purchased
the same pursuant to the terms of the contract.

Under the authorities above cited, the Commission did
not by Order No. 28884, entered on July 16, 1954, have

PBEM ATA AEROS RNY TE PDIP HIE, ONE AT POMS TEE

a a

any jurisdiction, power or authority to overrule or change
such adjudications.

(b) The application for the order, and the order itself,
fail to show any change in conditions from what they were
at the time the price fixing orders were made. Therefore,
the Commission was without authority to repeal, amend,
modify or supplement a previous order issued by it. Title
52, Section 112, O.S. 1951, is so construed by the Supreme
Court of Oklahoma in Carter Oil Company v. State et al.,
205 Okla. 374, 238 P.2d 300, and Wood Oil Co. v. Corpora-
tion Commission, 205 Okla. 534, 239 P.2d 1021. In these
opinions the Oklahoma Supreme Court held that the Com-
mission was without authority to review and modify a
former order that had become final upon the alleged
ground that said order was ill-advised, inequitable or other-
wise erroneous. Prior to July 16, 1954, appeals from the
price fixing orders had been taken to the Supreme Court
of Oklahoma in which the orders were reviewed and con-
strued. Cities Service Gas Co. v. Peerless Oil and Gas Co.,
203 Okla. 35, 220 P.2d 279; Natural Gas Pipe Line Company
of America v. Corporation Commission of Oklahoma, 272
P2d 425. This Court also construed and applied the 7¢
order in cases héretofore cited.

(c) The Commission’s Order No. 28884 of July 16, 1954,
is in direct conflict with the above decisions and with its
own previous orders. These decisions and orders clearly
and unequivocally stated that the price fixing orders ap-
plied to all gas in the Guymon-Hugoton pool and to all
producers, purchasers and takers of such gas and that the
Commission in making the orders and the Supreme Court in

a,

construing and sustaining them was primarily concerned
with the conservation of gas, the protection of correlative
rights and the interest of royalty owners and every person
having an interest in the gas.

In the original price fixing order, No. 19514 (R. 60)
the Commission ordered:

“that no natural gas shall be taken out of the producing
structures or formations in the Guymon-Hugoton
fom ee

for less than 7¢ per thousand cubic feet at the wellhead.

In Paragraph 4 of the Findings in Order No. 19702
(R. 84) denying Phillips’ application to vacate or modify,
the Commission stated that the order applied

“to all producers, purchasers and takers of gas in the
field,* * *”

and that Phillips Petroleum Company was a taker of
natural gas in the field.

And in Paragraph 6 of said Findings, the Commission
stated in substance that there would be discrimination if
it did not fix a uniform price for the field and that the
state’s natural resources would be dissipated and wasted

“all to the detriment of the producers, royalty owners
and School Land Commission of the State of Okla-
naa 9 ° 9"

In its opinion of January 17, 1950, in the consolidated
appeal of Cities Service and Phillips from the 7¢ order
heretofore cited, the Oklahoma Supreme Court made

OT Ce aes) STIS es PPE: OR een

—

numerous references to the fact that the 7¢ order applied
to all gas and that it was intended to and did have for its
purpose the protection of royalty and other owners. Perti-
nent thereto the Court said, at pages 39, 42 and 43:

“Obviously, the protection of the interest of all
owners of the gas is the intent of the statute and such
is the standard of guidance to the Corporation Com-
mission acting thereunder.

* * * bd ” a te a *

“Reference to protection of the interest of all those
having a right to produce gas from a common source
of supply directs attention to the owners of the land
overlying the gas and such interests as they have con-
veyed.

” x * ” * * * * *

“Under either of such circumstances prices might
be so reduced that landowners or royalty holders or
particular leaseholders would have their interests in
the gas exhausted, dissipated and taken, without hav-
ing received any reasonable compensation, and each
suffer waste of a valuable reversion.”

The Commission, in its Order No. 24745 (R. 91), as
heretofore stated, specifically found that the order applied
to all producers, purchasers and takers of gas from the
field and that no sales or purchases of natural gas would
thereafter be permitted at a price less than 7¢ per thousand
cubic feet, and that the purpose of the order was to insure
that owners of the gas in the reservoir, such as lessees,
lessors and other persons having an interest in the gas in
place would receive such price.

a

In Order No. 26096 (R. 96-101) fixing the price of gas
at 9.8262¢, the Commission reaffirmed the findings and pur-
poses of the 7¢ order.

— a

On appeal in the Panoma case, supra, the Supreme
Court in Paragraph 3 of the syllabus (the syllabus being
the law of the case in Oklahoma) said:

“When the Corporation Commission by valid order
fixes the minimum wellhead price which must be paid
for natural gas taken from a designated gas field or
gas pool, that order supersedes any existing contract
by which a purchaser is taking natural gas from such
gas field or gas pool at a lesser price; and from and after
the effective date of such order such purchaser owes
a legal duty to pay for all gas taken, as much as the
minimum price fixed by such order.”

In the opinion the Court stated that:

“* * * no one could legally take natural gas from
that field at a price less than 7¢ at the wellhead.”

In this opinion the Supreme Court of Oklahoma
definitely held that a purchaser of gas violated the price
order if it purchased gas at less than 7¢ per thousand cubic
feet at the wellhead, even though its contract provided for
a lesser price. Likewise, in its recent decision in the case
of Natural Gas Pipe Line Company of America v. Corpora-
tion Commission et al., supra, affirming the order of the
Corporation Commission, the Supreme Court of Oklahoma
reaffirmed its previous decisions in cases involving the 7¢
price fixing order.

In the Phillips’ case, supra, this Court said:

POOR COPY

PELL SE RE re C8 RETR A GeO ene AOC a SER PRS — 4
be

—15—

“Appellant does not argue that the orders violate
the Commerce Clause. In other respects, the appeal
presents only minor variations of the issues raised by
Cities Service. Phillips argues that it is not a pur-
chaser but merely a producer; that unlike the situa-
tion in Cities Service, the order as applied to it lacks
any connection with correlative rights, the interest of
the public, monopolistic practices or discrimination.
The distinction is without a difference; the connection
between realized price and conservation applies to
all production in the field, whether owners purchase
from others or not, and whether they own pipe lines
or not. In a field which constitutes a common reservoir
of gas, the Commission must be able to regulate the
operations of all producers or there is little point in
regulating any.”

Phillips argues, and induced the Commission to hold
in its recent order, that in entering the price orders

“the Commission contemplated and intended that the
landowners, usual and typical royalty owners, and
other persons whose royalty, overriding royalty or
other interest in the gas is, by contract, measured by
or dependent upon the market value or proceeds of
sale thereof by the producer, would under and as a
consequence of the terms of their contracts be entitled
to payment based upon the minimum price the pro-
ducer is so required to realize * * *.”

The effect of this is that owners of the minerals and
royalty owners having such contracts would be affected or
benefited by the price orders and a large number of
Phillips’ lessors would be excluded as Phillips does not
have such contracts with them. We must not be misled by
Phillips’ statement on page 21 of its petition, to-wit:

ovals

“It should be borne in mind that most overriding
royalties, as well as landowners’ royalties, provide
for payment on the basis of proceeds of sale by the
lessee or the market value of the gas or oil. Such
royalties were ‘typical’ in the Hugoton Field (see
Plaintiff's Exhibit 44, R. 113, and Stipulation, R. 26),
Such was the type of royalty owners mentioned in the
Commission's findings and in the Oklahoma Supreme
Court opinion in the Cities Service case, 220 Pac. 279,
287.”

Phillips again fails to state a material fact in the
record. It is true that the gas leases referred to by it did
contain such provisions when executed, but these leases
were thereafter definitely and materially, in many in-
stances, amended by the gas royalty agreements entered
into by Phillips with many lessor royalty owners (R. 50
and 30).

These royalty agreements in specific terms superseded
and modified the lease provisions. In lieu of the lease clauses
providing for one-eighth of the market value or proceeds
of sale, they substituted a provision calling for a minimum
payment to lessors of 4¢ per thousand cubic feet for sweet
gas and 314¢ for sour gas, with a further provision that
such minimum should be increased if the weighted average
price of the gas sold by Phillips in one Oklahoma and two
Texas counties should exceed such minimum price (R. 50).

Order No. 28884 would make it possible for these
royalty agreements to defeat one of the purposes of the
price orders and one of the grounds upon which they were
justified and approved by the courts. This would result
in gross and unfair discrimination since the effect of the

tL ees

ALF MELO RNID AOR, F

POOR COPY
BLEED THROUGH

Pe SRR PS ON a.

——] F-

price order would then vary with the terms of different
leases and other contracts. By ingenious contracts, lessee-
producers could take large quantities of gas from some at
much less than the minimum price fixed by the orders
while paying such minimum price to others. Such dis-
crimination would tend to destroy correlative rights and
the conservation of gas, the basic principles of the orders.

(d) The Commission’s price orders are legislative
orders, having the force of law analogous to an act of the
Legislature. Arizona Grocery Co. v. The Atchison, Topeka
and Santa Fe Railway Co., supra.

In the case of Cities Service Gas Co. v. Peerless Oil
ond Gas Co., supra, the Supreme Court of Oklahoma said:
“The orders are legislative in character and subject

in a large measure to the rules and principles by which
the validity of statutes are determined.”

It is a judicial function within the jurisdiction of the
Oklahoma Supreme Court to construe the statutes of the
state and the legislative orders of the Corporation Com-
mission, such as the price orders herein involved, for the
purpose of determining their meaning and application.
When so interpreted and construed by the highest court of
the state, such construction and interpretation is binding
upon all, and the Commission is powerless to give its price
orders a different interpretation or application from that
of the highest judicial authority in the state. Phillips cites
at page 16 of its petition the case of Columbian Fuel Corp.
v. Panhandle Eastern Pipe Line Co., 271 P.2d 773, by the
Supreme Court of Kansas, in support of its contention that

= Ss

the order of July 16, 1954, is conclusive upon federal
courts as to the meaning and application of its previous
price fixing orders, and seems to rely heavily on the state.
ment therein that an administrative body’s interpretation
of its own rules, orders or regulations, in case of ambiguity,
is entitled to great weight. In view of what has already
been said, this case could have no application for the reason
that there is no ambiguity in the orders and the Supreme
Court of Oklahoma, in the case of Cities Service Gas Co. y.
Peerless Oil and Gas Co., supra, so found, although Cities
Service and Phillips contended to the contrary. Moreover,
in the case relied upon by Phillips, and in other cases cited,
there had not been, as in the present case, prior judicial
interpretation and construction of the language of the
administrative orders.

In Bowles v. Seminole Rock ¢ Sand Co., 325 US. 410,
cited by Phillips, there had apparently been no judicial
interpretation of an administrative regulation. The federal
courts in construing a state statute accept the controlling
decisions of the highest court of the state and only give
weight to administrative interpretations when there have
been no judicial interpretations by such court.

II.

Phillips’ asserted second reason for granting the writ
is based upon its claim that the minimum price orders as
applied and construed by the Court of Appeals constitute
a taking of private property and an impairment of private
contracts in violation of the Due Process and Contract
Impairment Clauses of the Federal Constitution. Petitioner

FOOD OIE ta OW CO Me a hinge ate Miaettade nb

OR COPY
BLEED THROUGH PO

a

states that the Cabot-Phillips contract provides for what
Phillips labels “an overriding royalty payment.” There is
no such term used in this contract. Labels are not impor-
tant. Both the trial court and the Court of Appeals found
that under the plain language of the contract Cabot was
the owner of one-fourth of seven-eighths of the gas and
that Phillips purchased the same as produced. Therefore, it
was a simple purchase and sale. The price fixing orders as
construed by the Commission [Orders No. 19702 (R. 84-
87) and No. 24745 (R. 91)] and the Supreme Court of
Oklahoma applied to all sales and purchases of gas in the
Guymon-Hugoton field. Cities Service Gas Co. v. Peerless
Oil and Gas Co., 203 Okla. 35, 220 P.2d 279; Natural Gas
Pipe Line Company of America v. Panoma Corporation
et al., 271 P.2d 354; Natural Gas Pipe Line Company
of America v. Corporation Commission of Oklahoma, 272
P.2d 425.

Petitioner makes the claim that the one-fourth of
seven-eighths of the gas reserved by Cabot was a part of
the consideration that Phillips paid for the leases. This is
an incorrect statement. Phillips overlooks the fact that
Cabot was the lessee when the contract was executed and
that as such was the owner of the underlying gas—such gas
was its property and it could deal with it like any other
property. By the terms of the contract it transferred a
three-fourths interest therein to Phillips and Phillips
never at any time became the owner of the other quarter
interest that was retained by Cabot until after the gas was
produced. Obviously, Phillips could not give Cabot, as a
consideration, something Phillips never had. Even if it

‘ u
ir

were a consideration, it would be immaterial. City of
Durant et al. v. Consumers’ Light ¢ Power Co., 71 Okla.
282, 177 Pac. 361.

Phillips has several times mentioned in its petition
that the Commission in Order No. 19702 found that the
applicant was at that time in compliance with Order No.
19514 fixing the minimum price for gas in the field at 7¢
per thousand cubic feet, but has failed to call to the at-
tention of this Court the subsequent order of the Com-
mission made in the Panoma case (R. 91-95) wherein the
Commission explained the circumstances under which the
statement was made and completely rejected the inference
of compliance to be drawn from its order denying Phillips’
application to vacate.

Moreover, Phillips did not accept the Commission’s
statement of compliance in its Order No. 19702, but in fact
persistently urged in both the Supreme Court of Oklahoma
and in this Court that the statement was unsound.

The record (R. 78, 80) also discloses that at the time
Order No. 19702 was entered Phillips was under contract
with Panhandle Eastern Pipe Line Company to sell it gas
from the Guymon-Hugoton field at 4¢ per thousand cubic
feet and the Commission, apparently without any investi-
gation of the situation, assumed that the gross proceeds of
the by-products extracted from said gas by Phillips should
be added to the 4¢ contract price paid by Panhandle Eastern
in determining whether the 7¢ was realized and the order
thereby complied with.

—- =

That question constituted the material issue in the
Panoma case. The pipeline company purchaser from
Panoma urged that the Commission was bound by its
statement (unsupported by the record) in Order No.
19702 denying Phillips’ motion to vacate or modify the 7¢
price order and that the Commission should include the
proceeds of the by-products extracted from the gas in
determining whether the price realized was as much as
the minimum price fixed by the 7¢ order. The Commission
held that the proceeds of the by-products were not to be
considered, as the cost of such extraction was substantially
equal to the amount realized from the by-products. Later
in the pipeline cases the Commission in Order No. 26096
adopted a formula to this effect and on appeal the formula
was held to be reasonable and valid by the Oklahoma
Supreme Court. Natural Gas Pipe Line Company of Amer-
ica v. Corporation Commission of Oklahoma, supra.

In the proceedings before the Commission resulting in
the 9.8262¢ order Phillips again strenuously urged that the
proceeds from the by-products should not be considered,
while the pipeline companies, as above stated, insisted the
proceeds should be included. Since the pipeline companies
urged that what was said by the Commission in Order No.
19702 with reference to Phillips’ compliance was binding
in their cases and should be adhered to, the Commission
rejected the contention (Paragraphs 10 and 11, Order No.
24745, R. 94-95) as did the Oklahoma Supreme Court in
the Panoma case.

In view of this uncontradicted record, it does seem
that petitioner has taken an untenable position.

ee aad oe ona

—22—

Throughout its petition Phillips has repeatedly drawn
inferences and conclusions and set forth imaginary fact
situations wholly unsubstantiated by the record. It gives
very slight, if any, consideration to the adjudications of
the courts by which the issues in this case have been
considered. Among these matters is the persistency with
which Phillips implies it was not a purchaser of gas at
the time the 7¢ order was made. During all that time it
was purchasing gas from Cabot and others, and at the time
and before the making of the 9.8262¢ order it was pur-
chasing large quantities of gas in the Guymon-Hugoton
field.

In the case of Natural Gas Pipe Line Company et al.
v. Corporation Commission et al., supra, the Supreme
Court of Oklahoma, in referring to the evidence offered by
Phillips before the Commission, stated that:

“Phillips has contracts with certain other producers
by which it purchases gas at their wellheads, which
gas it gathers, processes and sells in the same manner
as the gas from its own wells and leases; that the
production from its own leases is 14% of the total
production of the field and the gas it purchases is 4.4%
of the field total, making a total of gas which it pro-
duces or purchases of 18.4% of the field total; * * *.”

Phillips asserts (page 22 of its petition) that the effect
of the judgment of the Court of Appeals is to require
Phillips to pay a huge sum of money to Cabot for Cabot’s
own private enrichment, in disregard of the contract. This
contention was disposed of by this Court in the Cities
Service case, supra, by the statement that a group of private

_ ee

~ =

producers and royalty owners deriving substantial gain
from the regulations does not contradict the established
connection between the orders and a statewide interest
in conservation. Petitioner also ignores the fact that its
own enrichment under the Commission’s orders far ex-
ceeds Cabot’s.

Phillips, among others, urged in the Supreme Court
of Oklahoma that the 9.8262¢ price order is valid and that
it compels the Panhandle Eastern to pay Phillips the price
fixed therein. This claim was sustained by the Supreme
Court of Oklahoma in Natural Gas Pipe Line Company of
America v. Corporation Commission, supra. On the sale by
Phillips of its share of the gas produced from the lease-
holds involved herein alone, Phillips will receive $3.00 for
every additional dollar it pays Cabot.

This Court disposed of substantially the same claim
with respect to the Due Process Clause of the Federal Con-
stitution adversely to petitioner’s contention in the cases
of Cities Service Gas Co. v. Peerless Oil and Gas Co., supra,
and Phillips Petroleum Company v. State et al., supra.

The orders as applied to the contract herein involved
also do not violate the Contract Impairment Clauses for it
is well settled by the decisions of this Court that private
contracts are subject to change by the exercise of the
police power of the state:

—Patterson v. Stanolind Oil & Gas Company, 305
US. 376;

Union Dry Goods Company v. Georgia Public
Service Corporation, 248 U.S. 372, 376;

mee. or

—_ =
Hudson County Water Co. v. McCarter, 209 US.
349, 357;

Atlantic Coast Line R. R. Co. v. Goldsboro, 239
US. 54., 558;

Louisville & Nashville Railroad Co. v. Mottley,
219 U.S. 467, 482;

Stephenson v. Binford, 287 U.S. 251, 276:

Armour Packing Company v. United States, 209
US. 56, 82;

Midland Realty Company v. Kansas City Power
and Light Company, 300 U.S. 109;

United States v. B. & O. R. Co., 333 US. 169, 175;

Philadelphia B. & W. R. Co. v. Schubert, 224 US.
603, 613-614;

Henderson Co. v. Thompson, 300 U.S. 258;
Sproles v. Binford, 286 U.S. 374, 390;

Producers Transportation Co. v. Railroad Com-
mission, 251 U.S. 228;

State of Oklahoma ex rel. v. Oklahoma Natural
Gas Corp. (10 C.C.A.), 89 F.2d 416;

City of Tulsa v. Oklahoma Natural Gas Co., 4
F.2d 399, appeal dismissed 269 U.S. 527.

The same principle has been applied by the Supreme
Court of Oklahoma in numerous cases:

—Cities Service Gas Company v. Peerless Oil &
Gas Company, supra;

Natural Gas Pipe Line Company of America v.
Panoma Corporation, supra;

Natural Gas Pipe Line Company of America v.
Corporation Commission of Oklahoma, supra;

NIAGARA EI ETRY PDL LO TPS AE II NE AP _—

ee ee ae EE ee ee

-_ =

State ex rel. Roth v. Waterfield, 167 Okla. 209,
29 P.2d 24;

Southern Oil Corporation v. Yale Natural Gas
Co., 89 Okla. 121, 214 Pac. 131, affirmed in
266 U.S. 583;

Consumers Gas Co. v. Corporation Commission,
95 Okla. 57, 219 Pac. 126;

Eagle-Picher Lead Co. v. Henryetta Gas Co.,
112 Okla. 65, 239 Pac. 890;

American Indian Oil & Gas Co. v. George F.
Collins & Co., 157 Okla. 49, 9 P.2d 438;

City of Durant et al. v. Consumers’ Light &
Power Co., 71 Okla. 282, 177 Pac. 361.

Petitioner’s contention that the Commission’s orders
cannot be sustained on the grounds of waste prevention or
correlative rights protection is wholly without merit. It
unsuccessfully made this same contention as to the 7¢
price order in the Supreme Court of Oklahoma in Cities
Service Gas Co. v. Peerless Oil & Gas Co., supra, and in
this Court in Phillips Petroleum Company v. State, supra.

III.

Phillips’ third asserted reason for granting the writ
is that the constitutional questions here presented by it
could have and should have been avoided by the Court of
Appeals. According to petitioner’s own argument, the only
way the Court of Appeals could have applied the orders in
a way to avoid the constitutional questions here asserted
by petitioner would have been for it to have decided the
case in petitioner’s favor. The Court of Appeals construed

2 Nee ities tee Sm ate

the orders in accordance with the construction of the Su.
preme Court of Oklahoma and the decisions of this Court
as applying to all sales and purchases of gas and applied
this ruling principle to the facts of this case. The governing
legal principles having been theretofore authoritatively de.
cided, there was no occasion for the Court of Appeals to
delay its decision.

Petitioner further contends that the Court of Appeals
should have stayed further proceedings in this case pend-
ing an interpretation of the minimum price orders by the
State Supreme Court or by the Commission. There was
no occasion whatever for the Court of Appeals to stay
further proceedings since the Supreme Court of Oklahoma
had already judicially interpreted and construed the orders.
Moreover, during the entire course of the present litigation
between Cabot and Phillips there was no suggestion made
by petitioner that the proceedings be stayed until the filing
of its petition for rehearing after the Court of Appeals had
rendered its decision, notwithstanding Phillips was
thoroughly familiar with all of the pending cases cited in
its petition for rehearing. In fact it was a party to all of
these pending cases except the case of Panoma Corpora-
tion v. The Texas Company. As heretofore stated, these
cases have since been decided by the Supreme Court of
Oklahoma, in which it adhered to its former decisions in
construing and applying the price fixing orders.

IV.

Phillips’ fourth asserted reason for granting the writ
is that the Court of Appeals misinterpreted and misapplied

NE IIV EE RG LEE RE ALOE EE LENE REESE NOMA ig Op OORT EOS

ee ee ee ee

a aeneaeemee

juli

the minimum price orders and violated settled state law
in respect to ownership of gas in place. It asserts under
subdivision (a) that the Court of Appeals’ interpretation
is in conflict with the language of the orders, with their
basic purpose, and with the findings of the Commission.

Petitioner admits that this claim is one with which
this Court would not ordinarily concern itself, citing Hud-
dleston v. Dwyer, 322 U.S. 232, 237, but contends that the
Court of Appeals’ interpretation and application of the
order has presented a serious cunstitutional question and
for that reason it should have declined to interpret the
orders until the state tribunals had interpreted them.

The above contentions are wholly without substance
or merit for the reasons:

(1) At the time of the rendition of the judgment the
Court of Appeals correctly applied the law of ownership
of gas as declared by the Supreme Court of Oklahoma.
Cities Service Gas Co. v. Peerless Oil & Gas Co., supra,
and Natural Gas Pipe Line Company of America v. Pan-
oma Corporation, supra. Since that time the State Supreme
Court has not changed its former rulings, but has reaf-
firmed and applied them. Natural Gas Pipe Line Company
of America v. Corporation Commission, supra.

(2) The judgment of the Court of Appeals does not
present a serious constitutional question for the reasons
hereinabove stated.

(3) As we shall hereafter show, petitioner’s argument
under subdivision (c) is also without substance as the
Court of Appeals correctly decided the question of the

~ =

ownership of gas in place by application of the law of Ok-
lahoma as declared by statute and the decisions of its
Supreme Court.

In further support of its contentions, petitioner pro-
ceeds on pages 36 to 40, inclusive, to discuss alleged find-
ings and purposes of the Commission’s orders. We con.
sider all such argument irrelevant at this late day in view
of the fact that these questions have all been settled ad-
versely to petitioner’s contention by this Court and by the
Supreme Court of Oklahoma in the cases above cited.

In the light of the decisions of this Court, it seems
unnecessary to refer further to the detailed findings in the
Commission’s orders or to extensively quote from the de-
cisions of the Supreme Court of Oklahoma. We deem it
appropriate, however, to call this Court’s attention to its
own decision in the Phillips’ case.

For the same reasons above given, there is no merit in
petitioner’s contention that the price orders as construed
and applied by the Court of Appeals exceed the statutory
powers of the Commission. The statutory power to make
such orders under the conservation laws has been estab-
lished by the Supreme Court of Oklahoma in the cases
heretofore cited as being a proper exercise of the police
power of the state and that all contracts are subject thereto.
Natural Gas Pipe Line Co. v. Panoma Corporation, supra.
Therefore, the Court of Appeals was eminently right in
following the decisions of the State Supreme Court and
applying the principles therein announced to the contract
involved herein. This Court in the Cities Service case said:

eee ae

—

= =

“Like any other regulation, a price-fixing order is
lawful if substantially related to a legitimate end
sought to be attained. Nebbia v. New York, 291 US.
502 (1934) and cases thereir cited. In the proceed-
ings before the Commission in this case, there was
ample evidence to sustain its finding that existing low
field prices were resulting in economic waste and con-
ductive to physical waste. That is a sufficient basis
for the orders issued.”

THE COURT OF APPEALS APPLIED THE LAW OF
OKLAHOMA AS TO THE OWNERSHIP
OF GAS IN PLACE

Petitioner, under sub-section (c) of its fourth alleged
reason for granting the writ, contends in effect that the
Court of Appeals did not apply the law of Oklahoma in
respect to the ownership of gas in place. There is no basis
whatever for this contention.

Whatever may have been the rule of the State of Ok-
lahoma decisions prior thereto, Paragraph 231, Title 52,
0S.A., enacted in 1913, provided that:

“All natural gas under the surface of any land in
this state is hereby declared to be and is the property
of the owners, or gas lessees of the surface under
which gas is located in its original state.”

In Chapter 26, page 404 of “Conservation of Oil and
Gas, a Legal History,” published in 1948 by the Section
on Mineral Law of the American Bar Association, it is
stated, in referring to Setcions 231 and 233 of Title 52, O.S.
1951, that:

~~

“Another 1913 act adopted the theory of ownership
of gas in place and provided that a well in the common
source of supply reduced the gas to possession.”

In the Cities Service and Phillips’ cases, supra, the Su-
preme Court of Oklahoma recognized this statute and gave
full force and effect to its language providing for owner.
ship of gas in place. This Court also recognized the validity,
attached importance to and apparently considered con-
clusive the provisions of the statute. This appears from the
following excerpt from its opinion (340 U.S. 179):

“The Supreme Court of Oklahoma rejected these
claims. It found that the Oklahoma statutes fully em-
powered the Commission to take the action which it
took. The Oklahoma legislature, as early as 1913 de-
clared that gas underlying land is the property of the
landowner or his lessee; that gas may be taken from
a common source of supply proportionately to the
natural flow of the well and that the drilling of a well
by an owner or lessee shall be regarded as reducing
to possession his share of the gas, * * *.”

Thus, as each well is drilled to production the gas
owners reduce the gas to possession. If any fictitious legal
incapability of ownership of gas which has not been re-
duced to possession be claimed, there certainly can be no
such claim as to owning gas which has been reduced to
possession. By drilling into the gas reservoir Phillips re-
duced to possession for Cabot one-fourth of seven-eighths
of the gas along with its own share of said gas. Therefore,
Cabot’s ownership of the gas became complete at that time
if not prior thereto.

SLRS PCN LLE OTTIE LOMD YON EILEEN INOS EI LISLE IT 3 TTS

Apart from the provisions of the Gas Act of 1913, Sec-
tions 231 and 232, Title 52, O.S. 1951, the Commission, as
a part of and in furtherance of its broad regulatory powers
(Laws 1915, Ch. 197, Sec. 4; Title 52, Sec. 239, O.S. 1951;
Cities Service Gas Co. v. Peerless Oil & Gas Co., 203 Okla.
35, 220 P.2d 279) has power and authority to consider gas
as subject to ownership in place, which is what it did in
its price fixing orders, and the Supreme Court of Okla-
homa on the appeal from the Panoma order (No. 24745)
recognized the validity of a sale of gas in the ground.

“These contract provisions tend strongly to support
commission’s findings, and to indicate that in truth
and in fact Natural bought and contracted to buy all
of Panoma’s Natural gas in the ground and to be pro-
duced from under this 78,000 acres, and that all pro-
visions for drilling, producing, piping, compressing,
processing, metering, etc. were merely details of de-
livery to Natural of that which it had already bought.”
Natural Gas Pipe Line Company of America v. Pan-
oma Corporation et al., supra.

The Supreme Court of Oklahoma has, in many cases
dealing with regulatory orders of the Commission, ap-
proved the abrogation or modification of many of the es-
tablished rules based by analogy on common-law prin-
ciples.

In Gruger v. Phillips Petroleum Company, 192 Okla.
259, 135 P.2d 485, it has expressly held that the Commis-
sion could, as an incident of regulation, modify or abrogate
the law of capture. See also Patterson v. Stanolind Oil and
Gas Co. et al., 182 Okla. 155, 77 P.2d 83, affirmed 305 U.S.

—3j2—

376; Palmer Oil Corporation, et al. v. Phillips Petroleum
Company et al., 204 Okla. 543, 231 P.2d 997.

CONCLUSION

We respectfully submit that the writ should be de.
nied.

Rosert M. Rarney,
Streeter B. Fiywn,
735 First National Building,
° Oklahoma City, Oklahoma;

Homer D. Jounson,

Box 1011,
Pampa, Texas,
Attorneys for Respondent,
Of Counsel:
Frep C. Fernatp,
77 Franklin Street,
Boston, Mass.;

Rarney, Fiynn, Green & ANDERSON,
735 First National Building,
Oklahoma City, Oklahoma.

September, 1954.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385610_0693%3A3. Public record. Not legal advice.