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Elks National Foundation v. Weber

filed: August 29, 1991.

ELKS NATIONAL FOUNDATION, A LEGAL ENTITY, ET AL., PLAINTIFF-APPELLANT,
v.
FRED J. WEBER, ET AL.; SHELL OIL COMPANY; CONTINENTAL OIL COMPANY; ROBERT P. SCHWINN, INDIVIDUALLY AND AS SUCCESSOR LIQUIDATING TRUSTEE OF MCDONALD & EIDE, INC., DEFENDANTS-APPELLEES



Appeal from the United States District Court for the District of Montana. D.C. No. CV-89-62-BLG. James F. Battin, Chief District Judge, Presiding.

Dorothy W. Nelson, John T. Noonan, Jr. and Thomas G. Nelson, Circuit Judges. Opinion by Judge T. G. Nelson.

Author: Nelson

NELSON, Circuit Judge:

Appellants here are disappointed litigants in Montana state court litigation who brought this 42 U.S.C. ยง 1983 action in federal district court against the justices of the Montana Supreme Court, two Montana district court judges and other parties to the state court case. We affirm the district court's dismissal of the complaint for lack of subject matter jurisdiction and its award of attorneys fees, and award attorneys fees on appeal.

I

Facts and Proceedings Below

This action in the federal courts follows long and colorful litigation in Montana state courts concerning ownership of the working interest in an oil and gas lease in the N1/2 of the NW1/4 of section 8, T7N, R60E, Fallon County, Montana. Details of the basic dispute can be found in the first opinion of the Supreme Court of Montana, Gunnip v. Continental Oil Co., 223 Mont. 141, 727 P.2d 1315 (1986) (Gunnip). It is sufficient to set the stage for resolution of the issues here to say that, in 1955, the corporate owner of the entire working interest in the lease assigned a one-half interest in that portion covering the north 1/2 to H. W. McDonald. McDonald did not record the assignment until 1963. (Appellants here claim as McDonald's assignees and will be referred to as such.) In the meantime, a conflicting assignment was made to predecessors of Continental Oil Company, who then assigned a one-half interest to Continental. Since McDonald had already filed a quiet title action against the holders of the conflicting assignment, in 1962 Continental persuaded McDonald to sign an agreement ratifying the assignment to Continental of the one-half interest. That ratification agreement further provided:

For the same consideration, the undersigned [McDonald] does hereby transfer, set over and convey unto Continental Oil Company an undivided one-half (1/2) interest in the oil and gas lease above described. . . .

At the time of the execution of the ratification agreement, McDonald held a 50% interest in the north 1/2 and a 100% interest in the south 1/2. The burning question which has occupied the courts of Montana for these many years is whether McDonald transferred 50% of the working interest in the lease, or 50% of only his share of the working interest in the lease.

The quiet title action by McDonald proceeded to judgment, as did a separate action filed by the shareholders of the corporate one-time holder of the entire working interest. These decisions created a situation which can be described as unclear.

The Montana state court litigation which immediately preceded this action was filed by non-McDonald assignees against Continental and Shell Oil Company. The McDonald assignees were not parties to the action originally. The Supreme Court of Montana reversed a summary judgment in Continental's favor, holding that unresolved issues of material fact remained regarding the interest of Continental. The court said:

A trial must be held to assess Continental's interest considering potential application of adverse possession, waiver and estoppel.

The court cannot decide Continental's interest under McDonald's ratification agreement without McDonald's assignees before the court. They must be joined on remand.

Continental's asserted 50% interest in the N1/2 of the Lease must be tested against the interest of McDonald's assignees and their successors in interest. . . .

Gunnip, at 1317.

On remand, the McDonald assignees were joined and designated plaintiffs, and the former plaintiffs were redesignated defendants. The Montana district court considered the effect of the 1962 ratification agreement and ruled that McDonald conveyed only one-half of his interest in the north 1/2 to Continental. The Supreme Court of Montana took the case under a writ of supervisory control under Rule 17, M. R. App. P. The court said:

Supervisory control is proper to control the course of litigation when the lower court has made a mistake of law or willfully disregarded the law so that a gross injustice is done and there is no adequate remedy by appeal; also, to prevent extended and needless litigation.

Continental Oil Co. v. Elks National Foundation, 235 Mont. 438, 767 ...


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