Oklahoma Company v. Oneil

1 This case arises out of the acquisition of ownership of fractional interests in the working interest of three oil and gas leases, known respectively as the Kane lease, the Kane B-1 lease, and the Longbone lease, the last named being an Indian departmental lease. These three leases combined cover the entire Northeast Quarter of Section 3, Township 25 North, Range 13 East, Washington County, Oklahoma. There is also involved a controversy concerning the development and operation of said leases after the title to and ownership thereof was acquired by the parties here involved. Plaintiff below, and plaintiff in error here, is an Oklahoma corporation engaged in buying and selling interests in oil properties and developing and operating same. The defendants, and defendants in error here, are all non-residents of Oklahoma; defendants ONeil and McCusker are experienced business men; defendants MacSmith, C.C. Alexander, Johnson, Lyle A. and Marguerite D. Titus, husband and wife, Evans and Krauss all live in Florida, Alexander and Evans being experienced business men there, and defendants Johnson, Lyle A. Titus and Krauss being retired experienced business men. All of said defendants were in the higher income tax brackets and were interested in investing in the working interest of producing oil and gas leases because of the income tax advantages which could be obtained in charging off development and operation expenses of the leases and depletion allowance on the income therefrom. We will hereafter refer to the parties by their trial court designation.