Court: Supreme Court of Arkansas; May 9, 1955; Arkansas; State Supreme Court
Appellant seeks judicial recognition of a one-third ownership interest in oil and gas holdings claimed by Charles F. Steele and Amos T. Hutchinson, asserting that they hold this interest in trust for him based on an alleged oral agreement. Steele disputes the existence of this agreement but acknowledges that appellant performed significant work related to obtaining correction deeds and mineral leases, claiming full payment for these services. The trial court found the evidence insufficient to support appellant's claim, leading to an appeal focused on the weight and sufficiency of the evidence.
The disputed oil and gas holdings involve a 22-acre interest within a larger 116% acre tract known as the 'Milwee Estate.' This estate comprises multiple parcels, including 70 acres and various smaller tracts. Steele and Hutchinson have collaborated in the oil and gas sector for approximately ten years prior to the lawsuit, with Hutchinson providing financial backing and Steele managing operations despite his poor health. Appellant, a reputable Arkansas resident with relevant experience, was engaged by Steele to assist with necessary legal and logistical tasks for drilling operations on the land. The case mentions Minnette Hutchinson, Amos's wife, and Berry Asphalt Company, though their interests are not central to the litigation's outcome.
As of January 1, 1952, Steele and Hutchinson believed they owned nearly all oil and gas leases for the disputed lands, excluding a minor 1/45 interest later acquired by Silvey. The necessity for correction deeds and additional oil and gas interests arose from the impracticality of drilling without them, prompting Steele to seek appellant's assistance. Appellant contends that his relationship with Steele involved two distinct agreements, which will be addressed separately in the opinion.
The first agreement, established around January 1, 1952, involved Steele and Silvey, who agreed that Silvey would perform work to resolve lease issues, resulting in Silvey receiving a 1/96 interest in the entire 116% acres after completing the work in 3 to 4 months. Silvey has since benefited from this arrangement due to subsequent well drilling.
During Silvey's work, Steele’s attorney, Charles H. Tompkins, identified the need for correction deeds to perfect the title to the 'Milwee Estate' and noted various outstanding splinter leases. It was acknowledged that substantial work would be required to meet the attorney's requirements before drilling could commence. After Silvey completed his initial work, Steele and Hutchinson expected him to undertake this additional work, leading to a dispute over the terms of the second agreement.
Silvey claims he had an oral agreement with Steele entitling him to a one-third partnership in all leases of the 116% acres, while Steele denies this, asserting he never agreed to provide Silvey a one-third interest in the 22-acre tract, which he believed he could clear without significant issues. Steele acknowledged assigning Silvey a one-third interest in the 70-acre and 19% acre tracts but contests the claim regarding the 22-acre tract. The lawsuit centers on Silvey’s attempt to secure a one-third interest in the 22 acres, with each party presenting evidence to support their respective positions. Silvey argues it is unreasonable for him to undertake extensive work without compensatory interest in all leases, particularly highlighting that much of his work pertained to the disputed 22 acres.
Leases obtained from the Milwee heirs included both the 22 acres and the 89% acres. On January 19, 1953, Tompkins notified Steele of Silvey’s claim to a one-third leasehold interest in the Milwee-Estate lands. Appellant highlights that appellees did not contest this claim at the time, nor did Steele recall receiving the letter. Appellant argues that Steele’s claim of no agreement to grant Silvey a one-third interest until July 1953 contradicts the letter's implication of Steele's awareness of Silvey's claim in January.
Silvey secured multiple leases in his name, which were later assigned to appellees. Appellees assert they acquired the original leases and largely secured leases on the 22 acres before Silvey's involvement. Steele financed lease-related expenses and maintained liens to facilitate drilling on the 70 acres. The 22-acre tract was recognized as the most valuable, with Silvey acknowledging a refusal from appellees to grant him interest in the 17-acre tract.
Silvey admitted awareness of certain lease assignments for drilling on the 17 acres but did not assert his claim at that time. Tompkins expressed ignorance regarding the specifics of agreements between Silvey and appellees, despite knowing some agreement existed. Evidence, including letters from Steele to Hutchinson, indicates Steele's reluctance to grant Silvey any interest in the disputed lands throughout early 1952. These letters reveal that Steele was dissatisfied with Silvey's performance and repeated refusals to grant Silvey interest in the 22 acres.
A conversation witnessed by Fred Forest highlighted a disagreement between Silvey and Steele over the ownership of two tracts, with Silvey downplaying its significance while Steele asserted clear ownership boundaries to avoid resource drainage.
Raney Ellis, an 82-year-old witness, testified that in July 1953, he heard Mr. Steele promise Silvey a one-third interest in both the 70 acres and the 19% acres, which pleased Silvey. Another witness, Billy D. Stroups, who lived with Steele during early 1953, was present during the discussion but only heard Steele give Silvey a 1/96 interest in the 'Milwee Estate' land, not a one-third interest. The testimonies present significant inconsistencies and lack clarity, making it difficult to ascertain the exact nature of the agreement between Silvey and Steele.
While evidence suggests that Steele and Hutchinson may not have intended to include a third party in their longstanding partnership, Silvey's desire for a one-third interest is noted, as is his current financial compensation of approximately $500 monthly which may increase. A letter from Tompkins dated January 19, 1953, indicates that Silvey was claiming a one-third interest, hinting that such discussions had occurred. However, Tompkins admitted he was unaware of the actual agreement, implying that his information came from Silvey, which wouldn’t bind Steele.
There is ambiguity regarding when the one-third interest was first mentioned, as Steele’s statements about the date vary. The chancellor, after thorough evaluation, concluded that Silvey did not meet the legal burden of proving he had an agreement with Steele for a one-third interest in the leases for all lands. The appellate court agreed with the chancellor’s findings, affirming the trial court's decree, with Chief Justice Seamster not participating.
