Nature of the Case
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Facts
In 1967, Ps conveyed land to the Feinsteins and reserved a fifteen-year one-half non-participating royalty interest. They retained an undivided one-half (1/2) non-participating royalty of all of the oil and gas in, to, and under that produced from the hereinabove described tract of land. The Feinsteins later sold the land, subject to Ps' oil and gas reservation, to Billy Blaha. In 1976, Blaha executed an oil and gas lease for a 1/8th royalty. Strata and Northstar (Ds) each acquired a working interest in the lease. They drilled one producing oil and gas well in July 1979 and another in February 1980. Ds entered into a joint operating agreement naming D the lease operator and providing that d would disburse all royalties from production. The agreement also provided that D's actions were made on behalf of both Ds. D hired an attorney to perform a title examination. That attorney erroneously informed D that Ps were collectively entitled to a 1/16th royalty, rather than the actual 1/2 royalty. D prepared the division orders and disbursed the proceeds. When various Ps died and royalty ownership changed, d prepared and sent transfer orders to the new royalty owners reflecting the same collective 1/16th royalty. Ps signed these division and transfer orders and received the disbursements. Ps were underpaid by 7/16th royalty, 7/16th of gross production, and Ds kept at least part of the underpayment. Ps discovered the error on September 29, 1982, and revoked the division and transfer orders. Two days later, their royalty interest terminated under the express terms of their reservation. Later in 1982, Ps filed suit to recoup more than $2.4 million in underpaid royalties owed them under the deed reservation. The trial court and the court of appeals held for Ds, maintaining the division orders were binding until revoked. Ps appealed.
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