Champlin Exploration, Inc. v. Western Bridge & Steel Co.
1979 OK 108, 597 P.2d 1215, 64 Oil & Gas Rep. 160 (1979)
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Rule of Law:
An owner of refined hydrocarbons that have been extracted from the earth and reduced to possession does not lose title when those substances escape, unless the owner is shown to have abandoned them. The common law rule of capture does not apply to personal property that has escaped.
Facts:
- Champlin Petroleum Company (refiner) operated a refinery and discovered that refined hydrocarbons were leaking from its pipes into the ground.
- The escaped hydrocarbons migrated underground from the refiner's property to adjacent premises owned by Western Bridge & Steel Company, Inc.
- Upon discovering the leak, the refiner immediately began recovery efforts by digging trenches on its own property to collect the escaped substances.
- Jim Peckham, president of Western Bridge, also began collecting the hydrocarbons that had seeped onto Western's property.
- Peckham then sold the hydrocarbons he had collected to Dosan Refining Company.
Procedural Posture:
- Champlin Exploration, Inc. (unit operator) filed a lawsuit in a trial court against Champlin Petroleum Company (refiner) and others.
- The lawsuit sought a declaratory judgment to determine ownership of the escaped hydrocarbons and requested an accounting.
- The trial court entered judgment in favor of the defendant, Champlin Petroleum Company, ruling that it was the owner of the escaped substances.
- Champlin Exploration, Inc. then appealed the trial court's judgment to the Supreme Court of Oklahoma.
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Issue:
Does the owner of refined hydrocarbons lose title to the substance when it escapes into the ground, thereby making it subject to the common law rule of capture?
Opinions:
Majority - Doolin, Justice
No. An owner of refined hydrocarbons does not lose title to escaped hydrocarbons unless it is shown by competent evidence that the owner has abandoned them. Once oil and gas are extracted from the earth, they become tangible personal property and are no longer subject to the rule of capture, which applies to fugitive resources in their natural state. Instead, legal principles governing lost or abandoned personal property apply. To lose title, the owner must have intended to abandon the property. In this case, Champlin Petroleum Company demonstrated a clear intent not to abandon the hydrocarbons by taking immediate steps to recover them. The court distinguished this from cases like Frost v. Ponca City, where the owner of the escaped substance was unknown and had made no claim, thus implying abandonment.
Analysis:
This decision solidifies the legal distinction between uncaptured minerals in their natural state and minerals that have been extracted and processed into personal property. It establishes that the rule of capture (or 'ferae naturae') ceases to apply once a resource is reduced to possession. The precedent protects owners of processed resources from losing title due to accidental leaks or escapes, shifting the legal analysis from the rule of capture to the doctrine of abandonment. This holding ensures that third parties cannot legally appropriate valuable, identifiable personal property that has accidentally escaped, unless the original owner has clearly demonstrated an intent to relinquish ownership.
