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Pieszchalski v. Oslager

OPINION FILED SEPTEMBER 20, 1984.

LEO PIESZCHALSKI, PLAINTIFF-APPELLEE,

v.

JOHN J. OSLAGER ET AL., DEFENDANTS-APPELLANTS; BI-PETRO, INC., DEFENDANT (LEO PIESZCHALSKI, PLAINTIFF-APPELLEE,

v.

ALBERT MIDDEKE ET AL., DEFENDANTS-APPELLANTS; FARM FEEDS CONSTRUCTION COMPANY, PLAINTIFF-APPELLANT,

v.

LEO PIESZCHALSKI, DEFENDANT-APPELLEE).



Appeal from the Circuit Court of Washington County; the Hon. Francis E. Maxwell, Judge, presiding.

JUSTICE KASSERMAN DELIVERED THE OPINION OF THE COURT:

Rehearing denied November 9, 1984.

The issues presented by the instant appeal arise out of two appeals that were consolidated by this court on motion of appellants.

One appeal involves plaintiff Leo Pieszchalski's complaint to compel defendants John J. Oslager, Madelyn B. Oslager, Albert B. Middeke, and Helen L. Middeke to execute to Pieszchalski a release of all interest owned by them in an oil and gas lease. Pieszchalski is successor in interest of the original lessors, and defendants Albert B. Middeke and Helen L. Middeke are the assignees of a portion of the interest of John J. Oslager and Madelyn B. Oslager, original lessees. Pieszchalski also sought a declaration that the lease was terminated and that he was the owner of all equipment or personal property left upon the land in question. Additionally, Pieszchalski prayed that defendant Bi-Petro, Inc., be ordered to pay to him all proceeds of sale of oil and gas presently withheld by Bi-Petro. After judgment was entered in the trial court in favor of Pieszchalski in his suit against the Oslagers, Farm Feeds Construction Company, the Middekes' successor in interest, filed suit against Pieszchalski for a declaratory judgment and injunction, alleging its lease was still in full force and effect. The Oslagers, the Middekes, and Farm Feeds Construction Company appeal from the judgments entered against them and in favor of Pieszchalski, finding the lease to have been terminated. The Oslagers also appeal from the trial court's determination that the equipment left on the land was Pieszchalski's property. This issue was decided against Pieszchalski as to the Middekes and Farm Feeds, and Pieszchalski did not appeal from this decision.

In his August 1982 complaint, Pieszchalski alleged that his predecessors in title had executed the lease in question to defendant John Oslager in 1972; that the lease covered approximately 200 acres and was for a term of six months and for as long thereafter as oil or gas was produced from the land; that John Oslager, joined by his wife, defendant Madelyn Oslager, had assigned to the Middekes a one-fourth working interest in the lease so far as the same covered 10 of the 200 acres contained in the original lease; that no oil or gas had been sold or produced "in paying quantities" for over two years and that the lease had therefore terminated by its own terms; that defendants had failed and refused to execute a release of the lease as required by statute; and that defendants' "failure to produce oil or gas" for over two years further constituted an abandonment of the lease and a forfeiture of equipment and personal property left behind on the land. A copy of the lease was appended to the complaint. The habendum clause of the lease (paragraph 2) provides: "Subject to the other provisions herein contained, this lease shall remain in force for a term of 6 months from this date (called `primary term') and as long thereafter as oil, liquid hydrocarbons, gas or their respective constituent products, or any of them is produced from said land * * *."

The Oslagers each entered a pro se appearance and general denial of the allegations of the complaint. Bi-Petro filed an answer denying that it presently withheld any proceeds from sale of oil or gas from the lease in question. By notice filed October 4, 1982, bench trial was set for October 26, 1982; the notice indicates that the parties were notified of this setting by mail. The Middekes filed their answer October 22, 1982, and on the same date moved for a continuance of trial.

The cause was called for bench trial on October 26, 1982, as set. A written order filed that date granted the Middekes' request for continuance of trial and stated that the Oslagers were notified of the trial date but did not appear personally or by counsel and that after considering the evidence the court found the lease to be abandoned and terminated due to "failure to produce [or] operate." The court found that Bi-Petro had no liability to Pieszchalski. A "decree" filed the next day states, inter alia, that no oil or gas had been "sold or produced in paying quantities" for over two years, resulting in both a termination under the terms of the lease and an abandonment of the lease; that the lease was of no force and effect; and that all equipment left on the land was Pieszchalski's property. The decree also recited that it was final and appealable and that there was no just reason to delay enforcement or appeal. A "certificate of mailing" filed October 27, 1982, indicates that the Oslagers and counsel for the Middekes were notified of the decree by mail. The Middekes and the Oslagers thereupon appealed to this court; however, Pieszchalski's motion to dismiss the appeal as to the Middekes was subsequently granted by this court.

After the Oslagers' appeal had been perfected, Farm Feeds Construction Company filed its complaint against Pieszchalski, seeking (1) a declaratory judgment that the lease in question was in full force and effect, and (2) an injunction preventing Pieszchalski from interfering with the operation of the lease and with the equipment located on the land. The complaint further alleged that the Middekes had assigned their entire working interest as to the 10 acres on which the well was located to Farm Feeds. This allegation was later established by introduction into the record of the pertinent documents. The latter case was consolidated with Pieszchalski's suit against the Middekes, which was still awaiting trial.

After a bench trial in the consolidated cases, the circuit court found upon conflicting testimony that Oslager had not been prevented from operating the well between August 1980 and August 1982 or from taking steps to increase production. The court concluded that the oil and gas lease had terminated but that there had been no abandonment of the equipment and personal property on the land by the Middekes or by Farm Feeds. The court also found that due to the prior judgment against the Oslagers as to the equipment, Pieszchalski was owner of a three-fourths interest in said equipment, and Farm Feeds was owner of one-fourth interest in said equipment.

The Middekes and Farm Feeds appealed to this court and moved to consolidate their appeal and the record therein with the Oslagers' appeal and its record. This court granted that motion over Pieszchalski's objection.

The Oslagers contend on appeal that the trial court erred in disposing of Pieszchalski's claim against the Oslagers without adjudicating the claim against the Middekes. The Oslagers characterize the Middekes as "necessary" parties without whom the issues could not fully and completely be disposed of by the trial court.

A necessary party is an individual or entity having a present, substantial interest in the matter being litigated, and in whose absence a complete resolution of the matter in controversy cannot be achieved without affecting that interest. The determination of whether a party is necessary to a cause of action is controlled by the issues presented in the case through the pleadings and the evidence and not by the final outcome of the litigation. Bovinett v. Rollberg (1979), 73 Ill. App.3d 490, 494-95, 392 N.E.2d 27, 31.

The record before us, being a default judgment as to defendants Oslager, contains no evidence regarding the issue of absence of necessary parties; therefore, it is necessary that we refer to the pleadings for resolution of this controversy. The complaint by plaintiff Pieszchalski prays that the court declare that the oil and gas lease was of no force or effect and that all right, title and interest of the Oslagers and the Middekes "be ordered cancelled, terminated and removed as a cloud upon title," and that the court declare any personal property and equipment left on the land forfeited and abandoned to plaintiff.

We are referred to no Illinois cases by the parties in which the question of the absence of necessary parties was considered in the context of partial assignees of oil and gas lessees, and our research has revealed none. Plaintiff urges that we consider certain comments of Professors Williams and Meyers in their treatise, Oil and Gas Law. We find that source helpful, but not the section urged by plaintiff. Section 877.1, cited by plaintiff, concerns the need to join all co-lessors, not co-lessees, in an action to cancel a ...


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