                                          NO.      92-113

              IN THE SUPREMECOURT OF THE STATE OF MONTANA
                                                  1992
JANE S. NORBECK, Trustee               of the
JANE NORBECKTrust dated                November 20, 1963,
             Plaintiff,            Respondent      and Cross-Appellant,
      -vs-
MRS. M. H. CRAWFORD        and MR. M. H. CRAWFORD,her husband,
if any, and other heirs,           devisees,     legatees,   creditors,
administrators,       executors,       and assigns of any of said
defendants,     if they be deceased: and any and all persons
known or unknown, claiming             or who might claim any right,
title,   estate or interest          in or lien or encumbrance upon
the real property       situated       in the County of Fallon,
State of Montana, described              as 25% of the net proceeds
derived from the production              as reserved by George Norbeck
in operating      agreement with Fidelity           Gas Company included
in and a part         of U.S. Oil and Gas Lease prospecting                 permit,
Billings    Serial    #021056 as to NE1/4, Section 12, Twp. 8N,
Rge 59E of M.P.M., Fallon County, Montana or any thereof
adverse to Plaintiff's         title      whether such claim     be present
or contingent       including       any claim or possible          claim of dower,
inchoate or accrued,
              Defendants,           Appellants,      and Cross-Respondents.

APPEAL FROM:            District  Court of the Sixteenth Judicial   District,
                        In and for the County of Fallon,
                        The Honorable Joe L. Hegel, Judge presiding.
COUNSELOF RECORD:
              For Appellant:
                        Charles       J. Peterson,        Mackoff,       Kellogg,    Kirby   &
                        Kloster,       Beach, North      Dakota
              For Respondent:
                        Chris Mangen, Jr.,    Crowley, Haughey,               Hanson,   Toole
                        & Dietrich, Billings,    Montana
             _ 4;   ;



                                                Submitted   on Briefs:        July   23, 1992
Justice             R.     C. McDonough                  delivered                 the    Opinion               of        the        Court.


          Mrs.           M.H.        Crawford,              et     al.,            appeals             from          a judgment                    of   the

Sixteenth                Judicial            District             Court,            Fallon            CoUnty.                   We affirm.

          The sole                issue       on appeal                 is:

          Whether              the     District             Court             erred        in        granting              the         disputed              25

percent             interest           in a federal                oil            and gas lease                  to Jane               S. Norbeck,

Trustee             of     the      Jane      Norbeck             Trust,             subject            however                 to     39/40ths              of

such      25 percent                   interest             being             vested            in     Mrs.          M.H.            Crawford,               et
al.,      upon           approval            of    the      Department                   of      the       Interior.

          In         1934,          George          Norbeck               (Norbeck)                  obtained               federal                lease,

021056         (b) ,        from       the        United          States                Department                   of     Interior.                   The

lease          contained              a fixed             twenty              year        term         and       granted                  the       lessee
right          of        renewal           upon          expiration.                      The         lease           also            contained                   a

provision                barring           assignment               without               consent               of        the        Secretary               of

the      Interior                through          the      land         office.

          Norbeck                entered          into      an operating                      agreement               with            Fidelity              Gas

Company.                   He retained                   record           title           ownership                   of        the         lease,           as

lessee,             with       25 percent                of the         net        proceeds            of production.                             Norbeck

appointed                Fidelity            Gas Company                      as his          attorney-in-fact                              to      obtain

renewal             leases           on his        behalf.                Subsequently,                       Fidelity                 Gas Company

assigned              the        operating              rights          in        the    deep          formations                    to     Shell           Oil

Company.

          In        1935,         Norbeck         made an assignment                             of the          25 percent                      interest

to Mrs.             M.H.         Crawford.               This      assignment                   was rejected                         by the         United

States          Land Office                  because             Mrs.         Crawford               did      not          pay        the        required

                                                                              2
lease        bond,               or     establish                    the      necessary                     qualifications                      to        own an

interest               in         the        lease.                   Mrs.           Crawford                    did        not       pay       any            delay

rentals.                After               the     assignment,                      Mrs.             Crawford               had      the      assignment

filed        with                the        county              clerk              and          recorder.                         Thereafter,                   Mrs.

Crawford              took            no action                in      regard             to      the        lease.

           Fidelity                   Gas applied                   for       a renewal                 lease           in        1954 on behalf                       of

Mrs.       Crawford.                         The             land         office               rejected                the         renewal            because

Fidelity               Gas            did         not        have           authority                  to        act         on      behalf          of         Mrs.
Crawford,               and the               land           office          did         not          recognize               Mrs.       Crawford               as a

lessee.               Fidelity               then            applied           for            a renewal                lease         as attorney-in-

fact       for        Norbeck.                     The        land          office             accepted                this         application                   and

issued           a renewal                    to        Norbeck.                    In        1964          Fidelity               applied           for          the

second        renewal                  as attorney-in-fact                                for         Norbeck,               and the           renewal            was

issued.               The         second            renewal                 lease             was put             on producing                     status              in

1968.            Since            then,            some $420,000                         in     production                   payments              have         been

allocated               to        the        25 percent                    interest.

           On October                   28,        1968,            the      land         office            notified               "heirs          of George

Norbeck"              that        under            federal             regulations                      they       had to establish                            their

succession                  to        his     interest                 in     the         lease.                 On August               18,       1987,          the

Bureau           of    Land Management                               (BLM),          the         successor                  to     the      land      office,

notified              the        Norbeck            heirs             that      it        recognized                   their         interest             in the

lease.

           The        Norbeck                heirs             transferred                      all         of     their            interest              in      the

lease        to        the            Jane         Norbeck                 Trust,              Julius             A.        Bernard,            Trustee.

Subsequently,                          Jane             S.     Norbeck                   took          over            as         trustee            (Norbeck
Trustee).                On September                 29,          1988,             Shell            Oil         notified            the      trustee
that       Shell         had     completed                 its        review               of        the       claim         to     the      interest

but      would      not        distribute              the         proceeds                    without             a quiet          title         action
being        completed.

           On October                22,     1990,          the         Norbeck                 Trustee             began          a quiet           title

action          before         the     District             Court.                  Efforts                were      made to          locate           Mrs.

Crawford,           but         no response                     was         forthcoming.                           A default                was      taken

against          Mrs.      M. H. Crawford.                              The District                         Court          quieted          title           to

Jane       S.    Norbeck,             Trustee,              on December                         7,     1990.
           Subsequently,                    the      heirs            of      Mrs.             M.H.          Crawford              (the      Crawford

heirs)          surfaced             and filed              a motion                     for      relief            from          judgment.              The

District           Court         vacated             the         default                 and         judgment               on June          4,      1991.

The Crawford               heirs            sought          to     quiet             their             title           to    39/40ths             of     the
disputed           interest.                  Jane         S.      Norbeck,                    Trustee,              filed          a motion             for
summary          judgment.                 In response                  the         Crawford                heirs           moved for          partial

summary          judgment.

           The     District                Court,         on January                       17,        1992,          ruled          that      Jane           S.

Norbeck,           Trustee,                owned          all           the         allocated                     production                proceeds.

However,           the    District                Court          ruled             the         Crawford            heirs          could      apply           to

the      BLM for         approval             of the            previously                      rejected            assignment.                   Should

the      assignment              be approved,                     the         Crawford                 heirs         would          own 39/40ths

of     the      disputed             interest              and        the          proceeds                  of     production               would           be

allocated            to         them         after          the            first               day      of        the        month          following

application               for        approval.                   This         appeal              followed.




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           Our     scope             of      reviewing                 motions                   for      summary               judgment                is     the
same as the             trial              court         and is             a question                   of law.                Summary           judgment

is    granted           only          if     no genuine                     issue           of        material             fact         exists.


           The District                     Court          found            that           federal            oil         and gas           leases             are

governed          by the             Mineral              Leasing               Act        of     1920,          P.L.       No.         146,      41 Stat.

437      (1920),          as         codified                   in     30 U.S.C.                       Sec.         5,     181      et         seq.            The

original           statute                 provided:                 "[N]o           lease             issued            under      the          authority

of this          Act    shall              be assigned                 or sublet,                      except            with      the         consent           of

the     Secretary               of         the        Interior."

           30 U.S.C.             Sec.             187a          (1990)           provides:
            [A]ny oil or gas lease issued under the authority                            of this
           Act may be assigned               . . ., subject          to final      approval     by
           the Secretary           . .         to any person or persons               qualified
           to own a lease             unddr      this      Act,   and any assignment            or
           sublease         shall    take effect           as of the first          day of the
           lease      month following            the date of filing           in the proper
           land      office       of    three       original      executed       counterparts
           thereof,        together       with     any required         bond and proof          of
           qualification           under the Act of the assignee                 or subleasee
           to take or hold such lease                     or interest     therein.       . . .

The District               Court                 in     light         of        30 U.S.C.                 187a,           ruled          the      Crawford

heirs       would        own 39/40ths                         of the         disputed                  interest             upon the              approval

of    the     assignment                    by the              BLM.

           The     case         of         Oasis          Oil         Co.       v.       Bell          Oil       & Gas Co.                 (W-D.             Okla.

1952),           106    F.Supp               954,          followed                   30 U.S.C.                  § 187a,            and          held         that

Oasis       Oil        Company              (the         assignor)                   was the             sole        record         holder               of the

lease       and was entitled                             to     all        of        the        oil      runs        from         the      well         on the

lease.            Oasis         at         957.          In Q&is,                  the          assignee,                Fish,          failed           to pay

the      requested               fee,             and         provided                insufficient                        information                   to     the

                                                                                 5
Department              of         Interior              which         refused              to        approve             the          assignment.
Thus,         the     assignment                 did     not        convey          any interest                     in    the         lease      under

the      statute            until          the      date         the       Secretary                  of     Interior                 approved         the

lease.

          The Crawford                     heirs         rely        on Gibbons                  v.        Pan American                   Petroleum

Corporation                  (10th         Cir.          1958),            262      F.2d          852,         for        the          proposition

that      neither             Norbeck             nor      his       heirs          were         obligated                 under          the     lease
after         the     assignment.                   However,               this      proposition                     is        contrary          to    the

facts         before          us.         The Department                      of     Interior                viewed             Norbeck          as the

record         owner          of the            lease.           The renewals                     were         made and accepted                        in

his      name.         A renewal                 submitted                on behalf               of       Mrs.      M.H.             Crawford         was

rejected             because              the       assignment                had         never            been       approved.                   Delay

rentals             became          the     responsibility                        of Norbeck,                  whether                he paid         them

or      not.           In          Gibbons,             the         Tenth          Circuit                 stated              that       Gibbons's
failure         to     submit             the      assignment                for         approval             could            not     destroy         the

obligation              of         an assignee                under          the         lease.              Gibbons             at      854.         Thus

Gibbons              rests           on       the        fact          that              Gibbons              did         not          submit          the

assignment              for         approval.                 Here,         Mrs.          M.H.         Crawford                applied           to    the

land      office             for     approval              of       the      assignment                    and it          was rejected.

          The        material               facts             are      not          in      dispute.                      Norbeck           made        an

assignment                  to       Mrs.           Crawford               but            she         failed              to          perfect          the
assignment             with          the      Department                  of Interior                  pursuant                to the       language

of      the     original              lease            and 30 U.S.C.                      5 187a.               Later            attempts             were

made to have Mrs.                         Crawford            pay the              rentals             but     without                success.          As

a result             the         obligations                  under          the         lease             remained              with       Norbeck.


                                                                             6
Neither     the assignor           nor assignee,         or their         heirs,     acted   relative
to any rights       they         had until      awakened by Shell             Oil.     The   District

Court     ordered   the existing             proceeds    of the 25 percent            interest          paid
to the Norbeck          heirs,      however by its        order      it    allowed     the Crawford
heirs     the opportunity          to perfect        the assignment          by seeking      approval
of the Secretary           of Interior          under    30 U.S.C.         5 187a.
         Based on the evidence               presented     in the record,             we agree with
the     determination        of     the   District       Court      and affirm         the   District
Court.



We Concur:




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