146 Dimock v. Kadane

Richard F. Brown

The following is not a legal opinion. You should consult your attorney if the case may be of significance to you.

Dimock v. Kadane¹ holds that the parties to an A.A.P.L. Form 610 Model Form Operating Agreement (1956) impliedly waive their right to compel partition. Joint owners of undivided mineral interests have the statutory right to compel partition. However, joint owners may expressly or impliedly agree not to partition. There is no express agreement not to partition in the 1956 MFOA.²

Under the court’s analysis of the 1956 MFOA, it is likely that every 1956 MFOA will be construed to contain an implied agreement not to partition (unless the form has been substantially amended). The court examined several form provisions and found them sufficient to imply an agreement not to partition. The principal provisions relied upon by the court were paragraphs 10 (“Term of Agreement”) and 12 (“Operations by Less Than All Parties”). Paragraph 10 provides that the 1956 MFOA stays in force for the term of the leases, and paragraph 12 provides for transfers of interests under the non-consent provisions until recoupment of certain costs. Both of these paragraphs indicate a desire to retain the cotenancy status during the life of the leases.³

The court found additional support for its ruling in paragraphs 20 (“Maintenance of Unit Ownership”), 23 (“Renewal or Extension of Leases”) and 24 (“Surrender of Leases”). Paragraph 20 provides for the sale or other disposition of rights subject to the 1956 MFOA, but such transfers must continue to be subject to the operating agreement. This evidences an intent to maintain joint ownership of the interests. Paragraph 23 provides an opportunity to participate in the joint ownership of renewal or extension leases, which also evidences an intent to maintain joint ownership. Finally, paragraph 24 restricts the ability to surrender leases, which supports an implied agreement not to partition the undivided interests in the leases.⁴

The holding is consistent with earlier decisions finding a similar implied agreement not to partition in drilling contracts and in a preferential right to purchase. The significance of the case is that almost any 1956 MFOA would fall within the court’s reasoning. Moreover, subsequent model form operating agreements have very similar provisions, so that the holding may easily be extended to these later forms.

1. 100 S.W.3d 615 (Tex. App.-Eastland 2003, no pet.).
2. Id.at 618.
3. Id. at 619.
4. Id. at 620-22.